DICK'S Sporting Goods, Inc. DKS is benefiting from its growth efforts, including merchandising initiatives and store-related endeavors. The company has been making smart moves to enrich customer experience. DKS is putting emphasis on the omnichannel experience to drive solid athlete engagement.

Buoyed by such strengths, shares of this sporting goods dealer have gained 71.2% compared with the industry’s 10.1% growth in a year.

Growth Efforts to Benefit DICK'S Sporting

DICK’S Sporting’s store-related endeavors appear quite encouraging. The company has revolutionized its most typical format, the 50,000 square-foot DICK’S store, into the Field House concept. The Field House concept is inspired by House of Sport, having interactive experiences with unique presentation and service. Such stores are performing extremely well.

During the second quarter of fiscal 2024, the company introduced two namesake and five Specialty Concept stores. Management unveiled plans to open its 15th House of Sport location and is on track to introduce additional five locations in fiscal 2024. It intends to introduce six DCs in Dallas, which will open in early 2026.

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DKS’ GameChanger app has been performing extremely well. GameChanger allows the company to connect to athletes beyond the traditional shopping experience, thus strengthening leadership in sport. In the most recent quarter, more than 6 million unique users engaged with GameChanger, reflecting a rise of 11% from the prior year. This averages nearly 45 minutes per day on the app.

DICK’S Sporting Goods is benefiting from brand strength and continued market share gains. Management remains committed to digital innovation. All the aforesaid endeavors are likely to capture extra sales and bolster overall profits.

Bumps in DKS’ Growth Path

DICK’S Sporting has been grappling with an uncertain macroeconomic environment. In addition, higher wage rates and increased investments in talent and technology to create a better athlete experience, as well as investments in marketing, have been leading to elevated costs. In the second quarter of fiscal 2024, adjusted selling, general and administrative (SG&A) expenses increased 4.1% to $786.3 million.
 
Management expects modest deleveraged adjusted SG&A expenses year over year, due to strategic investments to aid growth in the long haul. DICK’S Sporting envisions pre-opening expenses for the second half of fiscal 2024 to be moderately higher than the first half, led by the timing and mix of its store openings. Much of such expenses will fall in the third quarter of fiscal 2024. This may affect the company’s profitability ahead.

Conclusion

DICK’S Sporting has been taking initiatives to tackle cost issues. The company remains on track with business optimization to streamline the overall cost structure. Robust omnichannel athlete experience and unique product assortment are acting as catalysts.

The Zacks Consensus Estimate for fiscal 2024 sales and earnings per share (EPS) is pegged at $13.25 billion and $13.90, respectively. These estimates indicate corresponding growth of 2.1% and 7.7% year over year. The consensus mark for next fiscal year’s sales and EPS is pegged at $13.84 billion and $14.78, respectively, indicating a year-over-year increase of 4.4% and 6.3%. DKS currently carries a Zacks Rank #3 (Hold).

Key Picks

We have highlighted three better-ranked stocks, namely Deckers DECK, Boot Barn BOOT and Abercombie ANF.

Deckers, a footwear and accessories dealer, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. 

The Zacks Consensus Estimate for Deckers’ current financial-year sales indicates growth of 13.6% from the year-ago figure. DECK delivered an average earnings surprise of 41.1% in the trailing four quarters.

Boot Barn, a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories, presently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 6.8%, on average. 

The Zacks Consensus Estimate for Boot Barn’s current financial-year sales indicates growth of 13.4% from the year-ago figure.

Abercrombie, a leading casual apparel retailer, currently carries a Zacks Rank of 2. ANF delivered an earnings surprise of 16.8% in the last reported quarter. 

The consensus estimate for Abercrombie’s current financial-year sales indicates growth of 13% from the year-ago figure.

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