Why Dick’s Sporting Goods’ Sales Missed Estimates


Nov. 29 2018, Updated 5:20 p.m. ET

Sales fall short of estimates

Dick’s Sporting Goods’ (DKS) reported its third-quarter results for fiscal 2018 on November 28. The company reported sales of $1.86 billion, which missed analysts’ estimates of $1.88 billion. On a year-over-year basis, sales declined 4.5%. A calendar shift and weakness in the hunt and electronics categories hurt the company’s top line. The calendar shift led to a $41 million reduction from the top line.

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However, e-commerce sales remain strong. Management had stated that it’s trying to exit the electronics category and moderating its hunting business. It removed the hunting category from ten of its stores and replaced the space with sports equipment like baseball products, outerwear, and licensed wear.

Dick’s Sporting Goods’ private brands business is gaining momentum and contributing to top-line growth. It’s allocating more floor space to these private brands and launching new brands. In the third quarter, Dick’s launched Alpine Design, a brand focusing on outdoor apparel.

eCommerce sales (adjusted for the calendar shift) rose 16% in the third quarter. eCommerce penetration accounted for 12% of overall sales in the third quarter. To enhance its ecommerce operations, the company is building fulfillment centers in New York and California.

Negative comps

However, adjusted comps declined 3.9% due to weakness in the electronics and hunting categories. Weakness in these categories caused 255 basis points worth of decline in comps. On an unshifted basis, comps declined 6.1% in the third quarter. The company’s outdoor and athletic apparel categories saw positive mid-single-digit increases in comps. Private brands comps were positive, according to management.

For fiscal 2018, comps are projected to plummet  3%–4%, compared with a decline of 0.3% in fiscal 2017.

How have peers fared?

In the third quarter of fiscal 2019, Hibbett Sports (HIBB) reported sales of $216.9 million, an 8.8% decline year-over-year. It also marginally missed the consensus estimate. Big 5 Sporting Goods (BGFV) reported a sales decline of 1.5% to $266.4 billion for the third quarter and missed estimates by 3.4%. Top lines were affected by the calendar shift for both retailers.


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