Dick’s Sporting Goods CEO Says the ‘Consumer Is Holding up Very Well’

Dick’s Sporting Goods is not seeing slowdowns in consumer spending, bucking a trend of weak demand being seen across retailers this quarter.

“We are not seeing a significant trade down,” said Dick’s CEO Lauren Hobart in a call with investors on Tuesday. “Our consumer is holding up very well.”

Shares of the sporting goods retailer lifted on Tuesday morning after it reported Q2 results that topped analysts expectations. Dick’s posted net sales of $3.1 billion, up 38% compared to the second quarter of 2019 and ahead of 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 of between $8.85 and $10.55.

Dick’s shares were up more than 3% in pre-market trading and up slightly when markets opened.

In the last few weeks, retail executives have noted softening demand in non-discretionary categories amid a highly inflationary environment. Noting the weak consumer demand, TargetWalmart and Kohl’s have recently mentioned cancelling or cutting down on orders to stay ahead of their higher-than-usual inventories.

“While Dick’s will not be immune from the general slowdown in consumer spending, we believe it is in a much better place than many in retail to weather the storm,” said managing director of GlobalData Neil Saunders in a note. “This is one of the reasons the company has increased guidance for the rest of this year — which is a rarity in an environment that is deteriorating.”

Meanwhile, Hobart said Dick’s has not been subject to the same sort of slowdown in spending, with trends remaining relatively stable across all income demographics. Dick’s has also avoided the labor and staffing shortage that has permeated the broader retail industry, Hobart said.

Hobart also highlighted the company’s “favorable product assortment,” describing its products as “higher heat” and “more narrowly distributed.” Via 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 athletic brands around. 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 remain stronger than ever,” Hobart said.

Outside of Nike, Dick’s has also shifted towards higher margin categories and vertical brands, moving away from categories like hunting, which offer less favorable margins. Athletic apparel growth was stunted in Q2, given late shipments, but sales picked up when products started to flow. Golf and team sports were standout categories in Q2.

Hobart said Dick’s products can largely be viewed as non-discretionary, which has given the retailer the benefit of continued demand throughout a troubling economic environment.

“We do have products that have held up well in prior recessions,” she said.

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