Bricks-and-Mortar Still Score in Sporting Goods

by Marc Bastow | August 8, 2012 11:15 am

Years ago, a colleague and I went on a little reconnaissance mission before an important call just outside of Pittsburgh. Neither of us had ever been in a Dick’s Sporting Goods (NYSE:DKS[1]) store before. In fact, we’d heard of it only because I had a contact who just started there after leaving Pittsburgh neighbor Alcoa (NYSE:AA[2]).

My, how far Dick’s has come since then!

What started as basically a bait-and-tackle shop outside of Binghamton, N.Y., with $300 in seed money is now a 486-store sporting-goods chain in 44 states that’s run by Edward Stack, son of company founder Richard “Dick” Stack. It’s also a company whose stock price just hit a new 52-week high of $52, has seen revenues reach just over $5 billion and has a market cap of just over $6 billion.

You can still find fishing gear in any Dick’s, and virtually any other type of sports equipment you can think of, both indoor and outdoor. Dick’s carries brand-name sporting goods, apparel and footwear, and it owns and operates Golf Galaxy, a golf specialty retailer.

Name the brand, and Dick’s carries it: Nike (NYSE:NKE[3]), Under Armour (NYSE:UA[4]), Adidas (PINK:ADDYY[5]) and Reebok are just some of the more familiar ones. Dick’s was one of the first sporting-goods stores to test and open in-store sections that featured apparel and other items of specific brand names.

Make no mistake, the sporting-goods market is fierce, and Dick’s does battle every day with the likes of Foot Locker (NYSE:FL[6]), Cabelas (NYSE:CAB[7]) and privately owned Sports Authority.

In fact, one of the more interesting facets of all three public sporting goods chains is that in the era of Amazon (NASDAQ:AMZN[8]) and eBay (NASDAQ:EBAY[9]) using their e-tailing might to crowd out competition, the bricks-and-mortar guys are hanging in very nicely.

Cabelas offers another case in point. The Sydney, Neb., specialty retailer of hunting, fishing, camping and related outdoor merchandise is enjoying a nice run of its own by focusing strictly on an outdoor lifestyle. At around $48, it’s also sporting a share price approaching its 52-week high. Surprisingly for an outfit that has only 34 stores, Cabelas is just half of Dick’s market cap ($3.35 billion) with just over $620 million in sales.

Foot Locker is more mall-based, with with over 3,300 locations throughout the U.S. It operates four distribution centers, of which two are owned and two are leased, occupying an aggregate of 2.4 million square feet. FL comes in right in between Dick’s and Cabelas with a market cap of just over $5 billion and revenues of $1.5 billion. It, too, is right about at its 52-week high, currently trading around $34.60.

Of course, each of these purveyors also offers its wares online, but for a large number of consumers (and count me as one of them), going into the store and tossing a ball in the aisle will always be part of the shopping experience.

Times may get tough, but I believe these guys will stay for the long haul.

Marc Bastow is an Assistant Editor at As of this writing he did not hold a position in any of the aforementioned securities.

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