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Behind Dick’s Sporting Goods’ Fiscal 4Q17 Top Line Numbers

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Mar. 15 2018, Updated 9:35 a.m. ET

Sales fall short of estimates

As we saw in the previous part, Dick’s Sporting Goods’ (DKS) fiscal 4Q17[1. Fiscal 4Q17 ended on February 3, 2018.] sales (for 14 weeks) were $2.66 billion, missing analysts’ estimate of $2.74 billion. But on a YoY (year-over-year) basis, sales rose 7.3%, mainly due to the extra week in the holiday quarter. The 53rd week added $105.4 million in sales.

Its e-commerce sales rose 9% YoY, and its e-commerce sales penetration grew to 19% of overall sales from 17.9% reported in fiscal 4Q16. The company has been developing its omnichannel and digital capabilities to fight off competition from Amazon (AMZN) and other online retailers. The company is improving its products page design and working on a faster checkout process. It’s also looking to boost delivery time by exploring newer shipping and fulfillment processes.

It has also overhauled its ScoreCard Loyalty program. Now, the accumulated points will be carried forward to the next year.

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Negative comps

Dick’s Sporting Goods’ comps (for 13 weeks) declined 2% in the holiday quarter compared with a 5% increase in fiscal 4Q16. Tickets decreased 2% due to heavy promotions, and average transactions were unchanged from fiscal 4Q16.

Its hunting category comps fell in the high single digits, while the electronics category fell in the double digits. The company stated that both these categories will continue to be pressured in fiscal 2018 since it’s lowering its exposure to these categories. Dick’s recently took a stand on gun control and has stopped selling assault-style rifles. It’s also not selling any firearms to customers below 21 years of age. That could impact its hunting category sales going forward.

For fiscal 2018 (52 weeks), comps are expected to be unchanged to lower, in the low single digits, compared with a 0.3% decline in fiscal 2017 (52 weeks).

On the other hand, the company’s footwear and private brands saw positive low-single-digit and double-digit increases in comps, respectively.

Private brands

Dick’s Sporting Goods is focused on enhancing its private brands. It believes that amid stiff competition, product differentiation and exclusivity will augment sales of its in-house brands such as Walter Hagen, Top-Flite, Calia, and Field & Stream. The company reported sales from private brands of $1 billion in 2017, and it expects to add a billion dollars more in revenue in a shorter time frame. Dick’s said it will also be launching some new brands this year.

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