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Dick’s CEO: Active and Wellness Categories Are ‘Necessities Rather Than Discretionary’

Dick’s Sporting Goods’ CEO says the chain’s strong Q4 results highlight a healthy consumer that wants to keep spending on active and wellness.

“We are seeing our consumer doing very, very well,” CEO Lauren Hobart told analysts in a Tuesday call discussing the company’s earnings results for Q4 and the whole year. She added that consumers are prioritizing categories like health, wellness, active lifestyle and team sports more than they did prior to the pandemic.

“I think people really have decided with whatever they have in their wallet, they’re prioritizing these categories,” Hobart said. “They’re coming to life more as necessities rather than discretionary.”

The sporting goods retailer beat analysts’ expectations in Q4, with revenues of $3.60 billion, a quarterly record for the company, and ahead of the $3.45 billion expected. Adjusted earnings per diluted share were $2.93, compared to $2.88 expected. Net income was $236 million and same-store sales increased 5.3%.

Throughout 2022, Dick’s has consistently managed to buck the weaker trends across retail — and in the sporting goods category as a whole. According to Hobart, all income demographics grew in Q4, with core categories such as footwear, team sports, athletic apparel and golf driving more than 80% of the company’s business.

For the full year, net sales were $12.37 billion, up 0.6% compared to 2021.

In addition to consistent consumer demand, Dick’s benefited from a lack of widespread promotions at retail, which was common across other retailers looking to offload excess inventory in Q4.

“Promotions were not a key factor in our year last year,” Hobart said. “It wasn’t a highly promotional environment for us.”

In Q3, Hobart said Dick’s would take a “surgical” approach in implementing markdowns across select items as opposed to opting for a “sledgehammer approach” of offering sales across the entire store. As such, Dick’s managed to clear through its inventory excesses without taking a major hit to its margins.

“We cleared through inventory through our value chain stores or Going Gone chain, and we were able to keep the Dick’s store really looking great for holiday with an assortment of full-price merchandise,” Hobart said.

She added that Dick’s was also relatively shielded from the general promotional environment across retail due to its “differentiated” assortment of high quality brands. She later discussed the success of the retailer’s partnership with Nike.

In addition to receiving a regular flow of product from the Swoosh, Dick’s in 2021 launched a connected partnership with Nike that allows Dick’s Scorecard and Nike Membership members to connect their accounts. Via the Dick’s mobile app, customers can browse member-exclusive Nike footwear and apparel and participate in high-heat drops.

“Our relationship with Nike is at an all-time high, and that’s everything from insights that we are sharing and product information that we’re sharing,” Hobart said, echoing similar comments from Q3. “And we’re looking very long term at the state of the consumer and each category and working at a very strategic level.”

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