Dick's buys Chick's

Dick's Sporting Goods has picked up the pace in its run to the West with its takeover of a small Southern California chain.

The Pittsburgh-based retailer plans to buy Covina, Calif.-based Chick's Sporting Goods for $71 million in cash and assumed debt in a deal announced last month.

"It's a good leg up into California," said Jeff Mintz, an analyst with Wedbush Morgan Securities.

Dick's DKS already was planning for 90 stores in the Golden State as part of its goal to grow from about 340 stores mostly east of the Mississippi to 800 across the country by 2014. Gaining the 15 stores run by Chick's "just means we got a head start," said Jeff Hennion, senior vice president and chief marketing officer.

Buying a competitor with only 15 stores isn't always worthwhile for a major retailer like Dick's.

In this case, the firm will gain a foothold in the crowded Los Angeles area without needing to build new stores.

"You have to locate sites for those, and that's not always easy to do in places that are already built up like the L.A. area," said Mintz of Wedbush Morgan, which is seeking investment banking business with Dick's.

Source [CNN]