No sweat: Dick’s crushes 2Q as consumers focus on fitness
At home workouts and outdoor athletic activities are shaping up to be good business for Dick’s Sporting Goods. The retailer’s second-quarter results easily beat Wall Street’s expectations as consumers continue to focus on health and wellness while stuck at home amid the coronavirus pandemic.
“During this pandemic, the importance of health and fitness has accelerated and participation in socially distant, outdoor activities has increased. There has also been a greater shift toward athletic and active lifestyle product with people spending more time working and exercising at home,” Chairman and CEO Edward Stack said in a statement on Wednesday. “The majority of our assortment sits squarely at the center of these trends, and while mindful of the uncertainty in the current environment, we are in a great lane right now.”
While many consumers are concentrating on traditional exercise equipment during quarantine, Dick’s merchandise lends itself to various stay-at-home and socially distant activities. The retailer’s stores are full of items for boating, golfing and climbing.
For the quarter, Dick’s earned $276.8 million, or $3.12 per share. Stripping out one-time costs, the Coraopolis, Pennsylvania-based company earned $3.21 per share. That handily topped the $1.24 per share analysts polled by Zacks Investment Research predicted.
Revenue totaled $2.71 billion, which surpassed Wall Street’s estimate of $2.51 billion.
Sales at stores open at least a year, a key gauge of a retailer’s health, increased 20.7%. And online sales skyrocketed, nearly tripling in the quarter.
The strong performance – which included its highest quarterly sales and earnings ever – was a bit of a surprise to the market, and investors are rallying around the stock, pushing shares up more than 11% in morning trading.
It was only earlier this month that some analysts were predicting that sporting goods retailers, as well as those that sell athletic clothing and footwear, would likely have a tough go of it this back-to-school season. The argument was that those retailers might struggle, given that many schools weren’t planning to reopen for in-person instruction at the start of the school year and some fall sports were not being played.
But adults and children alike are eager to keep busy – and keep moving – while quarantining. Families are now expanding beyond workouts to socially distant activities that everyone can enjoy, like hikes, backyard camp outs and fishing. And this works in Dick’s favor.
“As a specialist player Dick’s was a clear destination for many shoppers and benefited from having a better assortment and stock levels than generalists, where inventory frequently ran short,” Neil Saunders, managing director of GlobalData Retail, explained.
And Dick’s is looking to keep the momentum going. For the first three weeks of its third quarter, same-store sales are up 11%.