At Telsey Advisory Group’s 6th Annual Spring Consumer Conference last week, Craig Levra, Sport Chalet’s chairman, CEO and president, said he expects Sport Chalet to be “at least twice its size” within five years with a goal of ultimately having stores open coast to coast.
“Clearly we need a national footprint,” said Levra. “One of the things that hurts us today as a business is we are so tightly focused on geography, the fact that we are in these four Western states that were hardest hit by the housing downturn. You all know the tremendous winter that we have had here on the East Coast and the Midwest. We have had exactly the opposite on the West Coast.”
He noted that the California Governor declared a drought emergency in January and temperatures hit 85 degrees in Los Angeles on Christmas Day.
“A national footprint would really help,” he added. He also mentioned a “more fully leveraged platform with stores and online and digital and team sales leadership” would also reduce weather risks. Levra had mentioned earlier in his presentation that half of Sport Chalet’s online sales come from outside the four states where its 51 stores are located.
Asked which region Sport Chalet may pursue next, Levra said the chain hasn’t identified one specifically but noted that data from its Action Pass loyalty plan shows that its best customers tend to be “highly educated, professional, technical, science jobs, love to travel, give to charity, believe that having the right gear and apparel and footwear can improve their performance in sport.”
With the help of Buxton, a real estate site selection firm, Sport Chalet has broken the country into 60 groups with “white-collar suburbia” performing best – and subsequently identified numerous “dots on a map” where a Sport Chalet would perform. Levra added, “That is why that first-to-market approach in merchandise works and that is why the focus on service and specialty service and teaching works.”
He added that since the chain understands “the winter business probably better than most,” the “northern half of the United States is probably a touch more favorable to us from a pure physical standpoint growth as opposed to down in the deep South.”
Asked about potential consolidation, Levra noted that Sport Chalet in the past acquired Stanley Andrews, a San Diego chain, and also acquired a small team dealer to get into the team business. But he still believes there are lots of opportunities with some regional operators with one to three stores and potentially facing challenges leveraging online or dealing with succession issues.
“There is a lot of regional players out there like we are throughout the country that if you don't live in Seattle, you don't know that they are there, if you don't live in Texas you don't know that they are there,” says Levra. “So there is certainly more opportunity like that. It is such a fragmented industry.”
