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Dick’s Sporting Goods’ Mixed Fiscal 4Q17 Results

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Mixed results, stock reaction muted

Sports goods retailer Dick’s Sporting Goods (DKS) announced its fiscal 4Q17[1. Fiscal 4Q17 ended on February 3, 2018.] results on March 13, 2018. Its sales were $2.66 billion, below analysts’ estimate of $2.74 billion. However, its adjusted EPS (earnings per share) of $1.22 beat analysts’ estimate of $1.20.

On March 13, after the announcement, DKS stock rose, but only 1% since investors seemed wary, given the continued margin pressure. However, on a YTD (year-to-date) basis, DKS stock has risen 14.4%. In comparison, Hibbett Sports (HIBB) has risen 11%, Foot Locker (FL) has fallen 6.4%, and Big 5 Sporting Goods (BGFV) has fallen 11.8%.

In fiscal 2017, Dick’s Sporting Goods beat analysts’ projections for sales only once and missed the estimates in the other three quarters. For adjusted EPS, it has beaten the estimates twice, reported one in-line figure, and missed in the remaining quarter.

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Dick’s Sporting Goods’ troubles

Dick’s Sporting Goods continues to be impacted by stiffening competition due to a rise in e-commerce and the subsequent price wars. Big sports brands, including Nike (NKE) and Adidas, are not only offering goods on Amazon but are looking at ways to boost direct selling to customers. That has added to the sports retailer’s woes.

In addition to investing in e-commerce and omnichannel capabilities, Dick’s Sporting Goods is now improving its private brands business. It’s convinced that amid tough competition, product differentiation and exclusivity will enhance sales of in-house brands such as Top-Flite, Field & Stream, Calia, and Walter Hagen.

Series overview

In this series, we’ll be looking at Dick’s Sporting Goods’ fiscal 4Q17 sales, margins, and earnings. We’ll also take a look at analysts’ ratings for DKS stock.

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