Outdoor apparel and equipment cataloger The Sportsman’s Guide has a mandate: to “return to profitability,” says president/CEO Greg Binkley. For the 39 weeks ended Sept. 30 (the most recent figures available at press time), sales were $95.9 million, down 22% from the comparable period of the previous year. Worse, the net loss totaled $2.5 million, more than four times the loss of $585,000 for the first three quarters of 1999.
The South St. Paul, MN-based cataloger also said it would be taking a one-time, pretax charge of $1.6 million in the fourth quarter due to an agreement to use the name and likeness of former CEO Gary Olen (who left in June), and the closing of a retail outlet. And to make matters worse, at press time Sportsman’s Guide was in danger of being delisted from the Nasdaq Exchange because its valuation had fallen below requirements. A hearing was scheduled for mid-February.
To transform the red ink into black, Binkley says that Sportsman’s Guide will reduce circulation in 2001 to 46 million catalogs, down from 61 million catalogs in 2000 and 80 million catalogs in 1999. Some of its specialty titles, such as the hunting and camping supplies books, will be combined with the core Sportsman’s Guide catalog.
In addition to cutting circulation, Binkley wants to encourage customers to order online, where he says the margins are better and the cost of selling goods is lower. Sportsman’s Guide operates three Websites: Sportsmansguide.com; outdoorguide.com, a portal that launched last June; and clearance site Bargainoutfitters.com. In 1999, Sportsman’s Guide’s online sales were $13 million, about 16% of its total revenue. By 2002, the company hopes Web sales will account for 25% of total sales.
Sportsman’s Guide is also focusing on its Buyers Club customers, who Binkley says typically spend two to three times more than nonmembers. In November it mailed members of the loyalty program a special 24-page catalog offering incentives such as free shipping, product previews, and exclusive merchandise. A second Buyers Club catalog mailed in January. By the end of last year, 133,000 had paid $29.99 to enroll in the program for a year; this year, Binkley hopes to increase membership to 200,000.
DESATURATING THE MARKET Binkley’s strategy of reducing circulation appears to be a step in the right direction. Joanne Henry, an analyst with Minneapolis-based Bluefire Partners, blames the company’s problems in part on overmailing and too many spin-offs. “Sportsman’s Guide reached its saturation point. If boots were selling well, it would suddenly mail a boot catalog,” she says. “But there’s a threshold as to what buyers will respond to.”
Other industry watchers agree. “The good news is that its core audience sees Sportsman’s Guide as the low-cost provider in the hunting and outdoor apparel space,” says Dan Lynch, an investment analyst with Minneapolis-based John G. Kinnard & Co. “The measures its has enacted in the past six to 12 months, such as the cuts in circulation, will put it back on the path to profitability.”