Growth story intact at Dick’s

PITTSBURGH — Forty new Dick’s Sporting Good stores are slated to open this year as the company remains undaunted by a weak fourth-quarter same-store sales performance at U.S. stores brought on by warmer than normal weather.

“In the fourth quarter, we generated record earnings, maintained an exceptionally strong balance sheet with our cash balance growing $188 million, initiated our first ever dividend, and announced a 12-month share repurchase program,” said Dick’s chairman and CEO Ed Stack. “In 2012, we will continue to build on our momentum as we profitably grow the business with earnings expected to increase approximately 18% to 19%, while simultaneously investing in key strategic areas including new stores, e-commerce, inventory management systems and private brands.”

Dick’s said its fourth-quarter same-store sales were essentially flat at 0.1%, but noted that new store expansion enabled total sales to increase 6.1% to $1.6 billion. The weak comps performance was due to a 2.5% decline at Dick’s full line stores where unusually warm winter weather hurt sales of cold weather products, partially offset by a 9% increase at Golf Galaxy stores and 52% increase in online sales. Dick’s opened six new stores during the fourth quarter.

In terms of profit, the company said net income increased 27% to $111 million or 88 cents a share which was at the high end of the company’s expectations that had been downwardly revised slightly in early January when it became evident warm weather was negatively impacting sales.

Dick’s ended its fiscal year on January 28 with 480 Dick’s full line stores and 81 Golf Galaxy stores and the company is looking to add 40 new Dick’s stores and relocate four others. The additional square footage and expectations for full-year same-store sales in the range of 2% to 3% are expected to yield earnings per share in the range of $2.38 to $2.41.

If the company hits the mid-point of that range it will be a more than 18% increase from the $2.02 in adjusted earnings per share the company reported this year on total sales that advanced 7% to $5.2 billion. Dick’s ended the year with no borrowings under its revolving credit facility and $734 million in cash and equivalents on its balance sheet compared to $546 million the prior year.