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dick's store
Dick's Sporting Goods.
Courtesy of Dick's Sporting Goods

With much of the Sports Authority bankruptcy saga reportedly coming to a close — the Wall Street Journal today reported that a group of liquidators won the firm’s bankruptcy auction held Monday — the focus turns squarely to major competitor Dick’s Sporting Goods Inc.

The sporting goods retailer will release first-quarter 2016 earnings Thursday, and Wall Street consensus estimates predict the firm will post diluted earnings per share of 49 cents, an 8 percent decline from the year-ago period. Sales, however, are forecast to advance 4.3 percent, to $1.6 billion.

Dick’s should meet or exceed EPS guidance of 48 cents to 50 cents and same-store sales guidance of flat to up 1 percent,” Sterne Agee CRT analyst Sam Poser wrote last week. “Dick’s may lose sales to the Sports Authority bankruptcy and liquidations in the near term, but will benefit from [the retailer’s] absence starting in 2H16.”

From the beginning of the year, when news broke that Sports Authority was prepping for a bankruptcy filing, market watchers began to suggest that Dick’s could benefit substantially from its competitor’s struggles. Now that the bankruptcy filing is behind the company and Sports Authority has abandoned its plans for reorganization in favor of liquidation, analysts continue to ponder the effects on Dick’s.

Poser, Citi Research analyst Kate McShane and Canaccord Genuity Inc. analyst Camilo Lyon continue to question whether Dick’s will snap up any of the Sports Authority’s abandoned leases in the near future — a move that could boost business for Dick’s.

Given its national presence and similar store size, we view Dick’s as the most likely bidder for a majority of stores that are likely to come up for auction,” Lyon said.

While they wait for Dick’s to make its move, analysts note that there are also a few other initiatives they are watching at the firm.

Dick’s will benefit from investments in the Dick’s Sporting Goods brand, the partnership with the U.S. Olympic Team, and the rollout of full-service footwear-selling floors,” Poser said. “[The company] will also benefit from taking its e-commerce business in-house in FY17.”

McShane — who forecasts Q1 EPS of 50 cents, a sales of increase 7.7 percent and comp gains of 0.5 percent in Q1 — was also bullish on the company’s new footwear floors after a tour last week.

The Dick’s store we visited featured a sleek new footwear format, with inventories moved from the selling floor to back rooms, store associates focused on servicing customers with hand-held devices and branded head-to-toe merchandise displays, which should drive a comp lift,” McShane wrote. “Kiosks throughout the store also highlighted Dick’s endless aisle initiative.”

McShane said she observed higher promos on Nike products and lower promos and overall inventory levels compared with prior seasons for Under Armour.

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