Dick's Sporting Goods is planning for a “very modest recovery going forward” but has some plans in place in case the turnaround gains momentum. Speaking at the Goldman Sachs Retailing Conference last week, CEO Ed Stack said, “We've got things in place that we can move pretty quickly to the upside, just as we moved very quickly to the downside a year ago.”


Stack also said that although the retailer has seen some trade-down in average price points, he doesn't see the chain's core athlete and outdoor enthusiast changing his spending mentality after the downturn ends.


“We don't think that's going to meaningfully change,” said Stack. “It hasn't changed in this downturn. As we come back out of it, I don't see any reason that it's going to change.”


Regarding the recent performance of categories, Stack said the company is “really quite pleased” with the footwear business. He noted that mall-based stores have seen seeing weakness from focusing more on fashion footwear over functional product, and while overall athletic apparel growth has slowed, the company still sees a “real continued opportunity” in women's apparel.


Fitness is being transformed to focus more on “flexibility-enhancing products,” mentioning power bands and medicine balls as examples, with reduced space from high-end weight machines. Those lower-priced categories are also benefiting in the economic climate. Stack described the team sports business currently as “difficult” but nonetheless a core growth category. He pointed to merchandise opportunities in lacrosse and baseball and noted that football and basketball remains two of America's core school sports.


Stack noted that the golf business has been “meaningfully better” at Dick's Sporting Goods stores than at Golf Galaxy.

 
He attributed this to the emergence of cultural conflicts with the former Golf Galaxy team following the 2007 merger as well as bringing in too many private label products to the Galaxy's stores. Half of Golf Galaxy's district managers have been replaced with employees of DSG and the balance between private label and branded product has improved. By the beginning of 2010, the approach at Golf Galaxy and DSG will be more similar. Overall, Stack said while the golf category remains challenging, “the macros are stabilizing.”


DKS still sees the opportunity to have more than 800 Dick's SG doors across the U.S. It currently, has 409, with most stores principally in the eastern half of the country. It expects its growth to continue to expand within its existing footprint, with fill-in opportunities in select markets, such as Florida and Texas. Stack also noted that the company has successfully converted some former Joe's locations into DSG stores in the Pacific Northwest and is planning more conversions in the area later this year. But he doesn't see any major consolidation driven by the downturn.


“We don't see any other big box retailers really consolidating or closing down,” added Stack. “We've seen a lot of smaller, independent retailers on the golf business, on the fitness side of the business, some bike dealers that have closed their doors.”


Stack said the company is “very pleased” with their entry into California with the acquisition of Chick's Sporting Goods and the converted stores' performance. Texas, as expected, has more difficult given competition from Academy. Stack elaborated, “We've invested heavily in Texas. We've got some meaningful traction in Texas. So we're pleased with what's going on in Texas. But it had gotten off to a slow start. And it's still difficult. Academy still remains a very good competitor. But we're doing better in Texas, and we're pleased with that.”