Dick’s Sporting Goods expands House of Sport stores

As many retailers look for ways to shrink store counts and square footage, Dick’s Sporting Goods is going bigger.

The retailer is building more sprawling “House of Sport” stores, which typically come in at 120,000 to 150,000 square feet, more than double the 50,000 for its traditional locations. The sporting goods company believes it’s working.

“We needed to build the concept that will kill Dick’s Sporting Goods,” Edward Stack, executive chairman and son of founder Dick Stack, told CNBC in an exclusive interview at Dick’s House of Sport store in Pittsburgh. “We need to build the concept that if somebody else built this store across the street from us, we’re out of business, and that’s exactly what we did.”

As shoppers prioritize experiences and choice, the locations allow Dick’s to meet them where they are. Most House of Sport stores have two-story climbing walls; sports cages for testing bats; field hockey and lacrosse sticks with statistical feedback; outdoor fields that double as ice rinks in the winter; and golf simulators.

Beyond the experiences, House of Sport has three times as much square footage devoted to footwear than a legacy store, plus 400 types of cleats in the House of Cleats section and other brands and merchandise exclusive to the concept.

“[House of Sport] has been wildly successful” Stack said. A typical House of Sport store on an does around $35 million in annual sales across channels with an earnings before interest, tax, depreciation and amortization rate of roughly 20%, “so these are extremely, extremely productive.” Dick’s Sporting Goods doesn’t break out EBITDA for the full business, though it did report earnings before taxes in its most recent quarter of 14%.

Before the first House of Sport location opened, Stack said Wall Street thought the retailer should be closing stores and reducing its footprint.

“Their concept was, ‘I don’t really know how many stores you have, but you have too many’ or ‘I don’t really know how big your store is, but it’s too big, you need to make it smaller'” Stack said. “When I told them, ‘Hey, our philosophy is that in 10 years, we’ll have probably the same amount of stores, we will have a lot more square footage, that didn’t go over very well, you know, and our stock kind of stalled out for that.'”

But Stack wasn’t dissuaded.  

The retailer’s first “House of Sport” store opened in 2021, and the newest location in Jersey City, N.J. just outside of New York City debuted this month. Dick’s plans to have 35 by the end of the year and up to 100 by the end of its fiscal 2027, in addition to its more than 850 stores across all of its banners, including Dick’s, Golf Galaxy and Public Lands.

There is risk to the concept. Dick’s Sporting Goods has said it takes around $20 million of net capital expenditures to open a House of Sport store, a significant cost outlay for a physical retailer at a time when more sales are shifting online.

Further, most House of Sport locations are in malls, which are facing difficulties with shopper traffic. Recent examples show that even compelling experiential retail doesn’t always translate into financial success and can be difficult to scale. Those include a re-imagined Toys R Us post-bankruptcy, Saks Fifth Avenue and Barneys. Nike has had mixed success with its large flagship experiential concepts.

The extra shelf space at House of Sport stores allows Dick’s to showcase more of its brand partners, both old and new. Nike, among other companies, has been impressed by the concept, Stack said.

“Nike management team came in and saw [House of Sport], and they looked around and said, ‘this is absolutely the best expression of sport anywhere in the world,'” he said.

While Nike is working on rebuilding other wholesale partnerships under new CEO Elliott Hill, Stack said “our relationship with Nike is great.” In fact, House of Sport offers Nike-produced Air Jordan and Kobe merchandise not available elsewhere.

Stack said the interconnection between experience and in-store product testing leads to merchandise sales. “That visit is not in just that visit, but then that they continue to come back,” though he declined to share further metrics.

A key merchandise strategy for House of Sport is also showcasing newer, smaller, more premium brands like Varley, Johnnie-O, Faherty, Marine Layer and others. There’s also a co-lab space, where brands are changed every 6 weeks or so. Currently, U.K.-based GymShark is using the rotating to test selling in U.S. retail.

While it’s not necessarily Dick’s goal to sell even the brands that prove successful in House of Sport in the legacy stores as well,  it could open the opportunity — or vice versa.

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