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DICK'S Sporting Aims at Strategic Growth: Should You Hold?
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DICK’S Sporting Goods Inc. (DKS - Free Report) has been riding on its unique strategy of offering exclusive branded merchandise sourced from leading manufacturers that provides it with a platform to better compete with other players. Also, the company has been gaining from the expansion of its omni-channel network, and powerful marketing and merchandising strategies. Shares of the company have surged 16.8% year to date.
Growth Strategies
This athletic goods retailer is strengthening its store network, and is focused on developing every possible avenue to boost sales. Also, the company remains on track to grow its eCommerce business, which generated about 9.2% of net sales in first-quarter fiscal 2016, up from 8.5% in the year-ago quarter.
The company has been dynamically expanding store base and eCommerce capabilities to achieve its long-term revenue target of $8.7–$9.0 billion by the end of fiscal 2017. In order to achieve this goal, the company intends to increase its retail store count to 735–750 by fiscal 2017 end.
Going forward, DICK’S Sporting intends to remain committed to further store expansion, store productivity enhancement and investments in omni-channel business for continued improvement. As part of its efforts to improve its mobile app, the company recently added the ‘Move’ feature, which helps customers keep track of their fitness status. This is likely to enrich their experience and in turn, boost top-line growth.
Moreover, the company continues to efficiently utilize cash flows to accomplish its long-term growth target via omni-channel development and store openings as well as by funding share repurchases and paying quarterly dividends. These moves further underscore its solid financial strength and commitment to shareholders.
After missing earnings estimates for two consecutive quarters, DICK’S Sporting bounced back with better-than-expected bottom-line results in the first quarter of fiscal 2016. However, sales lagged estimates for the fourth straight quarter.
The Overhangs
The prevalent adverse movement in foreign currency exchange rates remains a significant threat to DICK’S Sporting’s operational performance. Also, greater occupancy and shipping costs continue to weigh on the gross and operating margins.
Additionally, the company expects to witness some near-term pressure, owing to the major liquidation going on in the sporting goods space. Consequently, management lowered its earnings outlook for fiscal 2016, alongside providing a bleak view for the second quarter. This, in turn, caused a downtrend in the Zacks Consensus Estimate.
Moreover, the company is prone to significant seasonal hazards and the risk of sourcing from overseas markets.
Given the pros and cons embedded, the stock currently carries a Zacks Rank #3 (Hold).
Stocks that Warrant a Look
Investors interested in the retail space may consider some better-ranked stocks such as Delta Apparel Inc. (DLA - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Cabela's Incorporated and ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA - Free Report) , both carrying a Zacks Rank #2 (Buy).
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DICK'S Sporting Aims at Strategic Growth: Should You Hold?
DICK’S Sporting Goods Inc. (DKS - Free Report) has been riding on its unique strategy of offering exclusive branded merchandise sourced from leading manufacturers that provides it with a platform to better compete with other players. Also, the company has been gaining from the expansion of its omni-channel network, and powerful marketing and merchandising strategies. Shares of the company have surged 16.8% year to date.
Growth Strategies
This athletic goods retailer is strengthening its store network, and is focused on developing every possible avenue to boost sales. Also, the company remains on track to grow its eCommerce business, which generated about 9.2% of net sales in first-quarter fiscal 2016, up from 8.5% in the year-ago quarter.
DICKS SPRTG GDS Price and Consensus
The company has been dynamically expanding store base and eCommerce capabilities to achieve its long-term revenue target of $8.7–$9.0 billion by the end of fiscal 2017. In order to achieve this goal, the company intends to increase its retail store count to 735–750 by fiscal 2017 end.
Going forward, DICK’S Sporting intends to remain committed to further store expansion, store productivity enhancement and investments in omni-channel business for continued improvement. As part of its efforts to improve its mobile app, the company recently added the ‘Move’ feature, which helps customers keep track of their fitness status. This is likely to enrich their experience and in turn, boost top-line growth.
Moreover, the company continues to efficiently utilize cash flows to accomplish its long-term growth target via omni-channel development and store openings as well as by funding share repurchases and paying quarterly dividends. These moves further underscore its solid financial strength and commitment to shareholders.
DICKS SPRTG GDS Price and Consensus | DICKS SPRTG GDS Quote
Quarterly Performance
After missing earnings estimates for two consecutive quarters, DICK’S Sporting bounced back with better-than-expected bottom-line results in the first quarter of fiscal 2016. However, sales lagged estimates for the fourth straight quarter.
The Overhangs
The prevalent adverse movement in foreign currency exchange rates remains a significant threat to DICK’S Sporting’s operational performance. Also, greater occupancy and shipping costs continue to weigh on the gross and operating margins.
Additionally, the company expects to witness some near-term pressure, owing to the major liquidation going on in the sporting goods space. Consequently, management lowered its earnings outlook for fiscal 2016, alongside providing a bleak view for the second quarter. This, in turn, caused a downtrend in the Zacks Consensus Estimate.
Moreover, the company is prone to significant seasonal hazards and the risk of sourcing from overseas markets.
Given the pros and cons embedded, the stock currently carries a Zacks Rank #3 (Hold).
Stocks that Warrant a Look
Investors interested in the retail space may consider some better-ranked stocks such as Delta Apparel Inc. (DLA - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Cabela's Incorporated and ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA - Free Report) , both carrying a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>