Sports Authority Back to Basics

"This was a merger of equals, but of two companies with slightly different strategies, and the challenge was to come up with one strategy for the merged entity," Morton said of the merger with Gart Sports. One of the facets of day-to-day operations that Sports Authority has been focusing on is improving its distribution system, which it has accomplished with two major distribution centers where it has converted to new operating systems that are more efficient. However, Morton said, the conversion to the new systems "was slower than we hoped it would be and, frankly, a little more painful." Thanks to improvements in its distribution operations, "We have brands that formerly were taking us 35 days to replenish supplies to our stores that are now delivering in eight to 10 days, which has a big impact on our inventory turnover and a big impact on our in-stock merchandise, which is a key concern going forward," Morton said.

Morton said that the Sports Authority's attention to matters like distribution and supply is paying dividends in other ways too. In the last 18 months since the merger, for example, "We've spent a tremendous amount of time becoming one company from the supply chain standpoint," Morton said. "We began 2004 with zero percent of our goods being shipped to a distribution center and already packed for a store." By February, however, 35% of the merchandise that Sports Authority shipped to its distribution centers was already packed in a form that was ready to go directly onto store shelves." Company executives believe that, within the next 12 to 18 months, 50% to 60% of the merchandise shipped to its distribution centers will be ready to go directly onto store shelves." Morton added a caveat, however, saying, "We've got the easy part done. The next group of vendors are really going to be a little tougher and slower."

The Gart Sports stores are still being changed over to the Sports Authority name, with about 58 Gart stores in five major markets having been changed to the Sports Authority name in recent weeks, and a second wave scheduled for the fall. "One reason we didn't do them all at once is that we needed to understand what impact it would have on the marketplace, and what impact on the consumer," Morton said. By a year from now, "We will be one brand across the country," a scheduled that is "probably a little slower" than the chain anticipated at the time of the merger but a delay that was worth the wait because the company wanted to be sure it had developed consistent operating methods and strategy, according to Morton. As of Jan. 29, The Sports Authority operated 392 stores in 45 states under its own name and a number of names from the Gart acquisition.