The web winning streak continues at Dick’s Sporting Goods.
The retail chain, No. 70 in the Internet Retailer 2015 Top 500 Guide, reported today that e-commerce grew 24.4% in its fiscal quarter ended Aug. 1, accounting for 7.3% of sales versus 6.3% in the same quarter a year ago. Total sales increased 7.9% to $1.823 billion from $1.689 billion. That suggests sales tied to the web increased 25% to about $133 million from more than $106 million.
“We are pleased with our second quarter results. We delivered a double-digit increase in earnings by leveraging our omnichannel presence to generate profitable revenue growth and meaningful margin expansion,” chairman and CEO Edward W. Stack says. “We are seeing the benefits of our key growth pillars, as we continue to open very productive stores while winning online.”
Dick’s reported 32% growth in online sales in the first quarter of its fiscal year and 28% for fiscal 2014, putting Dick’s well ahead of the roughly 15% growth in U.S. online retail sales over the past two years. Asked about the slightly lower 24.4% growth rate in the current quarter, chief financial officer Andre Hawaux noted that both stores and the web benefited from a jump in sports apparel sales during the year-ago quarter tied to the soccer World Cup tournament.
The company also provided an update on its project to move its e-commerce platform in-house from the eBay Enterprise unit of eBay Inc., which has operated the Dick’s e-commerce sites 2001, when it was GSI Commerce. Stack told analysts on a call today that the retailer, as expected, launched a new GolfGalaxy.com site earlier this year on the internal platform. That new technology allows the retailer to ship online orders from stores, Stack said.
In addition, he said, the company plans to launch a transactional site on the new platform later this year for its Field & Stream brand. The Field & Stream site does not currently allow consumers to shop. Stack said its URL will remain FieldandStreamShop.com, and not FieldandStream.com, a web address owned by the hunting and fishing magazine.
Operating two e-commerce sites instead of one on the new e-commerce technology will improve profits by reducing cost, he said. “Not only will we capture incremental sales, but we will also be operating two sites on a single platform, which significantly leverages costs,” Stack said.
He said there will be further profit gains when the retailer moves its primary e-commerce site, Dicks.com, to its own technology by Jan. 1, 2017. Acknowledging that store sales are more profitable than web sales, he said the savings that will come from moving Dicks.com to the internal platform will make e-commerce “meaningfully more profitable, to the point it will be almost the same whether they buy online or in a store.”
In response to an analyst’s question, Stack declined to provide details on the relative profitability of online versus stores sales. But he did say, “We are extremely pleased with the profitability of e-commerce, and the profitability of that channel has grown significantly over the last several years.”
For its fiscal second quarter ended Aug. 1, Dick’s Sporting Goods reported:
- Net sales of $1.823 billion, an increase of 7.9% from $1.689 billion during the same period a year ago.
- E-commerce sales increased 24.4% year over year, and penetration increased to 7.3% of net sales compared with 6.3% last year. That suggests sales involving the web rose 25% to about $133.1 million from $106.4 million.
- Net income of $90.84 million, an increase of 30.8% from $69.47 million a year ago.
For the first two quarters of its current fiscal year, the company reported:
- Net sales of $3.388 billion, up 8.3% from $3.128 billion.
- Net income of $154.18 million, an increase of 10.6% from $139.45 million.
While Dick’s did not report full-year web sales in its report today, based on its first quarter report Internet Retailer estimates e-commerce sales grew roughly 28% from about $207 million in the first two quarter last year to $266 million in the first half of the current fiscal year.
Dick’s ended the quarter with 709 bricks-and-mortar stores, an increase from 659 a year ago.