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DICK'S Sporting Expands Store Base

Zacks Equity Research

Full-line sporting goods retailer DICK'S Sporting Goods Inc. (DKS) remains focused on driving growth through 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 Mexico, Washington, Arizona and Louisiana.

In New Mexico, the new DICK’S Sporting store will be located at the Coronado Mall in Albuquerque and will be the company’s 3rd outlet in the state. In Washington, DICK’S Sporting new store will be at Grandridge Plaza in Issaquah and mark the 4th outlet in the state. The company opened its 7th store in Arizona, which is located at Prescott Valley Crossroads in Prescott. Moreover, the newly opened DICK’S Sporting store at Prien Lake Mall in Lake Charles is the company’s 6th store in Louisiana.

Including all these new outlets, DICK’S Sporting store count is now 538. The celebrations to mark the opening of these stores will commence on Oct 11 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 Under Armour 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.

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-shops 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.

In 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 the shopping experience a convenient one, the company has introduced a new mobile application for iPhones and Android Smartphones that enable 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 #4 (Sell). 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).

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