In Focus

The Sports Authority Sorority

The Chick's One Stop Shop For Sporting Goods Struggles
by Chick Megan

A few months ago, Chick Karin started dropping hints about a walking/running exercise regimen she was trying. I assumed it was a joke because as long as I've known Karin the most exercise she gets is "running" to Bebe at the local mall or "curling" 12 ounce Coors Lights.

She explained that she read an article about pedometers; how people were using them and working toward a goal of 10,000 steps per day to lose those unwanted pounds. Sure enough, she'd walked 2,000 steps just during our conversation. I wasn't totally convinced so I headed off to the nearest Sports Authority and picked up a Freestyle Pedometer for a mere $19.99. Keep in mind I am an avid exerciser who puts in about 5-6 days per week but I'm still not where I'd like to be (are we ever??). I found that although on my workout days 10,0000 steps was a cinch, on my days off I'd be lucky to log 4,000 steps.

Now I wear my pedometer every day and if by 7 PM on a day off from the gym my numbers are low, I'll go for a walk. It holds me accountable on a daily basis, and it's fun to compare my numbers with my husband or my girlfriends. Everyone we know is buying them now. It's a low cost, very doable way to get and remain active.

Not surprisingly, I got to wondering: who makes these pedometers?

There seems to be millions of pedometer manufacturers out there. They monitor everything from miles and steps to calories, heart rate and body fat percentage depending on the model. None of the companies were easy to track down but many of them shared one common link. The Sports Authority! The Sports Authority carries numerous pedometers as well as exercise equipment, work out apparel, shoes, sport specific products...a whole plethora of goodies. A quick glance at their numbers (TSA, NYSE) told me the following:

GM: 27%

NM: .01

Cash: > 1.5X debt: .04

Flow Ratio: 1.7

Increasing Growth: -16.3

I don't know about you, but those are numbers that make me want to walk. Away. Actually, more like run. I might even leave skid marks.

What could make a company like this struggle? The appeal seems so obvious and yet their numbers are miserable. First I wanted to find out who would be considered their competitors. Hoover's online showed turned up Gart Sports (who?), Venator Group (remember Woolworth's?) and WalMart. Ah ha! An answer began to formulate. Problem number one: pricing. Why pay full price when you can run out to WalMart and get the same thing for less money? And what about the outlet world? Helloooo! They're everywhere these days, I mean, remember when you used to have drive hours to find one? Not anymore. So why would consumers pay full price when they've got the alternative? What could The Sports Authority possibly offer that would be enticing enough to draw people in to pay full price?

Well, strap on your helmets Chickies, because Cal Ripken, Jr, Brandi Chastain, Junior Seau, Jackie Joyner-Kersee, Mike Krzyzewski, Picabo Street, Dara Torres, Jim Furyk, Bobby Bowden, Andy Pettitte and Summer Sanders may be the answer. Marty Hanaka, Chairman and CEO of TSA is now boasting about his new "Advisory Board" and the invaluable experience they will bring to his customers. The program entitled "Celebrity Coaches Corner" will offer coaching tips, in-depth quotes and strategies. Aside from these displays, newspapers will carry inserts in over 16 million newspapers throughout the US. Maybe this is just what the doctor ordered.

Another avenue The Sports Authority is traveling is the Internet highway. www.thesportsauthority.com. This terrific revamped site now includes a "Zone" area with access to over 100 buying guides for more than 25 sports, aiding consumers in selecting the best merchandise for their respective level of athletic participation. Combining that with a comparison feature to decipher differences in various products gives the site a real edge over their competition.

TSA also added a new member to their management team, Elliott Kerbis. With 25 years of retail experience (12 years in sporting goods merchandising), this hiring shows the company's strong desire to make the changes necessary to become successful.

Last, but not least, on November 20, 2000, TSA announced that the October 28 ending of their fiscal quarter showed an operating income increase by $14.1 million versus an operating loss of $13.7 million in the same period last year. Also evident from this earnings report is production of positive comparable store sales for the first time in three consecutive quarters. Yippee!

So does this answer my question about the possible death of a major sporting goods retail store? Well, it's clear that it needed something pretty innovative to get this baby running hot again. Hopefully this new Advisory Board will be effective. My suggestion? Why not put a store within a store, like so many companies are doing these days? How about GNC (General Nutrition Center)? As a full line distributor of sporting goods it does seem to be the one element they are missing, supplements. I think I'm on to something here... I think I'll go give Marty a call. Wait, it's 7 PM and my trusty pedometer is reading a little on the low side. Maybe I'll walk over...