Dick’s Sporting Goods shares fall as the retailer predicts sales will decline in the coming year

A Dick’s sports shop

Craig Warga | Bloomberg | Getty Images

Dick’s sporting goods surpassed Wall Street’s fourth quarter estimates on Tuesday as shoppers continued to purchase equipment and apparel for outdoor activities and home exercise during the pandemic.

However, stocks fell more than 6% early Tuesday as the company forecast that sales are expected to slow.

The sporting goods retailer estimated that sales in the same store could decrease by up to 2% or grow by up to 2% in the coming year, a marked decrease from sales growth in the same store of nearly 10% in fiscal 2020. It estimated net sales of The Revenue for the coming year will be between $ 9.54 billion and $ 9.94 billion, which is roughly unchanged from FY2020 net revenue of $ 9.58 billion.

Here’s how the company performed in the fourth quarter of the fiscal year that ended January 30th: compared to analyst expectations based on refinitive data:

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

Dick’s reported net income of $ 219.6 million, or $ 2.21 per share, for the fourth quarter, compared to $ 69.8 million, or 81 cents per share, a year earlier. With no one-time expense, the company made $ 2.43 per share, up on what analysts had expected to be $ 2.28.

Net sales rose from $ 2.61 billion a year ago to $ 3.13 billion, above the $ 3.07 billion forecast by analysts.

Revenue in the same store rose 19.3% in the fourth quarter, outperforming the 17.1% growth expected by a StreetAccount survey. E-commerce sales increased 57% during the reporting period.

Dick’s sales increased during the pandemic as shoppers bought golf clubs, training tops, and other items to keep in shape and pass the time during the pandemic. One of its product categories, activewear, has become a popular but increasingly competitive category as retailers like Target, Kohl’s, Gap’s own Athleta and Lululemon battle for more market share.

Dick’s will increase investments to $ 275-300 million in the coming year, which is above total investments of $ 167 million and $ 180 million in fiscal 2020 and 2019, respectively.

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

On a call to investors, she said the company would expand and improve its wares. She said it will launch a new line of sportswear for men later this month. There are plans to invest in technology to support golf equipment and instruction in the Golf Galaxy stores and to grow the football business in the Dick’s stores. She said it will remodel over 100 additional stores so that they have full service shoe displays and ranges.

“We believe these improvements, along with strong consumer trends and an improvement in the allocation of the most sought-after styles, will continue to drive positive results in our sportswear and footwear business,” she said on the conference call.

Dick’s plans to open six new stores and six Concept specialty stores in the coming year. In addition to the sports stores outside the mall, the retailer operates the Golf Galaxy and Field & Stream stores.

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

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

Read the full press release here.

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