Dick’s Sporting Goods Sees Academy Competition Less Formidable Outside Texas

 

“The big news is that KKR bought Academy and well have to wait and see what’s happened there,” said Stack to a question at the conference regarding competitive pressures in the market.

At the same time, however, Stack said Dick’s Sporting Goods has adapted and improved its performance in Texas since entering the state a few years ago and Academy’s stores are less of a competitive threat outside of Texas.

“Academy, weve always indicated, is a very good retailer,” said Stack.  “Before we entered Texas, we signaled to the Street that we thought that Academy would be the most difficult competitor that we faced and we indicated that that was correct when we got there. Weve done a great job in Texas.  Weve talked over the last couple of years that the traction in Texas has been great. Texas has been comping at a faster rate than the company as a whole. So were very pleased with what’s going on in Texas.  As far as the competitive environment, Academy is a much different competitor inside Texas than outside Texas. So the further they get away from Texas, they become still a good retailer, but they become a less formidable competitor, the further theyve gotten away from Texas.”

As reported, Academy’s officials have said the KKR acquisition could expand its annual store-opening plan to a rate of about 18 to 20 stores annually. Academy is on track to open 12 new stores in 2011.

Stack said their primary competitor, Sports Authority, has increased its emphasis on gift promotion cards but “we havent seen that have much of an impact on our business.”

He also said Southern California, which the company entered with its acquisition of Chick’s Sporting Goods, has been “a difficult market from an economic standpoint,” but is performing better.

“Weve gone back and remodeled five stores that are performing extremely well for us right now,” said Stack.  “And as weve gotten out of Southern California, kind of up the valley and further north, were very happy with what’s happened with those stores, and you can see that in our new store productivity that’s been pretty strong.”

Regarding future expansion, Stack said the company expects DSG store growth to continue to grow at a “relatively rapid rate in this environment at about 8 percent in 2011 and at least that level in 2012.  Were starting to see a little bit of real estate opportunities pop up for us.”

DSG currently has 451 stores, and management reiterated that it sees the potential for at least 900 stores nationwide.  In 2011, its plans to open approximately 34 DSG stores in addition to 14 remodels.

Stack said the company is looking to open stores “all across the country.” Much of the prospective stores involve “recycled real estate” filling vacant locations of other stores that have closed although some new construction is appearing.

“Weve got no constraints around our growth rate other than the appropriate real estate that’s available,” added Stack. “So we could probably grow faster than we wanted — than were doing right now, but we wont do that because we dont want to compromise our real estate model. Weve got no constraints around the management of the company; no constraints around the financial aspect of increasing the growth. The only thing that’s holding back the growth on additional stores is the real estate development cycle.”