Dive Brief:

• Dick's Sporting Goods on Wednesday reported that third quarter net sales fell 4.5% year over year to about $1.86 billion. E-commerce sales in the quarter (adjusted for an extra week last fiscal year) rose 16%, to around 12% of total net sales, compared to about 10% in the year-ago quarter, according to a company press release.

• Consolidated same-store sales (also adjusted for the calendar shift) fell 3.9%, according to the release. Without the time adjustment, same-store sales fell 6.1%. In the year-ago quarter, consolidated same-store sales fell 0.9%.

• Net income for the quarter reached $37.8 million, up from $36.9 million a year ago.

Dive Insight:

Dick's profits held steady in the third quarter despite sales declines that are in part the result of the retailer's move to pulling back in the hunting and electronics categories.

Executives kept the focus on earnings, expense management and productivity in statements published Wednesday, and CEO Ed Stack said that comp sales were in line with the company's expectations. The quarter, though, hinted at some of the challenges Dick's faces in its category and business.

GlobalData Retail Managing Director Neil Saunders said in a note emailed to Retail Dive that Dick's efforts to thin its assortment thinning have dragged on revenue but boosted margins. "In our view, paring back on the range is sensible and is needed to both streamline the business and make shopping at Dick's easier," he said. But Saunders also said that "we do not believe that all of the declines are down to conscious decisions: we think Dick's is being blown off course by a number of unfavorable dynamics." 

Those dynamics include, above, all, a shift in where shoppers are going for their athletic gear. At the higher end, consumers are frequenting brands like Lululemon and Nike for apparel and specialists like Peloton for equipment. For less serious athletes, the company is losing traffic and share to mass merchants like Kohl's or Target, according to Saunders.

The recent decision to be more activist in gun control and curtail sales of some weapons and ammunition has alienated hunters and other gun owners, and the company has done little to pivot in other areas to make up for the lost revenue, Saunders said, calling that disappointing. 

Growing digital sales, which have been strong, comes with intense price competition and lower margins, Saunders also said. Meanwhile, Dick's stores also require some attention.

"The vast majority of the estate is characterized by cavernous warehouses crammed with products," Saunders said. "Despite attempts to thin down the offer, the amount of choice is still overwhelming, especially in apparel. Little attempt has been made to create an aspirational and engaging shopping experience — something that is vital if customers are to be enticed into stores."