Sporting Goods: Return of the Wild West?

March has been a difficult month for marginal sporting goods players. On the heels of G.I. Joe’s Ch. 11 filing on March 4th, Sportsman Warehouse filed this past weekend. Both companies are based in the Pacific Northwest, a region typically dominated by Big 5 and The Sports Authority. While both companies plan to reorganize under bankruptcy protection, Sportsman’s Warehouse is either selling or closing more than half its original locations.

Presuming Big 5 and TSA have the liquidity to pursue these locations, this could offer up an opportunity to fill out their respective stores bases west of the Mississippi.

If these players bow out, don’t completely count out Dick’s. For those who might have missed Dick’s remarks on the Q4 earnings call, they specifically identified G.I. Joe’s filing as a potential opportunity to move into that area and hinted at another in distress (i.e. Sportsman’s). With several states “up for grabs” in terms of a market share leader, we could see a return of the Wild West as Big 5, TSA and Dick’s grab for share.

As a sidenote, among the list of unsecured creditors is Columbia at #22 with $628k at risk, or just over $0.01 per share. We note that the company also has roughly $0.02 at risk related to the G.I. Joe’s filing in a quarter where it guided to $0.06. We have earnings closer to $0.20.

Casey Flavin
Director
Sportsman Warehouse Locations (67): The company plans to operate 29 stores during the restructuring process recently sold 15 stores, and plans to close another 23 stores.
G.I. Joe’s Locations (31):