retail

Dick's Posts Record Holiday Sales, Flags Uncertain Year Ahead

Despite delivering one of its strongest quarters ever, Dick’s Sporting Goods is predicting only modest sales growth this year, citing global uncertainty rather than waning consumer demand. Comparable sales in the fourth quarter rose 6.4%. The Pittsburgh-based company is also seeing continued growth from new retail concepts. However, the retailer shook observers with the prediction that sales in the coming year would gain a tepid 1% to 3%.

Total sales climbed 0.5% to $3.89 billion in the 13 weeks, compared to $3.88 billion in the prior-year quarter, which had 14 weeks. Net income rose 1% to $300 million, up from $296 million in the fourth quarter of last year. Both top and bottom-line results beat Wall Street forecasts.

And the company reported sales gains at all income levels, with no indication that worried consumers might have begun trading down in concerns about their finances.

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“Dick’s higher income consumer, product differentiation, innovation and better inventory levels helped drive the continued strength in average ticket,” powered by a strong assortment and the company’s new marketing campaign, writes Seth Basham, who follows the company for Wedbush Securities.

Dick’s commands about 9% of the highly fragmented $140 billion industry, and company executives believes Dick’s is poised for bigger gains in the years ahead. “We see tremendous strength and momentum in the U.S. sports industry, a trend we expect to continue through 2030 and beyond,” said Lauren Hobart, president, on a call webcast for investors. “With the continued excitement around women's sports, the enthusiasm surrounding next year's Soccer World Cup matches on U.S. soil, and the anticipation for the 2028 LA Olympics and the Rugby World Cup, which will be held in the U.S. for the first time, the convergence of sport and culture has never been stronger.”

In a nation obsessed with sports, “no one is better positioned to harness this opportunity.”

The company also sees continued growth from its GameChanger app, designed for game and team management in youth sports, with 9 million unique users and 1.8 million average daily users, and revenue topping $100 million last year. Hobart says the company expects that to reach $150 million this year.

She also said Dick’s is “very pleased” with early interest in Dick’s Media Network, which the company believes will become a long-term sales growth driver.

When questioned about the dim outlook, on the heels of a strong quarter, Hobart took pains to stress that Dick’s is not seeing any weakness in consumer spending at any income level.

“Our guidance merely reflects the fact that there's so much uncertainty in the world today, in the geopolitical environment, macroeconomic environment, we are just being appropriately cautious,” she said. “Our consumer has proven that in times of stress and uncertainty, they are leaning into the outdoors, being outside, going for a run or walk, playing and watching team sports. It's become much more of a necessity than a discretionary item. It is a way for people to find calm in an otherwise uncertain timeframe.”

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