Southland Sport Shops: A Packed Field : Retailing: Pacific Enterprises may find it hard to sell Big 5 Sporting Goods due to the glut.

There are plenty of excellent reasons to sell sporting goods in Southern California, but easy profit isn’t one of them.

White-collar unemployment has sapped some of the region’s appetite for pricey exercise machines, and the five-year drought--despite the recent flooding and snow storms--has hurt sales of ski equipment, normally a lucrative corner of the business.

Making things even tougher has been a proliferation of stores and their zest for price cutting.

“They’re always giving away the product out there,” Bob Carr, editor of the New York City-based newsletter Inside Sporting Goods, said of Southland retailers.

All of which makes this a hard time to sell a big sporting-goods chain here, particularly one with a small-store format that some experts regard as increasingly vulnerable to attack from superstores.

But that’s what Pacific Enterprises is trying to do with Big 5 Sporting Goods, a chain of 137 stores--half in Southern California--under the Thrifty Corp. umbrella.

Pacific Enterprises, also parent of Southern California Gas Co., has been thumped by critics for the diversification into retailing that it launched by buying Thrifty in 1986. Earlier this month, Pacific Enterprises reversed course, announcing that it would sell Big 5 and two sister sporting-goods chains in the Rocky Mountains and Midwest, plus some other retailing units. It also set aside $110 million against possible losses on the sales.

A Pacific Enterprises spokesman said the company, which is trying to sell the sporting-goods chains as a package, has had a dozen inquiries from potential buyers. However, some observers are skeptical about prospects for a quick sale.

“My heart goes out to Pacific Enterprises for having to sell that kind of property at this time,” PaineWebber analyst Gary Giblen said.

Chains such as Big 5 and Oshman’s have been slugging away at each other in the Los Angeles Basin for years with newspaper ads touting weekly sales promotions. Other rivals with huge stores and “everyday low prices”--Chicago-based Sportmart, for instance--have entered the market and increased the competitive pressure. Still others plan to jump in, notably Sports Authority, a Kmart unit that has ridden the mega-store formula to sales of $241 million in just five years.

California represents 12% of the U.S. population but buys 20% of its sporting goods. Climate, geographic diversity and population growth make the state a natural hot spot for sports. And Southern California is only more so. It’s no accident that it has become one of the nation’s most competitive sporting-goods markets.

Southern California presents “a classic case of being over-stored,” said Tim Sitek, senior editor of Sporting Goods Dealer, a St. Louis-based trade publication. His recent survey of retailers indicates that only half the sporting-goods dealers in the West enjoyed any sales growth last year.

A word about the trade: Low-tech hard goods such as baseballs, bats and hockey sticks produce thin profit margins because there is a relatively small number of well-known brands, everybody carries them and the main competition is on price.

Fatter margins can be found in soft goods such as ski jackets, running shoes and bicycle pants--especially if you’re on top of a trend. If lemon-green warm-up suits suddenly go ballistic and you’re stocked up, you can charge what you like--for a short time. Once competitors catch on, they’ll pound prices flat until the fad evaporates.

Keeping up with fashion is no easy trick.

Houston-based Oshman’s, one of the few publicly traded sporting-goods firms, has lost money for two years straight. Its sales have been shrinking and its stock trading at lackluster prices, closing Friday at $4.625 per share, $1.125 above its five-year low. Oshman’s has been criticized for missteps in the Southland, such as failing to keep shelves adequately stocked.

Big 5, which is similar to Oshman’s in store format (10,000-square-foot average), sales and number of locations, claims to be “solidly profitable” but does not provide figures.

Robert W. Miller, Big 5’s laconic 68-year-old president, has been with the firm since its founding as a war-surplus dealer in 1955. Industry insiders credit Miller with knowing his Southern California market and helping to craft the low-price, low-overhead approach that has made Big 5 the region’s largest sporting-goods chain.

“If anybody can make it out there, it’s him,” newsletter Editor Carr said of Miller, adding: “People don’t want to spend $90 for a pair of shoes anymore to walk the dog--which fits in fine with his approach. . . . He buys shoes by the ton at distressed prices.”

Jack Smith, 56, who started Sports Authority from scratch in 1987 and sold it to Kmart two years later, isn’t overly impressed with Big 5, Oshman’s, Sportmart or the rest of his rivals in Southern California.

Sports Authority expects to double its sales again this year, to $500 million, then break into California in 1993, opening one of its 40,000-square-foot superstores in Ontario.

“Then we’ll go into San Diego and come right up the state,” Smith said, predicting that he will duplicate the Southland success of such retailers as Ikea (furniture) and Staples (office supplies).

To Smith, the market seems ripe for the nation’s fastest-growing sporting-goods dealer, but others believe that he may be underestimating the competition.

“The bear’s going to go where the bear’s going to go,” said Sitek of Sporting Goods Dealer. “But he’s a damn fool if he goes to California.”

Sporting Goods Top 10 U.S. sporting goods retailers are ranked by sales, excluding department stores and discounters such as Sears and Kmart. They vary widely in store size from Sports Authority, whose outlets average over 40,000 square feet, to Foot Locker, averaging 1,800 square feet. 1991 sales in millions Foot Locker, 1,350 stores: $1,200 Herman’s, 260 stores: $650 Champs, 325 stores: $350 Athlete’s Foot, 550 stores: $325 Oshman’s, 185 stores: $310 Big 5, 137 stores: $300 Recreational Equipment, 28 stores: $254 Sports Authority, 35 stores: $241 Sportmart, 26 stores: $200 Lady Foot Locker, 476 stores: $200 Source: Sports Style magazine