Fore! Dick's Sporting Goods To Cash In On Golf Boom

Dick's Sporting Goods, Inc. is planning to cash in on an expected golf boom in the U.S. as the country lifts restrictions on socially distanced outdoor activities.

The company plans to make substantial investments in its Golf Galaxy store to capture market share in the growing golf equipment market.

Dick's will spend up to $20 million to upgrade stores. The spending includes the installation of Trackman golf simulators.

The simulator allows customers to try out products by letting them hit golf balls to a large digital screen that can display realistic sceneries while also providing data such as ball flight and speed.

According to Dick's, about 80% of its nearly 100 locations now have Trackman simulators. Apart from investing in the technology, Dick's said it will be enhancing digital booking for golf lessons and club fittings.

"The game of golf is in great shape. Our golf business has been tremendous. With Golf Galaxy comps significantly outperforming the company average in recent quarters, we're leaning into this streak by investing in our Golf Galaxy business," Dick's Sporting Goods' executive chairperson Ed Stack said.

The latest data from the National Golf Foundation showed that the number of rounds played in the U.S. jumped by about 24.3% month on month in March. Compared with last year, the number of rounds played increased by 45.3% during the same month.

The company's shares hit a high of $100.89 per share Thursday before closing at $98.76. Since the start of the year, the stock has risen 75.7%. Dick's shares have rallied by 18.6% this week.

Analysts at Jeffries said Dick's decision to increase investments and its bullish outlook is based on sound fundamentals which can't simply be attributed to a temporary rise as a result of the pandemic. Other analysts reported similar views.

"Although the company will start lapping significant comp increases in the upcoming quarter (particularly starting in June) we continue to see sales tailwinds through the remainder of the year including ongoing strength in categories including golf and fitness, team sports and a robust back-to-school season," analysts at Wedbush said.