Consumers are increasingly spending on active lifestyle items, leading to growth among retailers focused on the fusion of fashion and function, says Sean Naughton, CFA, a Vice President and Senior Research Analyst at Piper Jaffray & Co.
“These are all companies that are clearly benefiting from trends within this entire lifestyle,” he said. “Whether it is chips inside of shoes or tracking on shirts to monitor heart rates inside of your body, I think those are the types of initiatives that will continue to drive innovation in that category and continue to drive share of wallet with the consumer.”
Naughton favors Dick’s Sporting Goods (DKS). He says the company is well positioned in the marketplace to continue to take share as its two largest brands continue to compete against one another, and that innovation is helping to create merchandise. Importantly, about 25% of that merchandise is exclusive to Dick’s Sporting Goods, and Naughton believes that should continue to drive consumers into the store and lead to higher sales trends.
“Dick’s Sporting Goods is also going up against some relatively easy comparisons as we get into the fourth quarter. Last year, cold weather apparel and equipment really did not perform well given the warm weather,” he said. “We believe a normal winter this season leaves an opportunity for the company to exceed the expectations currently in the marketplace for the fourth quarter.”
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