Dick's firing on most cyclinders

Dick’s Sporting Goods overcame weakness in its golf and hunting businesses to generate much better than expected second quarter same store sales and made further inroads in e-commerce.

The nation’s largest sporting goods retailer said second quarter same store sales increased 3.2%, far better than the decline of 1% to 3% the company had forecast. The comp increase was even stronger without a significant headwind from the company’s underperforming golf business. Same store sales at Dick’s Sporting Goods stores increased 4.1% while same store sales at Golf Galaxy locations declined 9.3%. Total company sales increased 10.3% to roughly $1.7 billion and were aided by the addition of new stores and an e-commerce penetration rate that increased to 6.3% of sales from 5.6% of sales the prior year.

"As anticipated, the golf and hunting businesses continued to experience negative comps. However, excluding these two categories, the remainder of the business delivered a 7.8% same store sales increase,” said Dick’s chairman and CEO Ed Stack. “We saw significant strength in several areas, including categories that have received more space within our stores, such as women's and youth athletic apparel. The headwinds in our hunting business continued in the second quarter. However, as we look at the entirety of our outdoor business, strength in other outdoor categories offset the declines in hunting, and our total outdoor comps were flat for the quarter.”

Profits declined to $69.5 million, or 57 cents a share, including a $20.4 million charge related to restructuring of the company’s golf business, compared to $84.2 million, or 67 cents a share, the prior year.

"We have consolidated our Golf Galaxy merchandising, marketing and store operations into Dick’s Sporting Goods. In addition, we have eliminated specific staff in our golf area within our Dick’s Sporting Goods stores,” Stack said. “These changes are necessitated by the current and expected trends in golf. We will invest these cost savings into other aspects of our store operations and into the growth areas of our business."

One of those areas is the company’s newest concept known as Field & Stream. One of the new outdoor stores was opened in the second quarter, but seven additional locations are planned for the third quarter. In addition, plans call for the opening of 24 new Dick’s stores in the third quarter as part of a full year plan to open 46 stores. One Golf Galaxy store is expected to open.

Looking ahead, Dick’s said it is cautiously optimistic about sales in the third and fourth quarter, forecasting same store sales growth of 1% to 3% for the third quarter and full year. However, to realize those sales, Dick’s said increased promotional activity to appeal to cautious consumers would pressure margins and advertising expenses and negatively impact earnings by four cents a share.

Dick’s ended the second quarter with 574 Dick’s Sporting Goods stores and 85 Golf Galaxy stores.

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