The Business A single-location discount retailer of reputable outdoor goods and clothing. If you haven't shopped there, you've shopped someplace like it: aisles strategically cluttered; shelves overripe with everything from tents and Swiss army knives to shoes, denims, and skiwear; a local "institution" that's served three generations of customers despite spending nothing on advertising. The owners are retiring.

Financial Summary ($ in thousands)

1988 1989 1990*
Gross sales $3,239 $3,391 $3,600

Recast pretax profit 554 598 630

*projected

Price $3 million

Outlook A recession-proof retailer? The sellers claim so. As the economy in its Colorado city went belly-up, sales and profits at this store stayed strong. Sales per square foot exceed $500 -- more than twice what comparable niche outlets expect. The sellers argue that the business can be expanded by cloning new units that trade on the store's well-established reputation.

Price Rationale The sellers point to enormous goodwill and reliable profits, but the earnings multiple of five looks optimistic -- manufacturers may get that, say insiders, but retailers typically are priced at a multiple of three to four. Net worth is reported at close to $1.5 million, but that too may be soft; nearly two-thirds of the assets are inventory, which banks won't value at 100%.

Pros Solid historical performance, including sales that trend against a slumping market. Some say the local economy is healing, and even if it isn't, this low-end, price/value leader could thrive. The right niche at the right time?

Cons Retailing is distressed, and if the national economy goes further south, then even this business could be hit. Inventory, at $1 million wholesale, is too high and turns over only half as fast as most operators would like. Is regional expansion really possible without cannibalizing the parent? n

Inc. has no stake in the sale of the business featured and cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Colorado Business Consultants, in Denver.