Dick’s goes off-price with two new clearance concepts
Dick’s Sporting Goods announced last week the opening of two clearance concepts — OVERTIME by Dick’s Sporting Goods that will be open “for the foreseeable future” and Dick’s Sporting Goods Warehouse that will open only for the next six months.
The launches follow the retailer’s conversion of three stores last May into Dick’s Sporting Goods Clearance Outlets.
OVERTIME by Dick’s Sporting Goods will offer discounts up to 75 percent off Nike, Adidas, Under Armour and other brands Dick’s carries across categories. The retailer wrote in a statement, “New markdowns will be added throughout the year, keeping inventory at these outlet centers fresh for shoppers.” Including the three stores opened last year, Dick’s will have 11 outlet and clearance centers open in nine different states.
In addition, the company has already opened five Dick’s Sporting Goods Warehouse Sale locations. The concept offers deeper discounts at 90 percent off. “These clearance stores will provide a temporary pop-up-style shopping experience for customers,” the retailer announced.
Dick’s officials haven’t explained the reasons behind the openings, although the moves come as inventory levels have become elevated across retail due to store closures caused by the pandemic. The sporting goods industry took about a year to overcome the promotional pressures caused by the liquidation of Sports Authority in 2016.
On its first-quarter conference call on June 2, Dick’s officials said inventories were down two percent year-over-year. The decline was helped by promotions and a $28 million inventory write-down on top of deferred and canceled planned receipts.
“We feel great about our inventory position where we’re chasing inventory,” said Ed Stark, Dick’s CEO, on his company’s conference call. “We’re actually buying some off-price inventory from some of the brands that, for whatever reason, they have available.”
Off-pricers, in general, have been outperforming in recent years and historically benefit from downturns when customers are looking to stretch their dollars as far as possible.
Nordstrom Rack has become Nordstrom’s primary growth vehicle and Macy’s has found success expanding its Backstage concept. Kohl’s, however, ended a test of an off-price concept, Off/Aisle, last year.
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- Dick’s Sporting Goods now a clothing clearance outlet – Racine Journal Times
- Dick’s Sporting Goods Inc (DKS) Q1 2020 Earnings Call Transcript – The Motley Fool
DISCUSSION QUESTIONS: What do think is behind Dick’s Sporting Goods’ introduction of clearance stores? Does it make sense for Dick’s to have off-price banners?