This DKS print is a nail-biter. The space is absolutely broken. But that’s why we like Dick’s Sporting Goods, long-side. We’re hosting a FLASH Call on Monday to stress-test the call ahead of the print. Deets below.
Consider the set-up…
TSA Ch11 was the first domino
- Eastern Mountain Sports
- Gander Mountain
- Citi Sports
- Sports Chalet
- Academy? (KKR 6x levered deal – similar size as TSA)
- FL missed
- HIBB missed (twice)
- Nike futures decelerated big
- UnderArmour blew up -- twice
- LULU missed big
Is the space broken? Um…yes.
But that’s why we like DKS. We can point to four lines on the P&L that we think are getting better as a result.
1) Real Estate: Real Estate profile improving with full certainty, as it picks up prime leases from those going punk.
2) Comp: Nike pumping DKS with significantly better product – bc it NEEDS to.
- Adidas will follow
- UnderArmour will follow (and DKS putting the pressure on UA w private label)
3) GM%: Anniversary the golf/hunt/TSA malaise of 2016.
4) SG&A: Just peeled off costs related to paying 3rd party e-comm costs while building its own platform.
Are we on high-alert w DKS given all the misses we’ve seen in recent weeks? Fer sure.
Can we be wrong on one of our four P&L points noted above? You bet. We probably are.
Are we wrong on two? Possibly…but not probable.
But even if we’re wrong on half, DKS should still grow earnings this year and next 15% or better. If we’re right, it grows over 20% -- and it’s trading at sub-12x that number.
On the call, we’ll stress test the four pillars of our call on DKS.
Call Details:
Time: Monday May 15th at 11AM EDT
Toll Free:
Toll:
UK: 0
Confirmation Number: 13662354
Video Link: CLICK HERE
