Among discretionary retail categories, sporting goods is perhaps where we see the widest dispersion of visitation trends among different chains. On one hand, Sportsmans Warehouse reported a -6.7% decline in year-over-year sales during Q2 2024, which management attributed to “lower demand across most product categories and a decline in store traffic resulting from the continued impact of consumer inflationary pressures on discretionary spending”. On the other hand, Dick’s Sporting Goods reported a +7.8% increase in sales (including +4.5% comparable-store sales growth with a 1% increase in transactions). Hibbett Sports no longer reports public sales figures following its acquisition by JD Sports earlier this year, and Academy Sports is scheduled to provide its Q2 2024 update next week.
Why do we see such a wide range of visit trends across the sporting goods category? Part of the variance has to do with this being a category–like home furnishing and consumer electronics–that is feeling the impact of the pull-forward in demand because of the pandemic and subsequent normalization period. Like these other categories, we’re still not at the point where consumers are replacing products bought during the pandemic (most of the products in these discretionary categories typically have a 4- to 6-year replenishment cycle, with some exceptions like mobile phones).
Still, Dick’s outperformance in this category is notable. Below, we’ve presented visitation market share for Dick’s Sporting Goods and its closest sporting goods equipment competitors (we’ve excluded the more traditional “hunt/fish/camp” retailers from this analysis, but also recently examined this category). There is month-to-month variance in visit share, but we see Dick’s Sporting Goods on an upward trajectory, with August being one of the strongest months out of the past 12 months for visit share (which also reinforces the excitement Dick’s Sporting Goods’ management team shared about the back-to-school season).
How has Dick’s stayed ahead of the competition, especially during a period of uneven consumer demand? Innovation has really been the key. The retailer has embraced vendor partnerships with Nike, Under Armour, and others to create differentiated and exclusive products, which is helping to drive demand for footwear and athletic apparel. Inventory has been well managed, with clearance inventory down significantly compared to the same period last year. Management cited the quality of its merchandise assortment as being a key reason why the company increased its full-year outlook.
New store formats continue to be an effective way for Dick’s to showcase its differentiated product assortment while elevating the customer experience. We’ve covered Dick’s Sporting Goods’ new store formats in the past, but our data shows continued visitation outperformance. Below, we show visit per location trends for Dick’s House of Sport concept versus its traditional store format, and see that House of Sport continues to see more than twice as many visits. Our data also indicates longer dwell times at the House of Sport locations (not a surprise given their experiential focus) and trade area sizes that are often 2-3 times as large as a traditional Dick’s Sporting Goods store.
Looking ahead, Dick’s combination of differentiated merchandise assortment and experiential store formats should position the retailer despite questions about consumer demand for sporting goods. The company remains on target for low-single-digit unit growth this year, which strikes us as reasonable expectation for the years ahead (especially if competitors can’t catch up on the differentiated assortment/elevated store format front).
