According to the most recent NSGA Cost of Doing Business Survey, which is published every two years by the National Sporting Goods Association, Full-Line Sporting Goods appear to be making far more progress on the bottom line than their counterparts in the Specialty Sport Shop sector.
The report published two years ago saw both sectors feeling more pain in key profitability metrics even as the Full-Line stores increased key top-line metrics. This years report, which covers the 2005 period, saw both sectors post improving numbers on the top line, but the Full-Line guys were able to take advantage of improving margins and declining operating expenses as a percent of sales to deliver improvement to the bottom line.
The Full-Line Sporting Good Stores are obviously focusing on key operational metrics to squeeze more profit out of every dollar. A focus on tighter inventories helped the sector post continued improvement in inventory turn while the Specialty Sport Shops saw the metric move in the opposite direction versus the numbers reported in the 2004 report that covered the 2003 retail year.
Net Operating Profit and Return on Net Worth both posted sharp declines for the Full-Line retailers in the 2004 report, but both metrics took a sharp about-face in the positive direction over the last two years as the sector more than doubled its Return of Net Worth percentage and Return on Total Assets jumped 220 basis points. An 80 basis point improvement in Gross Margins on Merchandise Sales and a 160 basis point improvement in Operating Expense Margin helped push Net Operating Profit Margins up 280 basis points to 4.0% of sales from just 1.2% of sales in the 2003 retail year.
Specialty Sport Shops saw Net Operating Profit Margins stay flat at 2.8% of sales.
|NSGA Cost of Doing Business Survey|
|Productivity||Full-Line Stores||Specialty Sport Shops|
|Profitability||Full-Line Stores||Specialty Sport Shops|
|Net Oper. Profit||4.0%||1.2%||2.4%||2.8%||2.8%||4.1%|