2002, Professor Jerome M. Katrichis
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Sports Authority Example
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Sports Authority’s mission is to meet or exceed its customers’ needs by offering extensive selections of quality, brand name sporting goods, athletic footwear and apparel through multiple channels while focusing on customer service. The company seeks to project an image of success and establish itself as the “Sports Authority” by servicing all of its customers’ sporting goods needs.
Sports Authority had a 3.3% share of the sporting goods market in 2000. Through increased advertising and store renovations, Sports Authority’s goal is to increase market share in each of its three segments by the end of 2001. Their goal is to increase sports equipment market share to 4%, increase athletic apparel market share to 3.5%, and increase footwear market share to 3.6%. This directly relates to the sales goal of increasing sales to $1.7 billion, a 13% increase from 2000. Currently, sales equate to approximately $138/square foot of retail space. Sports Authority has no expansion plans for 2001; therefore, another sales goal is to increase sales per square footage to $156.
Gross margins have increased 11% from 1999 to 2000. Additional improvements are required to effectively compete against other retailers such as Dick’s Sporting Goods. The 2001 gross margin goal is 10% improvement by implementing various cost reductions measures.
Profitability levels have not been consistent for Sports Authority over the past five years. Their 2001 and 2002 goals are modest because Sports Authority’s overall plan does not include expansion during this time period. The goals are aimed at providing a stable financial environment where the result is a net gain. A 5% increase in profitability is planned for 2001 with an additional 5% increase in 2002.
Due to extensive reorganization efforts, Sports Authority had a 116% improvement in earnings per common share in 2000 after suffering a loss of $5.02 per share in 1999. The company will strive to further improve this value. The earnings per common share goal for 2000 are $0.82 per share and $0.86 per share for 2002.
Sports Authority is combining a cost leadership strategy with a differentiation strategy. The company differentiates itself by operating on a much larger scale than its competitors. Their plan is to carry all merchandise related to the sporting goods industry and be a one-stop shopping store with the largest selection and best prices in the industry. The corporation seeks to establish itself as the authority on athletics. CEO Martin Hanaka stated that Sports Authority strives to be the place that customers visit “for everything to fulfill their activity needs.”
One of Sports Authority’s main objectives for 2001 is to refurbish 67% of their U.S. retail stores with estimated capital expenditures of $15 – 20 million. These renovations are aimed at reinforcing the corporation’s position as the authority on athletics and increasing sales and market share. The changes will include colorful store walls, product information displays, improved signage, merchandise reorganization, and enhanced endcaps. The Sports Authority seeks to provide an easier shopping environment, as the corporation continues to promote their “Get Out and Play” slogan in an effort to increase store traffic.
An additional 2001 objective related to store design is to install, WTSA, an in-store television network, in all existing stores. This system was installed in 15 stores in June 2000 and has been very successful in providing a custom blend of sports news, product information, and celebrity tips to customers. Sales rose 10% in the first few months of airing for all pilot stores.
The Sports Authority’s advertising strategy will experience a transformation during 2001 due to recommendations from a study conducted by Accenture (formerly Andersen Consulting.) The corporation’s objective is to shift the direction of their advertising efforts and improve ad content, timing, and medium. In 2001, they will increase Sunday newspaper inserts, direct mail, and sports sponsorships, while maintaining historic advertising channels of electronic media and billboards.
Distribution objectives have primarily focused on Internet and team sales. As Internet usage becomes widespread across the nation, website retail sales are growing across all industries. Upgrades to the Sports Authority’s retail website are planned for 2001 in order to promote ease of use and increased sales. During 2000, the Sports Authority organized a new division of their sales department devoted to direct sales of sporting goods and apparel to schools, recreational leagues, and organized team sports. The corporation expects this market segment to exhibit extensive sales potential. The 2001 objective is to increase their sales force in this division and devote larger marketing efforts towards increasing sales related to this segment. Catalog initiatives are being organized to target this segment. Minimal investment will be needed in 2001 as the catalog distribution efforts startup.
The corporation wishes to maintain positive public exposure by participating in various community service programs. In 2001, Sports Authority’s objective is the launch their “Be a Sports Authority” program to teach children about the importance of fitness, safety, and sportsmanship through school sponsored interactive games and lessons. The corporation will continue to be a proud sponsor of Boys and Girls Clubs of America in 2001 as part of a joint national fitness program.