When Sportmart Inc. founder Larry Hochberg introduced his first sporting goods superstore, the company was a leader–the place countless Chicagoans went to find balls, bats, skis, shoes, jerseys and sweats, all under one roof.
Then came Sports Authority, and others, to chip away.
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Sportmart expanded, becoming the first U.S.-based superstore to enter the Canadian market.
A rash of other competitors followed, and Sportmart closed its 11 Canadian stores to concentrate on the U.S. market.
And Wednesday brought more troubles for the Wheeling-based retailer, as it reported a fiscal fourth-quarter loss of $28.1 million, or $2.19 a share, far deeper than the loss of $8.8 million, or 69 cents per share, a year earlier. For the year, the loss widened to $27 million from $6.4 million in fiscal 1996.
Adding to that, sales were down 6.3 percent for the fourth quarter and, even more telling, same-store sales (stores open at least a year) fell 13.8 percent during the quarter.
Retail analyst Richard Nelson of Chicago-based Nesbitt Burns Securities Inc., said “the balance of this year will be critical for Sportmart.”
Will they get through the year?
“That remains to be seen,” said Nelson.
“Don’t write the obituary yet,” Sportmart Inc. chief executive Andrew Hochberg said Wednesday.
“We’re not dead.”
But Sportmart’s deteriorating financial picture certainly indicated that Chicago’s sporting goods icon is gasping for air.
Hochberg and Sportmart’s executive vice president and chief financial officer, Tom Hendrickson, said the worst is behind them.
Hochberg, son of the founder, said: “We’ve spent a couple of years repositioning the company. We’ve closed our 11 Canadian stores so we can focus on the U.S. market, we’ve reduced inventory.
“Now, we’re focusing on hard goods (sporting goods and equipment), we’ve added private-label merchandise, we’re much more proactive in merchandising and marketing,” adding that Sportmart is raising its ad budget by an additional $3 million to $4 million.
But it will take a lot of TV commercials and direct mail pieces to overcome the lack of interest on the part of some customers and actual debits that have mounted.
Nelson pointed out that the holiday season, reflected in Sportmart’s dismal figures, was tough for all retailers. “Even Sports Authority’s same-store sales for the quarter were up only about 1 percent,” he said of Ft. Lauderdale-based Sports Authority Inc., the biggest sports superstore chain in the country.
Nelson, however, believes there’s hope for Sportmart.Strategies include Sportmart’s new efforts to focus on female sports figures and customers, to add its own private-branded merchandise and to implement its `Four Worlds’ concept.
Sportmart’s Lombard store, a prototype for future remodeling of stores and new stores that may be added after 1998, focuses on grouping together clothing with equipment in four areas: footwear, outdoors, team sports (basketball, tennis, golf) and fitness.
Analysts say moving merchandise around and adding merchandise may be too little, too late.
Branded merchandise labeled with a store name that’s lost its luster may not be such a hot idea, said one.
And, perhaps most significant, competition is fierce in every aspect of retailing.
Retail analyst Skip Helm, of Chicago-based William Blair & Co., says: “Sporting goods retailing is tough, really tough, because of the tremendous competition. It’s not just one sports superstore against another sports superstore. It’s Sears, Wal-Mart, Target, places that don’t necessarily look like you but are trying to get your business.”
Andrew Hochberg said the situation is improving in this year’s first quarter thus far, with same-store sales down only 2.5 percent.
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But industry sources don’t think the picture is quite as rosy as Sportmart’s executives do.
Among Sportmart’s problems, they say, are Sportmart’s lack of the type of training and inventory systems that rival Sports Authority has long had in place.