Dick’s Sporting Goods saw its stock value increase by nearly 20 percent on Tuesday morning as investors reacted to the single greatest same-store sales increase the retailer has recorded since fiscal 2013, with omnichannel and BOPIS driving those results.
In a Nutshell: Dick’s posted third-quarter same-store sales that were 6 percent higher than the comparable period last year and now expects consolidated same-store sales to increase by 2.5 to 3 percent by year-end, compared to a 3.1 percent loss in 2018. Dick’s said this was a result of sales growth in hardlines, apparel and footwear along with a more focused approach to marketing.
“The momentum in our stores continued to build with our focus on service standards, recognition of great results and stronger marketing,” Dick’s Sporting Goods president Lauren R. Hobart said. “Combining this with the successful openings of our new e-commerce fulfillment centers and enhanced website functionality, we continue to build one of the best omnichannel experiences in retail.”
Shoppers are choosing the convenience of making their purchases online for in-store pickup (BOPIS). Hobart added, “During the quarter we continued to see growth in the number of orders our athletes ordered online and picked up in store, significantly outpacing the double-digit sales growth we saw in our overall e-commerce business.”
Total inventory was up 17.1 percent for Dick’s in the third quarter. Although Dick’s has spoken about its plans to avoid undue tariff impacts in the past, the retailer said this increase was mostly a factor of “strategic investments in key growth categories.”
Despite incorporating expected tariff impact into new guidance, Dick’s said it will also be raising its full-year earnings outlook.
Sales: Revenue for Q3 increased by 5.6 percent to $1.96 billion at Dick’s Sporting Goods, above the $1.91 billion Wall Street expected. Same-store sales rose by 6 percent and e-commerce sales increased by 13 percent.
Overall e-commerce penetration for the retailer stands at approximately 13 percent of total sales, up from 12 percent in the comparable period last year.
Earnings: Net income of $44.8 million earned Dick’s Sporting Goods 52 cents per diluted share in earnings during the third quarter, above the Wall Street expectation of 38 cents. This result included charges related to closing eight Field & Stream stores as the company continues to mull over a decision to get out of the firearms business.
Dick’s Sporting Goods now expects earnings per share of $3.63 to $3.73 for FY19, up from its previous range of $3.30 to $3.45.
CEO’s Take: Dick’s Sporting Goods chairman and CEO of Edward W. Stack said the company was riding high after a successful third quarter and that the retailer stands to perform well over the holidays.
“We are very pleased with our strong third-quarter results, as we delivered a 6 percent comp sales increase and meaningful gross margin expansion. We saw increases in both average ticket and transactions, as well as growth across each of our three primary categories of hardlines, apparel and footwear,” Stack said. “As we head into the holiday season, we remain very enthusiastic about our business, and we are pleased to increase our full-year sales and earnings outlook for the third time this year.”
