UPDATE: Dick's Sporting Goods whiffs on expectations, cuts 160 jobs
- UPDATE: Dick’s Sporting Goods plans to cut 160 employee positions, mainly at its corporate store support center, according to a Seeking Alpha transcript of an investor call on Tuesday.
- Also on Tuesday, Dick’s reported first quarter net sales of $1.8 billion, a 9.9% increase from the same period in 2016, according to a company press release. Consolidated same-store sales increased 2.4%, falling short of the company’s expectations of 3% to 4% growth. E-commerce sales for Dick’s increased by 11% to reach 9.3% of total net sales.
- Net income rose to $58.2 million, a 2.2% increase above the first quarter of 2016. Earnings-per-share were 52 cents, in line with the company’s guidance of 48 cents to 53 cents per share but short of analyst expectations of 54 cents per share, according to data compiled by the Wall Street Journal. Together with same-store sales that fell short, this sent Dick’s stock down about 10% from yesterday's close.
UPDATE: CEO Ed Stack said the layoffs are part of the company’s broader cost-cutting plans that include slowing its store development program, consolidating its vendor base and reducing its dependency on “traditional marketing vehicles.” Savings from the cost-cutting measures will be reinvested in digital, ecommerce and marketing, Dick’s youth sports equipment service Team Sports HQ, and development of the company’s private brands, Stack said. Dick’s executives expects the job cuts to result in $7 million in severance and other related expenses.
The company opened 15 new stores, two Field & Stream stores and eight new Golf Galaxy stores during the quarter. GlobalData Retail noted that store closing sales of now-defunct rivals — such as Sports Authority — may have hurt Dick’s sales growth.
Although Dick’s reported continued sales growth during the first quarter of 2017, the sports equipment and apparel retailer's same-store sales growth fell short of analyst expectations — reminding the market that Dick’s is still a retailer subject to many of the same economic pressures that everyone else is, regardless of its dominant position in the sporting goods market.
Dick’s “was not helped by a downtick in demand across the first quarter which saw consumer interest in sporting apparel and footwear wane slightly," Håkon Helgesen, an analyst with GlobalData Retail, said in a note emailed to Retail Dive. And while Dick’s enjoyed market share gains across categories, weakened demand as well as closing sales of rival sports equipment retailers during the quarter might have slowed the pace of growth, Helgesen added.
Dick’s earnings come in the wake of an executive suite shake-up that saw the COO André Hawaux announce his retirement and CMO Lauren Hobart get promoted to president. Hawaux joined the retailer four years ago from ConAgra and will remain with Dick’s through the second quarter of this year.
Reporting to newly appointed President Hobart will be Don Germano, who oversaw the company's stores operations from 2010 through 2013 and will return as the company's senior vice president of store operations. Also joining the company is Keri Jones, who is expected to begin May 22 as the retailer's Chief Merchant. Jones, who according previously worked in supply chain and merchandising roles with Target, will report to Dick’s CEO Edward Stack, as will Hobart.
Stack said the changes — including Hobart’s promotion to president — are meant to make Dick’s more efficient and boost the company’s efforts to reach and sell to customers across sales channels. They follow Dick’s growing dominance in the market after major competitor Sports Authority succumbed to bankruptcy and sold its intellectual property and store locations to Dick’s. Dick’s also acquired $43 million of assets from Golfsmith that it plans to fold into its Golf Galaxy chain.
Going forward, GlobalData Retail’s Helgesen thinks Dick’s can become stronger through efforts to prune vendors and create a “clearer shopping experience.”
“However, we view this as a critical step to making Dick's shops more of a destination and increasing their appeal with exclusive merchandise and popular premium brands,” Helgesen said in a note. “In our view, the benefits from this strategy should start to come through later in the second half. Overall, we see most of this year as being one of transition for Dick's. The company has survived the turmoil in the market, but it now needs to enact strategies that will allow it to thrive.”
- press release DICK'S Sporting Goods Reports First Quarter Results