Dick’s Sporting Goods (NYSE:DKS) CEO Lauren Hobart said Wednesday that the company is not only selling more golf clubs and activewear — it has found a formula for driving up profits, even as shoppers buy more online.
Hobart’s comments tapped a theme that has come up frequently in recent retail earnings calls: Widening margins.
Consumers have been on a spending spree. That has helped. But another gamechanger is that retailers have learned to make e-commerce more profitable, from shipping online orders from stores to steering shoppers toward curbside pickup.
“In a way it’s simple: It’s ship from store,” said Michael Baker, a senior retail analyst for D.A. Davidson. “And if the customer is coming to the store to pick it up, that evens it out right there.”
He said companies have fundamentally changed their online businesses as they move more inventory out of distribution centers and closer to customers’ homes. Plus, he said, customers have shown they are willing to pay higher prices — a tendency that he doesn’t expect to change soon.
That has caught investors’ attention. Dick’s shares touched an all-time high of $134.80 on Wednesday after it became the latest retailer to beat second-quarter earnings expectations and raise its forecast. Its quarterly sales shot up by 21% compared with the year-ago period, and its profits jumped by nearly 80%.
DKS hurtled $2.72, or 2.1%, to $132.32.