Market watchers may have had high hopes for Dick’s Sporting Goods after many of its competitors went bankrupt — and it moved aggressively to snap up leftover market share — but results are taking some time to materialize.
Dick’s shares are plunging today — down more than 13 percent as of 11:45 a.m. — after the company missed same-store sales expectations for the first-quarter.
The sporting goods retailer said its Q1 same-store sales increased 2.4 percent during the period, missing its own guidance for a comp gain or 3 to 4 percent as well as Wall Street’s bet for an increase of 3.5 percent. Sales for the first quarter increased 9.9 percent to $1.8 billion, which was in line with forecasts.
Net income was $58.2 million, or 52 cents per diluted share, a 2.2 percent improvement over the comparable period. Adjusted net income, was $60.3 million, or 54 cents per diluted share, in line with what analysts had projected.
“Despite a challenging retail environment, we realized growth across each of our three primary categories of hardlines, apparel and footwear, and were pleased with the performance of our newly re-launched ecommerce site,” said Dick’s chairman and CEO Edward Stack in a release. “We remain optimistic as we drive profitable growth on our new ecommerce platform, make marked progress on our new merchandising strategy and continue to capture market share.”
It’s been a mixed bag for sporting goods retailers since The Sports Authority filed for Chapter 11 protection in March 2016. By and large, Dick’s Sporting Goods had been pegged as the biggest beneficiary of the retailer’s demise. In June 2016, Dick’s successfully bid on Sports Authority’s intellectual-property assets and the right to acquire 31 store leases. Dick’s also later took advantage of Golfsmith’s Chapter 11 filing, purchasing the company’s assets at a bankruptcy auction in October 2016. (In Q4, Dick’s opened three former Sports Authority stores as new Dick’s Sporting Goods and started the process of converting 30 Golfsmith stores into Golf Galaxy locations.)
But, despite its ability to snap up defunct businesses and expand its presence, hit-and-miss earnings reports suggest that it hasn’t been smooth sailing for Dick’s over the past year.
Another sign of weakening business: Dick’s lowered also its full-year reported diluted EPS range as well as its same-store sales expectations today. The company now expects reported diluted EPS $3.59 to 3.69, compared to the previously estimated range of $3.63 to $3.73. Same-store sales are now expected to increase 1 to 3 percent, compared to the previously provided range of 2 to 3 percent.
On Friday, Dick’s made headlines when it filed an amendment to its fourth-quarter earnings report, which it said contained a “computation error.” The error, Dick’s said, resulted in a $23.4 million overstatement of its adjusted EBITDA amounts for both the 13 weeks and 52 weeks ended January 28, 2017. There were no additional changes to the original filing.