Big 5 Sporting Goods Outperforms Peers With Big Discounts

Sporting goods is one of the retail sectors that the cash-strapped economy isn't treating kindly. In a necessity shopping environment, most consumers are likely more focused on everyday apparel than the latest sports threads and accessories.

But value-focused Big 5 Sporting Goods (BGFV) is bucking that trend in this economy and outperforming many of its peers. The chain, with nearly 400 locations mainly in western states, reported a strong third quarter, almost doubling its net income to $8 million from $4.5 million during the same year-ago period. Sales at stores open at least a year rose 1.6 percent -- a nice increase in this economy.

By contrast, same-store sales at the more than 400 Dick's Sporting Goods superstores around the country took a 4.1 percent dive in its most recently reported quarter. Sport Chalet, a chain with 55 locations on the West Coast, revealed a first quarter marked by a $3 million loss and 14.7-percent sales plunge at locations open at least a year.

So what is Big 5 doing right? Says a recent Credit Suisse report on the retailer: "As consumers return to the marketplace for athletic necessities, Big 5's value proposition, through its closeouts and opportunistic buys, continue to set it apart from its competitors, helping it gain share in what remains a very fragmented segment."

In other words, Big 5 adjusted well to the recession, realizing that consumers are hyper aware of price.

Steve Miller, Big 5's chairman, president and chief executive officer said during the company's quarterly conference call that part of the company's success in getting the word out is its aggressive print and circular advertising. And less competition, like the demise of Joe's Sport & Outdoor in the Pacific Northwest, helps as well.

"We are facing fewer doors in our marketplace than we were a year ago," Miller said. "I think it's logical to believe that we are gaining new customers, maybe we are reuniting with former customers, but clearly, we are performing well in this current environment."

Clearly, management expects this to continue. Big 5 tempered its store growth in 2009, and though management wasn't specific, it plans to open "substantially more" units next year.