Dive Brief:

• Dick’s Sporting Goods on Tuesday reported adjusted fourth quarter earnings of $1.32 per share on a 10.9% net sales increase of $2.5 billion, edging past the Thomson Reuters I/B/E/S expectation for $1.30 per share on net sales of $2.47 billion.

• Dick's same-store sales rose 5% in Q4, climbing toward the upper end of the sporting goods retailer’s guidance of an approximate 3% to 6% increase and a significant turnaround compared to 2.5% same-store sales declines in the year-ago quarter. Dick’s flagship stores experienced a Q4 same-store sales increase of 5.3%, while its Golf Galaxy same-store sales grew 13.2%.

• Full-year net sales rose 9% from last year's period to $7.9 billion, reflecting the opening of new stores and 3.5% growth in full-year same-store sales. Dick's said it expects same-store sales to rise approximately 3% to 4% in the first quarter and about 2% to 3% in fiscal 2017.

Dive Insight:

Dick’s Sporting Goods is still benefiting from last year’s bankruptcy of rival Sports Authority, from which it garnered that retailer’s intellectual property rights and some store leases. It’s likely also benefited from the exit of Golfsmith last year. But Dick's good news is tempered by the fact that it’s coming off last year’s not-so-great results, according to GlobalData Retail managing director Neil Saunders.

“The various failures and exits from the sports market across 2016 provided a very healthy windfall for Dick’s during the final quarter,” Saunders said in an email to Retail Dive. “Even the weather played ball, with a cold end to the quarter stimulating the sales of outdoor products in a way that last year’s warmer weather failed to do. All that said, there are two points that take some of the edge off the good numbers. The first is that comparatives from last year, especially on a same-store basis, were relatively weak, which contributed to the strong growth. The second is the net income number which fell by 30% thanks to store closure costs, and a write-down of inventory that is misaligned with Dick’s new merchandising strategy.”

But Saunders also gave props to Dick’s omnichannel efforts, which include providing its customers with online fitness tools that go beyond shopping. For example, its Move program allows subscribers to track progress towards health goals and earn Dick’s ScoreCard loyalty points that can be used to make purchases. “This ensures that Dick’s is constantly engaging with its customer base in an appropriate and non-intrusive way,” Saunders notes.

Dick’s new merchandising strategy includes plans to rationalize its vendor base and optimize and refine its assortment, CEO Edward W. Stack said on Tuesday. “We are in the process of reviewing our entire vendor base, which will be segmented into strategic partners and transactional vendors, with tertiary vendors being eliminated,” Stack said in a statement.

This is a sensible step, Saunders said. "Although Dick’s offering is comprehensive, it can also come across as a little jumbled and undisciplined.” And it could reduce costs while also helping the retailer create differentiated merchandise, which will be key against brands like Nike and Under Armour that are increasingly selling directly to shoppers, Saunders added. 

“The longer term outlook will also be helped by the harder push into growth categories such as athleisure and casual sportswear, a general improvement of the in-store shopping experience, and further investments in e-commerce capacity,” Saunders said. “All of these things should help ease up comparable sales, especially in the near term, when prior-year comparatives remain fairly soft.”