Sales at Dick’s Sporting Goods are up and Sport’s Authority’s downward spiral could soon spell more success for the brand.
For the first quarter ended Apr. 30, the sporting gear retailer posted net sales up 6.1% to $1.7 billion, or $0.50 per diluted share. Same store sales were up 0.5% overall, with the company’s namesake stores experiencing a 0.4% increase in sales and Golf Galaxy, the golf specialty retailer it operates, seeing sales up 1.7%.
Net income, however, was down 10 percent year over year to $56.9 million.
“We are pleased to have delivered first quarter earnings at the high end of our expectations in a challenging retail environment,” Dick’s chairman and CEO Edward W. Stack said, who noted on a conference call Thursday that the company’s apparel business was below expectations and below last year, but e-commerce proved more positive. E-sales were 9.2% of total sales in the quarter, up from 8.5% the same time last year.
The company opened three new Dick’s Sporting Goods stores in the quarter and plans are in place for 36 more this year.
But perhaps what was on most investors’ minds: What’s going to happen with Dick’s now that the sporting goods sector is perishing?
More market share for Dick’s is what’s going to happen.
“There’s a lot of activity in the sporting goods landscape right now. A long awaited consolidation is taking place,” Stack said on the call.
In the past several months, as the CEO pointed out, City Sports in Boston has liquidated, Sports Chalet said it would close all of its stores, The Sports Authority has gone bankrupt and is now liquidating its assets, and others are evaluating strategic alternatives.
“Although it’s a mess, it’s a great opportunity for Dick’s Sporting Goods,” Stack said, adding that the environment will likely put short-term pressure on the business.
Stack continued, “There are over 200 stores within five miles of a Dick’s store that are closing and liquidating, and over 350 stores within 10 miles of a Dick’s location. Once this consolidation works its way through the system, we are poised to pick up significant market share. We’re in the process of executing plans to make sure a meaningful portion of this market share comes to Dick’s Sporting Goods.”
At a Sports Authority asset auction Tuesday, Dick’s reportedly bid on 30 of the near-defunct retailer’s stores, but sources close to the matter think that count could come up.
For the full year 2016, Dick’s expects earnings in the $2.60 to $2.90 per share range, which contemplates expected liquidation activity in the market.
Dick’s shares were up nearly 9 percent to $41.44 at publication time Thursday.