Dick’s Upbeat on Footwear

Dick's Upbeat on Footwear
A Dick's Sporting Goods store
FN Archives.

Dick’s Sporting Goods Inc. is bullish on shoes as a growth driver for its business.

In its first-quarter conference call with analysts on Tuesday, Chairman and CEO Edward Stack said the firm’s footwear business continues to perform extremely well, and that he plans to shift the sales mix to more higher-margin-rate sales of apparel and shoes.

“[Footwear] was one of the better-performing categories that we had. The technology that is coming out in footwear continues to help drive the business. Our partnerships with Nike, Brooks, Asics [and] a number of other brands continue to bring out new products that [have] been very well accepted by the consumer, and we expect our footwear business to continue to move in the same direction it has,” he said, adding that most of the momentum stems from technical running and basketball.

“The lightweight shoes that are technical are doing very well. The only component of footwear that I would say is fashion that we’re doing very well in is the [Nike] Free shoe,” he added.

Stack also said he has seen little resistance to price increases from key vendors such as Nike and Under Armour, which hit this spring.

Analysts, too, remained bullish on the firm, which saw its shares rise Tuesday after it exceeded expectations for the first quarter and raised its guidance.

“We continue to view guidance as conservative and look for Dick’s to remain a beat and raise story,” Christopher Svezia, an analyst at Susquehanna Financial, wrote in a research note.

Kate McShane, analyst at Citi Investment Research, noted, “[There is] continued momentum in the underlying business from strong merchandising and selling innovative product.”

For the period ended April 28, Dick’s earned a net income of $57.2 million, or 45 cents a share, an increase of 52.5 percent from $37.5 million, or 30 cents, in the same period a year ago.

Revenue advanced 15.1 percent to $1.3 billion on the back of an 8.4 percent rise in consolidated same-store sales. The comps improvement was driven by a 7.3 percent improvement at Dick’s Sporting Goods stores, a 12.6 percent increase at Golf Galaxy and a 33.4 percent jump in the company’s e-commerce business.

Analysts were looking for earnings per share of 38 cents on revenue of $1.23 billion, as polled by Yahoo Finance.

The firm expects fiscal 2012 EPS to come in between $2.45 and $2.48, which would represent a 16.7 percent to 18 percent increase from $2.10 in fiscal 2011. Comps are expected to advance 3 percent to 4 percent.

Dick’s ended the quarter with $521 million in cash and cash equivalents, and $14.4 million in long-term debt.

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