Just a few weeks after saying the company would not meet guidance for the year, Dicks Sporting Goods Chairman and CEO Ed Stack told investors and analysts gathered at the William Blair Growth Stock Conference in Chicago that its fitness business had turned around.
“Between the cardio category of treadmills, elliptical machines and stationary bikes, our fitness business has turned around and strengthened and is actually running comp positive right now, Stack said.
Stack also said that in its first year, the adidas baseball product Dicks Sporting Goods launched exclusively in the U.S. accounted for 20% of its baseball business. A Reebok shoe named for David Ortiz, meanwhile, has become one of the best-selling metal cleat shoes since its introduction at DKS last year.
In hindsight, Stack said he wished he had waited a year to buy Golf Galaxy, although the deal has pushed golf sales to 15% of total sales and given DKS tremendous leverage with vendors and an opportunity to improve initial margins.
Last month Dicks SG said its second-quarter and full-year result would come in below expectation due to continued weakness through the balance of the year. DKS is famous for meeting or exceeding its guidance, but some analysts told SEW that the company was merely resetting the bar so it can be in a position to beat guidance going forward.
Still, its grim outlook for the back half has prompted more skepticism of guidance from other retailers, including Zumiez. The action sports retailer told investors at the conference that its guidance assumes that the economy will improve in quarters three and four.
“In the back half, we do think the kids are going to come out to shop and when kids come out to shop, we believe we are going to get our fair share,” said CFO Trevor Lang. “We assume at this point it is not going to get worse.”
Such divergent views troubled Bob Simonson, the Blair analyst who introduced Stack.
“If Dick's management is proven correct in its second half sales expectations, it will almost certainly be due to a 2008 Christmas selling season that is even more difficult than people are assuming,” said Simonson. “We can only wonder if the rest of retailing may have a bit of catching up on the downside as the reality of a very difficult consumer environment catches up with more than just a few other retailers.”
