Dick’s Sporting Goods CEO Sees ‘No Slowdown’ With Consumer Spending

Dick’s Sporting Goods reported stronger-than-expected results for its second quarter, providing additional evidence in the surge of retailers’ latest reports that consumers are willing to spend in-store, and especially online.

Despite the 5% gain in overall sales, to $3.7 billion, and the 5% comparable sales growth that management said was tied to ticket and transaction gains, investors sent the shares 4% lower on Thursday (Aug. 28) after results were disclosed.

During the conference call with analysts, CEO Lauren Hobart said that comparable sales moving forward would be in the 2% to 3.5% range, where that range had been 1% to 3%.

“We are not seeing any signs of slowdown with the consumer. In fact, one of the most exciting things about the quarter that we just delivered is the broad based nature of the growth that we saw. We saw growth across all of our key segments.”

Later in the call she stated that “our consumer across the board is doing well, and you see that in the fact that we’re not seeing trade downs … We’re seeing growth across all income demographics. We have products for absolutely every consumer, and that’s taking us into [growth in] the back half.”

Management noted particular strength in online sales. The company’s GameChanger platform has grown and the subscription based app has seen 16% boost in monthly active users to 7.4 million unique users.

“During Q2 more athletes purchased from us, they purchased more frequently and they spent more each trip compared to the same period last year,” Hobart told analysts, adding that “our multibillion dollar highly profitable e commerce business is standing out as a growth driver, once again growing faster this quarter than the company overall. Our app has been instrumental in creating a strong launch culture across key categories, driving energy and sell through.”

Chief Financial Officer Navdeep Gupta said that the 5% comps reflect an environment where “we continue to gain market share from online only and from omni channel retailers … these strong comps were driven by a 4.1% increase in average ticket and a 0.9% increase in transactions.” Private label brands, which have higher margin, were strong in the most recent quarter, too, per commentary on the call.

As for the retailer’s brick-and-mortar presence, the CEO said that during the past quarter the firm has opened one additional House of Sport location and in Q3 expects to open 13 more. “We continue to expect to open approximately 16 total House of Sport locations this year, which will bring our year end total to approximately 35,” she said.

During the question-and-answer session with analysts, management was asked about acquisition of Foot Locker, which reported relatively weaker results. “We plan to invest in stores. We plan to invest in marketing, and we know that there are opportunities from a core merchandising standpoint,” Hobart said, adding that “we’re excited about apparel opportunities and also bringing in a new assortment of products.” The acquisition remains on track to close early next month, she said.

“As Foot Locker becomes part of the Dick’s family, we are an even more important brand to our wholesale partners,” Hobart said.

“Footwear is the engine that pulls the train. We always have said the outfit starts with the footwear. Footwear is key for performance. It’s key for sport lifestyle,” she told analysts. “We’re serving different consumers, both at Dick’s and at the Foot Locker banners, and we are going to be delivering them what they need in a category that we think is fairly important both short term and long term.”

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