Dick’s weathers second quarter well
PITTSBURGH Dick’s Sporting Goods reported a 3.7% decrease in second quarter same-store sales and an even sharper drop in profits, but the company was quick to note that it exceeded earning guidance provided earlier this year.
Total sales increased 7% to slightly more than $1 billion due to the opening of 10 new stores and the inclusion of 15 Chick’s Sporting Goods that were acquired last November which offset the 3.7% same store sales decline. However, net income slid to $45.5 million from $47.9 million the prior year. That equated to earnings per share of 39 cents excluding merger integration costs, which exceeded the company’s guidance provided on May 22 that envisioned earnings per share in the range of 34 cents to 38 cents versus prior year earnings per share of 41 cents. Including costs associated with the integration of Golf Galaxy earnings per share were 35 cents.
“We are pleased to deliver results that exceeded our guidance,” said Ed Stack, Dick’s chairman, ceo and president. “We have demonstrated that our culture of financial discipline and emphasis on execution is evident even in these difficult times.”
Dick’s has a lot on its plate this year as it attempts to integrate Chick’s and Golf Galaxy, maintain an aggressive store expansion program and grow sales of its highly discretionary product mix in an economic environment where consumers are under duress.
The Golf Galaxy integration is expected to be complete this year and the first Chick’s store will be converted to the Dick’s format later this year with the remainder to follow in 2009. In addition, the company plans to open 26 new Dick’s stores in the third quarter on top of 10 stores in the second quarter that are part of planned 43 openings for the full year. Ten new Golf Galaxy store are also expected to open this year.
The ambitious growth plans are being pursued even as Dick’s has expressed a weak outlook for same-store sales growth during the second half of the year and expects profits to slide further. Third quarter same-store sales are expected to decline between 2% to 5% and those expectations exclude results of Golf Galaxy and Chick’s. Full year same store sales are expected to decline between 3% and 5%.
Third quarter earnings per share, excluding merger integration costs are expected to be between 4 cents and 8 cents compared to 10 cents last year. Full year estimates of earning per share, again excluding merger costs, in the range of $1.27 and $1.36 come closer to matching last year’s profit of $1.33.