It’s good to go out on top, and Ed Stack should know. Stack announced he will retire as CEO of Dick’s Sporting Goods (NYSE:DKS) in February, after 36 years at the helm. His father was the eponymous Dick. But when Ed joined the “chain” it had just two stores. and DKS stock is trading near a record.
The company recently reported net income of $177 million, $1.84 per share fully diluted, on revenue of $2.4 billion . The “whisper number” on earnings had been per share. Shares jumped from $56 before earnings to $58 on Nov. 25.
When Ed goes fishing, he’ll know where to go for his gear.
Hobart’s Hand
Dick’s ended the October quarter in a strong financial position, with $1.1 billion in cash and nothing drawn on its revolving credit.
The new boss is , who joined in 2011 at Pepsico (NASDAQ:PEP).
Hobart, unlike Stack, who became CEO at age 29, starts with extensive experience. She once ran the marketing of Pepsi’s carbonated drinks and spent time at JPMorgan Chase (NYSE:JPM) and Wells Fargo (NYSE:WFC). She has been president since 2017 and sits of Yum Brands (NYSE:YUM).
With Hobart as president, Dick’s , moving a lot of home fitness and athleisure apparel. The company now has clear leadership in its niche, . That followed the 2016 bankruptcies of Sports Authority and Sport Chalet and the 2019 bankruptcy of Gander Mountain. Dick’s in the consolidation, picking up Galyan’s in 2004, Golfsmith in 2016, and some of the G.I. Joe’s after its 2009 failure.
The $45 billion sporting goods industry has been , except in guns,
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The “big box” has been taken over by the bigger box, Walmart (NYSE:WMT). The industry’s biggest player, Nike (NYSE:NKE), also cut out the middleman and gets . Amazon (NASDAQ:AMZN) and other online merchants also increased share.
Hobart’s Strategy
If we’re going into a new normal, Dick’s should be in for more growth. Dick’s stores are bigger, with more employees, and try-out areas like putting greens and baseball batting cages. But the chain also lets customers check shoe sizes and see inventory . It’s a classic omni-channel strategy that worked for Best Buy (NYSE:BBY).
Dick’s “Black Friday” sales began early as retailers stretch the day into weeks in order to limit crowding. Its Christmas ad focuses on e-commerce and . It was created by in New York.
But analysts see success and demand more. the analysts following Dick’s at Tipranks say buy it. The rest mostly have it as a hold, and one is screaming sell. The average one-year price target is just $5 ahead of its Nov. 25 price.
The Bottom Line on DKS Stock
At its Nov. 25 market cap of $5.2 billion, Dick’s sells for about 60% of its $8.7 billion in sales. Retailers have notoriously thin profit margins. Dick’s last year brought just 3.4% of sales to the net income line.
But Dick’s is a conservatively managed company. It’s the kind that adds ballast to a balanced portfolio. While the stock currently yields just 2.13%, the dividend has nearly tripled in the last five years. Despite analyst fears, income investors can buy it on dips and make money.
At the time of publication, Dana Blankenhorn had a long position in AMZN.
has been a financial and technology journalist since 1978. His latest book is , essays on technology available at the Amazon Kindle store. Write him at or follow him on Twitter at .
