Summary
- Dick's Sporting Goods needs to quit blaming athletic apparel brands for their sale woes.
- The sporting goods retailer needs a more robust online offering and in-store experiences to drive traffic.
- The stock is cheap at a forward P/E ratio of 11x, but Dick's needs a catalyst for the stock to rally.
Dick's Sporting Goods (DKS) took the time to blame Under Armour (UAA, UA) multiple times for weak FQ2 sales, but the issue is the direct-to-consumer shift of the sector. The highly profitable business needs a different focus in order to make the stock a solid buy.
Image Source: Dick's Sporting Goods website
Blaming Under Armour
The sporting goods retailer spent the earnings press release blaming Under Armour for weak comp sales. Everybody knows that Under Armour famously started a distribution deal with Kohl's (KSS) last year, but the issue remains that the DTC plans of big sporting goods brands (which also includes Nike(NKE)) are cutting out the wholesale retail stores.
The real issue is that Under Armour released and promoted new show brands including Project Rock on their own website. The price points and selections at Kohl's are far too low to be the excuse for any weak results due to that relationship. Any impact from that deal is only at the margin.
