Over the past few years DSG has been busy acquiring sporting good businesses. These businesses include Chick's, Galyan's Trading Co., and Golf Galaxy. With no plans to merge in the near future DSG has set its sights on moving westward. DSG has a very strong presence east of the Mississippi River, but it is very spotty to the west. One of the big purchases and steps toward their own personal manifest destiny was to acquire Chick's who had built a name for itself out west.
In another article is seems as is DSG is not slowing down.
When asked about a possible acquisition of Bass Pro Shops, Cabela's or Sports Authority Inc., Kullman declined to be specific but said that Dick's is "an organic grower" that would consider opportunities that make strategic sense regardless of market valuation. He declined to comment further on potential targets.
I would look out for DSG in the future and more acquisitions. DSG must continue to grow to show profitability gains due to the trending Internet purchases. DSG is fending off Amazon and other dot coms as it continues to build its brick and mortar presence.
http://www.thedeal.com/content/consumer-retail/dicks-seeks-acquisition-play.php
Saturday, April 19, 2014
Dick's Sporting Goods, Ch. 13: Strategic Alliances
Dick's Sporting Goods use a strategic alliance to its advantage back in 2012. It invested in JJB Sports of the UK. This was the first investment and expansion overseas for DSG, based out of Pittsburgh. This alliance was created for the benefit of both companies. DSG would end up holding a 61% share of company, allowing it to reap the rewards of the 2012 Summer Olympic Games held in England. JBB had been fighting bankruptcy over the last few years. With DSG's support they would be able to provide confidence to their investors and potentially turn around the company's direction.
The ultimate hope for DSG was that JJB showed enough potential to be a multi-line sporting goods company in the UK and throughout Europe.
This alliance ended up crashing and burning as DSG quickly removed its obligation from JJB after the conclusion of the Olympics.
"Chairman and CEO Edward Stack said that the JJB Sports investment was high risk from the outset, and that Dick's has no further funding obligations to JJB and will continue to monitor the situation."
http://www.thedeal.com/content/restructuring/dicks-sporting-goods-to-invest-in-jjb.php
http://www.businessweek.com/ap/2012-08-14/dicks-sporting-goods-sinks-in-uk-investment
The ultimate hope for DSG was that JJB showed enough potential to be a multi-line sporting goods company in the UK and throughout Europe.
This alliance ended up crashing and burning as DSG quickly removed its obligation from JJB after the conclusion of the Olympics.
"Chairman and CEO Edward Stack said that the JJB Sports investment was high risk from the outset, and that Dick's has no further funding obligations to JJB and will continue to monitor the situation."
http://www.thedeal.com/content/restructuring/dicks-sporting-goods-to-invest-in-jjb.php
http://www.businessweek.com/ap/2012-08-14/dicks-sporting-goods-sinks-in-uk-investment
Tuesday, April 8, 2014
Dick's Sporting Goods, Ch 12: Implementing Corporate Strategy
| Name (Connections) | Board Relationships | Title | Type of Board Member | Age |
| Edward Stack | 22 Relationships | Executive Chairman and Chief Executive Officer | -- | 58 |
Other Board Members On Board*
| Name (Connections) | Board Relationships | Type of Board Member | Primary Company | Age |
| William Colombo | 15 Relationships | -- | Galyan's Trading Company, LLC | 57 |
| Lawrence Schorr | 8 Relationships | -- | Boltaron Performance Products, LLC | 59 |
| Larry Stone | 14 Relationships | -- | Dick's Sporting Goods Inc. | 61 |
| Jacqualyn Fouse Ph.D. | 18 Relationships | -- | Celgene Corporation | 52 |
| Emanuel Chirico | 82 Relationships | -- | PVH Corp. | 55 |
| Allen Weiss | 107 Relationships | -- | Dick's Sporting Goods Inc. | 59 |
| Vincent Byrd | 30 Relationships | -- | The J. M. Smucker Company | 58 |
| Mark Barrenechea | 24 Relationships | -- | Open Text Corporation | 48 |
Above is the list of the Board of Directors at DSG. DSG practices duality as Edward Stack is both the CEO and Director of the Board. This has been an ongoing issue and debate for many companies but there has been no sufficient data presented that companies that have duality operate on any different margins than those that do not. This board is also not very diverse with 1 woman and 8 men. They all range between the ages of 48 and 61, a gap of 13 years. This could potentially be a risk that DSG should consider. An expansion of the board to 10-15 members would be more practical as the company continues to grow and expand westward.
http://investing.businessweek.com/research/stocks/people/board.asp?ticker=DKS
Tuesday, April 1, 2014
Dick's Sporting Goods, Chapter 11: Diversification Strategies
Dick's Sporting Goods is in the sporting goods and retail industry. This would put them in a limited diversification, single business category according to the book. 95% or more of DSG's sales are that of sporting goods retail. While there is diversification of what field of sporting goods they sell, they are still considered a focused industry and would be nowhere close to that of a Berkshire-Hathaway.
Because DSG is so diversified in what sporting goods it sells it can capitalize on economies of scope within its product offerings. As touched on in the last chapter, DSG has integrated and acquired the rights to many name brands that are only sold at DSG locations. These agreements with other companies, such as Callaway and their Top-Flite line, saves DSG money by being able to purchase the items at an even lower manufacturing price than before, but also creates demand in the product for Callaway because it is only offered at DSG. This allows both sides to maintain higher profits. Dick's doesn't have to produce it, and Callaway doesn't have to sell it. This would fall under the shared activities section of Chapter 11.
DSG is now starting to diversify its stores, as they begin to open Field & Stream stores in the northeast to center solely around the outdoors.
Because DSG is so diversified in what sporting goods it sells it can capitalize on economies of scope within its product offerings. As touched on in the last chapter, DSG has integrated and acquired the rights to many name brands that are only sold at DSG locations. These agreements with other companies, such as Callaway and their Top-Flite line, saves DSG money by being able to purchase the items at an even lower manufacturing price than before, but also creates demand in the product for Callaway because it is only offered at DSG. This allows both sides to maintain higher profits. Dick's doesn't have to produce it, and Callaway doesn't have to sell it. This would fall under the shared activities section of Chapter 11.
DSG is now starting to diversify its stores, as they begin to open Field & Stream stores in the northeast to center solely around the outdoors.
Dick's Sporting Goods, Chapter 10: Vertical Integration Strategies
Dick's Sporting Goods does not vertically integrate into other fields but it does integrate certain brands to privatize them to sell only at DSG stores. This creates demand for the product and higher profit margins upon agreements with the company who created the brand and continues to produce the products.
In the golf section alone, DSG owns the rights to Top-Flite, made by Callaway, Walter Hagen, Maxfli, and Nickent.
Other brands include Koppen and Ativa.
When Dick's is unable to completely own a brand it seizes the opportunity to create deals to own certain rights to specific products and designs from larger, more popular brands such as Nike and Under Armor.
While Dick's hasn't integrated into the production of items directly as a DSG brand shirt or pair of shorts, it has cut out costs by owning brands.
In the golf section alone, DSG owns the rights to Top-Flite, made by Callaway, Walter Hagen, Maxfli, and Nickent.
Other brands include Koppen and Ativa.
When Dick's is unable to completely own a brand it seizes the opportunity to create deals to own certain rights to specific products and designs from larger, more popular brands such as Nike and Under Armor.
While Dick's hasn't integrated into the production of items directly as a DSG brand shirt or pair of shorts, it has cut out costs by owning brands.
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