Shares of sporting goods retailer Dick’s Sporting Goods, Inc. (DKS) have gained 72.8% over the past 12 months. Recently, DKS has upped its guidance for 2021, and provided an outlook for the fourth quarter.
The company sees 2021 consolidated same-store sales surging in the range of 25.8% to 26.1% against the prior guidance of 24% to 25%. Fourth-quarter consolidated same-store sales are seen to be increasing in the range of 3.7% to 4.7%.
With these developments in mind, let us take a look at the changes in DKS’s key risk factors that investors should know.
Risk Factors
According to the TipRanks Risk Factors tool, Dick’s Sporting Goods’ top risk category is Finance & Corporate, contributing 44% (against a sector average of 39%) to the total 32 risks identified. In its recent quarterly report, the company has changed five key risk factors.
DKS noted that evolving regulations regarding wage levels and taxation could adversely affect the company. If DKS fails to increase its wage rates competitively, then the quality of its workforce and consequently its customer service could suffer.
The company’s long-term success hinges largely on its personnel. If it is unable to attract and develop executive management and qualified personnel, then DKS may not succeed in implementing effective succession planning strategies.
DKS depends on suppliers, distributors, and manufacturers for offering quality products on a timely basis. The present COVID-19 pandemic has led to supply chain disruptions, and DKS sees these challenges continuing in the near term. Additionally, the company’s business is dependent on discretionary spending by consumers. Any decrease in this spending due to factors such as inflation or changes in U.S. consumer confidence could adversely affect the company.
Finally, DKS’ sales and profitability could suffer due to factors such as foreign trade issues, currency gyrations, higher raw material prices, supply chain bottlenecks, or political turmoil.
Hedge Fund Activity
TipRanks data points that Wall Street’s top hedge funds have decreased holdings in Dick’s Sporting Goods by 400.6 thousand shares in the last quarter, indicating a very negative hedge fund confidence signal in the stock based on the activities of seven hedge funds in the recent quarter.
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