Dick's: Sales, earnings figures revised downward
Dick's Sporting Goods Inc. cautioned Wall Street on Tuesday that same-store sales, as well as operating earnings, would come in lower than expected this year.
The Findlay-based retailer said weaker consumer spending changed its 2013 outlook for same-store sales growth to flat to up 1 percent from the previous projection of 2 percent to 3 percent growth. Same-store sales are a good measure of a retailer's performance because it differentiates between revenue growth from improved management and gains from new outlets.
“Dick's is not an isolated case. We're seeing a slower consumer environment than most people anticipated,” said Sean Naughton, an analyst at Piper Jaffray, Minneapolis.
Dick's joined a number of retailers, including big-box names, that reported sluggish quarterly results. Weak consumer spending hurt companies such as Wal-Mart Stores, J.C. Penney and Macy's.
Dick's stock closed Tuesday at $46.64 a share, down $3.95.
“We continue to see more people spending on home improvement and automobiles and appliances,” said the analyst. “But that is sucking up some of consumers' discretionary dollars.”
Naughton said many consumers tempered spending on sports gear and other discretionary items because of the 2 percent restoration of the payroll tax for Social Security. A recent Piper Jaffray survey found 42 percent of consumers said higher taxes led them to lower spending.
Dick's operates about 600 stores in 44 states, including 81 Golf Galaxy locations and two TrueRunner stores.
The retailer revised downward its operating earnings outlook to between $2.60 and $2.65 a share, from $2.84 to $2.86.
To combat sluggish consumer spending, the retailer will spend more on advertising and invest in growth categories such as hunting gear and high-schoolers' athletic apparel, CEO Edward Stack told analysts on a conference call.
Stack said the prototype Field & Stream store that opened in Cranberry on Friday produced the best grand-opening day in company history. A second Field & Stream store, which sells hunting/fishing/camping gear, will open in Kentucky in November, and a third in Erie next year.
“Once we get to 15 or 20 stores, we'll be happy,” Stack said without pinpointing exactly how many Field & Stream stores Dick's plans to open.
The revised financial outlook came amid Dick's financial report for the fiscal second quarter ended Aug. 3, showing earnings jumped 57 percent to $84 million, or 67 cents a share, compared with $53.7 million, or 43 cents a share, a year earlier. Year-ago results included a $32.4 million charge for impaired securities.
On an operating basis, earnings equaled 71 cents a share. Most analysts expected the retailer to earn 74 cents a share.
Sales rose 6.6 percent to $1.53 billion from $1.44 billion.
Stack said higher-than-normal rain and cooler temperatures in much of the country in July dampened results, particularly for golf-related sales, which account for nearly 20 percent of Dick's revenue.
Thomas Olson is a Trib Total Media staff writer. Reach him at 412-320-7854 or email@example.com.