Dick’s 2012 results were impressive indeed. Same store sales – that crucially key performance indicator in retail – rose more than 4% year over year. Net sales and net income both showed double-digit growth, 12% and 10% respectively. The gross profit percentage rose nearly a full percentage point.
Dicks Sporting Goods Inc (NYSE:DKS) is a merchandising innovator that uses a concept of mini-stores within the store to concentrate and showcase the most popular brands. Both NIKE, Inc. (NYSE:NKE) and Callaway products are sold at Dicks Sporting Goods Inc (NYSE:DKS). Think of the more upscale department stores and how they have designated spaces, complete with signage, for their most popular clothing brands. The same idea works well in sporting goods, in Dick’s case.
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You have to love the growth potential of overseas markets for Callaway Golf Co (NYSE:ELY) and other major golf equipment brands. The difficulty of predicting the performance of Callaway is that the company must constantly innovate. Sustainable success depends on successful new product introductions. Golfers are always seeking a miracle cure, the Wonder Club that will transform them from lowly hackers into hackers who are at least showing modest signs of improvement and not embarrassing themselves. Watch any golf telecast and you see all the other formidable brands that Callaway Golf Co (NYSE:ELY) is competing against. To me, golf equipment manufacturers are like cosmetics companies: They sell hope. Golfers are willing to switch equipment brands if they like the hope the other guy is selling this year.
A year or so ago Cleveland Golf, whose parent company is Dunlop Sports, traded on the Tokyo Stock exchange, introduced this cool-looking retro-style metal driver made to look like the classic persimmon wood drivers Arnold Palmer and Jack Nicklaus would have played in the ’60s. The minute I saw this club in a magazine, I knew I had to buy it — just had to. Such is the unassailable logic we golfers use in our purchase decisions. See why it’s a challenge for club manufacturers to predict what golfers might want to buy, and why?
The question for a company as large as NIKE, Inc. (NYSE:NKE) is whether it can continue its pace of sales growth. Having one of the most well-known brands in the universe is certainly an advantage, but there are always upstarts who come into the market and grab your customers’ attention. In the corporate world, mighty doesn’t necessarily mean achieving the most dramatic sales trajectory.
Continued improvement in the economy bodes well for Dicks Sporting Goods Inc (NYSE:DKS), as consumers that may have wanted to buy new sports gear or take up new sports postponed these purchases because of lingering recessionary fears. Dick’s expansion plans are aggressive and an indicator to those following the company that there are many cities and towns that currently do not have a sporting goods store of this quality. Its stores are fun places to shop — a kind of paradise for the sports enthusiast. From an investment standpoint, I am most enthusiastic about this company. Remember all the money the brand-name manufacturers spend on advertising and promotion brings customers into Dicks Sporting Goods Inc (NYSE:DKS) stores looking for those brands.
Brian Hill has no position in any stocks mentioned. The Motley Fool recommends NIKE, Inc. (NYSE:NKE). The Motley Fool owns shares of NIKE, Inc. (NYSE:NKE).
The article How to Play Better Golf (Stocks) originally appeared on Fool.com.
Brian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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