Dick's Sporting Goods shares fall as retailer predicts slowing sales in year ahead

Dick's Sporting Goods shares fall as retailer predicts slowing sales in year ahead

A Dick’s Sporting Goods store

Craig Warga | Bloomberg | Getty Images

Dick’s Sporting Goods on Tuesday topped Wall Street’s fourth-quarter estimates, as shoppers continued to buy equipment and apparel for outdoor activities and home workouts during the Covid pandemic.

The company’s shares were down by more than 6% early Tuesday, however, as it forecast that sales trends will likely slow.

The sporting goods retailer estimated that same-store sales could decline as much as 2% or grow by as much as 2% in the year ahead, a significant drop from same-store sales growth of nearly 10% in fiscal 2020. It estimated net sales for the year ahead will range between $9.54 billion and $9.94 billion, roughly flat compared with its net sales of $9.58 billion in fiscal 2020.

Here’s how the company did during the fiscal fourth quarter ended Jan. 30, compared with what analysts were expecting, based on Refinitiv data:

  • Earnings per share: $2.43 adjusted vs. $2.28 expected
  • Revenue: $3.13 billion vs. $3.07 billion expected

Dick’s reported fourth-quarter net income of $219.6 million, or $2.21 per share, up from $69.8 million, or 81 cents per share, a year earlier. Excluding one-time charges, the company earned $2.43 per share, higher better than the $2.28 expected by analysts.

Net sales climbed to $3.13 billion from $2.61 billion a year earlier, higher than the $3.07 billion forecast by analysts.

Same-store sales rose by 19.3% in the fourth quarter, better than the growth of 17.1% expected by a StreetAccount survey. E-commerce sales grew by 57% during the period.

Dick’s sales have picked up during the pandemic, as shoppers bought golf clubs, workout tops and other items to stay in shape and pass the time. One of its merchandise categories, activewear, has become a popular, but increasingly competitive category, as retailers including Target, Kohl’s, Gap-owned Athleta and Lululemon all vie for more market share.

Dick’s will increase investments in the year ahead to between $275 million and $300 million, higher than its total capital expenditures of $167 million and $180 million in fiscal 2020 and fiscal 2019, respectively.

CEO Lauren Hobart, who stepped into her role in February, said the retailer wants to capitalize on consumer demand across outdoor activities and growing interest in golf. She said it has had a strong start to the fiscal year.

On a call with investors, she said the company will expand and elevate its merchandise. She said it will launch a new men’s athletic apparel line later this month. It plans to invest in technology to support golf fittings and lessons at its Golf Galaxy stores and overhaul its soccer business at Dick’s stores. She said more than 100 additional stores will be converted so they have full-service footwear displays and assortment.

“We believe that these enhancements along with strong consumer trends and improving allocations of the most in-demand styles will drive continued positive results in our athletic apparel and footwear business,” she said on the call.

In the coming year, Dick’s said it plans to open six new stores and six specialty concept stores. Along with its off-mall sporting goods stores, the retailer operates Golf Galaxy and Field & Stream stores.

The company said it plans to buy back at least $200 million of its stock this year.

As of market close Monday, Dick’s shares were up about 119% over the past year. The company’s market value is $6.87 billion.

Read the full press release here.