The fragmented $46 billion sporting goods market, still dominated by mom and pops, is coming out of a seven-year slump. For now, the Sports Authority is the only coast-to-coast chain. Long term, however, analysts expect cash-rich Dick's Sporting Goods to become a second national player. So where does that leave Galyan's?

Dick's — currently dominant in Pennsylvania, New York, Ohio and North Carolina — differentiates itself with its unique store-within-a-store merchandising plan. The cash-rich retailer plans to open 15 to 20 stores per year and double its store counts on the East Coast and in the Midwest. Its real estate plan is to backfill existing markets, many of which are already occupied by The Sports Authority. Analysts anticipate the rapidly-growing company to achieve 5 percent market share by 2008. It currently controls 2.7 percent. It made a failed bid for the Bob's sporting goods chain last year, but the retailer could still be on the lookout for an acquisition.

The Prognosis: “As Dick's expands, it will capture market share from smaller specialty stores as well as stores like Sports Authority,” says Merrill Lynch analyst Lee Giordano.

Dick's Sporting Goods

Stores: 151
Avg. Size: 39,000 sq. ft.
Annual Comp Sales Growth: 1.1%
Total Annual Sales: $1.2 billion
Sales Per Sq. Ft.: $194

With stores in 45 states, The Sports Authority is already 50 percent bigger than its nearest competitor and is the only big-box sports shop in many large markets. But it's still digesting a recent merger with Gart Sporting Goods — a marriage of two large chains with lower-than-average returns on investment, same-store sales and organic growth. But former Gart execs plan to apply some of their more successful principles to the chain, spending about $30 million annually to open about 20 stores a year. The retailer will also spend $165 million in the next three years on integrating the two brands and remodeling and expanding existing stores.

The Prognosis: “After The Sports Authority's stores get ‘Gartified,’ they will be more formidable competition to Dick's,” says Harris Nesbitt Gerard analyst Sean McGowan. “But if some of its competitors enter The Sports Authority's markets, the company's results could suffer.”

The Sports Authority

Stores: 389
Avg. Size: 37,065 sq. ft.
Annual Comp Sales Growth: -3%
Total Annual Sales: $2.4 billion
Sales Per Sq. Ft.: $151

Galyan's same-store sales have been declining for six quarters. While it's holding off closing two underperforming stores in St. Louis and Arlington, Tex., it's slowing new store growth to four in 2005, says Michael Napolitana of JMP Securities. “The ongoing growth of other concepts, particularly category-dominant specialty stores, is probably taking away Galyan's traditional high-end customer. Galyan's is squeezed on the bottom by The Sports Authority and on the top by the likes of Cabela's, Bass Pro Shops and Golf Galaxy,” says Piper Jaffray analyst Brent Rystrom.

The Prognosis: The chain remains an attractive acquisition target. Dick's would be the most likely suitor,” says Jim Duffy of Thomas Wiesel Partners. “Galyan's has enough geographic synergies with Dick's, and the acquisition would be accretive to Dick's shares.”

Galyan's

Stores: 37
Avg. Size: 86,679 sq. ft.
Annual Comp Sales Growth: -6%
Total Annual Sales: $597 million
Sales Per Sq. Ft.: $204