Dive Brief:
- While other retailers are struggling to manage inventory and inflation, Dick’s isn’t particularly worried about either. On a call with analysts Tuesday, CEO Lauren Hobart said the company’s inventory “is very healthy and we are not concerned that there's toxicity in our inventory,” per a Seeking Alpha transcript.
- As to inflation, Hobart said its consumer is “holding up very well” and the retailer has seen no evidence of trading down. “We're not seeing people trade from best to better and better to good products. In fact, across all income demographics, the trends are pretty similar. I think that just speaks to the fact that our portfolio has something for everybody,” Hobart said.
- While the retailer’s net sales are down 5% compared to last year, they’re up 38% over 2019. Comps are also down about 5%, but Dick’s raised its guidance for the full year and expects comps to decline by 6% to 2% instead of by up to 8%.
Dive Insight:
While Dick’s reported a number of declines in the quarter, those are mostly due to how well the retailer has performed over the past few years. The fact that numbers are well up over 2019 is a testament to the strength of the business, according to GlobalData Managing Director Neil Saunders.
“The only fair conclusion from this is that Dick’s is now a much bigger and much stronger business and that it has held on to most, although not all, of the gains it made over the pandemic,” Saunders said in emailed comments.
Hobart believes the gains Dick’s made over the past couple of years are permanent, both because more shoppers are pivoting to healthier lifestyles and because Dick’s has improved several pieces of its business over the years.
“There's almost nothing structurally the same in our business as there was several years ago,” Hobart said. “I would point to the fact that our assortment is completely different now than it was. We've got access to higher-heat products, more narrowly distributed product that isn't nearly as susceptible to pricing pressures and promotions. Our product mix has meaningfully changed toward higher-margin products.”
Dick’s has gradually exited the hunting gear business, which had lower margins than its average, and has increased its efforts in private label, which bring in higher margins. The company is seeing success with its House of Sport, Public Lands and Going, Going, Gone concepts, and has revamped the store experience across its fleet.
“The business is structurally different than it was several years ago, and we are no longer looking at this, nor will we ever, as a COVID bump that was going to return,” Hobart said.
As the holidays approach, Dick’s is also avoiding another issue plaguing other retailers: staffing. Asked about challenges in the labor market, Hobart said the company has had no problems and that stores and distribution centers are both staffed and operating well.
