Dick’s Sporting Goods (DKS) is one of many retailers facing numerous challenges from the anemic macro environment. These issues include:
- tough y/y comparisons
- weaker same-store sales & traffic trends
- margin pressure driven by heavier promotional activity to clear inventory
Citi analyst Kate McShane believes there could be further downside risk for the stock in the near-term if the company misses Q2 expectations and/or needs to lower FY09 guidance (DKS reports Thursday, August 21st, before market). But she’s sticking to her long-term guns:
Despite near-term pressures, DKS’ long-term story (including double digit sq.ft growth annually, cleaner inventories, and margin expansion opptys) remain in tact in our view. While the stock will likely trade in a tight range through the end of the year, we think DKS remains a solid investment for the LT, and the stock below $20 provides an attractive entry point.
Citi reiterates BUY on Dick’s Sporting Goods (DKS), target $30.
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