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Dick's Sporting Goods Eyes Golfsmith's U.S. Stores

By Investopedia | October 19, 2016 — 2:59 PM EDT

The sporting goods world has been contracting, and Dick's Sporting Goods (NYSE: DKS) appears ready to once again take advantage of the misfortune of one of its fallen competitors.

It was expected the company would bid for many of the stores closed by now-shuttered rival Sports Authority, but that did not happen. Dick's kicked the tires on those locations, eventually taking over just 31 of them.

The surviving chain did buy its former rival's intellectual property for $15 million at auction, Reuters reported. That included website SportsAuthority.com, a loyalty program with 28.5 million members, and a list consisting of 114 million customer files.

Now, Dick's appears to be making another move to take over the assets of a failed company in the sporting goods space. It's getting ready to make a bid on the United States locations of Golfsmith, a golf retailer that recently filed for bankruptcy, according to a separate Reuters story.

What happens next?

The Golfsmith assets are being auctioned, so there is no guarantee Dick's gets what it wants. Privately held Worldwide Golf Shops was also expected to make a bid Golfsmith on Monday, in partnership with liquidators from Great American Group LLC, the news service reported.

Golfsmith had just over 100 stores at the time it closed. Dick's has not disclosed if it would keep any of them open under its own Golf Galaxy brand, or convert them to full-line sporting goods stores. Golf Shops has said it intends to keep some of the chain's stores open, Reuters reported.

Dick's is playing offense

By buying up the Sports Authority brand, Dick's guarantees that it won't be revived. That sounds a bit cutthroat, but it has already been proven that only so much space exists in the market for physical sporting goods retailers.

At least some of Dick's category has moved online, but it seems likely that for the foreseeable future, a percentage of the buying public will want to handle certain sporting goods, apparel, and sneakers before buying. If that's the case, then it's smart for Dick's to crowd out competitors and keep as much of the market as it can for itself.

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