A slam-dunk year online for Dick’s Sporting Goods
March 3, 2015 12:20 PM
Dick’s Sporting Goods Inc. posted big gains in online sales in its 2014 fiscal year and fourth quarter, and announced today plans for its first e-commerce site on its internally developed platform as the retailer moves to bring all of e-commerce operations in-house by 2017.
Web sales at the retail chain, No. 72 in the Internet Retailer 2014 Top 500 Guide, grew 28% year over year in its fiscal year ended Jan. 31, 2015, and 31% in the fourth quarter.
The company also disclosed plans to open a new e-commerce site, GolfGalaxy.com, in the first quarter, its first web store on a new e-commerce platform it has been developing internally. The company previously announced plans to bring the Dicks.com site in-house by 2017, moving it off the technology platform of eBay Enterprise, formerly GSI Commerce, which has operated e-commerce sites for Dick’s Sporting Goods since 2001.
The GolfGalaxy.com site will have some, but not all, of the features planned for Dicks.com, chief financial officer André J. Hawaux told analysts today. “We’ll have many of the capabilities out of the chute, with more to come as we move to 2017,” he said. Hawaux was promoted last month to executive vice president, chief financial officer/chief operating officer, with responsibility for store operations, as well as finance, legal affairs and information technology.
CEO Edward Stack said the incremental cost of the e-commerce project amounted to about 3 cents per share for the company in fiscal 2014, about $2.8 million based on 92.49 million shares outstanding, and would grow to about 4 cents per share, or $3.7 million, in the current fiscal year. “The investments are substantive. We are bringing a very large site on to become independent,” Stack said. “We believe it is the right thing to do. We have a growth business that continues to grow quarter in and quarter out.” Executives promised more details when they provide analysts with an annual briefing April 14 in New York City.
For the 2014 fiscal year ended Jan. 31. 2015, Dick’s reported:
- Net sales of $6.814 billion, an increase of 9.7% from $6.213 billion in the previous fiscal year.
- The web accounted for 9.2% of sales versus 7.9% during the earlier year. Stack said online sales for the year exceeded $628 million and grew by 28%. That suggests online sales for fiscal 2013 were about $491 million.
- E-commerce accounted for about 23% of sales growth for the year.
- Net income of $344.2 million, up 2.0% from $337.6 million a year earlier.
For the fourth quarter of fiscal 2014 ended Jan. 31, 2015, Dick’s reported:
- Net sales of $2.160 billion, up 10.9% from $1.947 billion during the prior-year quarter.
- E-commerce accounted for 14.4% of sales, versus 12.2% a year earlier. That suggests online sales totaled $311 million, an increase of 31% compared with $238 million a year earlier.
- The web accounted for about 34% of Q4 sales growth.
- Same-store sales, which include e-commerce, increased 3.4%, higher than the company’s prediction of an increase in the range of 1%-3%. Same-store sales for Dick’s Sporting Goods grew 3.8%, while Golf Galaxy declined 7.1%.
- Net income of $155.5 million, an increase of 12.2% from $138.6 million.
As of Jan. 31, the company operated 603 Dick’s Sporting Goods stores in 46 states and 78 Golf Galaxy stores in 29 states. Stack said he plans to close some of the stores of the struggling Golf Galaxy brand as leases expire.
However, the company plans to open about 45 news Dick’s stores in the current fiscal year. As Dick’s moves into new markets, online sales in surrounding ZIP codes increase by about 50%, Hawaux told analysts today, although that growth is typically off a small base.