By DAVID BRINDLEY
Staff Reporter
Sporting-goods retailer The Sports Authority Inc. will start moving into the Los Angeles market this year but it may take some muscle to push aside the competition.
With already 199 stores worldwide, the Fort Lauderdale, Fla.-based company plans to open 12 new stores and a 300,000-square-foot distribution warehouse this year in the Los Angeles metropolitan area.
That’s just the beginning of a bigger expansion plan for L.A., which includes opening 30 to 40 new stores in the next two years. And Los Angeles is only the latest target in its aggressive expansion strategy. Sports Authority has recently broken into such markets as New York and Chicago, and opened 31 new stores last year.
“A key part of our strategy is to be positioned in all of the major metropolitan markets” said Alexander Stanton, vice president of strategic planning and treasurer. “And Los Angeles is clearly that.”
Stanton would not indicate where the local stores would be located, saying he did not want to tip off competitors. But in an already crowded market with some tough local competition, including Sport Chalet Inc., Big 5 and Oshman’s Sporting Goods, Sports Authority may have a difficult time breaking in.
“We’ve got some very, very capable competitors here,” said Richard Giss, a partner in the retail services group of Deloitte & Touche LLC in Los Angeles. Giss specifically points to Sport Chalet, which he said “has a very, very loyal following.”
Based in La Canada Flintridge, Sports Chalet operates 18 local stores and targets the high-end sports customer. It also specializes in niche equipment markets, such as scuba diving.
Although Sport Chalet scaled back its own expansion plans after incurring losses in 1995 and 1996, it reported net income of $2.3 million in 1997.
Craig Levra, Sport Chalet’s president and a former vice president at Sports Authority, declined to comment on his former company’s local splashdown.
Like Sport Chalet, Sports Authority serves the high-end sports enthusiast. Billing itself as an “elite specialty store,” it sells an array of name-brand sports equipment and apparel. By operating superstores, averaging 43,000 square feet per store with up to 45,000 different items, Sports Authority keeps its prices low and offers one-stop shopping.
It’s no coincidence that Martin E. Hanaka, the former president and chief operating officer of superstore office supplies retailer Staples Inc., was appointed this month by Sports Authority as its new vice-chairman.
Local retailer Big 5, which emphasizes discount prices, doesn’t see Sports Authority as much of a threat. “Competition is not a new word for us,” said Steve Miller, president and chief operator of the El Segundo-based retailer. With 209 stores in Western states, Big 5 already competes with Sports Authority in several markets.
Though the privately held Big 5 is guarded about its operations, Miller indicated that its “revenues are growing positively.” and that it is “exploring additional stores in the greater Los Angeles market.” With 60 to 70 stores in the L.A. metropolitan area, Big 5 will likely remain the largest sporting-goods retailer in the region.
Some analysts question the moves by Sports Authority.
“I don’t like the aggressive growth strategy,” said Aram Rubinson, an analyst at PaineWebber. Rubinson noted that earnings per share for fiscal 1998 fell to 80 cents from 94 cents in 1997.
Sports Authority “has to make their existing stores better more profitable and then they can figure out what to do about adding new stores,” said Rubinson.
