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Is BBBY’s Meltdown a Preview for Dick’s?

Amazon competition could spell end of run for sporting goods store

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The (NASDAQ:AMZN) juggernaut has left a long list of casualties in its wake, and it now may be drawing blood from yet another victim: Bed Bath & Beyond (NASDAQ:BBBY). After the bell on Wednesday, BBBY missed on revenues and offered up a weak outlook for the rest of the year, leading to a drop of nearly 17% mid-way through Thursday’s trading session. Investors in another U.S. retailer — Dick’s Sporting Goods (NYSE:DKS) — should sit up and take notice.

To understand why, investors can just look at how Amazon has begun to take shares from Bed Bath & Beyond. Earlier this year, Amazon debuted the home goods website, which is the latest offering under the company’s Quidsi brand. Amazon purchased Quidsi — founder of the and websites — in 2010 after forcing the company into submission via price cutting. Since then, Amazon has launched (pets), (toys), and (home goods) under the Quidsi umbrella.

At first, investors didn’t take the threat seriously: from’s February 15 debut through Wednesday’s close, Bed Bath & Beyond shares gained 27.2%. Now, however, it appears that Amazon’s efforts have contributed to the abrupt halt in BBBY’s uptrend.

What does all of this have to do with Dick’s given that Amazon doesn’t have a sporting goods site yet? The answer lies on Quidsi’s careers page, which has three listings for positions related to sporting goods — indicating that a rollout is coming. Investors therefore need to consider the possibility that Dick’s will soon face the same type of competitive threat that BBBY is seeing now. This bears close watching given that the stock has printed a long-term valuation uptrend that looks very similar to Bed Bath & Beyond’s:

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Dick’s has its share of fans due to its favorable growth profile: analysts are calling for a 24.3% EPS gain this year and 14.3% in 2013. All 29 analysts covering the stock rate it a strong buy, buy, or hold, and the consensus target is $57 — well above the current price near $48.

Article printed from InvestorPlace Media,

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