Dick’s Sporting Goods CEO Says the ‘Consumer Is Holding up Very Well’ – Footwear News
Dick’s Sporting Goods sees no slowdown in consumer spending, bucking a trend of weak demand seen at retailers this quarter.
“We don’t see a meaningful decline in trade,” Lauren Hobart, Dick’s CEO, said Tuesday in a call to investors. “Our consumer is holding up very well.”‘
Shares of the sporting goods retailer rose Tuesday morning after it released Q2 results that beat analysts’ expectations. Dick’s posted net sales of $3.1 billion, up 38% from the second quarter of 2019 and beating analysts’ expectations of $3.07 billion. Non-GAAP earnings per diluted share were $3.68, ahead of expectations of $3.57. Comparable store sales declined 5.1%.
Dick’s also raised its guidance for 2022 and now expects comparable-store sales to fall between 6% and 2%. The company also expects earnings per diluted share to be between $8.85 and $10.55.
Shares of Dick were up more than 3% in premarket trading and up slightly as markets opened.
Over the past few weeks, retail executives have noted slowing demand in non-discretionary categories amid a highly inflationary environment. Amid weak consumer demand, Target, Walmart, and Kohl’s recently mentioned canceling or cutting orders to stay ahead of their above-average inventory levels.
“While Dick’s will not be immune to the general slowdown in consumer spending, we believe it is in a much better position than many in retail to weather the storm,” GlobalData chief executive Neil Saunders said in a statement. “It’s one of the reasons the company has raised guidance for the rest of this year — a rarity in a deteriorating environment.”
Meanwhile, Hobart said Dick’s hasn’t faced the same kind of spending slowdown, with trends remaining relatively stable across all income demographics. Dick’s has also avoided the labor and staffing shortages that have permeated the entire retail industry, Hobart said.
Hobart also highlighted the company’s “reasonably priced product range” and described its products as “stronger” and “more narrowly distributed”. Through a supplier relationship and a new digital partnership with Nike, Dick’s has been able to benefit from a strong connection to one of the hottest sports brands in the world. Unlike Dick’s, many other retailers such as Zappos, Dillard’s, DSW, Urban Outfitters and Shoe Show have had their wholesale accounts terminated by Nike in recent months.
“Our relationships with key brands are stronger than ever,” said Hobart.
Outside of Nike, Dick’s has also shifted into higher-margin categories and vertical brands, moving away from lower-margin categories like hunting. Athletic apparel growth was slowed in the second quarter by late shipments, but sales rose as product began to flow. Golf and team sports were prominent categories in Q2.
Hobart said Dick’s products can largely be considered non-discretionary, which has given the retailer the benefit of sustained demand in a difficult economic environment.
“We have products that have held up well in previous recessions,” she said.