Dick's Sporting Goods (DKS 34.05, -2.34, -6.43%) opened nearly 10%
lower after disappointing same store sales guidance overshadowed better than
expected earnings in the company’s latest quarterly report.
The sporting goods retailer reported better than expected second quarter earnings of $1.20/share on revenue of $2.18 bln, which increased 0.9% year/year but missed estimates.
The company increased the midpoint of its earnings guidance for the fiscal year, expecting earnings between $3.02/share and $3.20/share, up from a previous outlook for earnings between $2.92 per share and $3.12 per share. The midpoint of the new guidance range is ahead of market expectations, but the company said that consolidated same store sales are expected to decline between 3% and 4% while the previous guidance called for flat sales or a low-single digit decline at worst.
Chairman and CEO Edward Stack acknowledged that the company is seeing a significant drop in sales of Under Armour (UAA 20.69, -0.25, -1.19%) apparel due to Under Armour's decision to expand distribution. Mr. Stack added he is confident that sales trajectory will improve next year.
Returning to second quarter results, consolidated sales decreased 4.0% on an adjusted basis. The adjustment was made to reflect an extra week of sales in 2017. On an unadjusted basis, consolidated same stores sales declined 1.9%. Gross margin improved to 30.28% from 29.54% one year ago, partly due to fewer promotions and a favorable product mix.
Adjusted eCommerce sales increased 12% and made up 11% of total sales, up from 9% of total sales one year ago. The company is making continued improvements to its eCommerce side, which is considered a long-term growth initiative.
The company opened five new Dick's Sporting Goods stores after opening eight new locations during the first quarter. The company ended the quarter with 729 Dick's Sporting Goods stores and 129 specialty concept stores. Six more new full-sized stores are expected to be opened by the end of the fiscal year.
- OUR VIEW
- LEARNING CENTER