Byline: Janet Forgrieve, Rocky Mountain News
Last August, Doug Morton presided over the merger of Englewood-based Gart Sports and The Sports Authority, a deal that created one of the country's largest specialty sports retail chains.
Morton, 53, formerly chief executive and chairman of Gart and a prime-time player in Colorado's sporting goods industry, took over as CEO of the merged company, The Sports Authority.
The retailer, which expects to have 395 stores by year's end, operates stores under four names: The Sports Authority, Gart Sports, Oshman's and Sport Mart.
He chatted with the Rocky Mountain News about the future at the company's newest Colorado Gart store in Superior.
News: How do you see the issues of brand and name playing out in the future?
Morton: Right now we're still working on a name conversion plan. We think in the long term we'll be using Sports Authority somehow as the primary name. One of the challenges with Gart is actually growing it outside this market - it's got a long heritage here and people understand it, but if you open a new store in, say, Boston, it won't have the recognition. So, Sports Authority is probably a better national brand for us, though the one with the most consumer loyalty is clearly Gart. We may never actually, totally change the name in Denver.
The name to convert first will probably be Oshman's in Texas. There are fewer stores, they're more scattered and there's less brand loyalty.
News: Are you starting to see the expected efficiencies and economies of scale from last year's merger?
Morton: Yes. What we've told the investment world is that we're going to get about $20 million in cost efficiencies this year, and that number's going to go up to $40 million next year. We really are starting to see them; those are primarily overall cost efficiencies from better buying on supply and elevating IT systems.
The next step is closing one distribution center in Southern California, so we'll eliminate that redundant facility and have a more efficient, larger facility down there to service the 60 stores in California, as well as stores in Arizona, Nevada and Washington. All the stores today are serviced by one of the company's six distribution centers. It's a more cost-efficient way to do it. All those things help us take costs out of the business.
News: What do your expansion plans look like this year?
Morton: We're going to open 23 new locations (including one in Steamboat Springs this fall) and close around 25 stores, some of them the remainder of the old small mall-based stores. And we're going to relocate two stores. Other than that, we'll primarily see store growth in California, Arizona and the Northeast.
That's about what you'll see from us over time, square footage growth of about 5 percent a year, or 25 to 30 new stores a year, and a lot of backfills - going back into markets where we really don't cover the market and put in stores in new growth areas. That's really part of the strategy also, to put new stores in markets where we're already advertising, where we've already got brand recognition, and where the current store network may not be convenient to the customer. We're very focused on the Northeast, on Philadelphia, New York, New Jersey.
News: With the Sports Authority deal, did that get you into pretty much every market you needed to be in?
Morton: Yeah, it actually puts us everywhere we want to be. What it gives us is a great opportunity to backfill the existing infrastructure. We've got great distribution center networks so we can service stores in large geographic regions.
The other part of this merger was us having to remodel 150 stores. We'll spend about $40 million over the next two years remodeling stores.
News: Who do you view as your biggest competitors these days; is it the discount stores?
Morton: This is an interesting sector because discount actually has a smaller percentage of the sporting goods business today than it did in 1990. We don't want to tell you they're not, because they have 30 percent of the sector's business, but a lot of it's pretty niche. When you think about what we sell and why people come to us, a lot of it's just not available in the discount chains.
Nike isn't in Wal-Mart, Adidas isn't in Wal-Mart and our ski brands aren't in Wal-Mart. Certain segments of the business, like fishing, hunting and parts of camping are in Wal-Mart and they definitely compete with us there. Then we've got regional sporting goods chains that compete with us in some markets, and we've got some public companies like Dick's in the Northeast, Galyan's in some markets, Academy in Texas. So it's very fragmented. We actually have to have a differentiated strategy by marketplace in terms of who we compete with and how we're going to compete with them. When you look at the fact that 12 to 13 percent of our total sales will be done with Nike, and then you throw in Reebok, Adidas, North Face and a lot of the more technical brands we sell, you can come up with a pretty compelling story that we don't compete with Wal-Mart that much.
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Doug Morton, CEO of The Sports Authority, says the sporting goods chain, which merged with Gart Sports last year, may never totally change the Gart name in Denver, where the brand has strong consumer loyalty. The Sports Authority expects to have 395 stores by year's end. Most of its growth this year will be in California, Arizona and the Northeast, Morton said. ROCKY MOUNTAIN NEWS / 2003
CAPTION: Gart sports
