Dick's Sporting Goods 3Q earnings flat
By Thomas Olson
Published: Tuesday, Nov. 19, 2013, 11:00 a.m.
Dick's Sporting Goods Inc.'s push into e-commerce and its emphasis on higher-margin athletic apparel and footwear may be paying off.
The Findlay-based retailer on Tuesday posted higher than expected sales last quarter, despite a climate of continued consumer caution.
The company recorded sales of $1.4 billion in the three months ended Nov. 2, a 6.7 percent increase over $906 million the year earlier. Same-store sales rose 3.3 percent, compared with the flat to 1 percent rise the company had expected.
“Overall, their business is good and store traffic is getting strong,” said Sam Poser, an analyst for Sterne Agee & Leach Inc., New York.
Weakness in outdoor apparel and equipment was more than offset by stronger sales in athletic apparel and footwear. The latter generates higher profit margins and continues to be a focus of Dick's in-store remodeling activity.
The company remodeled the apparel sales space in 75 Dick's stores this year to increase customer traffic and completely remodeled four other stores. The company operates 558 Dick's Sporting Goods stores in 46 states.
Dick's expects to draw more customers with more direct marketing and continued free shipping, which the retailer promoted last quarter. Free shipping has “become more of the norm” in retailing, especially in e-commerce, which now accounts for about 6.5 percent of Dick's sales, said CEO Edward Stack during a conference call with analysts.
While the retailer lost some revenue by doing more free shipping last quarter, Stack said, it was offset by higher sales volumes, which usually accompany free shipping.
Stack said marketing efforts, as well as selective pricing initiatives, drove up store traffic but dampened profit margins somewhat more than expected. In “isolated” markets last quarter, Dick's priced certain products lower to compete, but Stack expects such cases to remain the exception.
The retailer said same-store sales should increase 3 percent to 4 percent in the November-February, fiscal fourth quarter.
In addition, Dick's raised its earnings guidance somewhat for the full year, saying per-share profit would be $2.62 to $2.65, an increase from the previous projection of $2.60 to $2.65.
Shares of Dick's Sporting Goods Inc. set a 52-week high on the financial news. The stock reached $58.40 midday Tuesday before settling back to close at $56.14, down 23 cents.
Company earnings guidance assumes a continuation of a “cautious consumer environment,” Stack said.
The company earned $50 million last quarter, roughly unchanged from the year earlier. The current period contained one week less than the year-ago quarter.
Per-share earnings of 40 cents were the same as a year earlier but above the 37 cents to 39 cents the company had expected, and just above the 39 cents expected by most analysts.
Dick's said that in recent weeks, it completed its 2013 store development program. This year, it opened 40 Dick's Sporting Goods stores, one Golf Galaxy store, one True Runner store and two Field & Stream stores, including the first one in Cranberry on Aug. 16.
Thomas Olson is a staff writer for Trib Total Media. He can be reached at 412-320-7854 or email@example.com.
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