Don’t tell Dick’s Sporting Goods that the activewear business is slowing down.
The Pittsburgh-based retailer said customers are opening their wallets for more sneakers and athletic apparel as it reported first-quarter results that exceeded expectations. The strong showing led the company to raise projections for the full year.
On Wednesday morning, Dick’s reported net income for the quarter ended May 4 of $275 million, or $3.30 share, down from $305 million, or $3.40 per share, a year earlier. Overall sales increased 6.2 percent to $3.02 billion from $2.84 billion a year earlier and comparable-store sales were up 5.3 percent on top of a 3.6 percent increase in last year’s first quarter.
Lauren Hobart, president and chief executive officer, attributed the gain to a larger number of transactions and a higher average ticket. “During the quarter, we saw more athletes purchase from us. They spent more each trip compared to the prior year,” she said.
Watch on FN
As a result, Dick’s said it is now expecting earnings per share to be between $13.35 and $13.75, up from its previous range of $12.85 to $13.25. Analysts had been expecting $13.25. Sales are expected to be between $13.1 billion and $13.2 billion with comparable-store sales growing between 2 percent and 3 percent. It had previously said it expected comps to rise 1 percent to 2 percent.
Dick’s is the country’s largest sporting goods retailer with more than 850 stores under the Dick’s Sporting Goods, Golf Galaxy, Public Lands and Going Going Gone nameplates.
In the first quarter, Dick’s opened two House of Sport locations, with six more in the hopper this year as well as two “Next Generation” 50,000-square-foot stores with 14 more planned. “We continue to be very pleased with these exciting Dick’s concepts.” Hobart said these two new concepts, combined with a strong omnichannel experience, are “the future of Dick’s.” House of Sport stores average 100,000 square feet and offer a number of experiences such as climbing walls and golf bays while the Next Generation 50,000-square-foot stores are a smaller version of that.
Hobart added that three new “immersive” Golf Galaxy stores that opened in the quarter are also seen as a concept with growth potential.
The CEO also singled out GameChanger, the newly acquired livestreaming mobile sports app for youth sports, as a potential contributor to long term growth. The app drew more than 5 million users who spent an average of 30 minutes a day on the site. And while the results on the bottom line are “relatively negligible” right now, it helps solidify Dick’s as “synonymous with sports,” said chief financial officer Navdeep Gupta, and “a big part of our future.”
Hobart also pointed to the company’s access to differentiated, on-trend product as its “second strategic pillar.” She singled out Nike’s recent Paris innovation summit, where the company “highlighted several breakthrough products across apparel and footwear that we look forward to bringing to our athletes. Our relationships with our brand partners are stronger than ever. The innovation of performance and style in our opinion has never been better.”
She said Dick’s had attended Nike’s innovation summit and were impressed with what the brand showed, including technology within its Air platform and the elevation of both performance apparel and footwear that will bring newness into those categories. Nike has been criticized of late for lacking innovation in its product offering.
On top of that, she said Dick’s private brands, such as DSG, Calia and Vrst are “resonating very well with our athletes and continue to outpace the total company” with a “long runway for growth.”
Turning to footwear, Hobart said it is “the engine that drives the train,” and Dick’s is “very pleased with our footwear business” as it continues to roll out the hot Hoka and On brands to more stores.
“Our strong first-quarter results continue to prove that Dick’s is the go-to destination for sport and sport culture in the U.S.,” said executive chairman Ed Stack. “The product pipeline from our key brand partners and our vertical brand portfolio has never been better. We have significant momentum and are excited about the differentiated product and compelling experience we are providing.”
Hobart pointed to the 5.3 percent increase in comparable-store sales and a double-digit EBT margin of more than 11 percent indicates that the retailer is continuing to gain market share.
Looking ahead, Gupta acknowledged that Dick’s remains “appropriately cautious as we think about Q2 through Q4, but we continue to remain really excited about the opportunities that we see for the balance of the year.”
Hobart summed up the climate this way: “Our consumer is absolutely putting apriority on a healthy and active lifestyle and we are providing them with an experience that they are clearly choosing. It’s the core strategies that are driving our performance.”
