Helped by favorable weather conditions, FGL Sports, the parent of Sport Chek, saw sales climb 5.5 percent in the fourth quarter and 5.8 percent on a same-store basis, according to its parent, Canadian Tire Corp (CTC).
At Sport Chek, same-store sales grew 5.9 percent.
CTC also announced that it had acquired Sher-Wood Athletics Group Inc.’s global hockey trademarks as well as the brand’s inventory for an undisclosed sum as part of an overall effort by the company to increase its number of owned brands.
Finally, Canadian Tire noted that TJ Flood has been named president, FGL Sports. He was most recently SVP – consumer brands division for CTC. He previously was SVP of marketing and VP of merchandising for the Canadian Tire chain. Duncan Fulton, who has been leading FGL, is leaving the company to pursue other interests.
The mid-single digit comp gain in the quarter represents a bounceback for FGL Sports, which also operates Hockey Experts, Sports Experts, National Sports, Intersport, Pro Hockey Life and Atmosphere in Canada.
The gains were due to solid growth in outerwear, casual apparel, and athletic clothing but were offset by lower sales of licensed and Olympic apparel due to the lack of Canadian participation in major sporting events compared to 2016. Promotional campaigns, such as Lifestyle supporting casual wear, also contributed to sales growth, including strong results on both Black Friday and Cyber Monday. E-commerce continued to experience significant growth.
Net sales in the period reached Canadian $618.6 million up from Canadian $590.9 million.
In August, CTC said FGL Sports would miss its ambitious growth goals of over 9 percent growth for 2017 due to its sluggish sales through the second quarter. Sales were up 2.6 percent in that quarter after sliding 2.7 percent in the first quarter. Same-store sales inched up 0.4 percent in the third quarter.
For the year, revenues for FGL reached Canadian $2.1 billion, up 2.4 percent on a reported basis and 2.0 percent a comp basis. Sport Chek’s comps grew 1.4 percent.
Key categories driving the growth in the year included athletic and casual clothing and outerwear categories. Throughout the year FGL showed positive growth from various promotional events and growing e-commerce sales.
FGL wrote in its financial report, “FGL continued to see annual retail sales growth in 2017 despite not achieving its annual retail sales growth aspiration of 9+ percent in 2017. Although FGL continues to experience increases in e-commerce sales, lower than expected growth at its franchise stores, unseasonable weather patterns and the decline in the Alberta economy resulted in lower-than-expected growth.”
On a conference call Thursday with analysts, Allan MacDonald, EVP, said FGL performed well in the quarter despite “competitive pressures.” He pointed to strength online, the cold weather and “investing a bit of margin” as key sales drivers.
But he said a key priority for FGL this year will be enhancing store network productivity.
MacDonald said FGL, led by Sport Check, “has not had the focus on operational effectiveness that a large business, like CTR, for example, relies on so heavily.” In the quarter, FGL’s team began collaborating with CTR “much more intently” on improving operation fundamentals, including pricing, promo and inventory management, as well as in incorporating advanced data analysis and sharing of planning expertise.
MacDonald added, “In 2018, all the banners will continue to collaborate to improve all aspects of our operations moving from a banner view of operating effectiveness to a one-company framework where the benefits will be larger and accrue faster.”
He added that the change in management of the segment will also mean a reassessment of the business. Said MacDonald, “While we were pleased with Sport Chek’s performance in the fourth quarter, we will of course, under TJ’s leadership, be completing a review of category performance, assortment and merchandising strategies as we look for every possible opportunity to deliver top line growth and margins.”
Other growth priorities for FGL include the digitization of retail experience, including stores, assortment and physical channels and the expansion of owned brands presence.
CTC’s management didn’t further discuss the acquisition of Sher-Wood Athletics, which is based in Sherbrooke, Quebec and has been in business for over 65 years.
Asked about FGL’s overall strategy around building exclusive labels, MacDonald said the overall penetration of owned brands is less at FGL than at the Canadian Tire chain, which is at 30 percent, or CTC’s other outlet, Mark’s Warehouse, which is at 70 percent. In sports, he said there are opportunities in some categories, but limitations in others that are more technical in nature.
He said Sports Chek and its other sports banners are counted on as places to find that major sports brands and “we’re not going to get to the point where we’re being careless and diminish customer engagement because of lack of choice.”
CTC acquired FGL, formerly Forzani Group Ltd, in 2011 and it has 427 locations across the country. These include 254 corporate and 173 franchise stores with about two-thirds of the location being Sport Chek.
Photo courtesy Sport Chek
