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Insight into Dick’s Sporting Goods’ Recent Quarterly Performance

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Jan. 10 2018, Updated 11:30 a.m. ET

Fiscal 3Q17 review

Dick’s Sporting Goods (DKS) exceeded analysts’ expectations in fiscal 3Q17[1. fiscal 3Q17 ended on October 28, 2017] but disappointed with a decline in comparable sales and dismal fiscal 2018 guidance. The company announced its fiscal 3Q17 results on November 14, 2017.

Dick’s Sporting Goods’ sales of $1.94 billion and earnings per share of $0.30 easily topped the analysts’ estimates of $1.89 billion and $0.26 per share, respectively.

On a YoY (year-over-year) basis, Dick’s Sporting Goods’ sales were up 7.4%, driven by increases in sales from new stores and robust e-commerce sales. The company opened 15 Dick’s Sporting Goods stores and six new Field & Stream in fiscal 3Q17.

Stores not included in comps (consolidated same-store sales) added $148.5 million to the top line. Its e-commerce sales were up 16.0% YoY while its e-commerce sales penetration grew to 10.3% of overall sales.

However, a 0.9% decline in comps reduced net sales by $14.6 million. The hunting and electronics categories are still areas of concern. Conversely, categories like golf and private brands witnessed double-digit increases in comps while athletic footwear saw a low-single-digit comps growth.

In comparison, peer Hibbett Sports (HIBB) reported $237.8 million in revenues in fiscal 3Q18, which grew 0.4% YoY. Big 5 Sporting Goods’ (BGFV) fiscal 3Q17 revenues of $270.5 million fell 3.0% YoY.

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Guidance

For fiscal 4Q17, Dick’s Sporting Goods expects its earnings per share to be $1.12–$1.24, compared with $1.32 reported in fiscal 4Q16. Comps are expected to be in the low-single digits against an increase of 5.0% in fiscal 4Q16.

For fiscal 2017, its EPS should be $2.92–$3.04, compared with $3.12 reported in fiscal 2016. Comps are forecast to be in a range of flat to down in low-single digits against an increase of 3.5% YoY.

In a preliminary outlook for fiscal 2018, the company’s management has cautioned that earnings could drop as much as 20% due to investments and higher markdowns.

Let’s discuss the company’s margins in the next part of this series.

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