Weak sales trend hits Dick's Sporting Goods

The CEO of Dick's Sporting Goods said strong back-to-school sales couldn't help his company recover from a slowdown in consumer spending in the third quarter.

For the third quarter ended Oct. 31, Dick's reported a 0.7% increase in same-store sales. Earnings were $47.2 million, or 41 cents a share, compared with $49.2 million, or 41 cents a share, in the same period a year ago. Revenue rose 7.6% to $1.64 billion.

"Our positive same-store sales for the quarter reflected a strong back-to-school selling season tempered by slowing trends later in the quarter. Strength in athletic footwear, accessories and athletic apparel was moderated by the impact of record warm weather in more seasonal categories," said Edward W. Stack, chairman and CEO. "With strong operational discipline, we generated earnings per share within our guided range."

The company said inventory was up 13.1% year over year, and that it is working with its vendors to reduce its exposure to slow-selling merchandise by returning product, canceling orders and securing markdown allowances.

"As we look to the fourth quarter, we anticipate a more promotional environment. Our focus will be to actively manage our inventory levels, while continuing to take the appropriate actions to win share and strengthen our business for the long term."

Dick's says e-commerce penetration for the third quarter was 8% of total net sales, compared to 7.3% during third quarter 2014.

For the fourth quarter, Dick's is forecasting earnings in the range of $1.10 to $1.25, compared with $1.30 in the prior year. Same-store sales are projected in a range of down 2% to up 1%, compared with an increase of 3.4% in the same period a year ago.

In the third quarter, the company opened 27 new Dick's Sporting Goods stores and seven new Field & Stream stores. The company now operates 645 Dick's Sporting Goods stores, 75 Golf Galaxy stores and 19 Field & Stream stores.

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