Dick’s Sporting Goods earnings smash estimates, expanding Field House concepts
Dick’s Sporting Goods reported a strong second quarter with earnings, sales and comps that topped Wall Street estimates amid growth in transactions and average ticket.
“Our strong second quarter demonstrated the continued success of our long-term strategies and how Dick’s is truly differentiated within the industry,” said executive chairman Ed Stack. “The future of our business is very bright.”
The company's future include the expansion of its experiential Dick's House of Sport format, which recently opened its 15th location. Five more are set to open by the end of the year.
"We continue to hear from mall operators that our House of Sport locations drive increased traffic, sales per square foot, and occupancy rates for the malls where they operate, CEO Lauren Hobart said on the company's earnings call. "House of Sport is drawing unprecedented landlord interest and the opportunity to join many of the best shopping centers in the country."
The retailer is also revamping 50,000-sq.-ft. namesake stores to its next-generation Dick's format, which it refers to internally as its "field house" concept. It unveiled four field house locations during the quarter, giving it a total of 17. It plans to opem nine more locations this year.
"Field House is inspired by House of Sport and includes interactive experiences and elevated presentation and service," Hobart told analysts. "These stores are performing exceptionally well."
On the call, Hobart said that there is “no set limit” on the number of stores that could be upgraded to the field house format
"We have a significant number of our stores that come up for renewal every year, and we'll continue to upgrade as it make sense, or we'll relocate as it makes sense and develop a Field House," Hobart said. "But long term, that is the future of DICK'S Sporting Goods."
Dick's net income rose to $362 million, or $4.37 a share, in the quarter ended Aug. 3, blowing past analysts’ estimates of $3.86 per share and up from $244 million, or $2.82 a share, in the year-ago period.
Sales rose 7.8% to $3.47 billion, topping estimates of $3.44 billion. Comparable sales increased 4.5%, also more than expected.
In a statement, Hobart said that Dick’s second-quarter comps were driven by growth in average ticket and transactions, and growth in sales, gross margin expansion and SG&A leverage, resulting in an EBT margin of nearly 14%.
“Because of our strong Q2 performance and the confidence we have in our business, we are again raising our full year outlook,” Hobart added.
For the full year, Dick’s now expects earnings of $13.55 to $13.90 a share, up from its previous guidance of $13.35 to $13.75 a share. It maintained its sales guidance of $13.1 billion to $13.2 billion, but raised its growth outlook for comparable sales for growth between 2.5% and 3.5%, up from previous guidance of 2% to 3%.
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Dick’s released its earnings one week after it disclosed in a securities filing that it was the victim of a cyberattack and “certain confidential information” was breached. The retailer also said in the SEC filing that it has no knowledge of this incident disrupting business operations and does not believe it is material to results.
At the end of the quarter, Dick’s operated a total of 861 stores, including 725 namesake stores (includes 14 Dick’s House of Sport locations) and 136 specialty concepts (includes 97 Golf Galaxy stores, seven Public Lands stores, 16 Going Going Gone! stores and other specialty concept stores).
