Dick’s Sporting Goods Inc. (NYSE: DKS) reported first-quarter 2018 results before markets opened Wednesday. The sporting goods retailer posted diluted earnings per share (EPS) of $0.59 on revenues of $1.91 billion. In the same period a year ago, the company reported EPS of $0.52 ($0.54 adjusted) on revenue of $1.83 billion. First-quarter results also compare to consensus estimates for EPS of $0.45 and $1.88 billion in revenue.
Same-store sales for the first quarter fell by 0.9% adjusted to account for an extra week of sales in 2017. The company said same-store sales were affected by a “continued deceleration” in hunt and electronic sales and colder spring weather that delayed the beginning of sales for key outdoor sports and activities.
The company did not mention any impact related to its late February announcement that it would no longer sell assault-style or semi-automatic rifles in its stores. The company also has stopped selling high-capacity magazines and will no longer sell any gun to anyone under 21 years of age, regardless of local ordinances.
CEO Edward W. Stack said:
Our strong first quarter earnings reflect improved execution against our merchandising strategy, which resulted in higher merchandise margins. Product newness, strength in our private brands and a more refined assortment led to a much healthier business, with fewer promotions and cleaner inventory throughout the quarter. We believe these benefits will continue as we further optimize our assortments.
Dick’s raised EPS guidance from a prior range of $2.80 to $3.00 to a new range of $2.92 to $3.12. Same-store sales are projected to come in flat to a low single-digit decline. The company plans to open 19 new Dick’s stores and relocate four others this year, and capital spending is targeted to reach $250 million, down from $373 million in 2017.
For the second quarter, analysts expect EPS of $0.99 and sales of $2.22 billion. Dick’s no longer provides a quarterly outlook. For the full year, the consensus estimates call for EPS of $2.93 and sales of $8.66 billion.
Last week, Sportsman’s Warehouse reported a rise of nearly 15% in firearms sales, which the company attributed to “recent policy changes by our competitors.” One of those competitors is Dick’s. But neither Sportsman’s Warehouse nor Big Five Sporting Goods, another retailer that reported an uptick in sales of guns and ammo, expects higher firearms sales to last.
Dick’s decline in same-store sales is more than offset by the boost in margins and earnings. Exactly how firearms sales play into that may be discussed on the conference call later this morning.
Dick’s shares traded up about 21% in Wednesday’s premarket to $36.88, in a 52-week range of $23.88 to $42.22. The 12-month consensus price target was $35.29 before the announced results.