Innovative Store Concepts and Private Label Brands Drive Record Sales at Dick’s Sporting Goods

Dick’s Sporting Goods is a pandemic-era success story.

After consistently delivering strong results over the last 12 months, the sporting goods retailer announced on Wednesday that it delivered its strongest quarter in the company’s history, with record sales and earnings. Stock for Dick’s Sporting Goods Inc. soared 13% after the company reported a net income of $495.5 million, or $4.53 per diluted share, on Wednesday.

Analysts and executives pointed to a variety of factors when explaining the standout performance. For starters, the retailer benefited from a surge in outdoor and athletic categories, driven by a consumer interest in hiking and the outdoors.

“The importance of health and fitness has accelerated, participation in outdoor activities has increased, and there’s been a far greater propensity for athletic apparel and athletic lifestyle product,” said Lee Belitsky, EVP and CFO of Dick’s Sporting Goods, in a call with investors. “These new habits and behaviors have largely continued into 2021, and looking ahead, we believe these trends have staying power.”

As sales abound, Dick’s has been seeing wins across multiple channels and categories. Just this year, the company launched an experiential retail concept with its its first House of Sport outpost and a men’s athleisure line called VRST.

Here are some key trends behind the explosive growth at Dick’s Sporting Goods.

E-commerce growth

Williams Trading analyst Sam Poser believes Dick’s will continue to see long-term impact from its digital progress in 2020, which helped improve consumer engagement across e-commerce channels. Poser predicted 2021 e-commerce sales of $2.49 billion, down 12.6% from 2020, but up 76.9% from 2019.

E-commerce sales for Dick’s decreased 28% year-over-year in Q2, but increased 111% compared with 2019. Poser forecast that e-commerce revenue for 2021 won’t top 2020 numbers, but will likely settle around a level that is 75% higher than 2019.

“The 2020 growth was driven out of need and great execution, based on management commentary and our proprietary checks,” Poser wrote in a note, calling out the execution of curbside pickup, BOPIS and advancements in the retailer’s website and mobile app.

Experiential retail is paying off

Dick’s Sporting Goods opened two House of Sport outposts earlier this year. The experiential store concept, which includes a 17,000-square-foot turf field, a running track, a rock-climbing wall, a batting cage, golf hitting bays and a putting green, is meant to attract consumers to physical stores.

According to foot traffic data from retail analytics firm Placer.ai, customer visits to the House of Sport store in Victor, N.Y., “significantly outpaced” visits to other Dick’s Sporting Goods doors in the area, with 93.5% more visits.

In Q2, brick-and-mortar sales increased by 36% compared with 2019. In a call with investors, Dick’s CEO, president and director Lauren Hobart said that the House of Sport stores had already exceeded expectations.

“The energy and enthusiasm with which athletes and communities have responded to these highly experiential concepts has been incredible,” Hobart said. “Looking ahead, we will continue to refine and grow House of Sport while rolling its most successful elements into our core Dick’s stores.”

A mix of brand partnerships and private label

Unlike other wholesalers, Dick’s has managed to maintain important relationships with key brands such as Nike and Adidas, which, like other footwear and apparel brands, have pulled out of various wholesale partnerships in recent months to focus on direct-to-consumer sales. Dick’s, though, remains a strategic partner for the sportswear market leaders.

Hobert said in call with investors that the company’s relationships with these brands have become even stronger and elevated as other partners get siphoned off.

“We’re speaking even more frequently and planning the future with our key brand partners,” she said.

However the shift to DTC has encouraged retailers like Dick’s to lean more actively into private label. Executives spoke to the scalability of their in-house brands, including the recently launched VRST men’s lifestyle label.

“We believe that there’s a lot of scale still out there in the apparel space, a little bit in footwear. There’s still a lot of room for growth,” Belitsky said.

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