- Dick’s on Wednesday lowered its guidance after reporting a 7.5% sales decline and an 8.4% comps decline, according to a company press release. Net sales came in at $2.7 billion, down about $200 million from the year prior, which saw exceptional growth.
- Last year during the same quarter, Dick’s sales surged 119% and were up 52% compared to 2019. CEO Lauren Hobart noted on a call with analysts that the retailer is lapping a period where stimulus payments also drove more spending.
- For the year, Dick’s now expects comps to be down by 2% to 8%, compared to previous guidance of flat to down 4%.
Dick’s joins many others in the retail space in posting a quarter of declines, but the moderation in the company’s results comes after a record year in 2021 and sales are still well above 2019.
Compared to the first quarter of 2019, net sales are up more than 40%. GlobalData Managing Director Neil Saunders pointed to this as proof of the strength of the Dick’s business despite the declines this quarter.
“This indicates that Dick’s has taken and held on to market share, as well as benefitted from organic growth from higher consumer demand for sporting goods and apparel,” Saunders said in emailed comments. “The group is also more profitable in both relative and absolute terms than it was in the first quarter of 2019. By no stretch of the imagination can this be seen as a failure.”
Analysts with Telsey Advisory Group called the lower outlook “disappointing” as it indicates consumers are spending less in the category and promotions are likely to return, but they maintained that Dick’s is a “long-term share gainer.”
The retailer has worked to improve its assortment over the years, building strong ties with large brands like Nike and introducing a slew of private labels to fill in the gaps. Hobart said the company’s private labels are gaining share across the business and noted that its partnerships with top athletics brands are all “at an all-time high.”
“We have invested so much in our stores and in our experience, such that brands who are rooted in sport want to actually showcase their product and their brand in our stores,” Hobart said. “So, yes, across the board we are getting access to higher heat and more pristine premier product that's high in consumer demand.”
The company has tested a number of store concepts as part of its investment in experience, and those are performing well. Dick’s opened its third House of Sport experiential store on Wednesday, and Hobart highlighted that the retailer’s Going, Going, Gone clearance concept is successfully helping the retailer clear out excess inventory. All of that sets up the retailer well, but competition is also growing, according to Saunders.
“One area of greater concern is sharper competition from specialists like Lululemon, the growth of newer entrants like Alo Yoga, and the reinvigoration of traditional players like Foot Locker,” Saunders said. “Taken together with the slower demand, this presents a challenge to Dick’s as rivals are now arguably better placed to steal share of wallet than they have been for some time.”