QUOTE AND NEWS
Forbes  Aug 15  Comment 
Wall Street is expecting lower profit for Dick's Sporting Goods when the company reports its second quarter results on Tuesday, August 19, 2014. Analysts are expecting earnings per share of 65 cents after the company booked a profit of 71 cents a...
Motley Fool  Aug 10  Comment 
The youth are our future -- and they may also be the future of Under Armour and Dick's Sporting Goods.
Clusterstock  Jul 31  Comment 
Golf sales still stink. Back in May, Dick's Sporting Goods highlighted its struggles with golf sales during the first quarter.  Today, Adidas joined the "party."  In a statement, the company said it expected to report that second-quarter...
Market Intelligence Center  Jul 28  Comment 
Friday’s trading in Dick's Sporting Goods Inc. (DKS) gives options traders an opportunity for a 8.70% return. By selling the Sep. '14 $43.00 call and buying the Jan. '15 call at the $38.00 level for a net debit of $4.60, traders will book a...
MarketWatch  Jul 24  Comment 
Last week’s British Open victory by 25-year-old Rory McIlroy aside, the golf industry is not catching on with millennials.
Motley Fool  Jul 23  Comment 
The sporting goods retailer has been in the rough for a long time now.
Yahoo  Jul 23  Comment 
Dick's Sporting Goods fired 400 of the PGA pros working in its stores as its golf business struggles. Golf survived the Great Recession, but does it have a future?
Motley Fool  Jul 21  Comment 
Size isn't everything when it comes to stock picking. My preferred sporting goods retailer may not be the biggest player in the market, but it is more attractive as an investment than a larger peer.
SeekingAlpha  Jul 16  Comment 
By Zacks Investment Research: Headquartered in Pittsburgh, PA, Dick's Sporting Goods (NYSE:DKS) is a full-line sporting goods retailer offering athletic shoes, apparel, accessories and a broad selection of outdoor and athletic equipment. The...
SeekingAlpha  Jul 11  Comment 
By David Hernandez: Solid Financial Performance Show Signs Of Slowing Since 2009, Dick's Sporting Goods (DKS) has been able to grow revenue, operating, and net income by a CAGR of 12.4%, 24.2%, and 25.7%, respectively. This impressive revenue...




 
TOP CONTRIBUTORS

Dick's Sporting Goods (NYSE: DKS) is the a specialty sporting goods retail chain. Dick's operates stores in the majority of states in the US which sell a wide range of sporting equipment and apparel, in addition to Golf Galaxy stores and Chick's Sporting Goods stores.[1] [2] The company ranks as the second largest sporting goods retailer in the U.S by sales.[3] By increasing its presence in temperate areas such as Florida, Georgia, and Texas, the company hopes to temper the declining sales during the winter since most of its products are directed at outdoor, warm-weather sports.

While the majority of Dick's products are brand names manufacturers like Nike, adidas, and Under Armour (UA), one important trend affecting Dick's is the growth of its own private label product lines, which the company aims to account for about 15% of total sales.[4] In addition, as one of the largest specialty retailers in the U.S., Dick's is particularly prone to downturns in the economy that can constrain consumer spending on non-essential goods like sporting goods equipment.

As a sporting goods retailer, Dick's generates revenue through sales of sporting equipment and apparel in its physical Dick's Sporting Goods retail stores and DicksSportingGoods.com (Dick's e-commerce site fully outsourced to GSI Commerce (GSIC)). The company also owns the Golf Galaxy retail chain which sells golf equipment and apparel and provides club repair and other services.

In most Dick's stores, approximately 80% of floor space is used for sales and 20% is used for backroom storage of merchandise, receiving area, and office space. [5]

Trends and Forces

Private-Label Helping Margins

In order to boost margins, Dick's carries its own private-label brands (including Ativa) alongside its brand name merchandise from companies like Nike (NKE), Under Armour (UA) and brands like The North Face from V.F. (VFC). Its private-label products sell at margins approximately 5-6 percentage points higher than typical branded goods. As Dick's moves private-label products into Golf Galaxy stores and increases the presence of these brands in Dick's stores it should help the company continue to increase their gross profits.

Seasonality

Seasonality affects Dick's sporting goods in two distinct manners:

  • As a retailer, Dick's typically experiences greater sales during the fourth quarter holiday season. Thus, a stronger or weaker than normal holiday season can considerably help or hurt Dick's.
  • Because many of Dick's products are used in warm weather, outdoor activities (baseball, running, golf, etc.) sales can slump during the winter seasons. Dick's counters this in part by carrying winter apparel and sporting equipment (such as skiing and snowboarding equipment). This type of seasonality could be minimized if Dick's can successfully enter markets in Florida, Texas and Southern California where warm temperatures remain year-round.dfdf

Macroeconomic Downturns: Squeezing Consumer's Wallets

As a retailer of non-necessary goods Dick's is one of the first companies to lose sales when poor economic conditions dampen consumer spending. Since Dick's product lines are not diversified with non-athletic offerings (e.g., groceries or basic clothing) it is more exposed to economic downturns than other retailers such as Wal-Mart Stores (WMT) and Target (TGT).[6]


Competition

Dick's competes in fragmented industry, with the top six sporting goods retailers holding only 19% of the estimated $52 billion market. The Sports Authority (bought by a private equity firm in 2006) follows in second place.

Other companies that Dick's compete with in the sporting goods retail market include the following firms:

  • Academy Sports & Outdoors: Academy is a private company operating just under 100 stores throughout the South and Southwest regions of the U.S. Academy's product offerings focus on apparel and equipment for outdoor activities such as camping, hunting, fishing and boating.
  • Recreational Equipment, Inc. (REI): "REI" is a privately-owned co-op that operates about 90 stores heavily concentrated in the Western half of the US. REI sells mostly apparel and equipment used for hiking, climbing, kayaking and other similar outdoor activities.
  • Big 5 Sporting Goods (BGFV): This small-store neighborhood style retailer leads the sporting goods market in Western states such as Washington, California and Arizona. If (or when) Dick's begins to make moves into the Pacific states, Big 5 Sporting Goods (BGFV) will be their main competition as Big 5 operates over 300 stores throughout the Western region.
  • Hibbett Sports (HIBB): Hibbet boasts over 600 small-format stores based primarily in the Southeast region of the US. These stores are traditionally located in indoor and strip malls and sell a variety of sporting equipment and apparel.

Dick's also faces considerable competition from footwear retailers like Foot Locker [7] and Finish Line (FINL) [8]. Dick's is also facing increasing competition from big box discount retailers like Wal-Mart, Target and Amazon.com who sell a selection of sporting equipment and apparel in their stores as well.




References

  1. Dick's Annual Report 2008, page 1
  2. Dick's Annual Report 2008, page 24
  3. Internet Retail "Dick`s Sporting Goods selects Global Sports to operate its web business"
  4. Kevin Stecyk, Seeking Alpha, "Dick's Steers Clear of Housing Weakness"
  5. DKS 10-K 2008, Item 1 "Business," page 7
  6. Dicks Sporting Goods, Inc. Q2 2009 Earnings Call Transcript
  7. Google Finance FL
  8. Google Finance FINL Financials
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