Dick's Sporting Goods Inc. swung to a first-quarter loss as closed stores took a big toll on sales. But the company said it sees “progressive recovery” in early second-quarter sales.
The sporting good giant reported a net loss of $143.4 million, or $1.71 per share, for the quarter ended May 2, compared to net income of $57.5 million, or $0.61 cents per share, in the year-ago period. Losses include $62 million in pre-tax expenses, or $0.50 per share, for worker compensation, safety amid the COVID-19 outbreak and inventory writedown. Dick’s adjusted loss came in at $0.62 per share.
Sales fell 30.6% to $1.33 billion. Consolidated same-store sales decreased 29.5%, driven by temporary store closures that started on March 18 to help prevent the spread of COVID-19.
Dick’s online sales jumped 110%, fueled by the launch of curbside contactless pickup. E-commerce accounted for approximately 39% of the chain’s total first-quarter net sales, compared to approximately 13% in the year-ago period.
The company noted that its comp sales for the current quarter were down only 4% from the same period last year as nearly 80% of its stores have re-opened, “representing a progressive recovery.” At the same time, it has maintained strong sales momentum in its e-commerce business, which has increased over 250%.
"Although the business environment of 2020 remains uncertain, Dick’s Sporting Goods is in a position of strength,” said Edward W. Stack, chairman and CEO. “We believe coming out of the current crisis, health and fitness will become even more important to the consumer. As the leader in the sporting goods retail sector, our relationships with key brands have never been stronger and we are in a great place to support this demand.”
Analyst Neil Saunders of GlobalData Retail agreed that consumers are likely to become more health-conscious in the wake of the pandemic. While this will bring a dividend to all players in the segment, including Dick’s, it is also likely to result in increased competition.
“We believe that more generalists will look to sports and active products as a way to boost their own sales, which means the segment may be more crowded coming out of this crisis than it was going into it,” Saunders said. For more analysis, click here.
At the end of the first quarter, Dick's had $1.5 billion in cash and cash equivalents, and $1.4 billion in outstanding borrowings from its revolving line of credit.
“Our balance sheet is strong, and due to the actions taken when the pandemic first hit, we have enhanced liquidity to emerge from this crisis in an even stronger competitive position,” Stack said. “Now, with confidence in our liquidity position and our stores re-opening, we can turn our attention to gaining market share for the remainder of 2020 and positioning our business for profitable growth in 2021."