The store expansion strategy of the full-line sporting goods retailer, Dick's Sporting Goods Inc. (DKS), seems achievable as the company made announcements of five more stores coming up in different locations in the United States. These stores making show at the Hanover Mall in Hanover, Massachusetts; Valley Mall in Harrisonburg, Virginia; Las Cruces, New Mexico; Southside Mall in Oneonta, New York; and Edinger Plaza in Huntington Beach, California; are slated to open to public on October 3, 2012.
Earlier this month, the company announced the opening of ten new stores at different locations across the country. The opening of stores remains in sync with the company’s previously announced plan of opening 21 stores in the third quarter and relocating 3 of them.
For fiscal 2012, the company plans to open approximately 38 Dick's Sporting Goods stores. Moreover, the company plans to relocate about five Dick’s Sporting Goods stores and one Golf Galaxy store in 2012.
In the long-term, the company aims at opening additional 400 stores, targeting a total store count of about 900 in the United States.
As of September 21, 2012, Dick's operated 500 stores in 44 states. Additionally, the company operates 81 Golf Galaxy stores in 30 states.
We believe Dick's continues to progress well with its growth initiatives, which include expanding its store base and bringing in technological advancements to better serve its patrons. The company leverages an extensive network of stores to effectively penetrate into its target markets, which in turn, enables the company to generate healthy sales and gain a competitive advantage over its rivals, including Foot Locker Inc. (FL) and Wal-Mart Stores Inc. (WMT).
Apart from expanding its store base, Dick’s is also focusing on buyers’ needs to generate growth opportunities that will augment sales. The company aims to provide topnotch shopping experience to its customers and has introduced a new mobile application for iPhones and Android Smartphones.
The app facilitates consumers to locate the company’s stores in any particular area and provides the ease of directly buying goods by using the application. Moreover, users will be rewarded 50 bonus points for downloading and indulging in the Dick's Sporting Goods brand on social media.
We believe that the company’s strategic measures of solidifying its store base and using technology to provide better customer services will enhance its relationship with clients and will help attract and retain customers as well as promote its offerings.
Currently, we maintain our long-term Neutral recommendation on the stock. However, Dick's Sporting Goods retains a short term Zacks #2 Rank (Buy rating) for the next 1-3 months.
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