Apr 05, 2017 – from Investor Insights

Which Athletic Firms Stand a Sporting Chance?

Runners high-fivingDick’s Sporting Goods announced that it is slashing its number of vendors, instead devoting more shelf space to its own brands. The move is a sign of weakness in a sports retail space full of firms looking to cut costs. The story is not as dire for the other half of the athletic industry: sports and apparel manufacturers (which we’ll refer to as “brands”). Brands like Nike and Lululemon have thrived by taking control of the point of sale, cornering the market on high-end goods, and focusing on everyday fitness. The gap between industry winners and losers will be accentuated by generational change. Unlike Generation Xers, Millennials are more concerned with healthy living than with clawing their way to peak physical form.

The athletic industry consists of two codependent parts. First are retail distributors. The largest is Dick’s Sporting Goods, a big-box retailer that earned $7.7 billion in revenue last year. Other competitors include product-specific retailers like Foot Locker ($7.6 billion) and Finish Line ($1.9 billion), as well as regional players like Big 5 Sporting Goods ($1.0 billion) and Hibbett Sports ($972 million).

Second…

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