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Dick's to Expand Store Base

Zacks Equity Research

In an effort to continue with its strategy of expanding store base and strengthening e-commerce capabilities to drive top-line growth, Dick's Sporting Goods Inc. (DKS) recently announced that it will open six new stores at different locations in the United States. The company will be celebrating the grand opening at these new locations between 18th and 21st September.

The Pennsylvania, USA-based full-line sporting goods retailer, will open two stores each in the New York City and Utah as well as one each in North Carolina and California. The company capitalizes on its extensive network of stores to effectively penetrate its target markets and gain a competitive advantage over its rivals and drive sales.

This is also well evident from the company’s recently concluded quarter, where net sales surged 10% to $1,437.0 million driven by a 3.8% rise in consolidated comparable-store sales (comps) and new store openings.

Prior to this, in September itself, the company added three new stores – two in California and one in South Carolina.

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 these. For fiscal 2012, the company plans to open approximately 38 Dick's Sporting Goods stores. Moreover, it aims at relocating about five Dick’s Sporting Goods stores and one Golf Galaxy stores in 2012.

In the long-term, the company strategizes to open additional 400 stores, targeting a total store count of about 900 in the United States.

Dick’s continues to establish a healthy vendor-customer relationship and add exclusive and more favorable product mix. Moreover, to generate incremental sales, Dick's Sporting Goods continues to roll out its ‘store within a store program’ with Nike Inc. (NKE) and Under Armour Inc. (UA).

As of July 28, 2012, Dick's Sporting Goods operated 490 stores in 44 states. Additionally, the company operates 81 Golf Galaxy stores in 30 states.

Currently, we maintain our long-term ‘Neutral’ recommendation on the stock. Moreover, Dick's Sporting Goods, which competes with Foot Locker Inc. (FL) and Wal-Mart Stores Inc. (WMT), retains a short term Zacks #2 Rank (Buy rating).

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