A growing sports apparel trend is making it increasingly difficult for Dick’s Sporting (DKS) to “stay relevant,” says one equities analyst.

“Dick’s may be the largest pure sporting goods chain in the U.S., but nearly all items in its inventory are available at other stores and online,” David Swartz, analyst at Morningstar, wrote in a note to investors.

He points out major brands are selling more directly to the consumer. For example, Adidas’ (ADDYY) direct-to-consumer business constituted 33% of sale last year, up from 25% in 2015.

“We think the COVID-19 crisis, which forced the temporary closures of Dick’s stores in 2020, could accelerate the digital and direct-to-consumer trends,” said Swartz.

The analyst says Dick’s market position is not strong enough to to prevent vendors from offering merchandise in alternate channels. The sporting goods company faces competition from a long list of retailers including, Walmart (WMT) Amazon (AMZN), Kohls (KSS), Macy’s (M), Foot Locker (FL), and Hibbett Sports (HIBB).

“While we believe Dick’s relationships with vendors are generally good, its largest vendors also have relationships with other retailers, some of which are much larger. Walmart, for example, has more than 5,000 stores in the U.S., about 6 times as many as Dick’s,” he added.

“Moreover, there are some popular and high-priced athleisure apparel items, such as Lululemon (LULU) yoga pants and Adidas’ Yeezy shoes, that are not available at Dick’s. Some brands make product available only to favored retailers,” said Swartz.

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Gus Promollo delivers an order into a customer’s trunk at Dick’s Sporting Goods in Paramus, N.J., Monday, May 18, 2020. (AP Photo/Seth Wenig)

The analyst says Dick’s recent strategy of aggressive store expansion has not worked to increase profits and attract new customers.

“Although e-commerce (16% of last year’s revenue) has been a bright spot (with sales growing to $1.4 billion in 2019 from $500 million in 2013), we think Dick’s large base of about 850 stores limits its flexibility,” said Swartz.

“We forecast same-store sales growth of 1.5% in the long term and compound average sales growth of just 1.3% over the next decade,” said the analyst.

“We expect Dick’s to fall short of U.S. activewear growth of 3%-5% as store traffic weakens, and it cedes market share to competitors,” he added.

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Ines covers the U.S. stock market for Yahoo Finance. Follow her on Twitter at @ines_ferre

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