The 2006 third quarter at retail, like the second quarter before it, was fairly stable in terms of acquisitions, consolidations, or other major shifts that would have caused a sever shift to the landscape. Big Dog Holdings’ additions of Steve’s Shoes and Footworks to its subsidiary The Walking Company and Collegiate Pacific’s adding Salkeld Sports and a majority interest in Sports Supply Group to its portfolio are on the way to their first anniversary, as is The Sports Authority going private, which occurred after the end of the first quarter. The Sportsman’s Guide acquisition by the Redcats Group in early September removed that business from the chart, leaving only Collegiate Pacific and GSI Commerce in the Catalog/Team/Web sector.

In the Specialty sector, sales were driven by newcomers to the chart. Zumiez, The Walking Company, and Golf Galaxy all had strong quarters, as did Oakley’s owned-retail, which is benefiting from the company’s expansion of stores and acquisition of several small retail chains. Sales at The Walking Company rose 19.5% on an organic basis. Removing owned-retail and the acquired TWC businesses sees the Specialty sector grow just 3.6% in the quarter.

Just as the top-line for Specialty retailers had its top performers, the bottom-line had the opposite. The sector had difficulties in the back-end, with margins shrinking over 200 basis points in the quarter, driving the bottom line downward in the low-double-digits. Pacific Sunwear can be pointed to as the main culprit here, as the company turned in a 77.8% decrease in net income for the quarter, which cancelled out improvements at Zumiez, TWC, and Golfsmith. Return on Sales for the sector, which represents income as a percent of sales, was down 70 basis points to 5.1% of sales from 5.8% in the year-ago quarter, but up 300 basis points from Q2.

For retail as a whole, the bottom line faired much better than at Specialty, mostly through the help of the Sporting Goods segment. At Sporting Goods, net income improved 80.0%, largely due to Gander Mountain and Sport Chalet both swinging to a net profit this last quarter from net losses in the year-ago. Thanks to the Sporting Goods retailers, retail as a whole saw the bottom line grow 14.3%.

Sales at Sporting Goods improved 15.5% in the quarter with Dick’s Sporting Goods leading the way. DKS led in comps sales as well, though the entire sector saw comparable store sales improvements.

The Catalog/Team/Web sector was dominated by GSI Commerce after the removal of The Sportsman’s Guide. Though Collegiate Pacific turned a modest sales improvement into decent gains on the bottom line, GSIC’s 39.5% sales jump fueled the 24.3% overall sales gain, while its widened net loss expanded the net loss posted for the segment as a whole.

Family Footwear retailers focused on back-end efficiencies in the third quarter, carrying a 150 basis point improvement in overall gross margins to a 38.5% jump in net income. All retailers posted double-digit gains on the bottom line, while all saw improvements in sales.

Aside from losses that were described as ‘seasonal’ at a couple of retailers and Pacific Sunwear’s continuing woes, the third quarter was relatively strong for the retail market covered in the report. With Heelys a must-have present for the holidays, the market has at least one key item to look forward to for Q4, but the warmer temps in the east in the current period does not bode well for outerwear and winter hardgoods sales for many of the sporting goods guys and the fashion trend shift in footwear to more athletic casual may also hurt the mall.