Dick's Sporting Goods Looks Beyond Soft Q4

Paul Ausick

Dick’s Sporting Goods Inc. (NYSE: DKS) reported fourth-quarter and full fiscal year 2017 results before markets opened Tuesday. The sporting goods retailer reported quarterly adjusted diluted earnings per share (EPS) of $1.22 on revenues of $2.66 billion. In the same period a year ago, the company reported EPS of $1.32 on revenue of $2.48 billion. Fourth-quarter results also compare to consensus estimates for EPS of $1.20 and $2.73 billion in revenue.

For the full year, the retailer reported net sales totaling $8.59 billion and adjusted EPS of $3.01, compared with 2016 EPS of $2.56 and sales of $7.92 billion. Analysts had been looking for revenues of $8.66 billion and EPS of $3.00. The 2017 fiscal year had 53 weeks, compared to 52 for the prior year. On a 52-week comparison, adjusted 2017 EPS was $3.12.

Same-store sales for the fourth quarter fell by 2%, missing the company’s own estimate of a low-single-digit increase. Same-store sales declined by 0.3% year over year. Online sales accounted for 19% of total sales in the quarter, up from 17.9% in the year-ago quarter.

CEO Edward W. Stack said:

In 2018, we expect stronger product innovation from select key partners and the continued expansion of our private brands to result in less margin pressure than previously expected. We see meaningful opportunity to drive improvements across our business and will make significant investments that will continue to position DICK’S Sporting Goods as the leader in our industry.

The company announced in late February that it would no longer sell assault-style or semi-automatic rifles in its stores. The company also will stop selling high-capacity magazines, and it will no longer sell any gun to anyone under 21 years of age, regardless of local ordinances.

Dick’s expects to report consolidated adjusted diluted EPS for the 2018 fiscal year in a range of $2.80 to $3.00. The company expects to fall in a range of a low-single-digit decline to flat for the year. Analysts are looking for full-year EPS of $2.77 and revenues of $8.8 billion.

For the first quarter, analysts expect EPS of $0.38 and sales of $1.9 billion. Beginning with the first quarter, Dick’s said it will no longer provide a quarterly outlook.

There is softness everywhere in the company’s earnings and guidance. Analysts and investors are not likely to be very forgiving.

Dick’s shares traded down about 6.8% in premarket trading Tuesday, at $30.35 in a 52-week range of $23.88 to $52.31. The 12-month consensus price target was $35.12 before this morning’s announced results.