Dick’s Sporting Goods reports $90.8 million in Q2 profit; seeks to expand casual sportswear offerings

19 August 2015

Sports retailer’s earnings beat analysts’ estimates.

Executives at Dick’s Sporting Goods Inc. on Tuesday laid out plans to expand the chain’s casual-sportswear lines in a retail environment that has become more about sporty clothes than sporting gear.

Dick’s said it will increase its offerings of Skechers casual shoes and Polo sportswear over the next year, in addition to the expansion of its Calia by Carrie Underwood women’s athletic line that debuted in the spring.

The retailer on Tuesday reported $90.8 million in profit for its fiscal second quarter ended Aug. 1, a jump of 31%, on sales growth of 7.9% to $1.82 billion. Sales at stores open at least a year rose 1.5% at Dick’s outlets, while those at the company’s Golf Galaxy chain fell 2.9%. In the previous quarter, same-store sales at Golf Galaxy slumped 11%, after falling 8% in fiscal year 2014.

The company announced a year ago it would restructure its golf business and reduce its emphasis on the sport, particularly as sports-apparel demand picked up.

Earlier this year, Dick’s executives said they expected the golf business to hit bottom during the fourth quarter—winter is traditionally a slow period for the category—before returning to profitability next year.

For Dick’s, sales of sports equipment tend to track sports participation rates. On the company’s earnings call on Tuesday, Chief Executive Edward Stack said declines in teen participation in football have been countered by growth in soccer and baseball.

”It feels as though those kids who played football have moved to soccer or to fall baseball,” he said, adding that the soccer business has performed strongly even beyond seasonal sales during last summer’s World Cup.

The company is planning to offer Skechers casual shoes in all stores by 2016, a further indicator of the shoe maker’s widening distribution beyond family footwear retailers. The brand, once most famous for its line of “toning shoes,” became the No. 2 sports footwear entry by U.S. market share this spring, behind Nike Inc. and surpassing Adidas AG, according to data from retail tracker NPD Group.

During the quarter, the company opened seven new Dick’s Sporting Goods stores, one new Field & Stream location, and closed three Golf Galaxy sites. The retailer operates 619 Dick’s Sporting Goods stores, 75 Golf Galaxy storefronts and 12 Field & Stream locations. For the current fiscal year, the retailer expects to open 44 new Dick’s Sporting Goods stores and nine new Field & Stream stores.

The company has also said it hopes to increase e-commerce revenue to between $1 billion and $1.2 billion in fiscal 2017, up from $628 million in 2014. On Tuesday, the retailer said e-commerce was 7.3% of total sales in the latest quarter, compared with 6.3% during the same period a year ago.

 


wsj.com