The recent mini-crash at lululemon athletica had some investors looking nervously at other companies that make their money from Americans' interest in sports and fitness. But the contortions of one merchant of yoga pants shouldn't put investors off sports-related retailers.
Sporting goods stores have momentum on their side. The May sales figures just released by the U.S. Commerce Department show sporting goods and hobby store sales are up 7% year-to-date over the same time last year. And the first-quarter results posted by Dick's Sporting Goods
Dick's is the biggest player in the segment, with stores nationwide and a growing presence online, but it's hard to bet on the favorite right now. Dick's is trading at a P/E around 21, which is off the average of 29 for retail stores, but far richer than its competitors. And the stock price is too close for comfort to its 52-week high. As Fool Rich Smith pointed out recently, the upside is limited.
Marketwatch reported recently that Reuben Mark, the former CEO of Colgate, who's a Cabela's director, has been buying up stock in the company -- 80,000 shares in May -- and the stock price has gone up all five times he's bought stock. Mark is in good company: Cabela's gets a four-star CAPS rating among Fools and has gone up about 52% in the last year.
The other, smaller players in the sporting goods sector are still in the game for now, but there's room for only a couple of big-box players in any given retail segment and this one is getting crowded. Between Dick's, Cabela's, Sports Authority (privately owned by Leonard Green) and the rising REI (the crunchy Oregon co-op that's expanding into new markets out East) the smaller players risk getting squeezed out.
Another player in the market, Big 5 Sporting Goods
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