NO LAYOFFS OR MANAGEMENT CHANGES PLANNED

UFA’s CEO Explains Acquisition of Sportsman’s Warehouse

By Bill Schneider, 12-03-08

	Dallas Thorsteinson, president and CEO of UFA Co-operative Ltd.

As noted in a breaking news story last week, UFA Co-operative Ltd. of Calgary is in the process of acquiring Sportsman’s Warehouse, the largest outdoor retailer in the New West. UFA stands for United Farmers of Alberta, so after the article came out several readers wondered why a Canadian farmer’s coop would buy a chain of sport stores in the United States.

With the kind assistance of UFA’s cooperate communications manager Natalie Dawes, today I had a chance to ask UFA’s President and CEO Dallas Thorsteinson that question.

“We are no longer that sleepy little agriculture coop,” Thorsteinson explained. “We’ve re-positioned ourselves away form the all-things-ag business model. We’re actually a diversified rural cooperative interested in all rural-related business. We support living, working and playing on the rural landscape.”

So, he said, the hunting, fishing and outdoor adventure business fits ideally with the new plan, which started with UFA’s purchase Wholesale Sports, western Canada’s largest outdoor retailer, earlier this year.

“That (acquisition) was the beginning of our outdoor adventure strategy,” he said. “Now, overnight (with the purchase of Sportsman’s Warehouse), UFA has launched itself as a billion dollar outdoor adventure company.”

He refers to the combined annual revenue of the two companies, 80 percent or $800 million from Sportsman’s Warehouse. Cabela’s, in comparison, has about $2.6 billion in annual sales.

Wholesale Sports is Canada’s version of Sportsman’s Warehouse, only with smaller and fewer stores, eight compared to 69. “The only real difference between the two is that Wholesale Sports is more profitable and has more growth potential. Otherwise, the footprints are similar.”

Thorsteinson said he plans no immediate changes at Sportsman’s Warehouse’s operations, marketing or product mix. “When we buy companies, we take a little time to get to know them. We don’t like to make mistakes early when we have a lack of understanding.”

The only immediate change will be replacing current chief executive Stu Utgaard with a new divisional vice-president, he said. “Otherwise the management team will stay. We’d love to have all managers stay, and we’re extremely impressed with the work they do.”

And, he assured, there are no plans to close down or downsize the Salt Lake City headquarters or move it to Calgary. “We like the infrastructure in Utah, and it will likely go the other way.”

By that, he explained, the two retail chains will be eventually be combined into one brand and one product mix, and that combined operation likely to be run out of Utah.

Most expansion will, however, be in Canada, he noted, where the outdoor retail market is less crowded. “The opportunities look better in Canada right now.”

Nor do Sportsman’s Warehouse employees need to fret, he insisted. Acknowledging that things haven’t been all happiness at Sportsman’s Warehouse lately because of depressed sales and inventory shortages, “we’re feeling pretty good about helping out those 5,500 employees, and they do not need to worry about their jobs.”

In explaining the status and nature of the deal, Thorsteinson cautioned that due diligence is still underway. “All comments are subject to successful due diligence,” he explained, but UFA is acquiring 80 percent of the assets of Sportsman’s Warehouse and leaving 20 percent for the current owners and equity investors who will become minority shareholders.

Even with the laws of two countries coming into play, he does not anticipate any government complications or delays in closing the deal.

And Thorsteinson assured, UFA is in it for the long haul. “We’re Warren Buffett-style investors. We buy, hold and build. We’re absolutely committed to that type of operation.”

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