Dive Brief:
- As other retail favorites falter, Dick’s Sporting Goods remained strong in Q2, with net sales up 7.8% to $3.5 billion, per a company press release. Comps in the quarter were up 4.5%, while net income increased 48% to $362 million.
- The retailer raised its full-year outlook as a result, with comps now expected to rise 2.5% to 3.5% for the year, up from 2% to 3% previously. Dick’s net sales outlook stayed the same, with that metric projected to reach $13.1 billion to $13.2 billion in 2024.
- Chief Financial Officer Navdeep Gupta said on a call with analysts that the retailer plans to make more “strategic” investments as a result of its strong growth, including in inventory, thanks to the strength of the assortment.
Dive Insight:
In a market where other retail high-performers are seeing disappointing results, Dick’s continues to win. Even in the athletics market, several big names are faltering, including Lululemon, Under Armour and Nike. That shows the strength of Dick’s business, according to GlobalData Managing Director Neil Saunders.
“The strong numbers have been delivered in the same challenging market facing all retail players. The difference is that Dick’s has a very clear strategy that … is allowing it to circumvent some difficulties and to take market share from other struggling players,” Saunders said in emailed comments.
He noted that Dick’s Q2 sales are up 53.7% from 2019 and the retailer is taking more back-to-school share. That includes apparel, a trend that comes at the expense of department stores. Partially, that is thanks to the strength of Dick’s private labels like DSG, VRST and Calia, which executives said are performing well. CEO Lauren Hobart also touted Dick’s long-term strategy of building up a differentiated assortment across both performance and lifestyle, and praised its merchants for consistently bringing in high-demand product.
Hot brands like Hoka and On are performing well in stores, and there’s more room to grow that assortment, according to Hobart. Bigger brands like Nike and Under Armour have also promised a return to product innovation, which bodes well for Dick’s, and Hobart noted she is excited about the product coming down the line from the company’s vendors.
“Our consumers … are holding up very well,” Hobart said, which has helped the retailer’s results. But the executive also said Dick’s strength is thanks to its long-term strategy of building a differentiated assortment, improving customer experience and investing in stores. “We keep reinventing Dick’s Sporting Goods. That’s something that is core to our values and our culture, but with House of Sport and the Field House, we continue to push what a reinvented model for serving athletes can look like.”
To that end, store investments are continuing apace, with Dick’s opening its 15th House of Sport later this month and planning for five more later this year. Hobart said the company is “very pleased” with the performance of both its experiential House of Sport concept and the store revamps it’s conducting at its 50,000-square-foot stores, which Dick’s is now referring to as its “Field House” format. The company has 17 Field House locations now open, with nine more planned to open this year, and Gupta said the stores are very strong on both the top and bottom line.
Hobart said on a call with analysts that the company could revamp more of its fleet going forward and that there is “no set limit” on the number of stores that could be upgraded to the Field House format. While Dick’s House of Sport concept is limited in number, Hobart said mall owners are seeing traffic increase where the concept has opened. And shoppers are embracing the format, per Saunders.
“From various qualitative surveys we have conducted at a number of House of Sport locations, we have found that some younger customers are simply coming to hang out. This is especially so in accessible locations, like the Boston store,” Saunders said. “While they may not buy on every occasion, this is still a win as it demonstrates the quality of the experience, and it keeps Dick’s firmly on the radar of the consumers of the future.”
