Dick's Sporting Goods Beats Q2 Projections, But Struggling Golf Sales Cut Into Profits
Women's and youth apparel "helped drive sales higher at Dick's Sporting Goods" in Q2, although "continued declines in the golf and hunting business cut into profits," according to Chris Fleisher of the PITTSBURGH TRIBUNE-REVIEW. Sales at its Golf Galaxy stores fell 9.3%, and the company "recorded pre-tax charges" of $20.4M from "restructuring its golf business." That included a $3.7M "severance charge related to laying off golf professionals at its Dick's stores." Dick's Chair & CEO Edward Stack said that the golf pros at Dick's stores "resulted in no 'meaningful difference' between stores that had them and those that didn't." Stack: “As much as we all love golf, the business reality of it is that golf, from a retail standpoint, is under pressure, and we had to change that labor model to meet the demands and the sales. We're taking those dollars and reallocating those in the areas of our business that are doing extremely well, such as the women's area, youth area, the team sports area, and I think it will serve the company well.” S&P Capital Senior Equity Analyst Efraim Levy said that golf will "remain important to Dick's for the time being, but looks like it will become less so in the next few years" (TRIBLIVE.com, 8/19).
IN THE ROUGH: The WALL STREET JOURNAL's Sara Germano writes with Dick's "reeling from a monthslong decline in sales, mounting inventories and little recovery in participation rates" in golf, the retailer expects the category to "fall to about 10% of its business over the next three to four years from 15% today and 20% a few years ago." The company yesterday said that nearly "two-thirds of Golf Galaxy's store leases will end in the next three years and that it might close underperforming locations" (WALL STREET JOURNAL, 8/20). In Pittsburgh, Teresa Lindeman notes Dick’s management "conceded that profit margins were hurt by clearance deals that boosted sales." Stack: “We got very promotional from a golf standpoint to drive traffic in" (PITTSBURGH POST-GAZETTE, 8/20). At presstime, shares of Dick's were trading at $44.68 per share, up 1.1% from the close of business on Tuesday (THE DAILY).