DICK's Sporting on Expansion Spree

Zacks Equity Research
October 21, 2013

Full-line sporting goods retailer DICK'S Sporting Goods Inc. (DKS) remains focused on driving growth through the expansion of its store base and incorporation of technological advancements to better serve its clients. In line with its strategic initiatives, the company recently declared the opening of one new store each in the states of New York, North Carolina, Florida and Kentucky, plus a relocated store in Ohio.

In New York, the new DICK’S Sporting store will be located at 1779 Old Country Road in Riverhead and will be the company’s 36th outlet in the state. In North Carolina, DICK’S Sporting’s new store will be at Morganton Heights in Morganton and mark the 29th outlet in the state. The company will open its 24th store in Florida, located at The Palms at Town and Country in Kendall. Moreover, the DICK’S Sporting store to be opened at Melody Mountain in Ashland will mark the company’s 8th store in Kentucky.
A day prior to these announcements, the company revealed its plans to open two stores, of which, one will be located at the Gary Farm in Bowling Green, Kentucky and the other at Eastridge Mall in Casper, Wyoming.

Including these six outlets, DICK’S Sporting store count now stands at 547. The celebrations to mark the opening of these stores will commence on Oct 25 and extend over the weekend. The store offerings will include over 40 suitable in-store services provided by DICK'S certified PROS in Golf, Bike, Hunting, Fishing, Team Sports and more.

In order to attract customer traffic into its new stores throughout the celebration period, DICK’S Sporting has announced a range of lucrative giveaways. The company will distribute Mystery Gift Cards in the range of $5–$500 to the first 100 adults in line on Friday and Saturday. Moreover, on Saturday, it plans to give free Tech T-Shirts manufactured by Under Armour Inc. (UA) to the first 100 adults in line. On Sunday, it will distribute free Scratch & Win cards to the first 100 adults in line.

On the other hand, the relocated store in Ohio, which occupies a floor space of 50,000 square feet, will have added professional services and tangible customer experiences in its Bike, Lodge and Golf departments. The store has moved from its original location at 1990 Buchholzer Blvd. to The Plaza at Chapel Hill in Cuyahoga Falls. The outlet will be reopened on Sunday, Oct 27 with lucrative giveaways to attract customers.

We believe that the full-line sporting goods and apparel retailer will benefit from its in-store action and online growth strategies. The company’s in-store efforts such as the remodeling of stores, launch of shop-in-shop facilities and recruitment of more sales personnel have boosted top-line growth. Furthermore, the company is aggressively enhancing its e-Commerce capabilities to increase its sales as well as market share in online retailing.

At its recent annual Analyst Day meet, DICK’S Sporting announced its plans to increase retail store count to 800 by the end of fiscal 2017 from 518 stores at the end of fiscal 2012. Further, the company will remodel its existing stores from time to time in order to keep them up-to-date and productive.

Additionally, the company will stay focused on maintaining strong relations with its vendors, introducing fashionable products and concentrating on high growth categories such as Women and Youth.

Moreover, DICK’S Sporting intends to increase its e-Commerce sales to nearly $1.1 billion by the end of fiscal 2017, from $292 million at the end of fiscal 2012. For this, the company will control its e-Commerce platform beginning with Golf Galaxy and Field & Stream in 2014, and DICK’S Sporting from fiscal 2017-end.

Apart from expanding its store base, DICK’S Sporting is concentrating on customer needs in order to boost sales. Further, to make customers’ shopping experience a convenient one, the company has introduced a new mobile application for iPhones and Android Smartphones that enables customers to locate DICK’S Sporting stores in any particular area and buy goods directly, using the application.

We believe that the company’s strategic measures of consolidating its store base and the use of technology to provide better services will enhance its relationship with present customers, attract new customers and effectively promote products.

Other Stocks to Consider

DICK’S Sporting currently carries a Zacks Rank #5 (Strong Sell). However, other stocks in the retail sector that are worth a look include Five Below Inc. (FIVE) and Cabela’s Incorporated (CAB). Both of these carry a Zacks Rank #2 (Buy).

Read the Full Research Report on UA
Read the Full Research Report on CAB
Read the Full Research Report on DKS
Read the Full Research Report on FIVE


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