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Dick’s Sporting Goods Could Report 14.4% Decline in Q3 EPS

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Nov. 27 2018, Updated 7:31 a.m. ET

Analysts are pessimistic

Dick’s Sporting Goods (DKS) is scheduled to announce third-quarter results on November 28. Analysts expect adjusted EPS to decline by 14.4% to $0.26 for the third quarter. Subdued top-line growth is likely to dent bottom-line numbers.

Dick’s Sporting Goods’ management hasn’t provided an outlook for the third quarter. However, for fiscal 2018, Dick’s Sporting Goods has projected adjusted EPS in the range of $3.02–$3.20 versus the $2.92–$3.12 range guided earlier. The increase in EPS outlook is being driven by the expectation of higher merchandise margins.

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In comparison, analysts expect Hibbett Sports (HIBB) to deliver a 56.8% decline in adjusted EPS to $0.16 in the fiscal third quarter of 2019 on a YoY basis. Hibbett Sports is expected to announce third-quarter results on November 27. Moreover, Big 5 Sporting Goods’ (BGFV) third-quarter adjusted EPS were $0.15, a 46.4% decline from the third quarter of 2017.

A brief recap of last quarter’s numbers

In the second quarter, the company’s adjusted EPS were $1.20, easily beating analysts’ estimate of $1.06 and $0.96 reported in the same quarter of fiscal 2017. Increases in sales, reduced taxes, and a lower share count boosted its bottom line.

The second-quarter gross margin expanded 74 basis points to 30.3%. Fewer promotions, a favorable product mix, and an improved product cycle boosted its profitability. However, the SG&A (selling, general, and administrative) expenses rose by 5.3% to $495.3 million. However, the SG&A expense (as a percentage of total revenue) rate expanded 95 basis points at 22.8%. The operating income increased 2.1% to $162.3 million in the second quarter. In fiscal 2018, gross margin is forecast to be unchanged YoY after expanding in the third quarter but shrinking in the fourth quarter.

Capex details

For the first half of fiscal 2018, Dick’s Sporting has spent $96.5 million in gross capital expenditure. For the current fiscal year, the company expects to incur about $225 million compared to $373 million in fiscal 2017. It is also expecting to relocate four Dick’s Sporting Goods stores and open 19 new stores in the current fiscal year.

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