Private Sporting Goods Stores Have Some Swagger

Private Sporting Goods Stores Have Some Swagger

As retail industry watchers await earnings from Dick’s Sporting Goods and Hibbett Sports next week, a look at privately held sporting goods stores shows strong growth over the last 12 months, according to recent data from Sageworks, a financial information company.

And these stores could continue to benefit in coming weeks as they garner their share of apparel sales in the back-to-school rush, said Sageworks analyst Tim McPeak.

“It’s a lifestyle thing,” McPeak said. “A lot of school-aged kids want to wear UnderArmour, Nike and Adidas, and the clothing sections of sporting goods stores are well stocked with those brands.”

Sales at privately held retailers selling sporting goods, hobby supplies and musical instruments (NAICS 4511) in the 12 months ended Aug. 1 were 10.5% higher than the same period a year earlier, and profit margins have been flat, at around 3 percent, according to Sageworks’ industry benchmarking data. In the 12 months ended Aug. 1, 2012, sales at the sporting goods/hobby/musical supplies stores increased 7.3 percent from the year-earlier period. (While hobby and music stores are included in the data category, sporting goods retailers represent the majority of the financial statements.)

Sales growth in the last two years has also outpaced increases at private clothing stores, which averaged 9.3 percent in the period ended Aug. 1 and 5.7 percent in the year before, according to Sageworks’ financial statement analysis.

“Part of the retailers’ growth is that the economy has certainly been improving, albeit slowly,” McPeak said. And of course, sporting goods stores also benefit this time of year from sales of gear for popular fall sports, such as football, McPeak noted. But the stronger growth among sporting goods stores seems to be more than the economic rising tide lifting all boats or sports gear. “I think the sporting goods stores are getting a larger share of back-to-school apparel sales,” he said.

A 2012 study by cotton-industry trade group Cotton Inc. said young consumers aged 13 to 24 are more likely to shop for athletic apparel at sport specialty retailers than at mass merchants. The same study noted that the robust athletic apparel market was outpacing other apparel retail and faced less pressure to discount prices.

While some of the largest sporting goods chains are publicly traded, the Census Bureau estimates there were more than 57,000 sporting goods, hobby and musical instrument stores with payrolls in 2007, the most recent estimate available. And privately held companies such as Modell’s and Academy Sports + Outdoors were common on SportsInsight magazine’s 2013 Power 12 listing of the major U.S. retailers in sporting goods.

“I used to think of back to school as notebooks and folders, but that seems to be a fairly small part of it now,” said McPeak, whose own 5-year-old daughter, Sophie, starts kindergarten this month. “Instead, parents and children focus more these days on apparel and electronics.”

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