Matthew McClintock downgraded Dicks Sporting Goods from Equal Weight to Underweight and lowered the price target from $33 to $25.
“We question how the DKS business model of a physical sporting goods box with a sparse labor model and no treasure hunt aspects will remain relevant as changing consumer preferences increasingly require intensive and specialized service/experiential levels to compete,” the analyst said.
With the major sportswear brands transitioning into a mixture of style and performance, Dicks is not positioned to sell the stylish athleisure product that the industry has evolved into, McClintock said, adding that JC Penney Company Inc (NYSE: JCP), Kohl’s Corporation (NYSE: KSS) and Nordstrom, Inc. (NYSE: JWN) have all noted recent strength in athletic apparel while Dicks remained silent.
Dicks' positioning is inferior to department stores due to the mix shift away from performance to more stylish activewear clothing, McClintock said. Department stores are historically better equipped to sell stylish products than sporting goods retailers, and Dicks will have to address the issue, he said.
Aside from differences in store environment, Dicks is simply not positioned to sell higher-end sportswear due to the vastly different labor model required to sell premium athletic apparel, McClintock said. Nordstrom’s has twice the employee coverage that Dicks has, and Lululemon Athletica inc. (NASDAQ: LULU) has 10 times Dicks' coverage, according to Barclays.
Dicks shares were down 5.14 percent at $29.87 at the close Monday.
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Photo by Mike Mozart/Wikimedia.
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|Jan 2018||Telsey Advisory Group||Upgrades||Market Perform||Outperform|
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