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Dick’s Sporting Goods (DKS) Q1 earnings top estimates, outlook cut

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A Dick’s Sporting Goods store stands in Staten Island on March 09, 2022 in Recent York City.

Spencer Platt | Getty Images

Dick’s Sporting Goods said Wednesday it’s trimming its financial outlook for the yr amid uncertain economic conditions, but that it is not yet seeing any dramatic shifts in its business.

On a call with analysts, Chief Executive Officer Lauren Hobart said she had confidence in Dick’s longer-term business strategy and in maintaining profitability. The corporate’s stock rallied after a stark sell-off in shares in early trading, after they sank to a fresh 52-week low of $63.45.

Dick’s shares closed the day up nearly 10%.

Despite the difficult economic backdrop, Hobart said the corporate has several benefits buoying its business. Its private-label brands have gained traction with customers. She said pressure to mark down excess items stays low. And consumers have embraced outdoor hobbies resembling mountaineering and golfing throughout the Covid pandemic.

“They’re running. They’re walking, they’re playing golf,” Hobart said. “The pandemic surging categories that we have all been talking about … we consider all of them have long-term growth potential.”

Still, 40-year-high inflation and ongoing supply chain challenges were enough for Dick’s to issue what it said was a “cautious” outlook for the yr.

Dick’s now expects to earn between $9.15 and $11.70 per share, on an adjusted basis, this fiscal yr, compared with a previous range of $11.70 to $13.10. Analysts had been on the lookout for adjusted earnings per share of $12.56, in accordance with Refinitiv estimates.

Dick’s is forecasting same-store sales to be down 2% to eight%, versus prior expectations for sales to be flat to down 4%. Analysts were calling for a year-over-year decline of two.5%, in accordance with FactSet.

The corporate’s decision to lower its guidance comes after similar adjustments from Walmart, Goal and Kohl’s, as these retailers deal with higher expenses which can be eating into their earnings. Shares of apparel retailer Abercrombie & Fitch fell nearly 30% Tuesday after the corporate slashed its outlook for the yr.

Here’s how Dick’s did in its fiscal first quarter compared with what Wall Street was anticipating, using Refinitiv estimates:

  • Earnings per share: $2.85 adjusted vs. $2.48 expected
  • Revenue: $2.7 billion vs. $2.59 billion expected

Dick’s reported net income for the three-month period ended April 30 of $260.6 million, or $2.47 per share, compared with net income of $361.8 million, or $3.41 a share, a yr earlier. Excluding one-time items, the corporate earned $2.85 per share.

Sales fell about 8% to $2.7 billion from $2.92 billion a yr earlier, but they were enough to top expectations.

Dick’s said its loyalty members accounted for greater than 70% of sales. Its stores fulfilled over 90% of transactions, including online purchases, as Dick’s made essentially the most of inventory sitting in stock rooms.

The corporate reported inventory levels as of April 30 up 40.4% from a yr earlier. But Chief Financial Officer Navdeep Gupta said Dick’s is closely controlling inventory levels, so the retailer won’t find yourself with excess merchandise and must slash prices later within the yr.

“We consider our inventory at plus 40% actually may be very healthy, and we’re very happy with it,” Hobart said.

Dick’s also touted its strong relationships with national brands, including Nike, at a time when a few of these labels have been pulling out of third-party channels to concentrate on selling on to customers. Hobart said it is a testament to the corporate’s investments in its stores and the shopper shopping experience.

Telsey Advisory Group analyst Joe Feldman said Dick’s will proceed to be a long-term market share gainer, thanks largely to its mixture of each national brands and in-house lines. Its off-mall locations are also more appealing to customers today, he said.

Dick’s shares have fallen about 32% yr so far, inclusive of Wednesday’s gains.

— CNBC’s Melissa Repko contributed to this reporting.

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