Shrink hits Dick’s Q2 profits; customer service jobs get cut
Sales rose at Dick’s Sporting Goods during the second quarter of fiscal 2023 even as profits declined.
The largest U.S. based full-line omni-channel sporting goods retailer reported net sales of $3.22 billion, up 3.5% from $3.11 billion a year earlier. Net income declined 31% to $244 million from $319 million, which the company said occurred in large part due to the impact of elevated inventory shrink.
Same-store sales climbed 1.8% after dropping 5.1% in the second quarter of fiscal 2022.
In addition, on Aug. 21, 2023 (during its fiscal third quarter), as part of a broader organizational review Dick’s eliminated certain positions, primarily at its customer support center. The retailer expects to incur approximately $20 million of severance expense in the third quarter of 2023. Related cost savings are expected to be largely offset by strategic talent investments over the next twelve months.
While Dick’s has not committed to specific additional actions, it currently expects the business optimization to be completed during fiscal 2023 and may result in additional one-time charges of $25 million to $50 million.
Looking ahead, Dick’s expects full year fiscal 2023 earnings per diluted share of $11.33 to $12.13, or $11.50 to $12.30 on a non-GAAP basis, which eliminates the potential impact of severance to be incurred as part of its business optimization. The company also expects flat to 2% same-store sales growth on a 52-week basis.
[Read more: Dick’s Sporting Goods opens nine House of Sport stores — with more to come]
In commentary, Dick’s executives were bullish about the company’s future.
"We are extremely excited about the future of our business. Our newest Dick’s concepts, Dick’s House of Sport and our next generation 50,000-square-foot Dick’s store, are yielding powerful results,” said Ed Stack, executive chairman, Dick’s Sporting Goods.
“We haven't seen growth opportunities like these since we went public in the early 2000s," said Lauren Hobart, president and CEO, Dick’s Sporting Goods. "We are pleased with our strong sales performance for the second quarter led by robust transaction growth and continued market share gains. Within the quarter, sales accelerated significantly in July, and we remain confident in delivering positive comp sales for 2023. Despite moderating our 2023 EPS outlook, the enthusiasm we have for our business and the confidence we have in our long-term growth opportunities have never been stronger."
As of July 29, 2023, Pittsburgh-based Dick’s Sporting Goods operated a total of 853 stores, including 725 Dick’s Sporting Goods stores and 135 specialty concept stores.