Dick's Suffers from Mild Winter

When one thinks of Dick's Sporting Goods, a plethora of sports-related items come to mind: golf clubs, basketballs, running shoes, and football gear. It would be natural to think that a mild winter would cause sales and profits to spike, as people can continue to engage in outdoor activities. However, as seen in a recent Forbes article, Dick's last quarter's woes during an exceptionally mild American winter have proved otherwise.

While Dick's still earned a net income $111.1 million last quarter, a 27% increase from last year, it was disappointing as previously projected sales goals were not reached. This could be due to less demand for harsh-weather wear such as winter jackets, Under Armour ColdGear tops and leggings, and snow pants. The increase in sales (which were up 6.6% last quarter) can be mostly attributed to the opening of new stores, exemplified by the fact that same-store sales only rose by 0.1%.

This underwhelming quarter performance comes about a a time where the sports retailer is re-tooling their CVP in order to maintain steady success throughout the year. They are now focusing on stocking more sports equipment, shifting from the current product mix with high levels of clothing and other goods. This shift should allow the company to be more resilient through harsh winters and unexpectedly hot or cool summers. The sales and earnings forecasts will also likely become more accurate as sports seasons will follow similar trends year after year irrespective of fluctuating temperature changes.

I believe that Dick's is making the right move by focusing more on sporting equipment instead of other goods. "Sporting Goods" is in the name of the company, and that is where the retailer retains its value over companies that focus more intently on clothing and other items. In order to shake off a quarter of less than stellar performance and poised itself for future growth, it makes sense for Dick's to realign its focus to a fundamental branch of the company's business model.

More information can be found about Dick's Sporting Goods' recent financials via Wolfram Alpha, as well as information about the company's ideals on their website.

Note: Dick's was one of few retailers to be burdened by the mild winter. Many other retailers, ranging from Gap to Nordstrom, experienced an influx of sales this season due to the warmer weather.