Sports Authority’s play to take on Dick’s – CNBC

Now, with two years under the belt for much of its executive team, Sports Authority is hoping to end years of what Moody’s described as “inconsistent” operating performance—the result of weak execution, high promotional activity and competitive pressure.

Moody’s recently upgraded Sports Authority’s ratings outlook from “negative” to “stable,” as the retailer works to tweak its merchandise mix, revamp its physical and digital stores, and cut costs. The credit rating agency added that Sports Authority should continue to improve its operations and control costs moving forward, which will help it maintain “adequate” liquidity over the next year.

Read MoreNike, Dick’s get real in new round of women’s ads

“They’re implementing strategies to improve the operation,” Moody’s analyst Michael Zuccaro said. “That takes time to develop.”

Sales of athletic apparel and shoes have been a bright spot in an otherwise challenged retail environment. The category’s popularity, however, has brought with it an influx of competition. In addition to the growth of specialty stores such as Lululemon and Athleta, a slew of high-fashion brands have expanded into the sport category, including a line from Tory Burch coming this fall. Celebrities are also getting in on the trend, including Carrie Underwood’s Calia line, sold exclusively at Dick’s.

To help differentiate its merchandise—and offer products at an affordable price—Sports Authority over the past two years has “really put the pedal down” on private label brands, said Stephen Binkley, the retailer’s executive vice president and chief merchandising officer. That includes the May launch of an exclusive apparel line with Champion, and last year, the introduction of a private label yoga brand called Bloom.

Though the private retailer would not disclose numbers on the sales or penetration of its private label goods, “We do see that as a major growth vehicle for us,” Binkley said.