Go Big with Dick's

In mid-September, I moved completely to the sidelines on retail names (Watch this call in action: http://decodingwallst.com/watch-soooo-what-do-you-do-with-jc-penneys-stock/). The call extended to long held favorites of mine, too, including Dick's Sporting Goods, Under Armour, Foot Locker, and American Eagle. The attack plan was to exit unscathed ahead of the crowd but then re-enter the scene on weakness as we got closer to the holiday season, grabbing fresh looks via third quarter earnings. Now, the moment has arrived to begin placing holiday season wagers, with a preference for best in show as opposed to potential best in show, especially post Sandy's unknown impact on the consumer (I reiterate it will be more than many believe). The first name on the docket from a long perspective is Dick's Sporting Goods, and here are the reasons underlying the call: •The profitability metrics of the online business continues to improve, can't say that for a majority of comparable companies. •Increased ship from store capabilities, where product is shipped to the consumer from the stores, is fundamentally altering the profit potential of the business. First, consumers gain access to more product through the internet/mobile portals. Second, it speeds up efficiency. Third, there is less reliance on third-party fulfillment, which aids margins meaningfully. •Online sales growth is demonstrating no Amazon effect, a significant positive. •Looking for a 1H13 dividend increase whether the company achieves my above consensus earnings expectations or delivers something in line. •Shop in shops from Nike and Under Armour are leading to higher profit margin sales mix exiting the stores.