Brian Sozzi: It Would Make Sense For Dicks Sporting Goods To Go Private

Speaking to Benzinga, Belus Capital Advisors CEO Brian Sozzi said that it would make sense for Dicks Sporting Goods Inc DKS to go private.

Earlier Wednesday, Reuters reported that Dicks is in discussions with some buyout firms about going private.

Sozzi said there are a number of structural problems with the company, including its buy-level giant stores and lack of customer service.

He explained that competing sports and fitness retailers like Nike Inc NKE and Under Armour Inc UA have been aggressively opening their own retail stores that offer a better assortment of products.

But Sozzi warned that while Dicks executives will want to take the company private to cash in on profits, private equity firms may not be as interested in the retailer. He estimated about a 25 percent chance that the retailer gets bought out.

“If I’m a private equity planner, I would almost rather take something like Abercrombie & Fitch,” Sozzi said. “At least with Abercrombie & Fitch you have a true, international, well-known brand.”

Shares of Dicks were trading 8.6 percent higher after the buyout rumors.

The rest of the retail sector was also performing well: Nike was up 2 percent, Under Armour was 3.5 percent higher and Abercrombie & Fitch Co. ANF was trading up 1.45 percent.