Dick’s Sporting Goods Mulls Sports Authority Buy Out

Dick’s Sporting Goods (DKS) said Tuesday it has interest in acquiring Sports Authority stores after the competing retailer went bankrupt. Sports Authority, which once held the title as America’s largest sporting-goods chain, was forced to enter bankruptcy earlier this week, citing $1.1 billion in debt and declining sales. The Englewood, Colo.-based company said it will seek buyers for 140 stores that are slated to be closed. During an earnings call with analysts, Dick’s CEO Edward Stack said the retailer will explore acquiring the leases to Sports Authority stores, depending on their location and whether it makes economic sense for Dick’s.

The short answer for Dick’s Sporting Goods is that it makes absolutely no sense for one big box sporting goods chain to buy out another once since their stores are almost within walking distance from each other. The Sports Authority is failing because most people are buying their goods from one of two places, department stores or the Internet. Since Dick’s and The Sports Authority were dividing the sports market between them as competitors, how would it benefit Dick’s to have adjacent locations of their chain competing with each other?

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