Yahoo Finance DICK'S Sporting's (DKS) Store Initiative Strategy Aids Growth
DICK’S Sporting Goods Inc. DKS is making significant progress in its store expansion initiatives. It is also benefiting from its long-term transformation through focused strategies and strong execution. This was evident in the fourth quarter of 2022, when the company continued its strong surprise trend, beating the Zacks Consensus Estimate on both the top and bottom lines and growing year over year.
Store Initiative: Key Factor
DICK'S Sporting has been performing well on the store front from its previously introduced DICK'S House of Sport, Golf Galaxy Performance Center, Public Lands, and Going, Going, Gone! As a result, it intends to convert its 17 existing Field & Stream stores, the majority of which are part of DICK'S Field & Stream combo stores, to DICK's House of Sport or larger format of DICK's stores and exit the Field & Stream brand.
Also, the company expects DICK'S House of Sport to be the primary driver of the square footage growth. For 2023, the company plans to open nine new DICK'S House of Sport locations. It also began construction on more than 10 new DICK'S House of Sport locations that will open throughout 2024. DKS also expects to grow the footprint of its Golf Galaxy business through the Golf Galaxy Performance Center and convert temporary value chain stores to permanent locations in 2023.
Image Source: Zacks Investment Research
Other Growth Driving Factors
DICK'S Sporting has been benefiting from a compelling assortment and its structural transformation in recent years. This led to impressive fourth-quarter fiscal 2022 results. The company’s net sales of $3,597 million improved 7.3% year over year driven by strength in its core categories. Consolidated comparable store sales (comps) grew 5.3% because of the strength across footwear, athletic apparel and team sports.
Driven by the impressive quarterly results, the company issued an upbeat fiscal 2023 view. For fiscal 2023, the company expects comps to be flat to up 2%. It envisions adjusted earnings of $12.9-$13.8 per share, including 20 cents for the 53rd week. At the mid-point, the EBT margin is predicted to be 11.7% due to a better gross margin. This includes potential improvement in merchandise margin and lower supply-chain costs. Gross and merchandise margins are expected to sequentially improve throughout the year.
Wrapping Up
Given the aforementioned strengths, DKS looks well placed despite higher supply-chain-related costs and inflation woes. Notably, a long-term earnings growth rate of 5.4% and a Value Score of A raise optimism in the stock. Also, the Zacks Consensus Estimate for fiscal 2023 earnings suggests growth of 11.1%.
Shares of this Zacks Rank #2 (Buy) company have gained 25.9% in the past six months compared with the industry’s growth of 21.5%.
3 Key Picks
Some top-ranked stocks are Build-A-Bear Workshop, Inc. BBW, Ulta Beauty ULTA and NIKE, Inc. NKE.
BBW has a trailing four-quarter earnings surprise of 17.4%, on average. Build-A-Bear 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 Build-A-Bear Workshops’ current financial year sales and earnings suggests growth of 6.2% and 12.3%, respectively, from the year-ago reported numbers.
Ulta Beauty is a leading beauty retailer in the United States. It currently carries a Zacks Rank of 2. ULTA has a trailing four-quarter earnings surprise of 26.2%, on average.
The Zacks Consensus Estimate for Ulta Beauty’s current financial year sales and earnings suggests growth of 8.5% and 5%, respectively, from the prior-year reported numbers.
NIKE, engaged in the business of designing, developing and marketing athletic footwear, currently carries a Zacks Rank of 2. NKE has a trailing four-quarter earnings surprise of 24%, on average.
The Zacks Consensus Estimate for NIKE’s current financial year sales suggests growth of 8.5% from the corresponding year-ago reported figures.
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
NIKE, Inc. (NKE) : Free Stock Analysis Report
DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report
Ulta Beauty Inc. (ULTA) : Free Stock Analysis Report
Build-A-Bear Workshop, Inc. (BBW) : Free Stock Analysis Report