Financial Performance

Dick’s Sporting Goods Stock Dives on Q2 Results

The company was expected to benefit from rivals' bankruptcies but same-store sales rose only 0.1%, well below analysts' estimates.
Matthew HellerAugust 15, 2017

Despite the demise of some of its leading competitors, Dick’s Sporting Goods on Tuesday reported disappointing quarterly earnings and lowered its full-year outlook, sending its shares down more than 21%.

Dick’s was expected to pick up market share from Sport Chalet and Sports Authority, which both went out of business last year amid the declining mall traffic and online competition that have affected companies throughout the retail sector.

During the second quarter, Dick’s net income rose to $112.4 million, or $1.03 a share, from $91.4 million, or 82 cents a share, a year ago, but adjusted earnings were 96 cents per share, 4 cents below estimates from Thomson Reuters.

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Consolidated same-store sales rose 0.1%, far below the company’s forecast of 2% to 3% growth and a Thomson Reuters forecast for 1.7% growth.

“In this very competitive and dynamic marketplace, we were able to deliver a significant increase in our bottom line from last year,” Dick’s CEO Edward W. Stack said in a news release. “We continued to capture market share and generated strong results in e-commerce, footwear and golf, although sales were pressured by weakness in hunting, licensed and athletic apparel.”

In trading Tuesday, the company’s shares fell 21.7% to $27.32 after opening at $28.63, a low not seen since 2010.

“Dick’s had hoped to benefit from rivals’ bankruptcies … but competition from specialty retailers like Under Armour and Foot Locker remains a threat,” CNBC noted.

Stacey Widlitz, president of SW Retail Advisors, saw the shadow of Amazon looming over Dick’s results. The apparel and accessories “specialty space is no different than a department store when your brands decide to wave the red flag and sell on Amazon,” she told CNBC.

“Here we go down the gross margin rabbit hole just in time for the holidays,” she added.

Stack said Dick’s will increase its promotional and marketing efforts “for the remainder of the year, as we will aggressively protect our market share.” But the company now expects adjusted earnings of $2.80 to $3 a share this fiscal year, compared to analysts’ expectations of $3.09 per share.