Ed Stack, chairman and CEO of Dicks Sporting Goods, also spent some time with investors at the Goldman Sachs conference, again reiterating that the retailer will continue its goal of achieving 15% of total sales coming from private label. Stack sees that number growing as they receive better terms from their Asian sourcing partners. Dicks expects to see improvements in their private label gross margins, which are already 600 to 700 basis points higher than their branded merchandise.
Dicks will continue its growth plans, with a 15% increase in square footage each year. This should translate into a 30 basis point increase in operating income per year and a long term EPS growth rate of 20%.
Dicks also wants to expand their “best in class lead” in the sporting goods retail world. Stack also said that he expects Dicks to be the largest sporting goods retailer in the nation, “maybe by the third quarter but certainly by Q4,” of next year.
Mr. Stack went into great detail concerning the Galyans acquisition which was recently completed, and said, “It was not the friendliest transaction,” and Galyans didnt give them any information until after the deal was closed. Because of the delay, Mr. Stack said they are still evaluating their strategy on the future of the single store markets and the future store closing expenses.
The CEO said that they have been spoken with every Galyans store manager to see what needs to be done differently. Several initiatives will be put in place, but the most startling discovery for Stack was that there was no “key item strategy” in place and the number one thing that each store complained about was running out of key item inventory. One manager told Stack that he had to walk 25 children out of his store in a single day because he couldnt fit them in cleats, and every manager felt they could easily double their golf business.
Additionally, every Galyans manager “without fail” said that they needed to get rid of their childrens lifestyle apparel because people didnt come to a sporting goods store for that product.