(This story was updated on 6/16/2023.)
Dick’s Sporting Goods commented on the opportunity it sees in the outdoor market in light of its recent investments in Public Lands and Moosejaw during an earnings call Tuesday morning.
The sporting goods retailer, which appears to be bucking slowing consumer spending trends, reported strong first quarter results with growth across all income demographics.
Net sales rose 5.3% to $2.84 billion. Same-store sales rose 3.4% compared to the 8.4% decline in the year-ago period, with the run up driven by more transactions and higher average transaction sizes.
Meanwhile, Dick’s reported net income of $305 million in the quarter, which was a jump of 17% from a year earlier.
“While consumers face macroeconomic uncertainty, our athletes have continued to prioritize sports and rely on Dick’s to meet their needs,” President and CEO Lauren Hobart told analysts during the company’s quarterly call Tuesday. “In fact, compared to the same period last year, more athletes purchased from us. They purchased more frequently, and they spent more each trip. Our strategies are working and resonating with our athletes.”
Still Assessing the Outdoor Market
Executive Vice President and CFO Navdeep Gupta said the company is continuing to study what’s working at Public Lands, which Dick’s launched in 2021 as an outdoor-focused concept.
That’s key particularly in the context of Moosejaw, another outdoor-focused retailer Dick’s acquired in March from Walmart.
“Public Lands I would say is still something that we are continuing to refine our learning and, especially with the Moosejaw acquisition, we are looking back and saying, ‘How do we best serve that athlete?’” Gupta said on Tuesday’s call. “Outdoor is a $40 billion industry, which is highly fragmented. So, we see a long-term, great growth opportunity there. We’ll just continue to learn and test with the Public Lands concept.”
Currently, Public Lands operates seven stores.
Big Expansion for House of Sport
While Dick’s is still studying what works best for the Public Lands concept and if it will expand the store fleet further, it has greenlighted an aggressive expansion plan for its House of Sport banner.
The company plans to open nine before the back-to-school selling season, and construction has also begun on the more than 10 House of Sport locations expected to open in 2024. The company said by 2027, it expects to have between 75 and 100 House of Sport doors open.
Hobart told analysts the concept is the “very best expression” of the company’s strategy to “enhance and refine” its store models.
“House of Sport is redefining sports retail and, over the long-term, will be a significant part of our growth story and the primary driver of our square footage growth,” the CEO said.
Dick’s counts 863 stores in 47 states, with the majority being its namesake Dick’s Sporting Goods stores. The remaining 135 are specialty concept stores, including Golf Galaxy and Public Lands.
Consumers Not Trading Down and Full Year Outlook
As some retailers note consumer hesitancy on pricier items, Dick’s appears to be faring well, according to Hobart.
Part of that is related to the company’s inventory position, which Hobart said is being managed well. In addition, Dick’s assortment is more narrowly distributed than it was in the past.
“So we have a moat against any industry-level promotion that might have affected us (before) when there was just wide distribution of similar product,” Hobart said. “So we are not expecting to have to go into a major promotional cycle here. We’re very proud and happy with the inventory levels that we have and the assortment is a real asset here.”
Dick’s quarterly performance prompted the company to reiterate its full-year 2023 outlook, which expects earnings per share to be in the range of $12.90 to $13.80 and same-store sales flat to up 2%.