Company positions itself well for continued growth; Adidas enjoys similar success despite supply chain obstacles, factory shutdowns and increased freight costs
Dick’s Sporting Goods Inc. (NYSE:DKS) reported another high earning fourth quarter and year end, closing out 2021 with $12.29 billion in net sales, a whopping 40.5% increase since 2019 and 28.3% since 2020 year end. Fourth quarter sales were also up 55% compared to 2019, ending the quarter in January with a record $3.35 billion in net sales.
“We are extremely pleased that our team delivered the largest sales quarter in our company's history,” said Lauren Hobart, Dick’s Sporting Goods president and CEO. “Our diverse category and brand portfolio, world-class omni-channel platform and strong execution continue to help us meet robust consumer demand. We are a growth company with a strong balance sheet and incredible momentum and confidence in our business. Our 2022 sales and earnings outlook establishes a new foundation for us to build on in the future."
Dicks Sporting Goods brick and mortar locations are fueling strong quarterly sales, with the launch of House of Sport and Public Lands, a standalone outdoor concept store, consumers were given opportunities to rock climb, to practice their golf swing or to score a goal — all inside the retailers own doors. In Golf Galaxy stores, DSG invested in Trackman technology and redesigned in-store performance center experience.
A move for increased in-store engagement paid off with a reported 14% increase in brick-and-mortar same-store sales in the fourth quarter of 2021 compared to 2020. Inventories have started to rebuild after supply-chain impacts reduced backstock and left shelves empty of many categories and stock-keeping units at the end of 2020. Fourth quarter inventories were up by 17.6% since 2020.
Notably, Dick’s Sporting Goods reported an 11% decrease in e-commerce sales since 2020’s fourth quarter. Having seen a 57% increase in e-commerce sales back in the fourth quarter of 2020, it seems that those consumers who were driven online in December 2020 were back in stores for the holiday season in 2021.
Diversifying markets and creating engaging in-store environments were just a part of DSG’s success in 2021. The company points to strong partnerships with Adidas, Callaway, TaylorMade, Ping and FootJoy for its year-end sales success. Furthermore, in 2021 Nike and Dick’s Sporting Goods teamed to create an integrated loyalty program via Dick’s mobile app. The partnership proved even more beneficial after Nike announced its plan to pull shoes from major shoe store chains across the United States. Dick’s Sporting Goods remains one of the last wholesalers to keep Nike footwear on its shelves, which means a shorter lead time and hotter products.
Dicks Sporting Goods is a powerhouse that plans to expand and make it worthwhile for shareholders. The company has already started a buyback program, repurchasing 10.8 million shares of stock for $1.2 billion. With the first quarter of 2022 on the horizon, things are looking very bright for the sporting goods retailer in the year to come.
ADIDAS RELEASES OPTIMISTIC REPORT FOR 2021
Adidas CEO Kasper Rorsted, in a letter to shareholders that was released along with its annual financial report on March 9, summed up the company’s performance with optimism.
“At Adidas, we delivered a set of strong results despite heavy disruptions in supply and demand, with currency-neutral sales up 16% to more than 21 billion euros and a net income from continuing operations of 1.492 billion euros — an improvement of more than 1 billion euros compared to the previous year,” he said. “In addition, we launched our new 2025 strategy ‘Own the Game,’ which will set us up for long-term success in this attractive industry.”
Adidas reported a 15.2% increase in 2021 year-end sales, stepping over the finish line with $23.5 billion in net sales compared to $20.4 billion in 2020. No surprise was that e-commerce revenues were up 4% in 2021. Keep in mind that in 2020 Adidas reported e-comm revenues had grown more than 50% due to increased online traffic.
Supply chain challenges were the biggest obstacles for Adidas in 2021. On top of massive factory shutdowns across the Asia-Pacific, Adidas noted additional freight costs of more than 100 million euros this quarter alone. The company reported only a 3% increase in currency-neutral sales in greater China and 8% in Asia-Pacific.
As Adidas launched new products such as the Adizero Adios Pro and campaigns like ‘Impossible is nothing’ in 2021, operating and marketing expenses shot up. Adidas reported a 4% and 7% increase in expenses, respectively. Adidas claims it was able to offset these expenses with significantly higher full-price sales.
Adidas is optimistic about the future with expectations of double-digit topline growth to continue in 2020, but understands that there are still struggles ahead. Future projections from the company includes a risk of up to $277 million in the company’s Russia/CIS business — marking about 50% of Adidas total revenues in the region. This is a nod to the suspension of Adidas retail and e-commerce operations in Russia due to the ongoing conflict in Ukraine.