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Within three years, the e-commerce channel for Dick’s Sporting Goods could be more profitable than stores, CEO Edward Stack told analysts yesterday on the retailer’s second quarter earnings call.
Dick’s Sporting Goods Inc. continues to build a nice book of business with its e-commerce channel along with a forecast that as soon as 2017, online retailing could be a more profitable operation than stores, CEO Edward Stack told Wall Street analysts yesterday on the company’s second quarter earnings call.
Dick’s, No. 72 in the 2014 Internet Retailer Top 500 breaks out the percentage that e-commerce sales represent of total sales on a quarterly basis, but doesn’t break out any profit or loss statements for online retailing. But Dick’s is putting a big emphasis on more e-commerce growth and profitability going forward, Stack told analysts. Though he didn’t provide any specific metrics, Stack said e-commerce will become as profitable as stores, and within three years will become more profitable than bricks-and–mortar stores.
“We’re right on target for what we think we’re going to be able to do from an e-commerce standpoint, and we are almost to the same profitability of the four-wall cost, if you will, on e-commerce as we are in the stores,” Stack told analysts. “By 2017, we will be completely ambivalent from a profitability standpoint and we think that there is a possibility that the e-commerce business will actually be more profitable.”
Dick’s is building up to better e-commerce profitability because the sporting goods retailer continues to look at different ways to grow the top and bottom line through its network of more than 574 stores more effectively with programs such as buy online and pick up in-store. “Our e-commerce team has just done a great job of driving volume that increases the productivity and profitability and really making some meaningful changes in the distribution model to the consumer with what we’ve done with the shift from store and what we’re in the process of doing with the buy online pick-up in store.”
For the second quarter ended Aug 2., Dick’s reported:
- E-commerce represented 6.3% of total sales compared with 5.6% in the second quarter of 2013. Based on those metrics, Internet Retailer estimates that e-commerce sales for Dick’s totaled $106.3 million, up 24.0% from $85.7 million in the prior year.
- Total sales increased year over year 10.5% to $1.69 billion from $1.53 billion.
- Comparable-store sales grew 3.2%
- Net income decreased to $69.5 million from $84.1 million in the second quarter of 2013. Net income declined as the result of a one-time charge of $20 million to restructure certain elements of its golf business, the retailer says.
Going forward, Dick’s will continue to leverage its stores to grow e-commerce Stack told analysts. “Our store base also supports the growth of our e-commerce and as many of you know, all of our existing and new Dick’s stores have shipment from store capabilities,” he said. “This allows us to connect online customers with in-store inventory. With each new store, we enhance our distribution network as new stores are able to fulfill e-commerce orders.”
For the first two quarters, Dick’s reported:
- Based on e-commerce sales as a percent of total retails disclosed in Dick’s quarterly financial documents on file with the U.S. Securities and Exchange Commission, Internet Retailer estimates that web sales grew 26.9% to $206.9 million from $163.0 million in the prior year. The web as a percent of all sales in the first quarter in each of the last two years was 7% and 5.8%, respectively.
- Total sales increased year over year 8.7% to $3.12 billion from $2.87 billion.
- The company didn’t break out comparable-store sales.
- Net income was $139.5 million compared with $149 million in the first two quarters of 2013.
“We continue to optimize our ship-from-store fulfillment to improve inventory utilization, reduce shipping costs and speed the delivery merchandise to our customers,” Stack told analysts.