Dick’s Sporting Goods Inc. DKS, +1.93% could take over as many as 180 stores now that The Sports Authority is liquidating rather than reorganizing, according to an analysis by Canaccord Genuity.
On May 16, the auction process for the remaining Sports Authority assets, including its store leases, will take place. Canaccord analysts believe Dick’s could “quickly take over 80 stores,” but they believe the sporting goods chain could acquire up to 180 leases.
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“Given its national presence and similar store size, we view Dick’s Sporting Goods as the most likely bidder for a majority of stores that are likely to come up for auction,” Canaccord wrote in a Monday note. “Our 180 store estimate represents the number of Sports Authority stores that do not have a competing Dick’s Sporting Goods or Academy store within at least five miles.”
Academy Sports + Outdoor is a Texas-based chain owned by a number of investors, including Kohlberg Kravis Roberts & Co.
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The base estimate assumes that Dick’s Sporting Goods will pursue 80 stores that don’t have competition within a 10-to-25-mile radius. Those 80 stores translate into $500 million in incremental sales, according to Canaccord.
Bank analysts previously estimated that Dick’s Sporting Goods will recapture $370 million in sales based on proximity to 140 Sports Authority closures planned for June.
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Canaccord rates Dick’s Sporting Goods shares buy with a $52 price target. Shares are currently trading at $45.46.
Dick’s Sporting Goods shares are up 1.2% in Monday trading and up 28.5% for the year so far. The S&P 500 is up 0.7% for the year to date.
Courtesy : marketwatch.com