Sign up Australia
Proactive Investors - Run By Investors For Investors

Dick's Sporting Goods slides as it warns on margins

Investors took fright at the outlook for the sporting goods retailer’s margins.
Golfer
Fore! (warned is forearmed)

Dick’s Sporting Goods Inc (NYSE:DKS) opened a mixed bag when it issued its third quarter results.

Earnings were ahead of expectations but the stock retreated in pre-market trading as investors took fright at the outlook for the sporting goods retailer’s margins.

Net income clocked in at US$36.9mln, equivalent to 35 cents a share, which was comfortably above the company’s guidance range of 22 to 30 cents.

The retail raised its full-year earnings guidance to a range spanning from US$2.95 to US$3.07.

Like-for-like sales were down 0.9% year-on-year but overall revenue rose 7.7% to US$1.95bn thanks to the addition of new outlets to the retail estate.

"In the third quarter, we delivered earnings per diluted share and comp sales at the high end of our expectations, with continued double-digit growth in eCommerce. As expected, margins were under pressure in this highly promotional environment, but our strategy for this environment enabled us to continue to capture market share," said Edward Stack, chairman and chief executive officer of Dick’s sporting Goods.

“We plan to make significant investments in our business, which will have a short-term negative impact on our earnings; however, we expect these investments will pay meaningful dividends in the future,” Stack said.

“We plan to increase investments in our eCommerce business, the technology in our stores and store payroll in order to enhance the customer experience. Meaningful investments will also be made to DICK'S Team Sports HQ, and in the development and support of our private brands. Given these investments, continued gross margin pressure and approximately flat comp sales, we expect earnings per diluted share to decline by as much as 20 percent in 2018," he concluded.

Shares dropped nearly 5% to US$25.03 on the day.



John-H.jpg


Register here to be notified of future DKS Company articles
View full DKS profile View Profile

Dick's Sporting Goods Timeline

No investment advice

The information on this Site is of a general nature only. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions. You acknowledge and understand that neither the Company, its related bodies corporate, the information providers or their affiliates will advise you personally about the nature, potential value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter. You should read our FSG and any other relevant disclosure documents and if necessary seek persona advice prior to making any investment decision.

You understand and agree that no Content (as defined below) published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person.

You understand that in certain circumstances the Company, its related bodies corporate, the information providers or their affiliates may have received, or be entitled to receive, financial or other consideration in connection with promoting, and providing information about, certain entities on the Site and in communications otherwise provided to you.

You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate. From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

Before you act on any general advice we provide, please consider whether it is appropriate for your personal circumstances.

© Proactive Investors 2017

Proactive Investors Australia PTY LTD ACN:132787654 ABN:19132787654.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use