Dick’s Sporting Goods Inc. and Amazon.com Inc. are poised to benefit most from the turbulence in the sporting-goods arena caused by bankruptcies and store closures, according to an MKM Partners consumer survey.
The research and trading firm surveyed 1,200 consumers who have shopped for sporting goods over the past year, according to a Tuesday note, and found that 53% of Sports Authority and Sport Chalet customers plan to shop at Dick’s Sporting Goods
after those retailers have closed.
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“If Dick’s were to capture even 20% of the displaced business, it would add $560 million of sales in fiscal year 2017,” MKM analysts wrote.
Nearly two-thirds, or 61%, said they would shop at Amazon
which, MKM’s analysts said, wasn’t surprising given the consumer shift online.
Other competitors to Dick’s Sporting Goods are the brands themselves.
“We do expect some of the displaced market share to migrate into the direct channel – a combined 32% of respondents indicated that they would shop at one of the major sporting goods brands’ physical stores or online sites as the industry rationalizes – and Dick’s is likely to continue to see some impact from strong direct-to-consumer growth,” the note says.
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However, MKM doesn’t expect that impact to be great since far more respondents said they’d head to Dick’s rather than shop specifically with a brand.
A quarter of respondents said they would shop at Big 5 Sporting Goods Corp.
after Sports Authority and Sports Chalet shut their doors, and both Cabela’s Inc.
and eBay Inc.
grabbed 19% of respondents. Though Cabela’s is focused on outdoor categories, MKM analysts note that the company did well in areas including brand recognition, online destinations, and overall consumer satisfaction.
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However, Hibbett Sports Inc.
did not fare well. The company’s brand recognition is relatively low, and only 4.7% of respondents said they would shop there after the liquidations at Sports Authority and Sports Chalet are completed.
“Other broad concerns include Hibbett’s lack of an e-commerce site,” MKM analysts wrote. “[A] launch is planned but not until the second half of 2017.”
MKM rates Hibbett Sports shares neutral with a $39 price target. Cabela’s stock is rated buy with a $56 price target. Dick’s Sporting Goods shares are rated buy with a $55 price target.
Dick’s shares surged 4.3% in afternoon trade Wednesday, and have soared 23% for the year so far. The S&P 500 gained 1.1% for the year to date.
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View more information: https://www.marketwatch.com/story/heres-who-benefits-most-from-the-demise-of-sports-authority-2016-06-28