Dive Brief:

• Dick’s Sporting Goods on Wednesday said that first quarter net sales rose 4.6% to approximately $1.91 billion, beating the FactSet analyst estimate cited by Marketwatch for $1.88 billion. Adjusted for the calendar shift to 53 selling weeks in 2017, same-store sales fell 2.5% from a year ago increase of 2.4% (or, based on an unshifted calendar, same-store sales fell 0.9%), hit by falling hunt and electronics sales and cold spring weather; FactSet expected a 1.5% decline.  
• E-commerce sales in the quarter rose 24%, based on the 53-week shift, and e-commerce penetration in the quarter was approximately 11% of total net sales, compared to 9% a year ago, according to a company press release. In the quarter, the company opened eight new DICK'S Sporting Goods stores.
• First quarter net income rose to $60.1 million or 59 cents per diluted share, from $58.2 million or 52 cents per diluted share a year ago.

Dive Insight:

Wall Street shrugged off Dick’s falling gun sales as the sporting goods retailer raised its full-year outlook, pegging earnings to land between $2.92-$3.12 per share, up from 2.80-$3.00 per share and past the FactSet estimate of $2.92. Dick’s now expects same-store sales to range between flat to a low-single-digit decline, with FactSet expecting a 0.6% decline.

In a statement on Wednesday, CEO Edward W. Stack said the retailer now offers newer products and an increased number of private brands in a more "refined" merchandising assortment that led to fewer promotions and cleaner inventory throughout the quarter — and said that's set to continue.

But the company is increasingly challenged by specialty retailers like Lululemon and Gap Inc.'s Athleta offering differentiated styles, brands like Nike and Adidas boosting their own direct sales, and even mass merchants like Kohl's expanding their athletic wear assortments, according to GlobalData Retail Managing Director Neil Saunders. GlobalData research shows that customer overlap between Dick's and other retailers is increasing.

"One of the things that is causing Dick's pain in terms of same-store sales is the crowding into the market of both specialist and non-specialist players," he said in comments emailed to Retail Dive. "All of these players are now posing a much more severe threat to Dick's — especially as their influence and reach are expanding at a time when growth in the traditional sporting goods market has weakened."

Stack is right to boast about the improved assortment, according to Saunders, though the full effect of that is unlikely to really emerge until the latter part of the year. But stores are another matter, with the clean interiors of Lululemon and even of Foot Locker presenting more appealing shopping venues. "Dick's older stores are dated and difficult to shop," Saunders said. "The environment is also dark and masculine, which does little to attract female shoppers."

The year is destined, therefore, to be another one of re-engineering for Dick's, with e-commerce and omnichannel services particular bright spots, Saunders said.