Dick's Sporting Goods is replacing its Field & Stream chain with its more experiential-focused House of Sport stores — where shoppers can try out gear on actual fields and even climb rock walls — and aims to have as many as 100 brick-and-mortar sites for that store brand open in the next five years.
The Coraopolis, Pennsylvania-based company, which bills itself as the largest U.S.-based full-line omnichannel sporting goods retailer, essentially said on Tuesday it was betting big on its Dick's House of Sport concept. Those stores offer what Dick's Sporting Goods describes as "multi-sport experiences inside and outside," with such in-store features as outdoor turf fields and running tracks, rock-climbing walls, batting cages, putting greens and a "House of Cleats" that rotates its shoe offering each season.
Dick's Sport Goods in the fiscal fourth quarter decided to pull the plug on its fledgling Field & Stream chain, which offered an assortment of outdoor equipment, accessories and services primarily targeting such activities as hunting, fishing, archery and camping gear. The move was announced by Chief Financial Officer Navdeep Gupta during the company's quarterly earnings call. Gupta said the company has closed 12 of its remaining 17 Field & Stream stores and will convert them into eight Dick's House of Sport stores and four expanded Dick's Sporting Goods stores during the quarter, incurring pre-tax charges totaling $30.1 million.
The retailer's financial results show that offering customers activities, making the stores a destination, could be a successful model for other types of retailers. Unlike several other chains, Dick's Sporting Goods had a good holiday season, with 5.3% growth in comparable store sales in the quarter ending Jan. 28. The company delivered record-setting full-year 2022 net sales of $12.37 billion, up just under 1% compared with 2021.
While some companies reported that their sales were hurt as consumers cut back spending because of inflation, Dick's Sporting Goods is doing well in the wake of the worse of the pandemic as Americans have become more health conscious, according to CEO Lauren Hobart.
"People are prioritizing health and wellness," she said.
The retailer views House of Sport as a growth vehicle and is looking to open over 20 locations over the next two years, including nine in 2023. Some of those stores are slated for Boston, Pittsburgh and Binghamton, New York, Hobart told Wall Street analysts. Three new House of Sport stores debuted in 2021.
The retailer envisions having as many as 75 to 100 House of Sport locations over the next five years, according to Hobart and company officials.
"We are leaning into new-store growth," Hobart said, adding that Dick's Sporting Goods believes it can grab a bigger slice of the fragmented $140 billion sporting and athletic goods market. It only has an 8% share now.
In its investor presentation, Dick's Sporting Goods quoted Nike CEO John Donahue's comments about House of Sport in December.
“I was blown away at the store’s unique service model, interactive sport experience and enhanced showcasing of product, which creates a true destination for consumers and will alter future expectations at retail,” Donahoe said.
Dick's Sporting Goods has a total of 853 stores, including 728 of its namesake locations and 125 specialty-concept stores. Its portfolio includes Golf Galaxy, Public Lands, Going Going Gone! and Warehouse Sale stores in addition to House of Sport.
Dick's Sporting Goods is allocating $550 million to $600 million for capital expenditures this year, and is looking to pursue acquisitions, Gupta said. Last month the company announced that it had a deal to purchase Moosejaw, an outdoor-outfitter retail chain, from Walmart, seizing what it sees as an opportunity to expand its presence in the growing outdoor gear and apparel category.
Neil Saunders, managing director of GlobalData, in a note to clients Tuesday outlined some of the trends he thinks contributed to Dick's Sporting Goods' good year and holiday season.
"Dick’s current success is underpinned by several factors, foremost among them continued strong demand for both athleisure products and workout and sporting gear," Saunders said. "Across the market, spending in both categories is growing at an above-average rate. Sporting apparel and sporting goods were also relatively strong gifting categories over the holidays, with things like sneakers, tops, outdoor goods and equipment appearing on quite a few holiday wish lists. As the predominant player in the market, Dick’s has been a major beneficiary of both of these trends."
More shoppers are now also coming to Dick's to buy everyday clothing instead of traditional department and apparel stores, according to Saunders.
"Another area of sales success has been in the outdoor category where Dick’s has made more of an effort in its mainstream stores and is slowly expanding through its new concept, Public Lands," he said. "Traditionally this is a segment where Dick’s has under-indexed, and it is great to see the company try and tap more strongly into a category that can provide a future avenue of growth. In our view, this is one of the hallmarks of Dick’s management in that they are alert to market opportunities and carefully pursue things that they believe will be additive to the business."