MARKET WATCH: Dick’s Sporting Goods Quarter Ended Nov. 1

Jeff Harbaugh

• December 09 2008
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Even been in a Dick’s Sporting Goods? I haven’t. Their 483 stores (including 85 Golf Galaxy and 14 Chick’s) in 41 states are mostly in the eastern part of the country. But I have visited Joe’s a few times, and I suspect they are similar to Dick’s.

Dick’s describes themselves as “an authentic full-line sporting goods retailer offering a broad assortment of brand name sporting goods equipment, apparel and footwear in a specialty store environment.” A Joe’s store is similar is that it’s big, well lit, attractively merchandised, stocks lots of leading brands, and has a crisp, clean feeling. I don’t worry so much about our specialty retailers competing against the lower end sporting goods chains. Those chains get the customers whose main focus is on price. But if Dick’s (and Joe’s) can offer competitive customer service and product knowledge, and that’s a big if, I can imagine they’ll become more of a competitive threat as they grow.

For the 13 weeks ended November 1st, Dick’s sales were up 10.2% to $924.2 million compared to the same quarter the previous year. For 39 weeks (more or less three quarters), sales were up 9.2% to $2.923 billion. Comparable store sales fell 2.8% for the 13 weeks and 3.7% for the 39 weeks. Gross margin percentage fell for both periods. From 28.5% to 27.4% for the 13 weeks and from 29.2% to 28.5% for 39 weeks.

This, I think, is a pattern we’re seeing and will see more of at least through the holidays; sales up but gross margins down due competitive pressures in a poor economy. Here’s the link to the filing.

Selling, general and administrative expenses rose very slightly as a percentage of sales for 39 weeks from 23.2 to 23.5% of sales. For 13 weeks it fell slightly from 25 to 24.8%. There was a $3.1 million merger and integration charge for the quarter ended this Nov. 1.

The net result of all this is that income per share, on a fully diluted basis, fell from $0.10 to $0.07 for the 13 weeks and from $0.75 to $0.62 for the 39 weeks.

Dick’s has opened 49 stores during the 39 week period, and expects to have opened a total of 53, including ten Golf Galaxies, by the end of the year.

Jeff Harbaugh is a consultant for the action sports industry and works with companies to identify and focus on critical business issues and opportunities fundamental to the bottom line. For more information, visit www.jeffharbaugh.com.