DICK’S Sporting Goods, Inc. DKS is well worth trying out now as its solid foundations and growth efforts look impressive. Zacks Rank # 1 (Strong Buy) stock has a VGM score of B. In particular, this company’s stocks are up 29.8% over the past three months, versus the industry’s 0.5% decline and the retail and wholesale sector’s 2% decline.
However, let’s dive into the factors that make the stock a promising bet.
Solid online show
DICK’S Sporting benefits from significant investments in e-commerce, technology, payroll, team sports and own brands. The company is seeing strong online demand due to improved omnichannel capabilities, including roadside pick-up services and BOPIS. E-commerce in particular grew 14% in the first quarter of fiscal 2021, which is almost 20% of net sales. The upward trend is due to the increasing acceptance of pick-up and curb offers by consumers. In addition, its stores accounted for more than 70% of online sales to meet growing customer demand online.
Expansion efforts of the shop
The company has tried to strengthen its branch network. With that in mind, it recently opened the second DICK’S House of Sport in Knoxville, TN, after the first store in Victor, NY. These businesses are doing well and are well on their way to becoming one of the top-selling businesses. At the same time, two newly designed Golf Galaxy locations, three warehouse sales locations, adventure-oriented football shops at selected locations and a relocated DICK’S sporting goods store were opened in June. Before that, the management opened a DICK’S Sporting Goods location, a warehouse sale location and two locations for a new off-price store concept – Going, Going, Gone! – in May.
The management plans to open six DICK’S Sporting Goods stores and six concept stores each for the 2021 financial year. In addition, the company is expected to open six redesigned Golf Galaxy stores and roll out enhanced technology capabilities in eight additional Golf Galaxy stores in select cities, driven by strength in the golf business. In addition, the relocation of 11 DICK’S Sporting Goods Stores and the conversion of two Field & Stream Stores into Public Lands Stores are planned.
Driven by a solid online show based on an improved supply chain and expanded technology and omnichannel capabilities along with a robust product portfolio, DICK’S Sporting capitalizes on solid demand for golf, outdoor activities, home fitness and active lifestyles. These factors resulted in better-than-expected results for the first quarter of fiscal 2021, with both revenue and profit improving year over year. The strength in hardlines, apparel and shoes also remained positive. Management has raised the forecast for fiscal year 2021. Revenue for fiscal 2021 is expected to be between $ 10,515 million and $ 10,806 million, up from a previous estimate of $ 9,544 million to $ 9,935 million. Sales in the same stores are likely to grow 8 to 11% compared to the previous forecast of 2 to 2%.
The Zacks Consensus estimate for fiscal 2021 earnings is set at $ 8.25 per share, up 3.6% over the past seven days.
Image source: Zacks Investment Research
All in all, we believe that solid demand, robust e-commerce business, and aggressive expansion plans will help DICK’S Sporting keep its stellar show.
Other stocks in the retail space
Hibbett sport HIBB is ranked # 1 in Zacks and has a long-term earnings growth rate of 8.5%. You can see the full list of today’s Zacks # 1 Rank stocks here.
Abercrombie & Fitch ANF has a long-term earnings growth rate of 18% and currently has a Zacks rank of # 1.
Five down FIVE has a long-term earnings growth rate of 32.6% and a Zacks rank of # 2 (Buy).
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.