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Inflation is easing in the U.S., but some sporting goods and apparel retailers are still seeing a slowdown.

On Tuesday, Academy Sports + Outdoors CEO Steve Lawrence said the company expects its customers to “remain under pressure” and “moderate spending for the remainder of the year.” Meanwhile, Foot Locker CEO Mary Dillon said in late May that she expects “the external environment to remain dynamic,” citing “lower savings balances and higher interest rates.” And in late April, Big 5 CEO Steven Miller said transactions were down by low double digits, calling it a “soft environment for discretionary spending.”

The sporting goods sector has experienced some challenges in recent quarters. Many shoppers are foregoing purchases of nice-to-haves like baseballs or skateboards to have more money left over for essentials like groceries and gas. According to the U.S. Bureau of Labor Statistics, sporting goods prices in the U.S. increased 0.9% from March to April.

But as sporting goods stores face challenges, the biggest players are starting to diverge in terms of their performance. In the last two weeks, Academy Sports + Outdoors and Foot Locker reported year-over-year sales declines. And yet, one retailer has managed to stand out from the crowd: Dick’s Sporting Goods.

Dick’s raised its full-year guidance in late May after reporting a 5.3% year-over-year increase in comparable sales growth. Meanwhile, Academy Sports + Outdoors said net sales fell 1.4% year-over-year. Foot Locker reported a 2.8% year-over-year sales decline. And Big 5 sales fell 13.5% from the first quarter of fiscal 2023 to the first quarter of fiscal 2024.

According to Seth Basham, an analyst at Wedbush Securities, several factors are playing a role in this growing divide in the sporting goods sector. The first and perhaps most important factor is the customer base, Basham said. Academy Sports + Outdoors tends to target low- to middle-income consumers, while Dick’s tends to target middle- to high-income consumers. “We’re seeing bigger cuts in spending from those low-income customers because of inflation and higher interest rates, so I think that’s by far the biggest difference,” Basham said.

Another factor is the range of brands. Academy Sports + Outdoors does not sell “hot shoe brands” like On or Hoka, said Basham, but Dick’s Sporting Goods does.

Other analysts agree. Compared to other sporting goods manufacturers, Dick’s has “improved its positioning in the market – including a stronger and more diverse assortment of national brands (and) powerful private labels,” wrote Joe Feldman, an analyst at Telsey Advisory Group, in a note. Big brands are also driving Foot Locker, although overall sales are declining. The retailer was able to more than double its Hoka business last quarter.

Geographical constraints may also have played a role in the sporting goods business’ performance, Basham stressed. On Tuesday, the CEO of Academy Sports + Outdoors said the company’s outdoor cooking division had a difficult quarter after “a crawfish shortage depressed sales throughout the Gulf region.” Academy Sports + Outdoors has stores in 19 states, many of them in the South.

Dick’s is also increasing its focus on omnichannel and experiential retail. The retailer plans to open eight new House of Sport locations this year – large-scale stores with immersive elements such as climbing walls, indoor tracks and simulated driving ranges.

Feldman, who recently toured a House of Sport in Boston, said he was impressed with the look of the store and the “breadth and novelty” of its merchandise. Dick’s is also seeing strong sales increases from GameChanger, its mobile app for live streaming and scoring in youth sports. According to Dick’s President Lauren Hobart, more than 5 million unique users used GameChanger last quarter, spending about 30 minutes a day on the app.

Dick’s competitors are also apparently trying to expand their omnichannel offerings. This week, Academy Sports + Outdoors announced it will partner with DoorDash to offer on-demand delivery from its 285 U.S. stores. Initially, customers will only be able to use this service through the DoorDash app, but “the next phase will be to integrate this functionality into our website, where customers can choose same-day delivery as another fulfillment option,” Lawrence said on a conference call Tuesday.

Although many sporting goods stores are struggling, Basham is cautiously optimistic about the future. “I think discretionary spending will improve over time as we put aside some of these economic headwinds,” he said. “In that context, some of the categories that are performing the worst for the industry are the ones that were pulled forward by the pandemic – things like fitness equipment and bikes. Eventually, we’ll get past that.”

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