Dive Brief:
- As retail enters the crucial holiday period, Dick’s sales continue to grow, with Q3 net sales up 2.8% year over year to $3 billion. Comps in the period increased 1.7%, according to a company press release.
- Net income fell about 12% in the quarter to $201 million. The retailer slightly raised its comparable sales outlook for the year, now expecting comps to be up 0.5% to 2% versus flat to 2% previously.
- Dick’s continued to expand its store footprint in the quarter, opening another five next-generation Dick’s stores and two more House of Sport stores, which were converted or relocated from prior locations.
Dive Insight:
As Dick’s prepares for the holiday season, the sporting goods company is coming off of strong back-to-school sales.
CEO Lauren Hobart said on a call with analysts Tuesday that sales moderated some in October due to warmer weather, but were strong in the back-to-school period. That could be a good sign for the holidays, which are once again starting earlier, but the two periods are not one and the same.
“Holiday season is a very distinct and a different season when we compare that to the back-to-school season,” Chief Financial Officer Navdeep Gupta said on the call. “It’s a much more wider competitive set compared to the back-to-school season.”
Although Dick’s sales are impressive — up 55.1% over 2019 — the slowing growth rate is something to watch, GlobalData Managing Director Neil Saunders said in emailed comments, as it could indicate consumer pullback. When it comes to how the retailer has posted consistent sales growth for so long, Saunders attributes it in part to its growing position as a casual apparel retailer.
“Part of this is because clothing tastes and preferences have become more casual, which includes the rise of athleisure garments. However, part is also because Dick’s has rounded out its assortment with new brands and a better own-brand offering,” Saunders said. “This has allowed Dick’s to attract new shoppers and enlarge the share of wallet it gets from existing shoppers. In doing this, Dick’s has taken share from other retailers, especially from department stores. This stealing of share is one of the central reasons for Dick’s outperformance.”
As Dick’s looks ahead, growing its fleet of store concepts is a priority. The retailer plans to open 10 House of Sport experiential stores in 2024, continues to roll out next-generation Dick’s stores, and is integrating its Moosejaw and Public Lands businesses to position the outdoor business for profitable growth.
“The economics of House of Sport are very good,” Hobart said of the large-scale experiential format. “We have a very high standard for how we look at our real estate investments and we don’t do anything unless we hurdle a certain amount of ROI.”
