Dick's Q3 tops estimates; issues weak 2018 outlook on business investments
Dick's Sporting Goods topped Street expectations in its third quarter, but forecast a big drop in profit next year based as its makes significant investments in e-commerce and other parts of its business.
The nation's largest sporting goods retailer reported that consolidated net income totaled $36.9 million for the quarter ended Oct. 28, or $0.35 per diluted share, down from $48.9 million, or $0.44 per diluted share, in the year-ago period. Earnings, adjusted for pretax gains, came in at 30 cents per share. Analysts predicted an average of 26 cents per share.
Net sales increased 7.4% to approximately $1.94 billion, also better than expected. E-commerce sales increased about 16%, accounting for 10.3% of total sales. Consolidated same-store sales decreased 0.9%.
"In the third quarter, we delivered earnings per diluted share and comp sales at the high end of our expectations, with continued double-digit growth in e-commerce,” said Edward W. Stack, chairman and CEO. “As expected, margins were under pressure in this highly promotional environment, but our strategy for this environment enabled us to continue to capture market share. As we look to the fourth quarter, we are comfortable with our prior implied sales and earnings outlook, and believe we are well positioned to gain additional market share."
Looking ahead to next year, Dick's said plans to make significant investments in its business, including in its e-commerce operations, in-store technology and store payroll. Meaningful investments will also be made to Dick's Team Sports HQ, and in the development and support of its private brands.
"All of this will have a short-term negative impact on the company earnings; however, we expect these investments will pay meaningful dividends in the future," Stack said. "Given these investments, continued gross margin pressure and approximately flat comp sales, we expect earnings per diluted share to decline by as much as 20% in 2018."
As of October 28, 2017, the company operated 719 namesake stores in 47 states, 98 Golf Galaxy stores in 32 states, and 35 Field & Stream stores in 16 states.
The nation's largest sporting goods retailer reported that consolidated net income totaled $36.9 million for the quarter ended Oct. 28, or $0.35 per diluted share, down from $48.9 million, or $0.44 per diluted share, in the year-ago period. Earnings, adjusted for pretax gains, came in at 30 cents per share. Analysts predicted an average of 26 cents per share.
Net sales increased 7.4% to approximately $1.94 billion, also better than expected. E-commerce sales increased about 16%, accounting for 10.3% of total sales. Consolidated same-store sales decreased 0.9%.
"In the third quarter, we delivered earnings per diluted share and comp sales at the high end of our expectations, with continued double-digit growth in e-commerce,” said Edward W. Stack, chairman and CEO. “As expected, margins were under pressure in this highly promotional environment, but our strategy for this environment enabled us to continue to capture market share. As we look to the fourth quarter, we are comfortable with our prior implied sales and earnings outlook, and believe we are well positioned to gain additional market share."
Looking ahead to next year, Dick's said plans to make significant investments in its business, including in its e-commerce operations, in-store technology and store payroll. Meaningful investments will also be made to Dick's Team Sports HQ, and in the development and support of its private brands.
"All of this will have a short-term negative impact on the company earnings; however, we expect these investments will pay meaningful dividends in the future," Stack said. "Given these investments, continued gross margin pressure and approximately flat comp sales, we expect earnings per diluted share to decline by as much as 20% in 2018."
As of October 28, 2017, the company operated 719 namesake stores in 47 states, 98 Golf Galaxy stores in 32 states, and 35 Field & Stream stores in 16 states.