According to the 2009 OIA Retail Financial & Operations Performance Report, the average outdoor retailer achieved sales of $2.46 million but notched a measly pre-tax profit of only 2% of sales. But the survey also showed that some stores are doing much better. “High Profit” firms had sales of $1.93 million, and profit margin of 8.2%.
Of greatest consequence, the OIA noted that the typical firm had a pre-tax return on assets of 5.0%. For the High Profit firm, return on assets was 22.1%.
As part of the report, the OIA, in conjunction with Profit Planning Group, recently surveyed independent retailers with respect to their gross margins, operating expenses, inventory turns and several other categories to benchmark financial and operational performance within the outdoor industry. Of the 29 outdoor retailers surveyed, 10 represented High Profit firms.
The report overall found that inventory turns had dropped while days on hand had increased since the group was last surveyed in 2007.
The results show that average sales per employee at a “Typical OIA Retailer” was $137,910, gross margin percentage was 40.9%, operating expense was 38.4% of sales, and inventory turnover was 1.9. Total square foot of selling space was 7,500, sales per square foot was $271, and inventory per square foot was $89. Internet sales represented 2% of sales.
By comparison, at the High Profit retailer, inventory turn was the same (1.9) as the Typical OIA Retailer but gross margins were higher (43.1%) and operating expense percentage was significantly lower (34.6%). Sales per employee ($124,114) was lower for High Profit firms.
On the margin side, the data showed that High Profit Retailer paid more in salaries and bonuses to owners significantly less in sales and commission expenses as a percent of sales compared with a Typical OIA Retailer. Overall, the Typical OIA Retailer averaged 19 employees versus 16.5 for the High Profit retailer group.
On the cost side, the High-End retailer had lower rent and advertising expenses as well as bank charges. Fixed and non-current assets were also noticeable lower as a percent of sales for High Profit firms. High End Firm also generated a healthier financial leverage (1.5%) versus the Typical OIA Retailer (2.2%).
The report also provided some details around product mix. The biggest category at a Typical OIA Retailer was Apparel, representing 35.4% of sales, followed by Equipment (excluding ski and snowsports), 19.6; Footwear, 11.1%; Paddle Sports, 9.5%, and Equipment Accessories, 8.4%. The remaining categories were Ski & Snowsports Equipment, 4.4%; Cycling, 4.2%; Fishing, 0.5%; Hunting, 0.1%, and All Other, 6.8%.
Comparing to the typical OIA retailer, the High-Profit Retailer sold significantly more apparel (43.4%) and more paddlesports (12.5%). But the group sold less equipment excluding ski and snowsports (9.6%) and cycling (0.9%).
Looking at margin contribution by product, the highest gross margin at the Typical OIA Retailer was achieved in the Equipment Accessories category (43.9%), followed by Footwear (42.3%), Apparel (42.2%), Equipment (excluding ski and snowsports), (41.3%); and Cycling (38.9%). Trending slightly lower in margin contribution was Ski and Snowsports equipment (35.1%) and Paddle Sports (35.5%).
The fastest turning categories at the average outdoor retailer was Apparel and Equipment (excluding ski & snowsports), both at 2.9, followed closely by Equipment Accessories at 2.8. Footwear turned at 2.3 times; Paddle Sports, 2.2; Ski & Snowboard Equipment, 2.1, and Cycling, 1.6.
Regarding advertising, direct mail represented 31.3% of advertising expenditures for the typical outdoor retailer, newspapers, 25.9%, radio, 10.8%, and all other, 32%.
A copy of the full report is available free to OIA members and for $495 to non members at www.outdoorindustry.org.
