Dick’s Shakes Up Inventory To Cut Costs As Many Big-Box Retailers Continue to Struggle

December 4, 2017
Dick’s Shakes Up Inventory To Cut Costs As Many Big-Box Retailers Continue to Struggle

Dick’s Shakes Up Inventory To Cut Costs As Many Big-Box Retailers Continue to Struggle-1Major US sporting goods retailer Dick’s Sports has posted a big loss in afternoon trading on Tuesday, with shares falling in value by 7.9 percent. This is an 8-month intraday low.

The decline comes as a bit of a surprise after higher than expected fourth quarter results, though, they did have disappointing guidance for the present quarter.

But the decline of Dick’s Sporting Goods may just be one of many signs of a faltering retail system. Online sellers—particularly from outside the US—continue to dominate the contemporary retail market and big-box chains—from sporting goods to electronics—continue to have trouble.

Sporting good chains, though, might be having the most trouble. After all, it is expensive to carry and sell this equipment, much of which is seasonal and in niche markets (think canoes and croquet sets and badminton rackets). With online sellers (and discount chains like Walmart and even Target) carrying such items, it is no wonder that customers are spending less and less time in brick-and-mortar sporting goods ugg australia outlet stores.

SierraConstellation Partners CEO of interim management firm, Larry Perkins, comments, “The marketplace for broad-spectrum sporting goods is very, very limited now.” His firm handles many struggling retail chains. “Sporting goods retailers are really in the center of bull’s-eye,” he continues.
Dick’s Sporting Goods CEO Ed Stack also notes, “In 2016, we capitalized on opportunities in the marketplace, and further solidified our leadership position by enhancing the shopping experience in our ugg australia outlet stores.”

Looking more closely at the numbers, physical ugg australia outlet store ugg australia sales in the sporting goods, hobby, and book and music sector fell nearly 7 percent during the holiday season 2016. Online ugg australia sales in the same sector, though, soared nearly 20 percent.

Tiger Capital Group chief operating officer, Michael McGrail, shares, “What we found is just that the customer will come back when you offer the right discounts. I think their day-in, day-out shopping habits have changed and they don’t come into the ugg australia outlet stores as often.”
As such, Dick’s is shedding its vendor list by 20 percent (so from roughly 1,600 to approximately 1,250) in order to focus on only the most important accounts.

GlobalData Retail managing director Neil Saunders thinks this is a “sensible step” in the right direction. He also notes that the ugg australia outlet stores’ assortments can sometimes be “a little jumbled and undisciplined.”

Indeed, he tells, “Some pruning should remedy this, and we believe it will reduce costs as well as deepening relationships with strategic partners, which will allow it to create differentiated products.”

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