Springtime: Birds and Bees, but Sporting Goods Too!

Posted On March 5, 2012 | by AllenCaron

We have been getting teased in New York with springlike weather, and even though it is still winter for another 2-1/2 weeks, it makes the mind wander to baseball season, warm sunny days — and golf, volleyball, tennis, badminton, croquet, handball, swimming & surfing, sailing, fishing, camping, hiking, maybe even climbing, just to name a few.  Seems like the ski season is fast coming to a close in our area unless we get whomped with a big snowstorm (which is always possible in March).  But the inevitable approach of April, flowering trees, songbirds building nests and kids playing shirts vs skins soccer in the parks moves closer to reality.  And with it, the idea of sports gear comes to mind.  Hard to play most sports without some gear, and even more difficult to camp or walk the Appalachian Trail.

Team sports equipment is a mainstay of most sporting goods stores, picture courtesy of Big 5 Sporting Goods

If you’re into sports, you’re into sporting goods, and it could be interesting to look at some of the players.  You might start with El Segundo CA-based Big 5 Sporting Goods Corp (Nasdaq: BGFV; http://www.big5sportinggoods.com).  Big 5 operates 406 of its own stores in 12 western states of the US, and it is a soup-to-nuts source for sporting goods, including youth team sports such as Little League and soccer, as well as grown-up leagues for sports like softball and bowling.  One big category for sporting goods stores is shoes, because most sports have specific requirements for footwear.  BGFV shares trade for about $7.59 vs a 52-week high of $12.81, which may mean the best is yet to come for this stock.  Market cap is about $110 million, and about 164,000 shares trade on an average day, or about $1 million in shares per day.

Birmingham AL-based Hibbett Sports Inc (Nasdaq: HIBB; http://www.hibbett.com ) operates about 799 stores in the south, southwest, midwest and mid-Atlantic states.  They seem to put an emphasis on apparel and shoes, but they also sell punching bags, balls & bats, batting tees, hoops, nets, coaching equipment, mouthguards, etc.  HIBB shares trade for about $50.32, near its year-high of $52.09, and a market cap of about $1.3 billion.  Daily trading averages 250,000 shares, impressively liquid in this category.

Footwear is an important category for sporting goods stores. Ad courtesy of Hibbett Sports

Plantation FL-based Dreams Inc (Amex: DRJ; http://www.dreamscorp.com ), engages in representing professional athletes such as Dan Marino, Ben Roethlisberger, Pete Rose, and Dick Butkus, and sells licensed memorabilia.  Its stores are branded as Fans Edge and/or Field of Dreams.  It has been around for 30 years, and although only marginally sporting goods (jerseys, hats, balls), it seems interesting enough to include in this article.  DRJ shares are changing hands for about $2.61 vs a year range of $1.66-$2.95, and daily volume of about 45,000 shares.  Market cap is about $117 million.

Some sporting goods retailers are specialized, such as Austin TX-based Golfsmith International (Nasdaq: GOLF; http://www.golfsmith.com).  Its 79 stores offer a full range of branded and proprietary golf gear, but it also sells a range of tennis gear — golf, tennis and skiing are probably the 3 most costly sports, requiring not only a significant outlay on goods, but also club memberships or travel (for most of us).  GOLF (what a great ticker symbol!) trades for about $4.15 vs a 52-week high of $5.75, and sports a market cap of about $65 million, but on very puny volume of less than 8,000 shares a day — which means it would require patience to buy or sell these shares.  With annual revenues in the range of $390 million, and quarterly revenues growing at 2+% per year, GOLF is reporting net losses, which most likely accounts for its discounted market cap vs its peers, but sometimes that can be an opportunity for investors who do their diligence carefully.

Please do your diligence carefully.  We do not make recommendations as to stocks; we just write about companies we find interesting.  We do not represent any of the companies in this article and do not own their stocks, nor do we have plans to buy their stocks.

Finally you might want to look at La Canada CA-based Sport Chalet Inc (Nasdaq: SPCHA and SPCHB;  http://www.sportchalet.com), by far the smallest of the companies in this article, with a fairly precarious financial position, though it has strong leadership.  The SPCHB shares have 20 times the voting power of the SPCHA shares, which may make some people uncomfortable, since there are very few B shares but they can carry the voting on important issues.  On the other hand, Sport Chalet stores are strong on service, with good inventory — and they have some categories that other stores do not have, such as SCUBA instruction and certification.  They operate 54 stores in the west, and the A shares trade at about $1.35 for a market cap of about $20 million on daily trading of barely 5500 shares.  Sales are up year-to-year, and like many of its peers, Sport Chalet was hit hard by a warm dry winter, but founded in 1959, it may be a longterm survivor for investors who can tolerate risk and illiquidity.

One Response to “Springtime: Birds and Bees, but Sporting Goods Too!”

  1. Springtime: Birds and Bees, but Sporting Goods Too … | The Tennis News
    March 5th, 2012 at 10:10 pm

    […] the rest here: Springtime: Birds and Bees, but Sporting Goods Too …   March 5th, 2012 Uncategorized Tags: full-range, golf-gear, outlay-on-goods, […]

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