Dick's Sporting Goods keeps on winning with middle-income shoppers, even as consumers cut back in other discretionary categories. In its latest evolution, the company says it is ready to further expand its House of Sport concept, following positive results from three years of testing.
Dick’s sales jumped 5.3% in the first quarter, rising to $2.84 billion, up from $2.7 billion in 2022. Comparable store sales notched a 3.4% gain. And net income climbed 11.6% to $305 million, versus $261 million in the year-ago period. Those increases follow two consecutive years of record sales gains.
The company credits the recent launch of the "Sports Change Lives" campaign, the largest in its 75-year history, with improving results and driving deeper brand engagement.
"The feedback has been very positive, and it's clear our message is resonating," said Lauren Hobart, Dick's president, in a conference call for investors. "We're excited to build on this energy as we launch the second iteration of this campaign early next month, focused on telling stories of how sports changed the lives of several well-known athletes."
Store executives invited analysts to tour the House of Sport location in Minnetonka, Minnesota, using the roadshow to highlight what it's learning as it prepares to expand. (It also operates House of Sport locations in Knoxville, Tennessee, and Rochester, New York.)
"House of Sport is fostering robust engagement with both our athletes and our brand partners, all while delivering much higher sales and profit," Hobart said. "This year, we're on track to open nine House of Sport locations ahead of the back-to-school season and are beginning construction on more than 10 additional locations that will open throughout 2024."
By 2027, Hobart estimates the Pittsburgh-based retailer will have between 75 to 100 House of Sport stores nationwide.
The company is also updating traditional stores based on insights gleaned from the House of Sport locations. It opened the first such remodel last month in South Bend, Indiana.
Seth Basham, an analyst who follows Dick's for Wedbush, writes that the tour of the Minnesota store leaves him optimistic about the House of Sport expansion plans, including growth opportunities and the company's ability to successfully manage through the choppy economic territory. He sees a continued "halo effect from applying merchandising, community-engagement and service learnings and successful products in House of Sport across the chain."
As Dick’s translates these to more exciting in-store experiences, Basham expects the adaptations to "drive traffic, credibility with all levels of athletes, loyalty and sales. We expect these halo benefits to last well into 2024."
Brian Nagel, who follows Dick's for Oppenheimer & Co., also finds the House of Sport concept compelling. "We came away very impressed with the look and feel of the company's House of Sport concept, noting expansive and well-showcased product selections and a very compelling, easy-to-navigate store layout," he writes.
So far, he notes that consumers appear to cross-shop both formats, "not cannibalizing sales at existing, smaller units."