Dick's Sporting Goods posts best sales quarter in six years

Show Caption Hide Caption Dick's Sporting Goods AutoStore system in action in Conklin Technology at the new facility at Dick's Sporting Goods Conklin Distribution Center includes an AutoStore system with 120 robots that place product into a grid of 97,000 totes.

Don't count out traditional retail yet.

Dick's Sporting Goods may have found the formula to thrive in the post Amazon world, combining the strengths of traditional retail with the convenience of online purchasing.

The Pittsburgh-based chain posted its best quarterly sales result in six years Tuesday, with same-store sales up 6% in the company's third quarter. That comes on top of a better than 3% increase in same store sales in the second quarter, executives noted.

"We saw increases in both average ticket and transactions, as well as growth across each of our three primary categories of hardlines, apparel and footwear,” said Edward W. Stack, chairman and chief executive officer. “As we head into the holiday season, we remain very enthusiastic about our business."

At 1 p.m. trading Tuesday, Dick's stock was up $7.43, more than 18% on the day, to $46.87, setting it to close at the highest point in more than two years.

On the strength of third quarter results, the company is raising its full year per share earnings estimate to $3.63 to $3.73, up 13 cents from previous projections.

The company was founded in Binghamton 42 years ago as a single bait and tackle shop on the east side, and has since grown into a 733 Dick's Sporting Goods Stores across the nation and 122 specialty store concepts, Golf Galaxy and Field & Stream, with 42 million square feet of retail space.

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About one in every eight dollars spent at Dick's comes from the online channel, according to results the company supplied. And the percentage of online sales is rising steadily.

In the past year, the company beefed up its online sales channel, opening fulfillment centers in Conklin, New York — near Binghamton — and California after taking over its web-based sales unit from a third-party.

Both fulfillment centers went into full operation during the second quarter, enabling Dick's to deliver merchandise to customers within two days.

The 933,000-square-foot Conklin distribution center employs about 300 people.

“The momentum in our stores continued to build with our focus on service standards, recognition of great results and stronger marketing," said President Lauren Hobart. "Combining this with the successful openings of our new eCommerce fulfillment centers and enhanced website functionality, we continue to build one of the best omnichannel experiences in retail."

The added convenience of ordering online and picking up in store has also proven to be a successful concept.

A day before the earnings release, Bank of America Merrill Lynch raised its rating on Dick's to a "Buy" from a "Neutral" based on strong growth in private-label merchandise and online sales growth. Additionally, analysts noted that Dick's is receiving an improved merchandise assortment from Adidas and Nike.

Robust sales follows the controversial decision to remove the hunting departments from 125 Dick's Sporting Goods stores across the nation. Higher margin apparel department replaced the legacy hunt category in many stores. Gun advocates threatened a nationwide boycott of the chain.

Stack, who has been running the company since inheriting it from his father in the 1980s, has taken a very public stand on strict controls for semiautomatic weapons that brought pointed criticism from gun rights advocates and praise from opponents.

During the quarter, Dick's sold eight Field & Stream stores, targeted to outdoor enthusiasts, to Sportsman's Warehouse for $28 million.

Company officials made no announcement on additional hunting. department closings in the 600 stores in which the segment remains, though Stack hinted the company may announce the unloading of the remaining Field & Stream stores in the near future.

"A strategic review of our hunt business is continuing," Lee Belitsky, chief financial officer, said during an hourlong conference call with analysts.

For the quarter that ended Nov. 2, Dick's reported earnings of $57.6 million, 66 cents a share, on sales of $2 billion, compared with net profit of $37.8 million, 39 cents a share, on sales of $1.9 billion.

In the first nine months of the fiscal year, the company reported net income of $227.6 billion, $2.53 a share, on sales of $6.1 billion, compared with net income of $217.3 million, $2.18 a share, on sales of $5.9 billion in the same period a year earlier.

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