Financial Performance

Under Armour Woes Drag Down Dick’s Sales

The sporting goods retailer attributes the 2% drop in Q4 same-store sales to "significant weakness in the Under Armour brand."
Matthew HellerMarch 13, 2018

Dick’s Sporting Goods on Tuesday reported a 28% jump in quarterly profit but sales were weighed down by distribution problems at Under Armour, one of the retailer’s major suppliers.

For the fourth quarter, Dick’s net income increased to $116 million, or $1.11 a share, from $90.2 million, or 81 cents per share, a year ago. Excluding one-time items, the company earned $1.22 a share, 2 cents above analysts’ estimates in a Thomson Reuters survey.

But revenue of $2.66 billion fell short of estimates of $2.74 billion while same-store sales, a key retailing metric, dropped 2% overall. Analysts had expected a decline of 1% in comp sales.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

“As expected, margins remained under pressure, however the decline was less than we anticipated,” CEO Edward Stack said in a news release, adding that Dick’s online and private brand businesses both grew to more than $1 billion in sales last year.

E-commerce sales for the fourth quarter increased about 9% as Dick’s completed its first holiday season on its new web platform. The segment accounted for 19.0% of total net sales, compared to 17.9% during the fourth quarter of 2016.

“Dick’s private-label lines, including Second Skin and Calia by Carrie Underwood, are one way the company is trying to combat margin pressure,” CNBC said. “It’s also been making a bigger push to win shoppers online.”

Stack pointed to Under Armour’s distribution struggles as the main driver of Dick’s disappointing sales performance.

“Our apparel business compared flat,” he told analysts on an earnings call. “Within apparel, strong sales growth came from Adidas, Calia, and Patagonia, which was offset by significant weakness in the Under Armour brand as expanded distribution and a highly promotional environment impacted its sales.”

As the Baltimore Business Journal reports, Under Armour has “struggled with its pricing and product assortment as it has expanded its distribution” and has been selling premium products at discount retailers like Kohl’s and DSW.

Stack, however, is confident Under Armour will turn things around under the leadership of its chief executive. “Kevin [Plank] and his team are focused on fixing the business,” he said.