Dick's suffers as brands bypass brick-and-mortar
Dick's Sporting Goods on Tuesday reported fourth quarter net sales rose 7.3% year over year to about $2.66 billion, missing the analyst forecast for $2.74 billion cited by CNBC. E-commerce sales in the period rose about 9%, according to a press release. Digital sales were 19% of total net sales, compared to 17.9% during the year-ago period.
The holidays took a bite, as same-store sales fell 2%, in line with its previous guidance and down from a 5% same-store sales increase a year ago. The metric missed the analyst forecast cited by CNBC for a 1% decline in same-store sales.
The retailer this year plans to open about 19 new Dick's Sporting Goods stores (eight in the first quarter) and relocate about four Dick's Sporting Goods stores, according to the release. It won't open any new Field & Stream or Golf Galaxy stores.
Dick's had a rough holiday quarter, at a time when many retailers saw both top-line and same-store sales growth increases.
A threat to the sporting good retailer comes from the effort by brands like Nike and Adidas to bypass brick-and-mortar retailers to sell directly to customers online and in their own stores. Nike, for example, is working with Amazon and Stitch Fix to reach consumers more directly.
Still, Dick's is unlikely to lose its command in sporting goods retail, according Wedbush analysts. "While we feel [Dick's] will continue to remain a dominant force, we need to see efforts around e-commerce, in-store service and price promotion lead to more profitable comp growth — factors that aside from the initial [Sports Authority] bankruptcy, have eluded the company," Wedbush analysts said in a note emailed to Retail Dive. "For [fiscal 2018], we look for commentary around the promotional environment and the level of reinvestment into the business."
In the face of those pivots from key brands, and in addition to boosting its own omnichannel efforts, Dick's plans to move more assertively to develop its own private labels, CEO Edward Stack said in a statement Tuesday.
"In 2018, we expect stronger product innovation from select key partners and the continued expansion of our private brands to result in less margin pressure than previously expected," he said. "We see meaningful opportunity to drive improvements across our business and will make significant investments that will continue to position Dick's Sporting Goods as the leader in our industry."
- press release via PR Newswire DICK'S Sporting Goods Reports Fourth Quarter and Full Year 2017 Results
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