RealTime IT News

On the Record with Michael Rubin

Consumer e-commerce stocks have become the forgotten stepchildren of the tech sector. But does Global Sports deserve a second look?

If Global Sports founder and CEO Michael Rubin has his way, Wall St. won't have any choice but to pay attention to his company's progress very soon. This leading operator of sporting goods sites took a small step in this direction earlier this month by announcing that it would post a smaller than expected loss for its fiscal fourth quarter.

Global Sports now expects fourth quarter sales to top analysts' estimates of $19.3 million with an operating loss of less than the $9.9 million that analysts had been expecting. In addition, in a sector plagued with e-tailers struggling just to stay afloat, Global Sports ended 2000 with roughly $93 million in the bank. Perhaps most impressive is the fact that Rubin secured almost $41 million of this capital back in September when the tech sector was still collapsing.

With the purchase of struggling competitor Fogdog.com last October, and reports out suggesting that high profile sporting goods site MVP.com is on life support, Global Sports appears to now have the online sporting goods category virtually to itself. The company now provides its soup-to-nuts e-commerce solution to fourteen different partners including Toys R Us , Kmart's Bluelight.com , Bally Total Fitness , Oshman's Sporting Goods and The Sports Authority among others.

While Global Sports appears to be on the right track to profitability, with quarterly losses decreasing and sales rising, investors have the right to remain skeptical about the future of any e-tail related company. Thus, we recently sat down with Rubin to hear about his future plans for Global Sports and his outlook on the entire e-commerce sector.

ISR: Let's start things off with a description of Global Sports today and what makes the company unique from almost any other e-tailer?

Rubin: For us, what is totally different is that we are providing an end-to-end e-commerce solution versus a lot of companies that are out there trying to build their own brand. With this model, we have the benefit of alleviating the majority of the marketing expenses as our partners are really growing their businesses. We're providing these partners with the entire infrastructure and are consolidating all of the demand for a particular category, which is sporting goods.

ISR: Okay. What are some of your most high profile partnerships at this point?

Rubin: Our biggest partner as an example is The Sports Authority. They are the largest full-line sporting goods retailer in the U.S. We run their entire e-commerce business for them from the actual fulfillment and customer service to their site's underlying technology. The way our relationship works financially is that Global Sports records the sales and then gives what you could almost consider a royalty to our retail partners.

ISR: So you get the immediate benefits of not having to try and build yet another online brand name from scratch, but leverage existing brands instead.

Rubin: Right. Our retailers are doing all of the branding. So if you go online to The Sports Authority's Web site, it is really a site that we're running for them. We also have the same type of relationships with companies like The Athlete's Foot, Oshman's Sporting Goods or FoxSports.com. Today we have fourteen partners. We started the business a little over a year ago with five partners.

ISR: Global Sports ended this past year with over $90 million in cash. You acquired struggling sporting goods e-tailer Fogdog.com near the end of last year. Do you see any future acquisitions in the cards?

Rubin: I would never say never. The Fogdog acquisition was very opportunistic for us. We looked at it as the opportunity to pick up a company for virtually its cash value.