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The Sports Guy Case Study

In: Business and Management

Submitted By Exzil
Words 2154
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The Sports Guy
Case Study

Case Synopsis

The case is about The Sports Guy which is an independent sporting goods store owned by Bob “Rocky” Rhodes; his business is in the retail sporting goods industry. The store is located in the south part of a small town which is just outside the Greater Toronto Area. The town has been growing rapidly for the last few years and the area around the store has become a prosperous neighbourhood, making their location a busy commercial area. The Sports Guy store sells sports related clothing and equipment. About 70% of their sales consist of equipment and uniforms bought by local teams, and 30% of sales consist of regular (walk-in) retail trade. The store’s sales have increased over the years however; have not been growing much in recent years. In the last few years the sales to teams have mostly covered the business’ costs, while the “walk-in” trade has provided most of the profits. Many times Rocky has been left with out-of-season stock that had to be sold off at a loss. Rocky is concerned about the declining inventory turnover rate that is causing an increase in his short-term debt and interest expenses.

Problem Statement

Rocky wants his business to grow with the town, but to do so will require access to bank credit to finance higher inventories and future expansion. He will have to improve The Sports Guy’s profitability. How will Rocky improve the financial performance of his business when their net profit (after tax) has decreased over the years?

Situational Analysis
The Sports Guy is in the retail sporting goods industry; it is a fairly attractive industry for Rocky because his expertise, passion and community involvement differentiate his business from his competitors. There are also not many threats of substitutes and little rivalry in the small town. Social trends may also be looking in the industry’s favour…...

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