Dick’s Sporting Goods saw sales plummet by more than 30 percent in a first quarter derailed by coronavirus store closures, though e-commerce and curbside pickup helped to lessen the blow.
In a Nutshell: Dick’s ended the first quarter with approximately $1.5 billion in cash and cash equivalents. The company added $255 million to its borrowing capacity through its revolving credit facility and issued $575 million in 3.25% convertible senior notes, raising $500 million from the sale.
As of May 30, the retailer has reopened around 80 percent of its physical locations, which shut down in March. Store associates now wear gloves and face coverings, plexiglass screens protect checkout locations and floor decals promote social distancing. Dick’s is limiting the number of people in stores as required by local regulations.
“Concurrent with the reopening of the majority of our stores, last week we restored previously reduced salaries for our teammates, except for certain executives, and have started bringing teammates back from furlough,” executive vice president and chief financial officer Lee J. Belitsky said during the company’s quarterly conference call. “We have also had very productive discussions with our vendors to reduce inventory receipts and extend payment terms.
“Likewise, we have had similarly productive discussions with our landlords about deferring and abating rent payments,” he added.
Inventory decreased by 2.1 percent at the end of the quarter compared to the prior-year period.
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Sales: Net sales decreased by 30.6 percent to $1.33 billion in Q1, below the Wall Street estimate of $1.49 billion. Same-store sales fell by 29.5 percent due to the store closures but e-commerce sales were up by 110 percent.
E-commerce sales leapt 210 percent after stores shut down in March.
Digital sales penetration reached 39 percent in Q1 versus 13 percent in the comparable period, thanks to a curbside pickup service rolled out as stores shut down. Compared to buy online, pickup in store, or BOPIS, sales in year-ago quarter, revenue from curbside pickup skyrocketed 1,000 percent.
“We’re regaining momentum, and through the first four weeks of Q2 with 44 percent of our stores remaining closed on average, our consolidated same-store sales have decreased only 4 percent,” CEO and chairman Edward W. Stack said.
Earnings: On a net loss of $143.4 million, Dick’s Sporting Goods reported a loss per share of $1.71 in the first quarter, below the Wall Street estimate of a loss of 36 cents.
Much of its Q1 earnings miss stemmed from to a 50-cent impact related to $34 million of staff compensation and safety costs and another $28 million for inventory writedowns.
CEO’s Take: “Virtually every business segment, including the retail industry and Dick’s Sporting Goods, has been affected. Organized sports at all levels have come to a standstill; gyms and fitness centers were closed across the country, forcing everyone to build new fitness habits and routines. Throughout this evolving landscape, we anchor to our corporate values and the promise that doing the right thing is the ultimate path to success,” Stack said.