Slow hunting, golf sales again drag down Dick’s profit
Dick’s Sporting Goods is focusing on women’s and kids’ apparel this holiday season, and expanding options for online customers as the sporting goods retailer looks to make up for declines in golf and hunting businesses.
The Findlay-based company on Tuesday reported profits were down slightly in the third quarter, largely because of golf and hunting sales. Net income in the quarter that ended Nov. 1 was $49.2 million, or 41 cents per share, compared with $50 million, or 40 cents per share, a year ago.
Net sales rose 9 percent to $1.5 billion, and same-store sales, a key measure of a retailer’s performance, were up 1.1 percent. But the golf business was a spoiler: Dick’s stores had a 1.7 percent increase in sales, while its Golf Galaxy stores declined 8.9 percent from a year ago. Excluding golf and hunting, the company’s same-store sales were up 4.6 percent from a year ago.
Dick’s has been slow to respond to the trend in women’s and youth apparel but finally appears to be giving it the proper emphasis heading into the holidays, said Joe Feldman, senior managing director at Telsey Advisory Group in New York City.
“If you think about what moms are wearing at the soccer fields, they’re not wearing jeans these days, they’re in athletic gear and that bodes well for Dick’s,” Feldman said. “They’re performing well in a tough environment with a couple of big headwinds.”
One of those big headwinds — golf — should lighten as Dick’s becomes less dependent on that sport in equipment sales. The company has reduced its golf inventory and the space it dedicates to golf in 85 percent of its stores, reallocating it to growth areas such as women’s and youth apparel, Dick’s President and Chief Operating Officer Joseph Schmidt told analysts Tuesday morning.
Those efforts will help it during a competitive holiday shopping season in which Dick’s is expecting same-store sales to increase 1 percent to 3 percent in the fourth quarter, compared with 7.3 percent a year ago.
The company had an unusually strong holiday sales season last year, however, and even 2 percent growth this year is a sign of confidence.
“That’s about as bullish as it would be reasonable to be,” said Sean McGowan, an analyst at Needham & Company.
Dick’s has also focused on shipping and delivery in a year in which more consumers plan to do their shopping online.
Online purchases in the third quarter were 7.3 percent of Dick’s total sales, up from 6.5 percent a year ago.
All of the roughly 600 Dick’s stores can ship directly to online customers, Schmidt said, which allows Dick’s to better manage its in-store inventory and lower its shipping costs, because its existing staff can take care of boxing up the items and sending them out.
“If you can leverage the inventory that you have in stock and you have the staff in the store already, that all works,” Feldman said. “That, to me, is really the future of retail … having that seamless customer experience.”
Dick’s has begun offering in-store pickup for some things purchased online. The service has been especially popular on items that are more expensive to ship, Schmidt said. It is a strategy that can drive in-store sales, as well, because those same customers often make other purchases when they go to pick up their order.
The focus on e-commerce and shifting product mix should help Dick’s overcome its lagging golf business, McGowan said.
“I actually think they’re pretty well-shaped-up for the holiday season,” McGowan said. “There was talk about reallocating space away from golf and towards women’s apparel, and that seems to be paying off.”
The wildcard will be the weather. Frigid temperatures last year kept many shoppers home and hurt retailers leading up to the holidays. It had a particular impact on golf, as the long winter cut into spring golfing rounds.
CEO Ed Stack emphasized that Dick’s was not getting out of the golf business and believed its profitability would pick up again next year after hitting bottom in the fourth quarter.
“Everybody has talked about the business needs to shrink in order to be more profitable, and I think that’s going to happen,” Stack said. “I think the manufacturers are much more disciplined, the retailers are much more disciplined, and I think the golf business is going to be an OK business.”
Chris Fleisher is a staff writer for Trib Total Media. He can be reached at 412-320-7854 or [email protected].