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Sports stores sacked
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January 8, 1999: 3:51 p.m. ET
Weak 4Q sales, NBA lockout sideline sales at sporting goods stores
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NEW YORK (CNNfn) - While the retail industry posted better-than-expected numbers for the 1998 holiday season, the sporting goods sector fumbled.
Sacked by unseasonably warm weather and the National Basketball Association lockout, sporting goods merchants, particularly the large super stores, suffered.
"When these heroes are not on the basketball court, people don't think of replacing their existing shoes," said Walter F. Loeb, president of Loeb Associates. "The whole fitness industry is not as trendy. I expect the downturn to continue for a while."
In little more than a week, major sporting goods retailers have either warned of weak fourth quarter earnings, declared bankruptcy or faced increased pressure from shareholders.
Hibbett Sporting Goods Inc. (HIBB) said Thursday that it expects net sales and earnings for the fourth quarter to be below consensus estimates and that fourth-quarter comparable- store sales will be in the flat to slightly negative zone.
"The primary reasons for our disappointing sales through the holiday season were unusual weather patterns throughout all of our markets, continued effects from the NBA strike on both footwear and licensed apparel, and softness in athletic branded apparel and footwear," said Michael J. Newsome, Hibbett's president.
The Birmingham, Ala.-based company said net sales for the 9-week period ended Jan. 2 increased 18.4 percent to $32.5 million, compared with $27.4 million for the year-ago period. Comparable-store sales fell 2.9 percent for the first 9 weeks of the fourth quarter.
Analysts said Hibbett was hurt by steep markdowns.
"I thought sales were running below plan, but the magnitude was greater than expected. Markdowns were more significant than expected in (Hibbett's) apparel and footwear," said Richard Nelson, specialty retailing analyst at Stephens Inc.
"On Hibbett, the issues at hand are not indicative of reduced growth prospects," said BancBoston Robertson Stephens specialty retail analyst Lauren Cooks Levitan. "This is their first major disappointment, and no other retailer is trying to go after the small market with a heavy emphasis on serving true sports enthusiasts."
Nelson cut his rating on Hibbett's to neutral from buy and lowered his fourth quarter earnings per share estimates to 23 cents from 45 cents. He also reduced fiscal year 1998 and 1999 earnings estimates to 99 cents from $1.21 and $1.26 from $1.51, respectively.
On Friday, Hibbett shares tumbled 7-7/8 at 19-5/8 in afternoon trading.
Like Hibbett, The Sports Authority (TSA) was caught in the fourth-quarter fade. The Fort Lauderdale, Fla.-based chain also warned that it expects profits for the period to be well below analysts' estimates because of weaker sales of sports apparel and ski wear.
As with Hibbett, Sports Authority, which was down ¼ at 5 Friday, also pointed to the recently-settled NBA lockout as a factor in the sales slump.
The downturn has hit even harder at Tampa, Fla.-based JumboSports Inc., which filed for bankruptcy last month.
On Dec. 28, JumboSports said its performance in recent years was weakened by intense competition in retail sectors, such as name brand sports equipment, athletic apparel and footwear. The company, which has closed stores and streamlined operations, said recent sales improvements weren't enough to stave off the bankruptcy move.
"Filing under Chapter 11 now is in the best interest of JumboSports," Jack Bush, the company's chairman and chief executive officer, said. "This allows us to call a 'time out' with our creditors while we work to develop a plan of reorganization that puts the company back on the right track with a reduced debt burden and improved profitability."
Also left out of the huddle is struggling athletic retailer Venator Group Inc. (Z), formerly Woolworth Corp., which was dumped from the S&P 500 list in late December and replaced with America Online (AOL), the Internet service provider.
Greenway Partners LP, the New York investment firm that is sometimes credited with the ouster of Unisys Corp.'s (UIS) chief executive two years ago, raised its stake in Venator Wednesday to 11.9 percent from 9.5 percent. Analysts say Greenway clearly wants a louder voice in the company's decision making process. 
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