Last year, Dick's sales increased by 10%, but the retailer expresses concerns about a potential decrease in sales moving forward.
Dick's Sporting Goods Thrives Amidst Challenges in 2020
Dick's Sporting Goods, the renowned American sporting goods retailer, is set to open 12 new stores in 2021, including six specialty concept stores and six regular Dick's stores. This expansion comes after a spectacular year in 2020, marked by a surge in active lifestyle participation and a boom in sales.
The pandemic-induced lockdowns led to a significant increase in sports and outdoor activities, particularly running. To capitalize on this trend, Dick's Sporting Goods expanded its offerings of popular running shoes like Hoka’s Clifton and Brooks’ Ghost models, boosting both in-store and online sales.
The retailer has also been focusing on both brick-and-mortar stores and digital channels. By doubling down on physical locations and expanding its e-commerce platform, Dick's managed to grow its digital sales even as many other retailers were struggling. Athletic footwear, which accounted for about one third of Dick’s revenue and had been the fastest-growing segment over the previous five years, saw a further intensification in growth in 2020.
The pandemic has also benefited Dick's Sporting Goods due to closed gyms and fitness centers. Sales of free weights, bikes, and exercise equipment skyrocketed as consumers turned to home workouts.
In the fourth quarter, Dick's Sporting Goods' comparable sales increased by 19.3%, and e-commerce sales surged by 57%. The company's top-line sales exceeded $3.1 billion in the fourth quarter.
Ed Stack, Dick's executive chairman and chief merchandising officer, stated that the company thrived despite the challenges of 2020, delivering record-setting sales and earnings. Telsey Advisory Group analysts noted that Dick's Sporting Goods is gaining share through its curated assortment of national brands, differentiated private label portfolio, and e-commerce.
Looking forward, Dick's Sporting Goods' outlook for 2021 estimates a 2% growth in comp sales on the high end or a 2% decline on the low end. However, the retail success in 2021 is considered a difficult calculus due to the impact of the pandemic on various sectors.
As gyms reopen and more retailers enter the sporting goods market, Dick's Sporting Goods faces potential disruption, according to Neil Saunders, managing director of GlobalData. However, the "mini spending splurge" as consumers prepare for post-pandemic life could continue to drive sales of Dick's Sporting Goods products.
In conclusion, the combination of increased consumer engagement in fitness activities during the pandemic, strategic investments in digital commerce, and strength in athletic footwear sales underpinned Dick’s Sporting Goods’ record sales growth in 2020. As the company continues its expansion in 2021, it remains to be seen how these trends will continue to shape the retail landscape.
References:
- Dick's Sporting Goods Q4 Earnings Call Transcript
- Dick's Sporting Goods capitalizes on pandemic-induced running boom
- Dick's Sporting Goods doubles down on physical locations and e-commerce
- As the pandemic drives a rise in home workouts, sales of free weights, bikes, and exercise equipment significantly increased for Dick's Sporting Goods.
- Aiming to capitalize on the boom in active lifestyle participation, Dick's Sporting Goods expanded its offerings of popular running shoes like Hoka’s Clifton and Brooks’ Ghost models.
- Despite challenges in various sectors due to the pandemic, Dick's Sporting Goods managed to grow its digital sales by focusing on both brick-and-mortar stores and digital channels.
- In the tech-driven age, AI and research in the sporting goods industry, finance, retail, and technology sectors could potentially offer innovative solutions to further boost Dick's Sporting Goods' sales and growth.
