Dick’s Sporting Goods bucked overall soft retail trends in the third quarter, posting a 2.8% increase in net sales after a solid back-to-school season.
Comparable sales increased 1.7%.
According to the company, more customers shopped at Dick’s during the quarter compared to the prior-year period and spent more each trip.
“As a result of our strong Q3 performance, we are raising our full-year outlook, which balances the confidence we have in our key strategies with an acknowledgment of the uncertain macroeconomic environment,” said CEO Lauren Hobart.
According to Hobart, the main theme of the third quarter was the strength of Dick’s back-to-school business. That meant robust sales in categories including footwear, apparel, hydration, backpacks, and socks.
Hobart attributed some of the recent success to Dick’s new retail concept, House of Sport, which feature large-format interactive features for customers to try out gear, including climbing walls.
She also said brands such as FP Movement, On, and Hoka have performed well in the House of Sport locations.
Integrating Moosejaw into Public Lands
Dick’s Sporting Goods is already reaping the benefits of integrating the operations of Moosejaw and Public Lands, Hobart said.
“This new structure immediately improves operational efficiency and strategically positions this business for profitable growth within the $40 billion outdoor industry,” she said.
According to Dick’s CFO Navdeep Gupta, the company started to see the benefits of forming one team for Moosejaw and Public Lands in this quarter and expects to see continued benefits in the fourth quarter and into 2024.
“We see the collective capability we have between the Moosejaw brand as well as the Public Lands brand, and we are extremely excited about that opportunity,” he added.
Gupta said there isn’t a “clear leader” in the “highly fragmented” outdoor industry.
Dick’s operates seven Public Lands stores, which are outdoor-focused, carrying an assortment of outdoor and lifestyle apparel, footwear, and equipment brands.
The company announced in September that it was closing 11 of 14 of its Moosejaw stores just six months after acquiring the outdoor retailer from Walmart.
The move is part of Dick’s strategy to focus its outdoor business around its Public Lands stores.
When asked if Dick’s plans to open more Public Lands stores, Gupta said, “We’ll share more details in 2024. But yes, our plans are to continue testing and learning and opening more stores as we go look into the future.”
Q3 By the Numbers
The company beat analysts’ consensus estimates for the quarter on both the top and bottom lines.
Dick’s delivered 1.7% growth in third quarter comparable store sales on top of a 6.5% increase in the third quarter of 2022.
Sales rose 2.8% to $3.04 billion for the quarter.
Net income was down 11.8% to $201 million for the period.
Excluding special charges, adjusted net income increased 5% to $240 million.
Third quarter gross margin expanded by 88 basis points versus the prior-year period.
Looking Ahead
Dick’s expects to see continued year-over-year gross margin expansion in the fourth quarter.
The company increased its earnings per share estimate for the year to the range of $12 to $12.60 on a non-GAAP basis. That compares to the previous estimate of $11.50 to $12.30.
“Our updated guidance balances the confidence we have in our key strategies with an acknowledgement of the uncertain macroeconomic environment,” Hobart said. “We know that consumers are going through a lot right now, so we’ve been reasonably cautious in our guidance.”
Hobart added that the company has “a tremendous long-term growth opportunity” ahead of it.
“We’re making strategic investments that position us well for growth and enable us to continue gaining share in a large, fragmented industry,” she said.
Bart Schaneman can be reached at bart@ordaily.outdoorretailer.com.
