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Why Dick’s Sporting Goods Is Slowing Down Store Expansion

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Jan. 10 2018, Updated 11:28 a.m. ET

Store portfolio

Dick’s Sporting Goods (DKS) is one of the leading sporting goods retailers in the US, stocking well-reviewed sports equipment, footwear, and sports accessories. It also offers hunting and fishing equipment. Apart from operating its namesake stores, the company also operates several specialty concept stores including Golf Galaxy and Field & Stream.

On October 28, 2017, Dick’s Sporting Goods had 719 namesake stores in 47 states. The company also operated 98 Golf Galaxy stores in 32 states and another 35 Field & Stream stores in 16 states. Together, these three stores covered 41.9 million square feet of space.

In the first three quarters of fiscal 2017, DKS opened 43 Dick’s Sporting Goods stores and 16 specialty concept stores. The company closed four specialty stores over the same timeframe.

Among its peers, Big 5 Sporting Goods (BGFV) operated 432 stores in the US as of October 1, 2017, while Finish Line (FINL) operated 566 stores in the US as of November 25, 2017.

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Streamlining store footprint

Dick’s Sporting Goods (DKS) is planning to reduce the number of store openings over the next few years. As other retailers shutter stores, DKS expects to open stores at more favorable locations and on more favorable terms.

Dick’s Sporting Goods is targeting new and underpenetrated markets where many retailers (like Sports Authority, Sports Chalet, and Golfsmith) have liquidated their stores as the locations for its new store openings. In May 2017, the company opened 36 new Golf Galaxy stores, which were previously Golfsmith stores.

For fiscal 2018, the number of new stores planned to be opened has fallen to 15–20 stores against 59 projected new stores opening in fiscal 2017. Dick’s Sporting Goods’ CFO, Lee J. Belitsky, noted during its 3Q17 conference call that the company would be providing more details about its store strategy in the 4Q17 earnings call.

In the next article, we’ll take a quick look at the company’s most recent quarterly performance.

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