Dick's Sporting Goods expects to accelerate its store opening growth by 30% above the rate of stores opened last year and what it plans to open this year. DKS opened 24 Dick's SG stores last year and expects to open “at least 25” in 2010. Expansion has lately focused on California, Florida, Texas and the Pacific Northwest.


Speaking last week at the William Blair & Co. Annual Growth Conference, Ed Stack, DKS chairman and CEO, said Dick's SG has been particularly successful expanding in Oregon.


“The Pacific Northwest has been great for us,” said Stack. “There was real void left when Joe's closed down. We moved very quickly to fill that void. We continued to work real estate deals and open in the Pacific Northwest, and we couldn't be happier than what's going on in the Pacific Northwest.”


On the other hand, its California entry came as the economy started deteriorating and progress has been slow because the stores were not renovated to the Dick's SG format quickly. Four or five more renovations will be complete by back-to-school.


“Right now the Chick's stores are the old Chick's kind of physical plant with our content in it,” said Stack. “We're very pleased with the results to date, but we think they will improve even more once we renovate these stores. So by the end of 2011, we'll have all of the former Chick's Sporting Goods stores converted to the physical plant of the Dick's Sporting Goods store.”


Asked about real estate options in 2011, Stack described many of the opportunities as “recycled real estate,” such as a closed Circuit City, Mervyn's or Home Depot Expo locations.


“It's much less expensive than what it was a few years ago,” noted Stack. “So if there's a landlord that's got a vacant building that's not getting any rent because Circuit or Linens or somebody else is gone, they're much more receptive to a deal and these costs are substantially less than what they were a few years ago.”


Regarding categories, Stack said footwear continues to be “very strong,” led by running and toning. Partnering early on with Reebok and aggressively marketing the toning category, Stack estimated that if Dick's SG is not the largest, then, “the second largest retailer of this product in the country today. So it's very impactful. It's been very good and we expect it to continue to be so for at least the near term.”
In team sports, the biggest driver has been lacrosse, and the company is making a “big investment” in the category as the sport expands across the country. Stack said another benefit is that it provides a “pretty good size ticket” given the need for stick, helmet, gloves and shoulder pads. Stack added, “Going forward the lacrosse business will be much more impactful than the toning business, and the toning business is pretty good.”


Golf has “really strengthened”  over the last nine months with positive comps in the category in the Dick's SG chain and  a 12% Q1 gain for Golf Galaxy. The fitness category has benefitted from a transition from “big weight units” into more training and flexibility products such as bands, medicine balls and floor mats. He said these items have become “a great business at margin rates, 600, 700 basis points higher than the products that they replaced.”


Athletic apparel has also been “very good” in both men's and women's, driven by Under Armour, Nike, and “a resurgent Adidas product.”


Dick's SG has 383 Nike in-store shops, reaching around 90% of its doors while Under Armour shops are in 61%. Three in-store shops that opened under the Nike Field House concept “have been terrific,” and about 20 additional shops under the concept will open over the next 24 months.
Asked in a Q&A session about how aggressive Sports Authority has been in its markets, Stack said Sports Authority has talked about opening some stores in its markets but Stack contends the company competes well against them. Said Stack, “We certainly don't dismiss any competitor. As you know, we've competed very effectively with Sports Authority in the past. We expect to continue to do that every effectively in the future. And with our store growth program, we'll probably be opening more stores on top of Sports Authority in their areas than they will be opening on top of us.”


Stack said Dick's SG is “just about done” taking over the merchandising and marketing of its e-commerce website and working to get its vendors fully integrated online. Those functions had been handled by GSI Commerce. GSI still handles fulfillment. Stack said e-commerce represents around 2% of sales and remains “not nearly where we want it to be.”


“The site's not as content-rich as we'd like it to be,” explained Stack.  “There's still some navigation issues. We're in the process of rebuilding the site, and over the next 12 to 18 months you'll see a very different online presence from us going forward.”


Asked about the impact of video games on its younger demographic, Stack said that while kids are indeed playing video games, “they're still out there playing soccer and lacrosse and baseball and our team sports business has been really very good. And if you take a look at our comps at the end of the fourth quarter of last year and at the end of the first quarter this year of plus 8.2%. That's a pretty good increase in market share, and these kids are out there playing these sports still.”