the major retailers in sporting goods the power

THE POWER
INCLUDING RETAIL
SCORECARDS
THE MAJOR RETAILERS
IN SPORTING GOODS
ACADEMY SPORTS + OUTDOORS • BIG 5 SPORTING GOODS • BOB’S STORES
DICK’S SPORTING GOODS • DUNHAM’S SPORTS • HIBBETT SPORTS
MC SPORTS • MODELL’S SPORTING GOODS • OLYMPIA SPORTS
SCHEELS SPORTS • SPORT CHALET • SPORTS AUTHORITY
MARCH/APRIL 2012 A SUPPLEMENT OF SPORTS INSIGHT
THE POWER
POWER GOES BEYOND
SOME SAY KNOWLEDGE IS POWER. Some believe influence is
the most powerful force in business. For others, size is key. Many
say money brings power with it. For the Power 12 of U.S. sporting
goods, all four definitions fit like a well-used baseball glove. From
the marketing genius of Scheels Sports to the impact Modell’s
marketing has on competitors and friends alike … from the sheer
size of Dick’s Sporting Goods and Sports Authority to the profitability
1
P6
ACADEMY
SPORTS +
OUTDOORS
It has been a year of change
for venerable Texas retailer
Academy Sports + Outdoors
and the family-owned company
is now adjusting to life in the
Kohlberg Kravis Roberts stable.
7
P30
MC SPORTS
MC doesn’t go crazy trying
to keep up with the Joneses.
Instead, it opens doors where
it sees opportunity and closes
them when it no longer sees
potential. It also strives to be a
fixture in its communities.
of wise retailers such as Hibbett and Olympia, power is in the eye
of the beholder. Whatever the definition, the dozen sporting goods
retailers profiled in this special Version 2.0 issue of The Power 12
of 2012 wield it for the benefit of themselves, their customers, their
shareholders and owners and, indeed, for American retailing as a
whole. It is power used wisely. The information in The Power 12 of
2012 was compiled in the past few months by contributing editors
2
P12 BIG 5
SPORTING
GOODS
Big 5 is not one of the
sporting goods industry’s
better merchandisers, but
its “neighborhood store” and
powerful marketing niche allow
it to get away with it.
8
P34 MODELL’S
SPORTING
GOODS
After 123 years in business,
Modell’s Sporting Goods is
still a work in progress, a
term CEO Mitchell Modell
uses freely to describe the
chain’s ongoing commitment
to its born-again self.
Editor: Mark Sullivan • Writers: Michael Jacobsen, TIm Sitek • Art Director: Francis Klaess • Designer: Mary McGann
4 • THE POWER 12 / SPORTS INSIGHT
3
P16 BOB’S
STORES
The deep pockets of Versa
Management continue
to fund expansion while
keeping management
focused on what it does
best — sell softgoods,
footwear and online.
9
P38 OLYMPIA
SPORTS
It clearly has a strategy
that works: Locate
stores in underserved
communities. Why play
with the big boys when
you can be the big fish in
the many smaller ponds
throughout your territory?
MARCH/APRIL 2012
NUMBERS
SCORECARDS
VIEW THE RETAIL RESULTS
P48
Michael Jacobsen and Tim Sitek utilizing personal interviews, public
reports, competitor and supplier comments and inside knowledge
gleaned from a combined five decades of covering the business of
sporting goods. Together this information paints a vivid picture
of the most powerful forces in sporting goods today and going
forward. It is a work in progress – just like the retailers themselves
– and comments are always welcome. As a special bonus to our
4
P18
DICK’S
SPORTING
GOODS
With a goal of doubling in
size to more than 900 stores,
Dick’s has put together the
infrastructure and management
team to get it done. The chain
remains the cream of the
sporting goods crop.
readers in Version 2.0 of The Power 12 of 2012, we commissioned
Secret Shoppers to visit every one of the retailers profiled in these
pages. Their comments are reviews provide an insightful portrait
– and not always a flattering one – of these businesses at the store
level. Together with the retailer profiles this section is sure to
spark conversation at many different levels of the sporting goods
retail chain. All we can say is, the more power to them...
5
P24 DUNHAM’S
SPORTS
P27 HIBBETT
SPORTS
The chain continues to
strengthen its presence on
its home turf, but there are
still plenty of holes to fill
in throughout its 13 other
states. Modernizing stores is
also on its to-do list.
Terms such as “probably
the most efficiently run
sporting goods retailer
in the country,” “wellmanaged, well-run,” and
“know how to control
costs” are synonymous
with Hibbett Sports.
n
n
n
10
P40
6
SCHEELS
SPORTS
11
P42 SPORT
CHALET
With competition from both
general and specialty retailers,
Scheels continues to overwhelm not only with selection
but also an insistence on
catering to the entire spectrum.
12
P44 SPORTS
AUTHORITY
It has repositioned itself at the
upper end where customer
service is a necessity, not
an option. Sport Chalet has
responded to the challenge
from national chains on its
home turf.
n
n
New leadership no
doubt again means new
direction for the chain.
But can Sports Authority
plot a consistent course
as it battles Dick’s for
national supremacy?
n
THE POWER 12 / SPORTS INSIGHT • 5
THE POWER
ACADEMY
SPORTS
+ OUTDOORS
A New Beginning Under KKR
It certainly has been a year of change for venerable Texas retailer Academy
Sports + Outdoors. It has been more than a year since president and guiding
light Arthur Gochman passed away suddenly from a heart attack in November
2010, leaving the 140-store chain’s leadership – and future – in limbo.
I
“Right stuff. Low prices. Everyday.”
140 STORES, IN 11 STATES
Alabama, Arkansas, Florida, Georgia,
Louisiana, Mississippi, Missouri, Oklahoma,
South Carolina, Tennessee and Texas
HEADQUARTERS
Katy, TX
KEY EXECUTIVES
• Rodney Faldyn, CEO & President
• Robert Frennea, EVP, CMO
t was, perhaps, inevitable that the familyowned company would then seek an
outside buyer, which it did with the sale
in early August, 2011 to Kohlberg Kravis
Roberts, a global investment firm with $61
billion in assets under management, for an
undisclosed amount. (Among the other big names
previously or currently under the KKR umbrella
are Sealy, Dollar General, Toys R Us, Gillette, RJR
Nabisco and Safeway.)
The sale was not something that would have
happened had Gochman not died suddenly at age
79, but with his son, David, not involved in the dayto-day operations as CEO it was the logical next step
for a more than $3 billion regional business with
16,000 employees forced to go head-to-head with
national competitors in may of its key and newer
markets.
Or, as new CEO and president Rodney Faldyn
said at the time of the sale, “Our new partnership
with KKR provides us with tremendous growth
opportunities and will position us well for the future.
I look forward to maintaining our commitment to
our strategic priorities and ensuring the culture of
SALES FOR 2011
More than $3 billion (2010: $2.7 billion)
KEYS TO SUCCESS
How well the “Don’t Mess with Texas”
crowd at Academy’s Katy headquarters
meshes with the bean counters at KKR will
go a long way to determining the success
of the chain.
The expansion into the southeast – three
stores opened in Atlanta last year – will test
its backroom and marketing chops away
from its home field in Texas.
STRENGTHS AND WEAKNESSES
One of Academy’s hallmarks in both its
stores and in its advertising are its own
private label brands, which account for
almost 30 percent of its sales. It is not shy
about having a Russell or Under Armour ad
on one page of a flyer and its own private
label brand right next to it.
The executive team, led by CEO and
president Rodney Faldyn, has made a
transition from under the paternalistic
guidance of the late Arthur Gochman.
KKR has more than $61 billion in assets
under its management, giving Academy
deep pockets, although the efficiency
experts from KKR are starting to make
themselves felt. Word out of the trade show
circuit is that Academy buyers are coming
back to vendors asking for GTD money,
something not previously in the playbook.
www.academysports.com
6 • THE POWER 12 / SPORTS INSIGHT
our company continues to grow.”
David Gochman, Arthur’s son and then CEO,
admitted last year that he had first explored the idea
of selling Academy in 2007, but the timing was off
because of the impending recession. “Since that
time, it’s been in the back of my mind,” he said, and
after his father died and then the market for selling
Academy improved, the time was right.
“We couldn’t find a better buyer,” he said. “KKR
loves Academy — the concept, the culture, the
merchandise, the customers and our management
team.” He noted that Mike Calbert, who is head of
KKR’s retail investment team, is an East Texas native.
Gochman said he never had the desire to take
the company public and only focused on selling it
to a private equity firm.
He and his sister Molly
Gochman will be minority
investors in the company.
Gochman speculated
in one press report that
under KKR’s ownership
the company could
expand to a rate of about
18 to 20 stores annually.
For its part, KKR in
its short time so far as the financial force behind
Academy has left the running of the business in the
hands of the sporting goods professionals, although
there have been rumblings of discontent among
Academy buyers and merchandisers over KKR’s
to-be-expected efficiency efforts. Also, Academy has
always had a reputation for being tough but very fair.
Yet vendors are talking about how
Academy is coming back to them
asking for GTD margin money, just
like every other retailer.
“Academy Sports + Outdoors is a
leading retail franchise with a unique
and rich history,” says Calbert, a
member of KKR and head of the
firm’s retail investment team. “We
look forward to the opportunity to
support the future growth of this
brand. Our goal is to make the
ownership transition seamless for
customers by maintaining our quality
assortment, everyday low prices and
exceptional customer service.”
Industry observers have
nonetheless noticed subtle changes in
the look and feel of the stores under
KKR’s stewardship. “It is no secret that
they employ a Wal-Mart EDLP (every
day low price) strategy and that’s how
they are positioned in the market,” says one industry
executive who just happens to live in Academy
territory. “Theirs is definitely a low pricing strategy
and they are very aggressive retailers, but I have
definitely noticed some prices being raised at the
same time their advertising and stores are looking a
little classier.”
And, this observer notes, “Academy has a decades
head start on Dick’s and Sports Authority in Texas
Academy has
always had a
reputation for
being tough
but very fair.
THE POWER
Academy Sports + Outdoors (continued)
and they pretty much own the market for sporting
goods equipment and apparel.”
For his part, new CEO and president (he assumed
the CEO role after the KKR acquisition) Faldyn does
not dispute any of those assertions. “Academy Sports +
Outdoors is an everyday low price sports, outdoor and
lifestyle retailer and we believe our business model will
continue to be relevant in all of our markets and during
any economic environment,” he tells Sports Insight.
Just how has the KKR purchase impacted dayto-day operations and the company’s focus on its
competition? “We are a sports, outdoor and lifestyle
retailer with competitors in all three of these channels,”
Faldyn points out. “We offer a balanced assortment
of footwear, apparel, sports and leisure and field and
stream products and KKR is aligned with our five-year
strategic growth plan.”
As for the long term, Faldyn says that under KKR
ownership the chain is “well on our way to achieving
our five-year strategic growth plan and we continue to
be a dominant player in the industry.”
Expansion – both filling in existing markets and
regionally into primarily the Atlanta area – is obviously
a part of that five-year plan. Faldyn reports that
Academy opened 12 stores opened in 2011, in addition
to two relocations, one expansion and no store
closings. Included in that figure are three new metro
Atlanta area stores in 2011 – in Cumming, Snellville and
McDonough – and it has another location set to open in
Hiram during the first quarter of 2012. Q
LATE 2011 STORE OPENINGS
WHAT VENDORS ARE SAYING...
In November Academy opened its first store in Hattiesburg, MS, a
75,000-square-foot site located on U.S. Highway 98 that features an archery
lane and a digital golf simulator.
Also in November Academy opened another 75,000-square-foot store in
Knoxville, TN, its fifth location in Tennessee.
Its third Atlanta-area store opened November 4 in Cumming. The 72,000-squarefoot site is located on Peachtree Parkway.
In August Academy opened at 69,000-square-foot store in Columbia, SC. It is its
first store in the Columbia area and the chain’s third in South Carolina.
With more than 15 new store openings planned for the rest of 2012, the folks
down in Katy can’t help but enjoy all of that KKR money behind its aggressive
expansion plans.
OF NOTE
One of the hallmarks of Academy over the years has been a willingness to not only
try new product categories – 40-foot gondolas featuring BBQ and cooking gear and
accessories appear in a number of stores – but to bring in non-sports products
such as Wiis or PlayStations during the fourth quarter to grab even more dollars.
“They have no problem trying these new categories, which is what makes them so
interesting,” says one industry observer.
Academy has reportedly started football helmet and pad fitting in football-crazy
Texas to grab some of the team hard good business from players forced to buy
their own gear.
Academy Sports + Outdoors makes its presence known in every aspect of sporting goods, and its EDLP strategy keeps customers coming in the door year-round.
8 • THE POWER 12 / SPORTS INSIGHT
THE POWER
BIG 5
SPORTING GOODS
Firmly in the Middle
To paraphrase the old Stealer’s Wheel song, when Big 5 Sporting Goods looks
around it sees “retailers to the left of it, retailers to the right, and it is stuck in
the middle” with all of its stuff. That’s because as the West Coast’s pre-eminent
neighborhood sporting goods stores, its middle of the road merchandising and
location strategy puts it squarely in, well, the middle of the pack.
R
“Your Neighborhood Sporting Goods Store”
406 LOCATIONS IN 12 WESTERN STATES
Half are in California
HEADQUARTERS
El Sugundo, CA
KEY EXECUTIVES
• Steven G. Miller, Chairman, President/CEO
• Barry Emerson, Senior VP, CFO, Treasurer
• Richard A. Johnson, Executive VP
• Thomas J. Schlauch, Senior VP-Buying
• Shane Starr, Senior VP-Operations
SALES FOR 2011
$902.1 million (up from $896.8 million in 2010)
KEYS TO SUCCESS
It is one of the sporting goods retail’s biggest
advertisers, with weekly glossy ads in every
market giving consumers the impression that
the chain is much bigger than it really is.
An ability to work with vendors on closeouts
and specials helps drive customers to its
stores regularly and helps with margins.
Good leases help it remain profitable in key
markets, but it needs the economy in California
– its strongest market, with half of its stores –
to rebound for its numbers to improve. A colder
winter would have been nice.
STRENGTHS AND WEAKNESSES
Descriptions of its stores range from “messy”
to “cluttered,” and the fact remains that
Big 5 is not one of the industry’s better
merchandisers. Its “neighborhood store” niche
allows it to get away with it.
Big 5 has a ton of stores in dozens of
markets and knows its customers, so it gives
them what they want as a full-line retailer.
The something-for-everybody positioning
makes it great for general sporting goods
customers, but more agile and more focused
specialty retailers are carving its niche
customers off in markets like running and
outdoor.
www.big5sportinggoods.com
12 • THE POWER 12 / SPORTS INSIGHT
ecent sales numbers reflect the
challenges it faces. At a time
when specialty shops in running,
outdoor, cycling, soccer and the
rest are carving their own retail
niches, and while the giants like
Dick’s Sporting Goods and Sports Authority
continue to expand their footprints, the middle
of the pack is not really the best place to be. But
it is squarely where Big 5, despite the Big in its
name, holds court.
But “stuck in the middle” is not necessarily
a bad thing if you do it right. And Big 5, with
stores ranging from 8000 to 15,000-square feet,
certainly does it right, with a strength in real
estate and favorable leases taking advantage
of a weak retail real estate situation – coupled
with an acknowledged leadership ability to find
and benefit from closeouts and vendors deals –
adding to its bottom line.
And in the world of sporting goods, Big 5 is
one of the leaders in marketing and advertising
to support the myriad product lines literally
filling the aisles at its average 11,000-square-foot
strip mall-based stores. Big 5 is renowned in the
industry – and certainly in the local newspaper
community – as a prolific print advertiser,
counting on weekly glossy inserts in virtually
every one of its markets to make it look like
an even bigger player than its smaller stores
suggests.
Indeed, some in the industry – and sometimes
even Big 5 executives themselves – refer to the
company only half jokingly as an advertising
company that happens to sell sporting goods.
Another strength lies in its ability to ferret out
and capitalize on leases for its new or relocated
sites. Retail vacancies provide an opportunity for
an opportunistic company like Big 5 to find new
opportunities or to renegotiate existing terms.
They are acknowledged to be among the industry’s best at both.
One of its other strengths lies in its uncanny
ability to work with (or hit up, depends on your
perspective) vendors for “deals” and closeouts.
While this strategy is becoming more difficult to
pursue as more vendors, especially in its vital
footwear category, are sending their closeouts
to their own outlets, Big 5 still relies on and has
success with it.
Unfortunately, that strategy leads to one of
the other challenges Big 5 faces — the look and
feel of its stores.
With so many
locations in so many
neighborhoods
selling so many
closeouts and
specials, it is
inevitable that
SQUARE FEET TO merchandising and
display take a back
seat. The chain
has a somewhat
deserved reputation
for clutter, a look that seems to work but makes
it tough to compete with jazzier bigger box
competitors.
The numbers also don’t lie and illustrate a
neighborhood store’s susceptibility to economic,
weather and other factors outside of its control.
After a basically flat year in 2011 over 2010, the
company announced in late January that 2011
sales increased only slightly to $902.1 million,
from $896.8 million for the fiscal 2010 full year.
That comes after 2009 sales were $895.5 million,
marking little growth over a two-year period.
Even more ominous, same store sales
BIG 5 STORES
RANGE FROM
8000
15,000
OF NOTE
Big 5’s numerous neighborhood locations and accessible
store format encourage frequent customer visits, resulting
in approximately 27.9 million
sales transactions and an average transaction size of approximately $32 in fiscal 2010.
Big 5 opened 11 new stores
and four relocations in 2010
and it anticipated opening
between 10 and 15 net new
stores in fiscal 2011.
Taking a major leap into event
sponsorship, last fall Big 5
partnered with the Honda LA
Marathon as the event’s official
sporting goods retailer and
title sponsor of the “LA Big
5K,” the popular race held the
day before the marathon. The
2012 LA Big 5K is March 17.
All participants in the Honda
LA Marathon and LA Big 5K
receive an offer from the retailer
after registering for either of
the events. Four of its stores
across LA County will rotate a
weekly training run beginning
mid-February to help prepare
runners for the big day.
AD
“
THE POWER
Big 5 (continued)
The chain has also made an investment in
private label merchandise, which now represents
approximately three percent of its net sales. Its
key PL categories include shoes, apparel, golf
equipment, binoculars, camping equipment,
fishing supplies and snowsport equipment.
Private label merchandise is sold under
trademarks it owns or licenses, including Court
Casuals, Golden Bear, Harsh, Pacifica, Rugged
Exposure and Triple
Nickel.
Big 5 also knows its
customer. Unlike Hibbett,
which focuses on shoes
and soft goods, Big 5 is
full-line sporting goods
more similar to Dick’s
or TSA, but under a
smaller roof. While that
lends itself to clutter –
“downright messy” as one
observer put it – it allows
it to be all things to all people — moms looking
to outfit their young athletes, weekend warriors
looking for a pair a cleats, golfers needing a
sleeve of balls, fishermen casting around for
a new reel or hikers in need of outerwear and
shoes for a walk in the woods.
Interestingly, Big 5, despite the clutter, prolific
advertising and reliance on closeouts, does
not live in EDLP land. One competitor insists
that other than its closeout specials Big 5 is
rarely the lowest priced sporting goods store
in the neighborhood. “It makes them a good
competitor,” he says. “Its advertising may give
that impression that they are an every day low
price retailer, but that is not the case and we
never have to worry about them competing
strictly on price.”
In a retail era where the neighborhood store in
any market – from hardware to shoes to records
– is struggling, Big 5 has staked its future on this
beleaguered concept. If any retailer can pull it
off, it would be Big 5. If not, then they are clearly
and firmly stuck in the middle, with retailers to
the left and more retailers to the right. Q
Big 5
knows its
customer.
It is a fullline sporting goods,
under one
roof.
Not known within the sporting goods community as being a particularly great merchandiser, the powerful local flavor
and myriad locations allows Big 5 to get away with it.
decreased 1.2 percent for the fiscal 2011 full
year. (For the fourth quarter alone same store
sales decreased 2.1 percent.) A soft holiday
season, a continued weak economy in its
California stronghold and unseasonably warm
early-winter weather all contributed to the weak
showing.
“We are disappointed with our fourth quarter
sales results, particularly given that same store
sales were solidly positive through the first
half of the quarter,” said chairman, president
and CEO Steven G. Miller. “The holiday selling
period was below expectations as our results
were heavily impacted by a lack of favorable
winter weather in most of our markets and a
highly promotional environment. The adverse
weather conditions throughout the second half
of the quarter negatively impacted sales in all of
our major merchandise categories, particularly
apparel sales.”
In retail terms, apparel comped down midsingle digits for the quarter and sales in its
footwear and hardgoods categories decreased in
the low single-digit range.
But all is certainly not gloom and doom at the
West Coast’s neighborhood retailer. The “smaller
and steady” strategy, similar to that successfully
employed by fellow little guy Hibbett Sporting
Goods in the southeast, gives it the flexibility
to close under-performing locations and the
financial resources to open in under-served
markets, which it does on a regular basis.
WHAT VENDORS ARE SAYING...
“
14 • THE POWER 12 / SPORTS INSIGHT
THE POWER
BOB’S
Reborn Again... And Loving It
STORES
For a retailer with such a simple name, Bob’s Stores certainly is a complicated
business. Seemingly on the brink of disappearing from the retail landscape
more than once in the past decade, Bob’s is not just alive and well – with 34
stores in six states in the Northeast – but is intent on thriving in head-to-head
competition with some of the region’s best sporting goods retailers.
“Always Rewarding.”
t the heart of this aggressive
posture is the well-received
opening of the new Bob’s
prototype retail design in East
Northport, Long Island, NY. The
chain’s first new store since 2006
is a 30,000-square-foot contemporary design that
features high ceilings, flattering display lighting,
lifestyle photography, custom fixtures and a
focus on the brands sporting goods consumers
want these days — Nike, Under Armour, Levi’s
and Dockers among them. The new design
addresses not just the Bob’s consumer, but the
typical American shopper who is time-pressed
and value hungry.
“We have seen that many consumers are not
willing to spend as much time browsing as they
once did,” Walsh told Sports Insight in a rare
cover feature story in the magazine’s November
2011 issue. “Our job is to quickly and effectively
communicate our offering in the clearest, most
compelling way possible. We believe we have
the best brands and best value proposition in
today’s marketplace.”
And Walsh this month says the chain is ready
to branch out based on the store’s success into
2012. “We’re very pleased with the success
of our new prototype in East Northport, so
plans are to move forward with this concept,”
he says, crowing that Bob’s and FRCH, the
design firm behind the new look, just won first
place for Design in the Large Format Specialty
Store category and an Innovation Award for
Merchandise Presentation from the Retail Design
Institute for the prototype.
All of this is aimed at continuing to carve out
its niche in the uber-competitive and crowded
Northeast sporting goods and lifestyle retail
market in its strongest states of Connecticut,
Rhode Island, Massachusetts, New York, New
Jersey and New Hampshire. It is a market where
the competition goes far beyond sporting goods
A
35 STORES IN 6 STATES
HEADQUARTERS
Meriden, CT
KEY EXECUTIVES
• Mark Walsh, CEO
• Jim Smith, CFO
• Scott Hampson, SVP-Store Operations
• Lisa Ramos, SVP-GMM
SALES FOR 2011
Unknown. Company is privately owned.
KEYS TO SUCCESS
Bob’s is banking all on the appeal of its new
prototype store on Long Island and has plans
to roll out more based on its success.
The deep pockets of Versa Management
will continue to fund any expansion while
insisting on a tight business model that will
keep Bob’s focused on what it does best —
softgoods, footwear and online marketing.
STRENGTHS AND WEAKNESSES
A much-anticipated e-commerce initiative
kicked off last October and Bob’s is using it to
expand beyond what it can put on shelves in
its northeast U.S. stores.
There is no denying the fact that Bob’s
does business in one of the most competitive
areas of country, where an affluent consumer
attracts all sorts of competition. With names
like fellow Power 12 retailers Dick’s Sporting
Goods, Sports Authority and locally owned
Modell’s within shouting distance of most of
its stores – and with no hardgoods to bring
in big-ticket customers – Bob’s faces the
challenge of carving out an identity.
www.bobstores.com
16 • THE POWER 12 / SPORTS INSIGHT
(think: Kohl’s), but Walsh is focused on taking
on the immediate competition with Bob’s own
unique take on the needs of its core consumer.
(To underscore the depth of the competition,
Dick’s has two stores, Modell’s five and Sports
Authority one in Suffolk County, where the new
prototype store is located.)
Being privately owned, Bob’s Stores does
not reveal it sales figures – although one
local newspaper recently put its 2010 sales
at $300 million – but Walsh does point out
that “Bob’s has been profitable for the last
three years.” Expect that to continue with its
planned controlled growth, with two new stores
reportedly to open in 2012.
BOB’S REVENUE
“While we can’t comment
specifically at this time, we
expect to continue to see
FOOTWEAR growth for our company in
2012 and we are seeking to
take advantage of great real
estate opportunities where we
can be of service and fill a
ACTIVEWEAR need for our core customer,”
& ACCESSORIES
he says.
“Within the sporting goods
sector we recognize our main competition to be
Dick’s, Modell’s and TSA, as well as numerous
locally owned shops of similar nature,” Walsh
adds. “While we don’t carry hardgoods, there
is a lot of similarity in the team licensed and
activewear businesses. We differentiate ourselves
through our value proposition. We offer great
brands at great value with a best-in-class loyalty
program and an easy, customer-centric store
experience.”
Bob’s revenue breaks out to about 45 percent
footwear and 55 percent activewear and
accessories, Walsh says.
Like many other retailers, Bob’s is looking well
beyond brick-and-mortar for future opportunities.
An aggressive e-commerce effort kicked off
45%
55%
OF NOTE
The Bob’s Stores financial story
is interesting and complicated.
In 1990, with five stores,
Melville Corp., now known
as CVS Corp, bought it and
grew it to 34 stores, all in the
Northeast and New England,
by 1996. In 1997, when Melville
sold all its chains except CVS
Pharmacy, Bob’s was passed
to Melville’s management
and Citicorp Venture Capital.
Bob’s Stores went bankrupt
in 2003 and in late 2003, TJX
Companies outbid companies
such as Dick’s Sporting
Goods and bought the chain
for $113 million. TJX
expressed interest in Bob’s
Stores because it shared similar
characteristics to other TJX
chains, including large stores
and similar brands. In August,
2008, TJX announced it would
sell Bob’s to private equity firms
Versa Capital Management and
Crystal Capital.
in October and Bob’s is counting on the
significant investment in it to keep it relevant
in the online shopping space.
“Being long-awaited, we needed to make
sure it was right and delivered on the value and
rewarding experience we promise our loyal
customers,” Walsh explains. “Right now we
feature a full complement of workwear, men’s
tops, pants and jeans and there is also a great
selection of team, workboots and action sports
footwear. We continue to add brands and
categories on a regular basis that will appeal to
all customers. We’re excited for this business
to bring us closer to loyal customers who may
reside outside of our northeast region.”
That online effort goes well beyond
simple e-commerce and Bob’s has earned
a reputation for one of the more astute
e-marketers in the business. It’s customer
loyalty programs are at the core of this success
and they take both traditional and new media
forms, according to Lynn LaRocca, AVP,
marketing director.
“Our primary marketing outreach is through
web – email, etc. – inserts, direct mail and
outdoor,” LaRocca explains. “We place a high
priority on our loyal customers and the benefits
of our ‘Best of Bob’s’ program. Capturing
emails for ease and speed of communication
with our customers is still of the utmost
importance and we have and will continue to
use local TV for various events and branding.”
Bob’s new retail design
addresses not just the
Bob’s consumer, but the
typical American shopper
who is time-pressed and
value hungry.
The chain is also becoming more involved with
digital tactics overall, including search and
social advertising.
But at the end of the day it all comes down
to the product on the store floors and Bob’s is
constantly redefining its position in the minds
of its consumers. The stores remain reliant on
softgoods, so the focus is on going deep and
wide.
“We currently have robust, comprehensive
offerings in jeans and licensed product,
but we never rest,” says GMM Lisa Ramos.
“We’re always looking for and testing
various offerings – including performance
gear and hardgoods – in stores. Now we’ll
also be able to bring different product to
customers through our e-com channel,” she
adds, making it possible to offer product
that previously wasn’t feasible for it to
carry in its northeast stores, like a Green
Bay Packers hat or a San Francisco Giants
T-shirt.
Having risen from the ashes in the past,
Bob’s Stores is now in the somewhat
unfamiliar position of expanding from a
position of strength rather than just fighting
to survive. That means the market should
expect more stores built following the East
Northport model in the near future as the
real estate market lends itself to expansion.
“We will have more locations like our
new East Northport prototype throughout
the Northeast and Mid-Atlantic and a wellrounded e-commerce site,” says Walsh.
“We’ll never stop looking for ways to improve
all areas of our business.”
That’s a simple strategy for a simply named
retailer with big, complicated plans. Q
Without hard goods to bring in the big ticket sales, Bob’s goes wide and deep in its apparel and footwear collections to compete in the highly competitive Northeast market.
THE POWER 12 / SPORTS INSIGHT • 17
THE POWER
DICK’S
SPORTING GOODS
The Gold Standard
In a rare blip on the Dick’s Sporting Goods rise to the top of the heap in
sporting goods retailing in America, the company in January announced
lowered same-store sales and softer third quarter sales. The culprit? The warm
winter in most parts of the country and the resulting lower-than-anticipated
sales of vital outdoor product. But it is nothing the chain can’t handle.
A
“Every Season Starts at Dick’s”
480 DICK’S STORES IN 43 STATES;
81 GOLF GALAXY STORES IN 30 STATES
HEADQUARTERS
Coraopolis, PA
KEY EXECUTIVES
s Ed Stack, Chairman & CEO
sJoe Schmidt, President & COO
sTim Kullman, EVP & CFO
sLauren Hobart, SVP CMO
sDavid Mosse, SVP & General Counsel
sJoe Oliver, SVP CAO
SALES FOR 2011
More than $5 billion
KEYS TO SUCCESS
With a goal of doubling in size to more than
900 stores, Dick’s has put together the
infrastructure and team to get it done. Now if
only more real estate was being developed.
With its in-store golf shops and its 81 Golf
Galaxy stores, Dick’s is perhaps the most
influential golf retailer in America.
STRENGTHS AND WEAKNESSES
As shown by its softer third quarter numbers
due to a warm winter, Dick’s is just as
susceptible to factors beyond its control as is
the smallest retailer. It just happens to have
the resources – and clout with vendors to
take back product – to weather any storm.
How big is too big? Now with
approximately 26 million-square feet of retail
space, Dick’s went through some severe
growing pains during its first growth spurt late
in the last century and is determined to not
repeat the past.
www.dicksportinggoods.com
18 s THE POWER 12 / SPORTS INSIGHT
t the time of our third quarter
earnings announcement we
noted that our guidance was
predicated on normal winter
weather patterns,” chairman and
CEO Ed Stack told Wall Street in
announcing the disappointing earnings. “While
the warmer- and drier-thannormal winter has impacted
our same store sales and
inventory levels, sales and
gross margin pressure has
been minimized due to
better than anticipated
operating leverage, resulting
in anticipated full year EPS
growth of 23 to 24 percent.”
The weather is one of the
few things the 800-pound-gorilla of the sporting
goods industry can’t control and it – like many of
its retail brethren – took it on the chin in late 2011
and the first few months of 2012. But Stack and his
seasoned executive team have seen it all before
during the chains meteoric – and sometimes
dangerous – rise to the top of the business. With
474 stores in virtually every corner of the United
States bringing in more than $5 billion in sporting
goods sales, Dick’s has the resources to withstand
a rough quarter or two.
But that doesn’t mean Stack is resting on the
successes of the past in becoming the Leader of
the Pack. There was a time not too long ago that
Dick’s rapid expansion severely tested its ability
to handle all that growth and, indeed, there were
times the very future of the chain was in question.
That undoubtedly led to a strongly worded
corporate philosophy that Stack, in an exclusive
and wide-ranging interview recently with Sports
Insight, says permeates
everything that every one
of the chain’s thousands
of employees lives by. “We
have an internal mantra —
relentlessly improve everything
we do,” Stack says.
That about says it all for
the gold standard of sporting
goods retailing. And just
think: In a few years there
will be twice as many of them in America.
Read on…
Ed Stack, 56, has served as chairman and CEO
of Dick’s Sporting Goods – the company founded
by his father Richard “Dick” Stack – since 1984.
He has been with the company since 1977 in
many different positions, including store manager
and merchandise manager, and also served as
president back in 2008. Sports Insight recently
caught up with Stack to talk about the chain’s
past, present and future and his relationship with
Mitchell Modell.
Dick’s Region by Region
Current
Store Base
Percent
of Stores
Potential
Store Count
Percent
of Stores
Northeast
200
41.7
288
32.0
Southeast
103
21.5
163
18.1
North Central
80
16.7
133
14.8
South Central
43
9.0
119
13.2
North Rocky Mountains
0
0.0
6
0.7
South Rocky Mountains
15
3.1
34
3.8
Northwest
13
2.7
35
3.9
Southwest
26
5.4
122
13.6
Region
Source: Bank of America/Merrill Lynch
THE POWER
Dick’s Sporting Goods (continued)
INTERVIEW
ED STACK
Chairman & CEO,
Dick’s Sporting Goods
Dick’s now has close to 500 stores
in almost every part of the country.
Is it true there were only two stores
when you started working for the
company back in 1977?
Yes, there were only two stores then
in Binghamton, NY, and they were both
pretty small — one was 2800-square
feet and the other was 5000-square feet.
When we moved the offices to Pittsburgh
in 1994 we had 12 stores.
So what are the plans for 2012 in
terms of new stores and geographic
expansion? Any store closings on
the horizon?
We will open between 35 to 40 stores
in 2012 and they may be in a couple of
new states. We will relocate some stores
if leases are up, but there are no stores
that are not performing well enough that
we would close them.
Not too long ago you announced
plans to more than double your
store count to more than 900. Are
you still on track for that?
We still feel can have 900 stores, but
a lot of that depends on real estate. We
can grow 8-9 percent a year but there
is not enough real estate out there to
support more than that.
Dick’s already has the reputation
as the best-looking sporting goods
store. Do you have any ongoing
plans for store redesigns or
renovations?
We continue to look at all of our stores
and every four years we go through a
redesign process. I expect that in 18 to
24 months we will see a new look in our
new stores.
Is Dick’s in any sort of acquisition
mode in 2012?
We look at different opportunities
from time to time but there is nothing
front and center right now in terms of
acquisitions.
What about your plans in golf, either
in the stores or with Golf Galaxy?
We are very happy with our golf
business both in our stores and with
Golf Galaxy. We believe the golf shops
20 • THE POWER 12 / SPORTS INSIGHT
THE POWER
Dick’s Sporting Goods (continued)
in the stores are appropriately sized and they
will not be getting bigger. There are 81 Golf
Galaxy stores now in 30 states and there can
be about 250 stores in the United States some
day. We are looking to open several Golf
Galaxy stores this year and they will be larger
– closer to 40,000-square feet, similar to the
35,000-square-foot store in Pittsburgh – than
the existing 15,000-square-foot stores we have.
Your third quarter numbers were softer
than anticipated and you pointed to the
warm winter weather as a major factor.
What are you doing to make up for that?
There’s not much we can do. We can’t
control the weather. This is not going to deter
us from our outdoor business in the future
and now we are looking to liquidate the
product that we have. Our vendors have been
very helpful in taking back their product and
putting it in their outlet stores.
What are the bright spots in your
business in 2012?
The Nike Field House concept has been
great. They will be in about 100 of our stores
by the end of the year. They provide us with
some differentiated product for the market
and we are giving Nike much more space
in our stores because they are such a good
brand for us.
Is Dick’s involved in team sports sales to
schools in any way?
We do very little in selling directly to
schools. When we purchased Chick’s Sporting
Goods (in California) they were doing team
sports but they were not making much money
at it, and we are not planning to do any more
of it.
In addition to the Nike shops, what is
your brand strategy going forward?
We are expanding with The North Face,
which is a very good brand for us. We will
continue to do a lot with other brands
important to our customers, like Under
Armour and Adidas. Columbia is a great brand
for us.
And what about your in-house store
brands?
Our house brands are now about 15 percent
of our business and we anticipate that to grow
over the next several years. They give us more
control over the product, the margins are better
and even though it is not an easy business it is
important to us and will continue to be.
You are also bullish on your online
business.
We certainly are. Our online business has
been very good and we have announced
significant comp gains in it. Right
now online sales are about two to
three percent of our business and
we expect that to increase at a rapid
rate. GSI handles our fulfillment but
we do all of the merchandising and
marketing ourselves to support our
online business
Our house brands
are now 15 percent
of our business and
we anticipate that to
grow over the next
several years.
Years ago you said it would take a lot
to get you to put stores in the New York
metropolitan area, yet here you are now
with quite a presence. What changed?
We are a very different company now and
we are well equipped to be in that market. We
“
Dick’s Sporting Goods is univerally regarded as one of the best merchandisers in the business, yet the chain looks to improve its store designs every 18 to 24 months.
22 • THE POWER 12 / SPORTS INSIGHT
are starting to enter the five boroughs, but we
do not have any plans now to be in Manhattan.
Going into New York puts you squarely
into Modell’s territory, and Mitchell
Modell sent us a picture of him giving
you a kiss on the cheek at the National
Retail Federation meeting recently. Are
you that good of friend with all of your
competitors?
Mitch is a funny guy and he was the instigator
in that. We had a good time at the NRF meeting
and I respect him as a competitor and like him
as a person.
Dick’s Sporting Goods is looked at as
the gold standard among sporting goods
retailers. What does Dick’s not do well?
We don’t view ourselves as the gold standard.
There are a lot of things we need to improve
on and we look every day at what we need to
do that. Internally we can always find room to
improve, anything and everything. We have
an internal mantra — relentlessly improve
everything we do.
So how should the outside world view
Dick’s Sporting Goods?
We are viewed by our customers and brands
that we partner with as a company that focuses
on the core athlete and enthusiast exclusively
with the best products and brands. We are fully
involved in sports, much more so than in just
trying to sell it. And we are very involved with
our communities and are very proud of what
we do there, like with our PACE program that
has helped pay for almost one million kids
getting baseline concussion testing.
So where will Ed Stack and Dick’s
Sporting Goods be in five years?
We should be roughly twice the size. There
are a lot of things we can improve on. Our
merchandising will continue to evolve and we
will take full advantage of the technology that
becomes available to help us sell more sporting
goods. We will be much bigger and better and I
am not going anywhere. Q
OF NOTE
In early March Dick’s reported
that net sales for the full year
2011 increased seven percent
to $5.2 billion primarily due to
the growth of its store network
and a two percent increase in
consolidated same store sales.
For the fourth quarter, earnings
rose 27 percent on a 0.1
percent comp gain. For 2012,
Dick’s Sporting Goods said it
expects same store sales to
increase two to three percent
compared to a 2.0 percent
increase in fiscal 2011.
Dick’s is building a
600,000-square-foot
distribution center on 50 acres
in Goodyear, AZ, that will
service the western United
States and is expected to
open in early 2013. The
DC will ultimately support
approximately 160 stores.
In the fourth quarter, the
company opened six Dick’s
Sporting Goods stores. As
of January 28, the company
operated 480 Dick’s Sporting
Goods stores in 43 states,
with approximately 26.3
million square feet and 81 Golf
Galaxy stores in 30 states,
with approximately 1.3 million
square feet. From its current
store sites, management
has identified more than
900 potential locations,
which should help diversify
its locations geographically
with less exposure to the
Northeast and Midwest regions
where they are currently
concentrated.
THE POWER
DUNHAM’S
SPORTS
Opportunity Knocks,
So Open Some Doors
It’s no secret that the retail landscape was completely reshaped by the
Great Recession. A whole litany of chains – Circuit City, Linen ‘N Things,
Borders to name a few – went dark, and many more begin shutting down
unprofitable locations. Needless to say, strip centers went begging for
someone to fill many vacant holes.
D
“Get In The Game”
179 STORES IN 14 STATES
HEADQUARTERS
Waterford, MI
KEY EXECUTIVES
• Jeffrey Lynn, Chairman and CEO
• Ken Meehan, President
• Al Blazek, CFO
• John Oehler, VP-Marketing
SALES FOR 2011
$1.4 billion (estimate; company is private).
KEYS TO SUCCESS
It continues to strengthen its presence on its
home turf. With 67 stores in Michigan, there are
still plenty of holes to fill in its 13 other states.
Modernizing stores is on its to-do list. Its
racetrack floor plan better segments product
categories while enhancing the shopping
experience.
STRENGTHS AND WEAKNESSES
It’s a throwback to the days of when full line
meant full line. Many of its hard goods may not
bring the margins of soft goods, but it gives
Dunham’s authenticity.
Industry insiders believe management is
sharp both with a pencil and in execution. The
chain tries to get many goods on consignment
and often succeeds. Profits follow because they
focus on cost and opportunities.
Dunham’s has no on-line sales presence. Its
Website serves strictly as an information portal.
Customers must visit a store to buy anything.
Some wonder if customer service is keen.
That gets even tougher when Dunham’s opens
huge stores and carries so many categories.
There’s a price to pay when hunting for
bargain real estate. For one, there’s no real
prototype since square footage runs the gamut.
Consequently, it loses some consistency and
brand identity.
Stores often are cluttered and can look “beat
up.” Merchandising is not up to its competitors’
levels, with one industry pundit calling some of
its stores an older version of Big 5.
www.dunhamssports.com
24 • THE POWER 12 / SPORTS INSIGHT
unham’s took the opposite
track, opening up a bevy of new
stores in 2011 – 13 alone from
May through November of last
year. Several more are in the
works, too. And many of these
will find a home in a former Kmart or Pick ’n
Save. Yes, the boys in Michigan have been
busy expanding Dunham’s footprint across the
Midwest, especially in areas where it can find
bargains on retail space.
As an example, Dunham’s opened a massive
store in Burlington, WI, right before the holidays.
Weighing in at a hefty 55,000-square feet, it’s onequarter larger than in its normal stores. And it’s
located in the Fox River Plaza, thanks to space
vacated by Pick ’n Save, a supermarket chain that
calls the Cheese State home.
Dunham’s no doubt negotiated a great deal
on the space so it could expand its selection
of products, especially its field and stream and
fitness offerings, not to mention its well-known
value area where it features footwear for 30-50
percent off MSRP.
The same probably holds true at a store
set to open this spring in the Westgate Mall
in Baxter, MN. Dunham’s will take about
33,000-square feet there in a space formerly
occupied by Kmart. Plans also call for opening
another massive store in the Schuylkill Mall in
Frackville, PA, this spring. The long-standing
retailer will fill 58,000-square feet in an
outparcel in the center.
While never known for its talkative nature,
the chain speaks loudly by its actions. Industry
insiders call it one of the most opportunistic
retailers in the business, and its aggressive
expansion backs that up.
Coupled with this, Dunham’s is truly a full-line
athletic chain. Whether it’s a fly rod or hunting
boots, inversion table or air hockey table,
shotgun or sweatshirt, customers can find it at
a Dunham’s store. Many of its stores also have
Fairway Center golf shops that stock Callaway,
Nike, Taylor Made and more.
While many so-called full-line chains have
moved out hard goods, especially in field and
stream, to make room for higher margin soft
goods, Dunham’s stays true to its roots as a
purveyor of all things athletic. It still stocks a
wide assortment of casual sports apparel and
footwear to cater to athletes and those who just
enjoy the comfort of sweatsuits and sneakers.
It also lives up to its motto: Big Names … Low
Prices. It carries some of the industry’s bestknown names, from Nike to Under Armour, from
Remington to Shakespeare. And everything is
promoted by showing a discount off the MSRP.
This includes its Hot Deals and Sport Values to
lure customers in with rock-bottom pricing.
To keep customers looking for deals,
Dunham’s typically promotes through weekly
circulars in newspapers, and the chain usually
runs these on Monday or Tuesday to take
advantage of cheaper ad rates. Yes, the ads
scream with savings across the breadth and
depth of its product categories.
The other hook is through its Dunham’s
Rewards card, which gives customers
additional coupons and discounts. The
program also allows Dunham’s to gather
a wealth of information on its customers’
interests, shopping patterns and preferred
contact methods. Q
OF NOTE
It drives customers to its stores
through discounts, including
its Sportsmen Club discount
program for hunting, fishing,
kayak, boating, camping and
archery clubs. It also has a
Team discount program for
schools and youth programs.
Both are free and offer 10
percent discounts on regularly
priced items (not sure if that
exists in its stores, though)
and 20 percent off regularly
priced items over any chosen
weekend by teams and during
special event weekends for the
fishing and hunting crowd.
Speaking of opportunities,
the chain gets creative
during the holiday shopping
season. It’s been known to
sell even curling irons to
draw customers, especially
husbands who pick up a
shotgun and still need to find
something for the wife.
The chain traces its roots
to 1937 when it opened as
Dunham’s Bait & Tackle. It
remains true to its roots by
carrying a deep selection of
not just fishing but also hunting
products. It also doesn’t hurt
that many of its stores are in
the heart of America where
hunting and fishing are viewed
as a birthright.