Retail Stocks: Academy Sports And Outdoors VS Dick’s Sporting Goods

Benzinga

We had retail specialist Seth Basham from Wedbush Securities on today's show to discuss some retail names including who he would choose between Academy Sports And Outdoors VS Dick’s Sporting Goods.

Transcript

00:00Seth, I'm going to put you on the spot here, and I'm going to give you a couple stocks

00:04that are in similar spaces, kind of competitors, and you tell me which one you would rather

00:10own.

00:11Okay?

00:12Okay.

00:13All right.

00:14We'll start with Academy Sports, ticker ASO, versus Dick's Sporting Goods.

00:21Our ratings are based on a 12-month timeframe, and on that basis, we prefer Academy Sports

00:27over Dick's.

00:28Okay.

00:29Why is that?

00:30Why is that?

00:31So Academy's valuation is extremely attractive.

00:34It's a growth story that's not being valued appropriately.

00:38They potentially add 50% to their store base, and once they get comparable store sales back

00:45to positive, and the unit economics of those new stores show some improvement, they're

00:51going to get valued appropriately.

00:53In the near term, they're in the doghouse, because they serve more of a low-income customer

00:58than does Dick's.

00:59They don't have access to as many marquee brands, and so there's a very big divergence

01:04between the two companies when it comes to comparable store sales.

01:06But as we move into 2025, we expect some of those pressures to dissipate, and the valuation

01:12gap to narrow.

01:13What?

01:14I mean, I've only been to a couple Academy Sports.

01:17I've been to some Dick's Sporting Goods.

01:18It seems like Academy is more geared toward outdoors, kind of like the hunting, or outdoor

01:26adventure.

01:27Do you see any big differentiators between the two companies, or are they just both to

01:31you like big sports retail stores?

01:36Academy does have more exposure to the outdoors category and to hard lines generally, relative

01:43to Dick's, which has more exposure to footwear and apparel.

01:47The drivers of the industry over the last year and a half have been certainly in footwear

01:51and apparel, so that's been something that's weighed on Academy.

01:56The other big thing that I mentioned before is their customer-based exposure, and there's

02:00some regional exposure as well, with Academy Sports mostly in Texas and the Southeast.

02:05So those are three differentiators that's leading to underperformance for them, and

02:09we expect those to start to improve in 2025.

02:13And the last one, as I mentioned before, is they don't have key hot brands like Hoka

02:18and On Running Shoes, for example, and we hope that they'll get those in 2025 as well.

02:25For more information, visit www.academy.edu

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