• by Sarah Mahoney  @mahoney_sarah, November 29, 2021

Image above from a recent Dick's ad.

Dick’s Sporting Goods scored another winning quarter with sales and profits that easily topped expectations. But some observers believe those big gains, fueled by pandemic interest in health and fitness, may be ready to fade.

Dick’s same-store sales for the third quarter jumped 12%, an astonishing gain given its 23% increase in the third quarter of 2020, and the 6% bump it had in 2019.

Net sales rose 14% to $2.75 billion, which marks a 40% rise from the comparable period in 2019.

Ecommerce sales continue to flourish, up 1% compared to last year and 97% from 2019. Online sales now account for 19% of its total.

Net income for the Pittsburgh-based retailer jumped to $322.2 million, compared to $182.2 million in the comparable period of 2019.

And citing a solid start for the fourth quarter, Dick’s raised its forecast for the full year.

Some observers think consumers’ interest in sporting goods can no longer be dismissed as just a pandemic blip. “We believe that most sporting goods categories have ‘re-baselined’ meaningfully higher vs. pre-COVID sales levels due to a fundamental shift in consumer behavior with a bigger emphasis in health and fitness, participation in outdoor activities and a far greater propensity for athletic apparel and athletic lifestyle products,” writes Seth Basham. He follows the company for Wedbush Securities.

After “crushing” expectations with these promising results, Dick’s “is positioned to continue winning market share through its merchandising, assortment, experiences and service improvements—its transformational partnership with Nike is a case in point, driven by CEO Lauren Hobart,” writes Basham.

Brian Nagle, who tracks the company for Oppenheimer, takes a different view. He writes that the company continues to impress with its improved business model, benefiting not just from increased consumer interest in sporting goods but, more broadly, from higher levels of discretionary spending.

But he thinks those good times may be ending. “We are now turning even more concerned that potential for outsized sales and profit expansion at the chain might be waning, as pandemic dynamics abate and spending normalizes,” he writes in his note.

And at Morningstar, analyst David Swartz sees significant challenges ahead for Dick’s. He applauds the company’s “home run” in the current quarter, especially the 12% gain in same-store sales. Still, Dick’s “is struggling to stay relevant as sporting goods are sold through an increasing number of channels,” he writes. “Although its sales have soared during the pandemic, we believe the impact is temporary.

Swartz believes Dick’s faces intense competition from many strong retailers, including Walmart, Amazon, eBay, Kohl’s, no- Macy’s, Bass Pro Shops/Cabela’s, and Foot Locker.