Dick's Sporting Goods' Success And Sports Authority's Failure

Since 2018, the sporting goods sector has enjoyed a ranking as one of the fastest-growing industries in the U.S., with a market size estimated at $67.2 billion in 2022. With 14.2% of the market controlled by a single company, Dick's Sporting Goods is the top player.

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As Dick's refocused its distribution strategy during the pandemic, it posted a record annual revenue of $12.3 billion in 2021 and tripled its net income.

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As Dick's navigates tough competition in the sports goods e-commerce space, CEO Lauren Hobart focuses on technology to sustain the company's record growth. 

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In 1948, Dick Stack opened his first Dick's Sporting Goods store with $300 in his pocket when he was 18 years old. Initially, it was a bait and tackle store, but later on, expanded into sporting goods, gear, camping supplies, and clothing. Despite this, Dick's expansion took time, with the second store opening nearly two decades later.

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A decade after Dick Stack's son Ed bought the company, business started taking off. As Dick's Sporting Goods grew in the 1990s, they began offering more sports equipment, apparel, and footwear, and by 1996, the company had 50 stores.  

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141 Dick's stores are located across 25 states when the company went public in 2002. As sports participation became a major part of the business as the sporting goods segment grew in popularity in the early 2000s, competitors emerged like Sports Authority. 

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There were more stores and revenue generated by Sports Authority, Dick's largest rival at the time. Although Dick's grew its reach with more stores, revenue, and net income increased consistently.

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Dick's was able to surpass Sports Authority in size in 2005 by improving operating margins and retaining its position as the king of sporting goods retail.

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The Dick's Company went on a spending spree between 2004 and 2007; it purchased the Galyan Trading Company, the Golf Galaxy, and Chick's Sporting Goods. Through this expansion, the company expanded from 234 locations to nearly 487 stores by 2008. Revenue increased by almost 65% between 2008 and 2014.

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Sports Authority, Dick's arch-rival, was on the verge of bankruptcy as Dick's was expanding. A 2016 sale of company assets to former competitors, primarily Dick's, started the process.

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Due to the 28.5 million loyalty program members associated with Sports Authority's IP, and an estimated 114 million client files, including email addresses, addresses, and transaction histories, Dick's was able to boost its e-commerce business that year. 

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With the bankruptcy and closing of Sports Authority and a slowdown in same-store sales, Dick's has prioritized its investments in e-commerce since 2017. During that year, dicks.com was launched, resulting in a 17% increase in sales. 

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The company has reaped the rewards of heavy investment in e-commerce. Sales increased by 46% to $12.3 billion in 2021 from $10.2 billion in 2018.

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Over 70% of online orders during the pandemic were fulfilled directly by stores via curbside pickup. With Dick's online ordering service, customers can place their orders online and pick them up in person at an outside location. Additionally, the company was able to offload its inventory during lockdowns when stores were closed.

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In addition, Dick's has become an omnichannel retailer, which has enabled nearly 900 U.S. stores to serve as e-commerce fulfillment centers and has made customer orders more efficiently stocked. 

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The company set new records in 2021 as Dick's Sporting Goods continued to grow. The company's revenues grew by almost 30% and its net income nearly tripled, which caught the attention of Wall Street.

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On Oct. 30, of that year, the stock peaked at $145.19, a record high. The third quarter of 2002 ended with net sales up 7.7% over the previous quarter - and over 50% higher than the third quarter of 2019.

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Hobart, as new CEO, has continued to develop the company's strong performance with high-quality product lineups, expanded its in-house brands, developed its e-commerce network, and widened its margins.