Sporting Goods Get a Workout

Consumers have been boosting their purchases of sporting goods and outdoors products during the pandemic, as they search for ways to exercise safely, look to break up their homebound routines with activities outside, and, in some cases, address their fears in a turbulent time.

Total retail sales of sporting goods in June 2020 were up 37.5% to $5.5 billion, from $4 billion in June of 2019, according to U.S. Census figures. While sales fell month-over-month in July to $5.1 billion, the category continues to outperform many others as the pandemic goes on. The growth has cut across categories, from kayaks to home fitness equipment to golf clubs, with shortages of many products, from dumbbells to bicycles. Meanwhile, monthly sales of guns have been on the rise by high double and sometimes triple digits, driven both by outdoors enthusiasts renewing their interest in hunting and residents who feel they need to protect themselves during the summer’s political and social upheaval.

These trends have benefited sporting goods retail chains, a segment that had been struggling before the lockdown started. As the following list shows, the status is not rosy for everyone. Some chains saw great results in the second quarter, while others continue to face steep challenges. Even companies in the latter group, however, have seen an uptick in their fortunes in recent months:

  • Dick’s Sporting Goods reported growth in second-quarter sales of 20.1% year-over-year, with same-store sales increasing 20.7% (versus 3.2% in the same period last year). The spike came despite 15% of its stores being closed earlier in the quarter due to the pandemic. Meanwhile, growth in online sales in the quarter hit 194%, compared to the previous year, with 75% of orders fulfilled by its bricks-and-mortar stores. Online sales accounted for 30% of total net sales, nearly triple the 12% share in Q2 2019. For the first half, the company saw an increase of 154% in e-commerce sales, but a decline of 3.1% in net sales overall. Dick’s, which counts CALIA by Carrie Underwood as one of its private labels, opened three stores this month, across its Dick’s and Golf Galaxy brands. It also partnered with Under Armour for a women’s basketball shoe, part of an ongoing expansion into the women’s space.
  • Academy Sports, which had been showing improvement in its financial results for the past year after three years of negative comparable store sales, saw same-store sales rise 15.9% and sales overall increase 18.5% in the first half of this year. The company’s outdoors merchandise division (including guns, fishing equipment, kayaks, and camping supplies) and sports and recreation merchandise division (fitness equipment, bikes, and the like) were up 47.3% and 22.6% during the period, respectively, while footwear and apparel both declined. E-commerce sales spiked by 283.5%, accounting for a 10.9% share of sales in the first half of 2020 compared to 3.4% in 2019. The company filed for an initial public offering earlier this month.
  • Sportsman’s Warehouse said its sales were up more than 79% in the second quarter of 2020 versus 2019, with same store sales 61% higher than the same period last year. Categories leading the charge included firearms (up 123%), ammunition (75%), camping (46%), and fishing (45%). Even footwear and apparel saw growth of 30% and 19%, respectively, on a same-store basis, with items such as hunting boots, camo, and waders particularly strong. The chain also saw e-commerce revenue increase more than 300%; online shopping now contributes in excess of 10% of total sales. The chain has opened four new stores this year, with three more to come, including limited formats for smaller markets. Last year, it bought eight Field & Stream locations from Dick’s and rebranded them as Sportsman’s Warehouse.
  • REI was in the news this month for selling its brand-new, unused 400,000-square-foot headquarters building, which had been set to open this past summer, to Facebook for $367 million. It plans to rely more on remote working and utilize multiple smaller physical office locations, rather than a central HQ, after the pandemic. REI said it would use the profits from the sale to finance consumer-facing innovations including ecommerce improvements and virtual outfitting, as well as partnerships with nonprofits and environmental initiatives. The company’s financial results have not been as positive as many of its competitors’ of late. It laid off 300 corporate staffers in April and 400 retail workers in July. In May, it projected a 30% decline in revenue for 2020 compared to 2019, although it later predicted a narrower annual decrease due to strong demand for its products after it opened its 162 stores.
  • In Canada, SportChek, a division of Canadian Tire and Canada’s largest sporting goods chain, saw a sales drop of 24.9% in the second quarter, due to store closures during most of the period. The company spent the time clearing inventory through e-commerce, to keep its inventory fresh, with online sales up 300% during the period. In the final month of the quarter, when most of its stores were gradually able to reopen, retail sales grew 3.2%.
  • Modell’s, which entered bankruptcy in March (just before the pandemic hit the U.S.), after 131 years in business, and is in the process of liquidating all of its stores, got a new owner in August as its IP was purchased by Retail Ecommerce Ventures for $3.64 million. REV’s other purchases of distressed and defunct brands have included Pier 1, Linens ‘N Things, Dressbarn, and Franklin Mint. Its strategy for all of its acquired brands, which it plans to follow with Modell’s, is to relaunch or refresh the brand’s e-commerce presence, as well as selling products through marketplaces on Amazon and Walmart.com. It also plans to consider categories where the brand has not yet played, from gym equipment to trading cards. There may be some bricks-and-mortar presence but the focus will be online sales.

Each chain is unique in terms of its current fortunes, as well as brand positioning, business strategies, and other characteristics. But, unlike many segments of retail in these times, sporting goods stores are, for the most part, moving in the right direction. The question is whether the current COVID-fueled results will continue if and when consumers can go back to a more “normal” post-pandemic lifestyle.

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