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Team Dealers Increase Profit, Productivity, According To NSGA Study

MARCH 12, 2004 -- With improvements in several key areas of productivity, team dealers edged up their net operating profit, according to data contained in the new NSGA Cost of Doing Business Survey, published by the National Sporting Goods Association.

Net operating profit rose to 2.6% in the new study, when compared with 1.8% in 2001. In previous studies (1999 and 1997), net operating profits were 2.5% and 1.9% respectively.

Except for a rise in total operating expenses, team dealers showed positive results in other measures of profitability. Return on total assets rose to 5.7% in 2003 versus 3.7% in 2001. The return on total assets also exceeded the ROA in the 1999 and 1997 studies, which were 3.7% and 5.2% respectively. However, return on net worth fell to 9.2% in 2003 versus 13.5% in 2001, 12.3% in 1999 and 12.1% in 1997.

"The culprit seems to be a rise in total operating costs. Improved sales per employee and gross margins were not able to offset this rise," said NSGA VP/information & research Tom Doyle. "Increased payroll and occupancy expenses accounted for the rise in operating costs."

Sales per salesperson rose 6% to $462,000 in 2003 versus $435,000 in 2001.

Gross margins have been trending upwards. Team dealers captured a 32.6% margin in 2003 versus 31.4% in 2001. In 1999, gross margins were 31.1%; in 1997, 30.6%.

The typical team dealer participating in the survey had annual sales of $1.8 million, with the middle 50% of participants having sales of $800,000 to $3.5 million.

According to Doyle, "This research effort provides sporting goods team dealers and retailers with the most up-to-date comparative financial performance information available anywhere. A total of 314 companies took part in the 2003 study, a record number of participants." In addition to the segmentation of sporting good stores and specialty shops by sales volume, comparison categories include single versus multi-store operations, size of store and marketing mix. The study also provides comparisons to high-profit performing retailers.

Besides Balance Sheet and Income Data, the NSGA Cost of Doing Business Survey includes five measures of profitability, three measures of financial management and 14 measures of productivity. The study is provided at no cost to NSGA retailer members. Non-member retailers can obtain the study for $250.

For more information, contact NSGA VP/information & research Tom Doyle, who supervised the research program. Phone: 847/296.6742, ext. 107. The study is prepared for the Association by Industry Insights, Inc., a research firm based in Columbus, OH, that specializes in these types of studies.




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