Retail Bankruptcies Don’t Always Help Rivals

by MR Magazine Staff

A competitor’s loss doesn’t always translate into a win. Dick’s Sporting Goods Inc. said Tuesday that sales at established stores rose 5 percent in the most recent quarter from the year before as it picked up retail locations from now-defunct sporting goods competitors such as Sports Authority and Golfsmith.  But the company also warned sales and earnings growth would slow in the coming year, lower than analyst consensus, even as it opens 60 new stores. Shares dropped as much as 9 percent on the news. Investors spent much of 2016 bidding up Dick’s stock under the assumption it would score big as competitors closed shop. When Oppenheimer analyst Brian Nagel upgraded Dick’s to the equivalent of “buy” from “hold” in September, he estimated the company could get a sales boost of $110 million to $225 million by taking 10 to 20 percent of Sports Authority’s business. But Nagel ended up downgrading the stock last month, after Under Armour Inc. and other big suppliers posted poor results. He said Dick’s might be gaining more of the spending pie, but the pie is shrinking. U.S. spending on sporting goods fell by 8 percent in February from a year earlier and has been losing steam for the past seven months, according to data from payment-processing firm First Data Corp. Read more at Bloomberg.