According to Dick’s Sporting Goods Inc., the interest in golf that has grown during the pandemic continues to grow in both the chain of the same name and the Golf Galaxy.
“Because of this robust demand, our golf business at both Dick’s and Golf Galaxy has been great. The Golf Galaxy Comps have significantly outperformed the company’s average for the past few quarters,” said Lauren Hobart, managing director of Dick’s, on the earnings statement.
Dicks DKS (+ 0.37%) reported first quarter earnings that exceeded estimates and sales that exceeded FactSet’s expectations.
Shares were up 18.6% over the week.
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The athletic retailer plans to invest more than $ 20 million in Golf Galaxy in 2021. New technologies have been added and store redesign is already underway.
And not only golf is on the upswing.
“Team sports were coming back with a vengeance,” said Hobart. “Rightly so, because it’s been about a year since people played. At the same time, some of the pandemic-related categories like golf and outdoor fitness are still very, very, very strong. “
Cowen analysts note that the newcomers are going to golf courses.
“The participation rates among women, juniors and young adults are healthy and help grow the game.
Analysts continue to see upside potential as Dick’s loyalty program ScoreCard takes members into the back-to-school season. ScoreCard has more than 20 million members.
Cowen rates Dick’s stock above average with a target price of $ 132 off $ 102.
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“Although the company will begin significantly increasing sales in the coming quarter (especially from June), we continue to see tailwinds as the year progresses, including continued strength in categories such as golf and fitness, team sports, and a robust back-to-school season,” Wedbush wrote in a note.
The analysts there rate Dick’s outperformance with a price target of USD 110 versus USD 97
“The combination of these tailwinds in connection with strategic transformation initiatives (e.g. retail brands, ScoreCard loyalty program, online, new store prototypes and the introduction of new in-store concepts) could lead to additional sales and margins upwards and to additional margins this year Long-term market share gains lead to double-digit long-term EPS growth. “
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Raymond James, on the other hand, believes that Dick’s may have reached a “short-term climax” after an “impressive climb”. There analysts rate the share as below average.
“Even if the resurgence of team sport activities later in FY21 should benefit demand, we believe Dick’s has an unfavorable attitude because of 1) large, one-off purchases of fitness and outdoor equipment, 2) peak stay – Spending behavior at home and 3) a very favorable advertising environment where inventory is at record levels. “
Dick’s stock is up 75.7% year-to-date, while the benchmark index S&P 500 SPX (+ 0.12%) is up 11.8% over the period.