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PITTSBURGH, PA-”Some people thought we’d stop expansion plans in order to absorb the Galyan’s units, but we will continue our momentum and add a minimum of 15 new stores in 2005,” Jeffrey Hennion, SVP of strategic planning for the locally based sporting goods retailer, tells GSR. “That is a minimum,” he emphasizes, “not what we expect to open. It could be more.”

By the end of this year, Dick’s will have 239 units in 32 states, which include 188 Dick’s stores and 51 former Gaylan’s units. Dick’s acquired Galyan’s through a merger in late July. Dick’s closed two Galyan’s and a clearance center in Indiana and also closed a Dick’s unit in Cleveland, OH, which was across the street from a new Galyan’s, which since opened under the Dicks’ banner.

“The Galyan’s acquisition was primarily a real estate transaction for us,” Hennion says. “It got us into key markets. For example, we’ve operated outside Chicago, and Galyan’s had seven units and was opening an eighth in the Chicago area, which strengthens our foundation there. Similar situations occurred in the Atlanta, Denver, Dallas and Minneapolis market areas.”

The rebranding and reassortment of Galyan’s units is expected to reach completion by mid-2005. Each of the companies had two prototype footprints that are roughly similar. The Dick’s footprints include single-level units of about 50,000 sf and two-level units of about 75,000 sf. The larger units are in areas that experience higher sales volume, which calls for increased inventory, Hennion says. “They are also a little broader in kids’ and women’s sections, but not substantially different from our other stores.”

The Gaylan’s retail footprints are either single-story units of about 65,000 sf or two-level stores ranging from 70,000 sf to 90,000 sf. “They are similar in appearance to Dick’s stores,” says Hennion. “Rebranding calls for a change of indoor and outdoor signage and the installation of systems, such as point-of-sale equipment, that makes these stores operate like a Dick’s.”

There is an 85% overlap in merchandise. “The remaining 15% of Galyan’s merchandise is more focused on fashion apparel, while we are more oriented toward equipment and authentic athletic apparel,” says Hennion. He would not disclose the price of transforming Galyan’s stores into Dick’s, where the art of interactive merchandising is practiced.

A Dick’s golf shops are the epitome of the retailer’s bent toward interactivity. All have hitting ranges and some have simulator technology. “Golfers, especially high-end enthusiasts, can spend between $400 and $500 on a driver,” Hennion explains. “They want to know they’re getting exactly what they want and we want to help them do that. That’s why we devote space to letting them try out merchandise, and we devote staff to answering their questions. We’re the second largest employer of PGA golf pros (second to course pro shops). Golf business has been growing nicely for 10 years,” he says. It represents 15% of Dick’s sales and is the only product category tracked according to sport.

Overall, Dick’s derives 60% of sales from equipment, 20% from apparel, and 20% from footwear. Sales per sf average $200. “We don’t put much focus on sales per sf,” Hennion says, acknowledging that while a hitting range is not technically productive space, the use of space is offset by its contribution to higher sales. “We focus on profit, return on investment, and return on capital,” he says.

All Dick’s stores are leased. “We look for grade A retail centers where we have a very strong location in areas that have the demographics and traffic we need, co-tenants that are best-in-class in specialty retail, and rental rates that allow us to achieve good ROI,” says Hennion. The demographic focus is suburban families with kids. “Our customers cover a broad range of very active people who look for mid- to high-end product.” Keeping tabs on sports trends is as important as important as demographic trends. Paintball, for example, “enjoys huge participation among a broadening market,” according to Hennion.

The company’s competition is fragmented and includes full-line sporting goods stores, department stores, sports footwear and apparel specialty retailers, and stores devoted to particular sports. Although Hennion would not reveal expansion plans beyond next year, he says, “we have a huge opportunity to grow. Essentially we are not in the western half of the country, and tremendous opportunity remains for us on the eastern seaboard.”

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