Dick’s Sporting Goods turns in mixed Q3 results as sales fall

Dick's Sporting Goods beat profit expectations and raised its earnings outlook amid disappointing sales.

The sporting goods retailer reported that its net income rose 2% to $37.8 million, or 39 cents a share, in the quarter ended Nov. 3, from $36.9 million, or 35 cents a share. Analysts had expected 26 cents a share.

Net sales fell 4.5% to $1.86 billion, slightly below estimates of $1.88 billion. Same-store sales, based on an unadjusted calendar, declined 6.1%. (Adjusted for an extra week in 2017, same-store sales fell 3.9%.)

Neil Saunders, managing director of GlobalData Retail, commented that a number of unfavorable dynamics played into Dick’s sales decline, with the foremost being a shift in where people buy sporting goods.

“Here the company is facing a pincer movement,” he said. “At the higher and more professional end of the market, consumers are migrating to dedicated specialists like Lululemon and Nike. These players offer a more streamlined and focused assortment of relevant product in a more compelling setting. The same thing applies to exercise equipment where, despite the ongoing failure of a large player like Sears, Dick's is not managing to succeed in the same way as more specialist firms like Peloton. Within the everyday sporting segment, non-specialists like Target and Kohl's are attracting more shoppers as they improve their athletic offerings.” For more analysis, click here.

Dick’s said its online sales, adjusted for the calendar shift, rose 16% in the quarter. E-commerce accounted for 12% of total net sales in the quarter, up from 10% in the year-ago period.

“Our continued improvements in gross margin and disciplined expense management more than offset our strategic investments, and contributed to increased profitability compared to last year,” said chairman and CEO Edward Stack. “Comparable sales were within our range of expectations, including continued headwinds in the hunt and electronics categories.”

Dick’s banned the sales of assault-style weapons from its stores nationwide last February following the shooting rampage at Marjory Stoneman Douglas High School in Parkland, Fla.

The retailer raised its 2018 EPS guidance range to $3.15 to $3.25 from $3.02 to $3.20.

At the end of the quarter, Dick’s operated 732 Dick’s Sporting Goods stores in 47 states, 94 Golf Galaxy stores in 32 states, and 35 Field & Stream stores in 16 states.