The future may hold far fewer and radically redesigned stores, analysts say.
E-commerce represents 38% of growth for the sporting goods chain.
E-commerce is steadily accounting for a bigger share of the business and growth at retail chain Dick’s Sporting Goods Inc.
In the third quarter the web represented 6.5% of sales for the retail chain, versus 4.4% in the third quarter of 2012, the company reported today. While Dick’s does not report web sales in dollars, Internet Retailer calculates that online sales grew to about $91.0 million in the third quarter of this year, a 58% increase from about $57.6 million in the same period a year ago and 38% of the company’s total year-over-year revenue growth.
Dick’s offered free shipping on more orders—more than 50% of online orders now ship for free—and that helped boost web sales, chairman and CEO Edward W. Stack told Wall Street analysts today on a conference call. “We did offer more free shipping, which is getting to be more of an expectation of the consumer,” Stack said.
He said absorbing the shipping fees on more orders modestly cut into gross profit margin, but said that was more than offset by sales increases. “Our online business is much more profitable than we anticipated,” he added, though he did not go into detail on how much e-commerce contributed to the retail chain’s profits.
Later on, he added, “When we do offer free shipping the sales spike quite a bit. We're trying to figure out what the optimal point will be. There will be more free shipping, rather than less free shipping.”
Stack also said e-commerce growth is coming from the company employing store inventory to fulfill online orders, a program it launched last year. Dick's soon will enable consumers to order online and pick up items in store, he said. That will begin with a pilot early in 2014, the company says.
For the fiscal third quarter ended Oct. 27, Dick’s Sporting Goods, No. 94 in the Internet Retailer Top 500 also reported:
- Total sales increased 6.7% to $1.400 billion from $1.312 billion in the same period a year ago.
- Comparable-store sales increased 3.3%, when taking into account that there were 53 weeks in the 2012 fiscal year.
- Net income of $49.98 million, down 0.3% from $50.14 million a year earlier.
For the first nine months of the fiscal year:
- Dick’s did not break out online sales for the first three quarters. However, based on the retailer’s quarterly reports, Internet retailer calculates that web sales totaled $254.1 million in the first nine months of the current fiscal year, up 52.6% from $166.5 million a year ago.
- Total sales increased 5.8% to $4.266 billion from $4.031 billion.
- Based on Internet Retailer’s calculations, e-commerce accounted for 37.3% of revenue growth in the first three quarters.
- Net income totaled $199.0 million, up 23.6% from $161.0 million.