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Creator of a unique retail format in the sporting goods industry, Oshman's Sporting Goods, Inc. operates a chain of relatively small retail specialty sporting goods stores and a chain of massively sized specialty retail sporting goods stores featuring athletic facilities that allow customers to play with merchandise before they purchase merchandise. For a company founded in 1931, the chain of smaller stores are vestiges of its past, with the exponentially larger stores measuring between 50,000 and 85,000 square feet representing the company's future. Oshman's Sporting Goods did not begin recasting itself as an operator of megastores until 1990, when the first SuperSports USA store opened its doors, but during the first five years of the company's focus on developing large retail units the megastores have increased their importance quickly, generating more than 50 percent of Oshman's Sporting Goods' total sales in 1995. As the 1990s progressed the number of the company's smaller, 8,000-square-foot to 12,000-square-foot stores declined, while the number of its enormous SuperSports USA stores increased. At the end of 1995, there were 109 traditional Oshman's Sporting Goods stores and 24 SuperSports USA stores.
Early History
The Oshman retail business began in 1919, when Jake S. Oshman opened his first store, a dry goods establishment called "Oshman's Dry Goods." Jake Oshman's greatest success, however, was not achieved in the dry goods business, but in another retail business that would make the Oshman family name known to millions of consumers across the United States. Jake Oshman embarked on the road that would carry him toward national recognition and his signal business success in 1931, when he opened his first sporting goods store in downtown Houston. Founded as a proprietorship, Jake Oshman's sporting goods business was incorporated 15 years later, in 1946, as the country emerged from World War II and embarked on an economic boom period that would at last bring an end to a decade-and-a-half of economic hardship and give the nation's citizens unprecedented amounts of discretionary income and leisure time. Though geographic expansion would come slowly, Oshman's Sporting Goods thrived during the postwar economic rebirth, steadily building a presence in its home state of Texas before entering into neighboring Sun Belt states.
Decades would pass before Oshman's Sporting Goods began to resemble a retail chain, but despite its relatively small size, the business founded and built by Jake Oshman recorded encouraging success during its formative decades. The company's rapid growth and its bid to become one of the country's largest sporting goods chains began nearly four decades after the first Oshman store opened its doors and after its founder, Jake Oshman, left the company. The company's push toward a national presence was orchestrated by another individual, Alvin Lubetkin, who was first introduced to the Oshman family business through the courtship of one of Jake Oshman's daughters, Marilyn Oshman. Lubetkin, a Harvard-educated broker who worked on Wall Street, married Marilyn Oshman in 1960. He then left his job in New York to join Oshman's Sporting Goods a year later at Jake Oshman's request.
Father and son-in-law worked together in Houston, with Lubetkin learning the retail trade from Jake Oshman. Before long, however, the arrangement fell apart and, after one year, Lubetkin quit and returned to working as a broker, later explaining, "Jake Oshman was not easy to work for." But the business separation was not permanent. In 1964, Jake Oshman once again asked his son-in-law to join Oshman's Sporting Goods, this time offering Lubetkin greater responsibility in running the business than he had extended three years earlier. Lubetkin accepted the offer and soon was given more responsibility than he could have expected. Six months after inviting his son-in-law to join the company, Jake Oshman died, paving the way for Lubetkin's ascension to the top of Oshman's Sporting Goods' managerial ladder.
1970 Public Offering
Under Lubetkin's reign of command, Oshman's Sporting Goods blossomed into a national chain with units scattered throughout the Sun Belt states and stretching from coast to coast. Lubetkin's ambitious expansion program began in earnest in 1970, when he took the 11 stores composing the Oshman's Sporting Goods chain public in an initial public offering of stock. The conversion to public ownership marked the beginning of a new era in Oshman's Sporting Goods' history, one that would be dominated by the company's explosive growth and its entry into new territories, as four decades of prosaic growth gave way to two decades of rapid expansion. Looking back from this pivotal juncture in Oshman's Sporting Goods' development, Jake Oshman had taken 39 years to establish a handful of stores, creating a stable, modestly sized business bounded by Texas's borders. Ahead, as the next chapter of Oshman's Sporting Goods' history unfolded, were years of exponential financial growth and physical expansion. In a little more than a decade, Oshman's Sporting Goods' annual sales would leap from the $19 million generated in 1970 to nearly $250 million, and earnings would soar from $883,000 to $7.5 million.
Financial and physical growth was achieved during this period by Lubetkin's emphasis on penetrating new markets through the establishment of new Oshman's Sporting Goods units. Although the proliferation of stores through internal means played a significant role in Oshman's Sporting Goods' growth following the public offering in 1970, growth through external means also contributed to the transformation of the company from a regional chain into a national chain. Lubetkin led Oshman's Sporting Goods through a series of acquisitions following the 1970 public offering that enabled the company to reach the robust pace of expansion that made the Oshman name a national contender in the retail sporting goods industry. In 1972, the company acquired five corporations operating as "Stan's Sports" and purchased Mid-Valley Sports Center. After abandoning the wholesale business in 1974, Oshman's Sporting Goods acquired 24 retail stores from Edison Brothers Stores, Inc. in 1977, and then continued the acquisition spree during the 1980s, acquiring 33 sporting goods stores from Zale Corporation in 1981 and 18 L&G Sporting Goods stores from Lucky Stores, Inc. in 1982.
In the midst of this campaign to add to the company's stature through acquisitions, Oshman's Sporting Goods entered into a new retail niche by acquiring the exclusive rights to the name, trademarks, and service marks belonging to the venerated and esteemed Abercrombie & Fitch Company. Lubetkin made the move in 1978, one year after Abercrombie & Fitch had entered into bankruptcy. He then opened the first revised store bearing the Abercrombie & Fitch name in 1979, establishing the store on Wilshire Boulevard in Beverly Hills. There, Oshman's Sporting Goods' management began superintending the revival of a retailer known for high-priced, prestigious merchandise such as $150 wooden ducks and $25,000 handcrafted Italian rifle sets, devoting as much effort to the growth of Abercrombie & Fitch as they did to the growth of Oshman's Sporting Goods units.
Despite the efforts of Lubetkin and others, Abercrombie & Fitch proved to be a perennial money loser, dashing hopes that two separate retail vehicles would drive Oshman's Sporting Goods' growth during the 1980s and beyond. Aside from the dismal performance of Abercrombie & Fitch, however, profits were pouring in from the flourishing chain of Oshman's Sporting Goods stores. Since the public offering in 1970 the chain had grown enormously, ranking as the second largest specialty sporting goods retailer in the United States by the mid-1980s, with stores stretching from Sacramento, California to Florida. There were six stores in Hawaii, Oshman's Sporting Goods stores in every Sun Belt state except Mississippi, and stores slated to open in Japan. Annual sales were nearing $300 million, and the number of Oshman's Sporting Goods units was projected to eclipse 200, excluding the nearly 30 Abercrombie & Fitch stores that were part of the company's operations. On nearly all fronts, the business founded by Jake Oshman more than a half century earlier was performing admirably, but in a few short years Oshman's Sporting Goods was in trouble.
Before the luster of Oshman's Sporting Goods' business began to fade, the company sold Abercrombie & Fitch, divesting the floundering enterprise in 1988. Not long after shedding what had been a drag on the company's profits, Oshman's Sporting Goods' nearly 200-store chain began to demonstrate flagging profitability itself, as the dynamics of the retail industry as a whole began to change. In 1989, Oshman's Sporting Goods reported a $1.5 million loss, marking the beginning of what would turn out to be a consecutive string of annual losses that would force Lubetkin and other company executives to reexamine Oshman's Sporting Goods' approach to retailing sporting goods. A new, much larger retail force--"megastores"--had entered the sporting goods fray, stores four to five times larger than the conventionally sized stores that composed Oshman's Sporting Goods' chain, and their pernicious effect on smaller competitors was swift and decisive. Commenting later on the negative impact megastores had on Oshman's Sporting Goods' business, Lubetkin explained to Footwear News, "I could blame this on the recession, but the real issue is that some other people out there had developed a better mousetrap. When someone put a 40,000- to 50,000-square-foot superstore next to my 10,000-square-foot store it was painful."
1990 Birth of SuperSports USA
Clearly, something needed to be done to arrest Oshman's Sporting Goods' deteriorating financial health and to reposition the company as a competitor able to thrive in the retail sporting goods industry of the 1990s, but the company's management and board members were undecided on what that something should be. One possibility involved adopting the strategy that threatened to destroy Oshman's Sporting Goods' 193 retail stores. In March 1990, the company opened an 80,000-square-foot SuperSports USA store in Houston that aped the retail trend of the times, but Lubetkin added a twist to the megastore's concept by including athletic facilities within the massive stores that allowed customers to try various sporting good items before they purchased them. Amid the shelves and racks displaying a full line of sporting goods were mini-basketball courts, batting cages, golf simulators, putting greens, boxing rings, racquetball courts, ski decks, climbing walls, archery ranges, and in-line skating areas, offering customers the opportunity to "play before you pay," as the company termed it.
Another SuperSports USA store was opened in 1990, but Lubetkin and the company's board of directors were divided as to whether the megastore strategy was the approach to be adopted for Oshman's Sporting Goods' revival. Lubetkin and others favored the megastore strategy as the company's best opportunity to effect a turnaround, while other board members deemed the creation of a chain of massive retail stores too costly, particularly given the company's anemic financial condition. Following annual losses in 1989 and 1990, Oshman's Sporting Goods registered a $1.9 million loss in 1991 and a $679,000 loss in 1992, which heightened the need to find a solution.
As the number of traditionally sized stores composing the company's chain dwindled during the early 1990s, falling from a peak of 193 to 165 by the end of 1992, Oshman's Sporting Goods tentatively moved forward with the megastore concept, opening three more SuperSports USA stores in 1992. Board members were still arguing over whether the company should pursue the megastore concept, however, lending a rancorous air to board meetings during the early years of the decade that did not disappear until a new chairman took over in April 1993.
Marilyn Oshman, daughter of founder Jake Oshman and the former wife of Lubetkin (the couple divorced in 1977), took the reins of command in April 1993 and sided with her ex-husband on the course the company should follow in the years ahead. After months of debate, the megastore concept was fully embraced, touching off a new era in the company's history that would witness the closing of money-losing, traditionally sized stores and the opening of additional SuperSports USA stores. Although company officials resolved not to abandon their small retail stores entirely (a point underscored by Lubetkin when he told Discount Store News, "Oshman's won't ever be just a superstore chain [because] we've got some good little stores that generate pretty good income"), the future of the company was vested in the growth of its SuperSports USA stores.
Three more SuperSports USA stores were opened in 1993, giving the company a total of eight megastores by the end of the year, but staggering losses continued to hound Oshman's Sporting Goods. The company lost $19.4 million in 1993 as the number of its traditional stores fell to 153, causing widespread concern among those in charge of Oshman's Sporting Goods' fortunes. Looking for a saviour, the company's board of directors found one when Marilyn Oshman walked into a meeting in mid-December 1993, although at first those in attendance were startled by Oshman's attire. Oshman entered the meeting wearing camouflage clothing from head to toe, presenting herself more as a curious apparition than the company's chairman, prompting those gathered around the meeting room's table to ask, "Are you going hunting?" Oshman, as she later related the reaction and her response, answered, "Not exactly--not in the traditional sense. But I am hunting--I'm hunting for a profit."
Oshman vowed to wear camouflage clothing every day until Oshman's Sporting Goods turned an annual profit, which she did until the end of 1994, when the company climbed out of the red and posted $290,000 in earnings. During the year, the company had opened four more SuperSports USA stores, giving it a total of 12. Then ten more were opened in 1995, when Oshman's Sporting Goods generated $342.8 million in sales and an encouraging $1.9 million in earnings.
Future Growth Projections
As the company planned for the late 1990s and the beginning of the 21st century, the results of its move into the megastore category were decisive. Between 1990 and 1995, sales from the company's SuperSports USA stores increased from $15.5 million to $164.5 million, a figure that represented 50.3 percent of the company's total sales. For the future, Oshman's Sporting Goods planned to close traditionally sized stores that no longer generated sufficient profit to justify their operation and to accelerate the development of its megastore chain. The company anticipated opening seven new SuperSports USA stores in 1996, 12 in 1997, 14 in 1998, and 16 in 1999, intent on establishing a 72-store SuperSports USA chain by the end of the decade.
Principal Subsidiaries: J. S. Oshman and Co., Inc.; Oshman Ski Skool, Inc.; The Best of Oshitch, District of Columbia; Oshitch Company; Oshitch of Maryland, Inc.; Oshitch of Virginia, Inc.; URAFAN Corp.
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