Dick’s Sporting Goods cuts back on cold-weather outdoor goods, then takes hit when it gets cold
Dick's Sporting Goods struggled to gauge ever-changing winter weather. Fitness sales take a hit too. But footwear and apparel sales rise to close out year.
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Trying to predict long-range weather trends is like trying to win at the casino. You might get lucky, but more often than not, the house wins.
Dick’s Sporting Goods (NYSE: DKS) attempted to take on Mother Nature this winter season, slashing orders and inventory of cold-weather outdoor goods on a bet that the warm and dry winter would continue. Early on, that decision seemed to be the smart money. But as the season wore on and more snow and cold arrived post new-year, the national outdoor, fitness and sporting goods retailer said Monday it got caught a bit flat-footed.
“While this was a prudent move that enabled us to effectively manage inventory and protect our margins [in the early winter], it did limit our ability to capture sales in January when temperatures dropped and snowfall increased,” explained Dick’s CEO Edward Stack. Officials added that fitness sales also took a hit, particulary large-equipment sales, such as treadmills and ellipticals.
Dick’s Sporting Goods still managed to squeeze out a 1.2 percent rise in same-store sales for its fiscal fourth quarter 2012, ended Feb. 2, 2013, (thanks to higher sales in footwear, apparel and hunting gear) but that was with an extra week in the cycle, compared to last year, and came in below investor expectations.
Total sales for its fourth quarter, including seven new stores and one relocation, increased 12 percent to 1.8 billion. Quarterly net income came in at $129.7 million, versus $111.1 million a year ago.
Investors reacted negatively to the news, sending Dick’s Sporting Goods’ stock down more than 9 percent in early trading Monday.
For the full-year 2012, Dick’s Sporting Goods reported same-store sales up 4.3 percent and total sales rose 12 percent to $5.8 billion.
Looking ahead, officials said Dick’s Sporting Goods will make “meaningful investments” in 2013 to improve its mobile capabilities, including a “pick-up-in-store” pilot and growth of its e-commerce team. Officials predict same-store sales to rise 2 to 3 percent in 2013. It plans to open 40 new stores with one relocation and complete four full and 75 partials remodels. The company also expects to expand its specialty running store concept, True Runner, with two additional stores in 2013 for a total of four locations.
Click here to view Dick’s Sporting Goods complete fourth-quarter and year-end 2012 report.
