Sports retailing on the West Coast will be heating up now that privately held Chick's Sporting Goods has been acquired by industry leader Dick's Sporting Goods
Primarily a West Coast retailer, Big 5 has a commanding presence with 343 stores, but it's still seen as vulnerable to a national retailer. Third-quarter results posted earlier in the month saw comps increase just 0.1%, although margins did improve as a result of better pricing.
Dick's has apparently been eyeing the market for some time. Back in July, it said it wanted to make an entrance into California but didn't know when, and the family-owned retailer gives it the means to do so. Chick's operates 14 stores in the state, along with its headquarters and a distribution center. Dick's has plans to make it the home of the largest number of Dick's stores, with as many as 90 over the next seven years.
That should worry Big 5 and Gander Mountain
The $71 million deal for Chick's is not important for its size. The $100 million in revenue Chick's realizes in annual sales pales in comparison to the $3.1 billion Dick's reaped during its last fiscal year. Rather, it's a warning to other sporting goods retailers: Dick's is putting its imprimatur on the market nationwide.
With $900 million in trailing-12-month revenues, I wonder if this puts Big 5 into play. Dick's is looking westward, and a hurry-up-and-grow strategy might mean the retailer starts to look attractive. The sporting goods industry has been experiencing a wave of consolidation as it is, in no small part fueled by the likes of K2 before it was itself acquired. Jarden
There could be many targets in Dick's sights. The company's projections of its future store count show tremendous growth in Texas and Florida. The Chick's acquisition is interesting enough that we may continue to see rollups in this market.
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