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Dick’s Plans Expansions Even As Rivals Quit The Field

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In the wake of Sports Authority’s Chapter 11 bankruptcy filing, chief rival Dick’s Sporting Goods is further setting itself apart as the top spot to buy all sports-related merchandise. In fact, Dick’s revealed in its Q4 earnings filing that it plans to open approximately 47 new stores in 2016.

By the end of the year, Dick’s will open 36 stores under its flagship brand, nine Field & Stream stores and two additional Golf Galaxy stores.

Given that Sports Authority is closing approximately 140 of its stores, it’s apparent that Dick’s is trying to take advantage of these expected vacancies to bolster market share and potentially attract a new segment to its consumer base.

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“We want that business to come to us versus somebody else,” Edward W. Stack, Chairman and CEO of Dick’s Sporting Goods, told analysts on a conference call to discuss Q4 earnings.

The sporting goods industry took in $49 billion in revenue in 2015 with a 2.4% annual growth since 2010, according to a recent report from IBISWorld, so shoppers are certainly still buying equipment from somewhere. However, sportwear manufacturers such as Nike and Under Armour have both done their part to cut into the big box model that sporting goods retailers used to cling to, perhaps indicating that there is an oversaturation of physical stores that is no longer necessary.

Additionally, the downfall of Sports Authority marks the hard times and shakeout for a retail vertical that frankly just doesn’t have room to support a ton of major players. To close out 2015, City Sports shut down all 26 of its stores before selling off its intellectual property rights.

Although Dick’s is making serious headway to ensure it leads the league in sporting goods, the retailer has to be wary of over-expanding — and thus overspending — within the coming year. After all, Q4 same store sales were down 2.5%, with profits for the quarter falling a whopping 17% from 2014 totals.

The disappointing financial results, like many that plagued the retail industry over the past five months, have been attributed to unseasonably warm weather. High temperatures had their biggest effects on the sales of jackets, fleece and boots, forcing Dick’s to offer markdowns to clear out cold-weather merchandise.

For now, Dick’s is in position to stay well ahead of the competition for sporting goods supremacy. While it’s never advisable to take a lead for granted, the retailer’s continued focus on innovating the omnichannel experience shows that it knows how to keep evolving to meet consumer needs effectively.

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