Dive Brief:
- Dick's posted its best-ever quarterly earnings and sales figures as consumers spent more time exercising and outdoors in the second quarter.
- Comparable sales jumped 20.7%, pushing net sales up more than 20% to $2.7 billion for the period.
- Dick's e-commerce sales, including its contactless pickup option, ballooned by 194%. For the quarter, digital penetration reached 30% of net sales, more than double that of a year ago.
Dive Insight:
As Dick's sales spiked, so did its profits, with earnings per share up 148% even as the retailer took on $42 million in compensation and safety costs in a quarter defined by the COVID-19 pandemic.
CEO and Chairman Edward Stack attributed the gains to consumer trends that swung the retailer's way. "During this pandemic, the importance of health and fitness has accelerated and participation in socially distant, outdoor activities has increased," Stack said in a statement.
Dick's President Lauren Hobart said that the quarter brought growth across the retailer's three primary categories: hardlines, apparel and footwear. The company also reported that sales increases have continued beyond Q2, at a slower but still robust pace with comps up 11% for the first three weeks of the third quarter.
Analysts with Jane Hali & Associates pointed out in a note that Dick's has "responded to consumers' lifestyle changes by focusing on currently popular activities." That includes stocking brands like Yeti, Hydro Flask and sneakers, including Nike's Air Force 1 and Jordan 4 Retro. Helping margins and profits was a decrease on promotions, which focused mainly on fishing and basketball in the quarter, according to the analysts.
GlobalData Retail Managing Director Neil Saunders said in emailed comments that Dicks' has "more than bounced back" from a "very poor" first quarter, which brought store closures and comparable sales declines of nearly 30%.
Saunders attributed Dick's Q2 to it being a sporting goods destination amid a "surge" in consumer interest in bikes, workout apparel and other exercise equipment, as well as camping and outdoor gear.
"In addition to the gym-crowd pivoting to working out from home, our data also show that many traditionally less-active customers have engaged more in fitness over the past few months," Saunders said. "Some of this is because of an absence of other things to do and some is related to more people being conscious about their health and wellbeing as result of the virus. This trend has created a new wave of shoppers, many of which gravitated to specialist sports retailers for the service and authority they provide."
Telsey Advisory Group analysts said that going forward, Dick's should benefit from strong demand in outdoor categories like biking, running, golf and kayaking, as well as its inventory position, merchandise differentiation, e-commerce and curbside offering, and placement in off-mall locations.
