Dick’s Sporting Goods Inc. says interest in golf, which grew during the pandemic, continues to grow across both its namesake chain and Golf Galaxy.
“As a result of this robust demand, our golf business has been great at both Dick’s and Golf Galaxy, with Golf Galaxy comps significantly outperforming the company average in recent quarters,” said Lauren Hobart, chief executive of Dick’s on the earnings call.
Shares have rallied 18.6% for the week.
The athletic retailer plans to invest more than $20 million in Golf Galaxy during 2021, with new technology added and store redesigns already underway.
And it’s not just golf that is on the upswing.
“Team sports came back with a vengeance,” Hobart said. “Rightly so because it has been a year or so since people have played. And at the same time, some of the surging categories that were pandemic-related such as golf and fitness, outdoor, are still really, really, really strong.”
Cowen analysts note the newcomers heading to golf courses.
“Participation rates are healthy among women, juniors and young adults contributing to the game’s growth.
Analysts also continue to see upside potential as Dick’s loyalty program ScoreCard adds members heading into the back-to-school season. ScoreCard has more than 20 million members.
Cowen rates Dick’s stock outperform with a $132 price target, up from $102.
“Although the company will start lapping significant comp increases in the upcoming quarter (particularly starting in June) we continue to see sales tailwinds through the remainder of the year including ongoing strength in categories including golf and fitness, team sports and a robust back-to-school season,” wrote Wedbush in a note.
Analysts there rate Dick’s outperform with a $110 price target, up from $97
“The combination of these tailwinds coupled with transformational strategic initiatives (e.g., private brands, ScoreCard loyalty program, online, new store prototypes and rollout of new in-store concepts) could lead to additional sales and margin upside this year and additional market share gains longer-term to drive double digit long-term EPS growth.”
Raymond James, on the other hand, thinks Dick’s might have reached a “near-term peak” after an “impressive climb to the top.” Analysts there rate the stock underperform.
“Even if the resurgence in team sport activity were to benefit demand during the remainder of FY21, we believe Dick’s has an unfavorable set-up due to 1) lapping large, one-time purchases for fitness and outdoor equipment, 2) peak stay-at-home spending behaviors, and 3) a very favorable promotional environment, all with the stock at record levels.”
Dick’s stock has skyrocketed 75.7% year-to-date while the benchmark S&P 500 index
is up 11.8% for the period.