Dick’s Sporting Goods is moving from centralized ecommerce fulfillment to regional east and west coast operations as it revamps its supply chain to speed up deliveries while also testing pickup lockers, the company’s CEO told analysts on a Q1 call.
Overall Dick’s Sporting Goods reported 24% growth in ecommerce for its first quarter, increasing from 9% to 11% of sales in the past year, while same-store sales decreased 2.5%. The company also touted success with its omnichannel efforts, as well as supply chain and inventory improvements.
“I think (the ecommerce growth) is really driven by better execution that we’ve had this year vs. last year across a number of metrics that we track,” said Dick’s Sporting Goods CEO Ed Stack in a conference call with analysts.
Stack said a new distribution center in Conklin, NY will be expanded to handle regional ecommerce fulfillment in 2019, with plans for another regional facility on the west coast next year as well. Plans call for expanding the facility from 630,000 square feet to 930,000 square feet, making it the largest in the network of five domestic operations. Currently the bulk of ecommerce fulfillment is handled from a centralized facility in Louisville, KY.
“We believe we can hit all of the Northeast within a day from our New York facility and we believe that we’ve got better execution really from our centralized fulfillment center than we do from the stores, so that should improve,” Stack said. “We’re also beginning work to look at a west coast fulfillment center that we will be working on for next year as well.”
Dick’s has also been testing out self-serve pickup lockers where shoppers can pick up online orders within an hour, a practice that is slowly gaining momentum in the U.S. but has been popular for years in Europe. Stack said it’s a small test at a few stores at this point.
“Our next part of this innovation cycle will be to actually see how important the locker is vs. getting the inventory into the front of the store, so that we make a positive economic decision in terms of this investment,” he said. “I don’t think you’ll see a full rollout by holiday but we will continue to make improvements to the omnichannel experience, and we are doing that in many stores.”
Since Dick’s took its ecommerce operations in house a couple years ago by insourcing its platform, the channel’s profitability “has improved significantly,” said company president Lauren Hobart.
“We will continue to improve even further as we are able to leverage fixed expenses with growth,” Hobart said. “We’re very pleased with the profitability of the channel and expect to grow it significantly.”
Executives also addressed the company’s decision to ban so-called assault weapons in the wake of the mass shooting in February at a high school in Parkland, FL, saying there have been pluses and minuses. For instance, gunmaker Mossberg has discontinued its relationship, and the company has been banned from the National Shooting Sports Federation’s annual event.
“Our cold weather businesses such as outdoor apparel and boots increased sharply,” said Dick’s CFO Lee Belitsky. “These areas of strength however were offset by declines in our hunt and electronics businesses. As expected our firearms policy changes impacted our hunt business which saw an accelerated decline in an already challenged category.”
“There have been a number of people who have started shopping us or said they’re going to shop us more because of the policy,” Stack added. “Overall, I would say there’s definitely been some benefit of people who have joined us so to speak because of the policy.”