Dick’s Sporting Goods outlined a bit of its vision for their Private Label business while answering questions at the Banc of America Securities Investment Conference in San Francisco last week.

Dick’s reiterated its plan to get Private Label to 15% of its total volume. It was just over 10% at the end of the company’s fiscal second quarter. The Private Label business is a real driver for improving profits, with PL margins running 500 basis points higher than the total business. The sourcing group put in place to support the PL business has grown to 30 people.

Dick’s said the PL business is coming from “second-tier” vendors. The simple rule seems to be don’t go after Nike and adidas in apparel and stay “just below” Columbia and the North face in the Rugged Outdoor category. In footwear, the company stays away from everything but the boot category. CEO Ed Stack also said that they are now contracted with Jack Nicklaus; company to design golf clubs that will be in the stores in January.

Stack said Dick’s has a ‘very balance approach to target a (private label) brand and make a name for it.”

Talking competition, the company sees about 30% overlap with TSA/Gart, with only two current Gart locations in the same market as a Gart store. Management indicated that SKU overlap is “around 50%”.

In a related story, the retailer has decided to close its two Ativa stores in upstate New York after the six month test of the smaller women’s format stores ran its course.
COO Bill Colombo told SEW that the stores were “a test, and the test is complete”. Jeff Hennion, VP of Finance said in a the local paper, “We're pleased that we did the test. We learned a lot.”

Claire Armstrong Gallacher, an analyst with investment firm Caris & Co., said in a report in the Albany, NY paper that Dick’s may have been using the Ativa stores to see whether it would benefit from expanding the clothing offering at the equipment-heavy sporting goods stores it operates.

DKS officials did not confirm that rationality.

During the BofA Conference, management said the Women’s category was “very good” for the retailer. CEO Stack outlined a two tier strategy that focuses on the 12- to 22-year old athletic consumer and the 25- to 49-year old woman that shops for product from a wellness standpoint. He said that women are the largest purchasers of home fitness products.

Operationally, the company can service up to 200 stores with the current distribution center in Pittsburgh. The facility can be expanded up to 50% more.


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