Dick’s Sporting Goods CEO Lauren Hobart said Wednesday that in addition to selling more golf clubs and sportswear, the company has found a formula to increase profits even as shoppers buy more online.

Hobart’s comments picked up a topic that has come up a lot in recent retail earnings calls: widening margins.

Consumers are on a buying frenzy. That helped. But another crucial factor is that retailers have learned how to make e-commerce more profitable, from shipping online orders from stores to directing shoppers to roadside pickup.

“In a way, it’s simple: it ships from stock,” said Michael Baker, senior retail analyst at DA Davidson. “And when the customer comes into the store to pick it up, it immediately balances out there.”

He said companies have fundamentally changed the way they do business online as they move more inventory out of distribution centers and closer to customers’ homes. Plus, customers have shown that they are willing to pay higher prices – a trend he doesn’t expect to change anytime soon.

That caught the attention of investors. Dick’s shares hit an all-time high of $ 134.80 on Wednesday after being the last retailer to beat earnings expectations for the second quarter and raise their forecast. Quarterly sales increased by 21% compared to the same period last year and profits by almost 80%.

Dick’s CFO Lee Belitsky said profits from online sales are now in line with typical in-store sales, in part because more customers are making their own online purchases in-store or in the parking lot.

Numerous retailers, including Dick’s, Target, and Best Buy, have also covered the cost of e-commerce orders. They have also turned stores into mini-warehouses and touted parking pickup as a faster option – they make more money as they save on shipping costs.

Target, which began the strategy before the pandemic, generated more than 95% of sales in its stores in the second quarter. According to Best Buy, in the second quarter about 60% of online orders, based on sales, were fulfilled by stores – and 42% were picked up by customers in its stores.

Dick’s stores accounted for more than 70% of online sales in the second quarter, Hobart said. Also, she said that customers who use the service tend to buy more.

Investors have observed another dynamic that has helped margins: the level of promotions.

Customers have paid less attention to price as they clear shelves and put items in virtual shopping carts. The Urban Outfitters and Anthropologie brands saw “record drop rates for merchandising items in the second quarter,” said Frank Conforti, co-president and chief operating officer of Urban Outfitters.

Best Buy also said fewer goods are ending up on clearance shelves.

Best Buy’s chief financial officer Matt Bilunas admitted on Tuesday’s conference call that some of this could fade. He said the consumer electronics retailer will soon have periods of very little promotional activity. However, he reckons that the company will offer fewer Christmas promotions than two years ago, even if they are higher than in the previous year.

Speaking on a conference call Wednesday, Hobart said Dick’s had become more and more sophisticated about promotions. She said it was phasing out circulars requiring the company to guess in advance what to offer for sale. Now, she said, it can use data science to monitor trends and adjust faster – lower or higher prices in near real time. It has more exclusive products like the new men’s athleisure line to avoid them just competing on price.

She said she believes higher profits can persist even if the level of government incentives wears off.

Michael Lasser, retail analyst at UBS, said retailers have levers they can use to keep margins higher. He pointed out that Dick is shortening his weekly newsletters and Best Buy cross trainings of employees for various roles, which may reduce working hours.

Still, he said, consumer spending will change as people return to offices, business trips, and more social events. The challenges in the supply chain will gradually subside. People will no longer be the same target group of buyers: they buy new couches, second computer monitors, and more.

This will force retailers to make more offers and intensify marketing again.

“If sales slow down, the promotions will pick up and that will put some pressure on margins,” he said