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DICK's Sporting Outlines 5-Year Growth Plan - Analyst Blog
Full-line sporting goods and apparel retailer DICK's Sporting Goods Inc. ( DKS ) declared its major strategies to boost sales, operating profit as well as shareholder value over the next five years at its annual Analyst Day meeting held yesterday.
As part of its key financial targets, DICK's Sporting hopes to increase revenues to $10.0 billion by 2017, recording a 5-year compounded annual growth rate (CAGR) of approximately 11% from revenues of $5.8 billion in fiscal 2012. The company intends to achieve its long-term revenue target through expanding stores and e-Commerce capabilities.
Moreover, DICK's Sporting plans to increase its retail store count to 800 by the end of fiscal 2017 from 518 stores at the end of fiscal 2012. Further, the company will remodel its existing stores from time to time in order to keep them up-to-date and productive. Additionally, the company will stay focused on maintaining strong relations with its vendors, introducing fashionable products and concentrating on high growth categories such as Women and Youth.
Moreover, DICK's Sporting intends to increase its e-Commerce sales to nearly $1.1 billion by the end of fiscal 2017, from $292 million at the end of fiscal 2012. For this, the company will control its e-Commerce platform beginning with Golf Galaxy and Field & Stream in 2014, and DICK's Sporting from fiscal 2017-end.
With an estimated market of over $30 billion for outdoor activities such as fishing and hunting, DICK's Sporting plans to generate revenues of $750 million by the end of fiscal 2017 through its Field & Stream outdoor specialty stores. To achieve this end, it intends to increase the Field & Stream store count to approximately 55 by fiscal 2017-end. For this expansion, DICK's Sporting will invest around $1.8 billion over the next five years.
Additionally, the company increased its forecast for operating margins on the back of gross margin expansion and effective cost management. The company now expects operating margin for fiscal 2017 to grow to 10.5%, expanding 150 basis points from 9% in fiscal 2012.
Furthermore, DICK's Sporting announced that it would continue to focus on enhancing shareholder value through share repurchases and dividend payouts.
We believe that the strategies and targets outlined in the meeting, along with DICK's Sporting's diverse brand portfolio, brand management, excellent operating team and competitive advantages position it well for long-term growth. With these targets, the company is expected to successfully deliver value to both consumers and shareholders, going forward.
DICK's Sporting currently has a Zacks Rank #4 (Sell). However, other stocks performing well in the retail industry include Hanesbrands Inc. ( HBI ), Michael Kors Holdings Limited ( KORS ) and Gildan Activewear Inc. ( GIL ). While Hanesbrands and Michael Kors carry a Zacks Rank #1 (Strong Buy), Gildan has a Zacks Rank #2 (Buy).
DICKS SPRTG GDS (DKS): Free Stock Analysis Report
GILDAN ACTVWEAR (GIL): Free Stock Analysis Report
HANESBRANDS INC (HBI): Free Stock Analysis Report
MICHAEL KORS (KORS): Free Stock Analysis Report
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