After spending the last 18 months undergoing a massive consolidation due to the merger of two companies, Sports Supply Group is ready to take on more acquisitions. Speaking at the Cowen & Co. consumer conference, Adam Blumenfeld, Sport Supply's chairman and CEO, said the company had no bank debt; $60 million in available credit and “a partner sitting on the Board that is looking actively for acquisition candidates.” He said Sports Supply is looking at either an acquisition or joint venture with a public or private company that complements its business model. “We have vertical tentacles that reach out into this marketplace,” said Blumenfeld. “We have three million catalogs, 40 tele-salesmen, 25 websites, select dealer partners — all reaching into this marketplace. Any time we can trap a vertical, a valuable brand or product line or company inside that vertical and make it the only product that is available to the customer base only through our catalog or through our sales force — that is highly valuable to our company. So we look for those kinds of acquisition candidates and in weakening economic times they tend to surface.” Looking forward, Sports Supply Group formed from the merger of Collegiate Pacific and the former Sports Supply Group is looking for 5% top-line growth in fiscal year 2008. Longer term, Blumenfeld predicts top-line growth between 5% to 10%, continued gross margin growth, and “a complete leveling of the expense line that generates a 40, 70, something close to three digits kind of EPS rollout over the next three years.” He said Sport Supply should gain market share in any recessionary period, noting that during tougher times schools tend to gravitate to the lower-cost provider. Blumenfeld said Sports Supply typically sells product at prices that are 10% to 30% less than what a local sporting goods store would sell similar merchandise. Besides discounts, he said Sports Supply also benefits by being able to quickly deliver product like bleachers, benches, backstops and soccer goals that typically take four to six weeks to get delivered from an industry supplier. These products typically get shipped the day after the order arrives. The company also has a number of in-house brands including McGregor and Voit that its competitors aren't able to sell. It also has a master distributorship relationship with New Era. “I think as the economy weakens it opens manufacturers' eyes to the weakness economically of the team dealer who is very dependent on walk-in retail and his inability to necessarily pay his bill on time,” said Blumenfeld. “So I think that's why the conversation level tunes up a bit when things start to weaken.”
