Dick’s Q2 Results Get Omnichannel Boost, Golf Losses Narrow

A Dick's Sporting Goods location
A Dick's Sporting Goods store.
Courtesy Photo

Pittsburgh-based Dick’s Sporting Goods announced double-digit gains in net income and an 8 percent jump in revenues in the second quarter, thanks mostly to its omnichannel focus, the company said.

The retailer, whose golf division has posed challenges not dissimilar to those faced by other sellers of athletic-goods — also saw a modest 1.2 percent rise in comparable-store sales in the second quarter, which ended Aug. 1, 2015.

An upbeat management team says the golf business is steadily improving — it was down 3 percent in Q2, versus a decline of 9 percent in the comparable quarter last year. The company has upped its FY15 guidance on the momentum of its second quarter. 

The share price was up more than 4 percent in midday trading following the release.

Net Income: Dick’s reported consolidated net income of $91 million, up 30 percent from the year-ago quarter, when earnings were $70 million.

EPS: Diluted earnings per share also rose, to 77 cents, from the comparable quarter, when diluted EPS was 57 cents.

Net Revenue: Net revenues rose 8 percent year-over-year, to $1.82 billion, from the comparable quarter, when net revenues were $1.68 billion.

Adjustments: Excluding golf-restructuring charges in the prior year, net income was $81.7 million, or 67 cents per diluted share.

Hit, Miss or Beat: Dick’s revenues was in line to slightly below the Street’s forecast, while revenues surpassed estimates for the quarter. Analysts polled by Yahoo Finance had predicted EPS of 75 cents and revenues of $1.83 billion.

Executive Insights:
“Our focus on e-commerce continues to pay off, with e-commerce penetration growing to 7.3 percent of sales in the second quarter of this year, compared to 6.3 percent of second quarter of 2014, reflecting growth of 24.4 percent.”
— CEO and Chairman Ed Stack, during the Q2 conference call.

Stack on the Golf Galaxy business:
“Our golf business is continuing to show encouraging trends. Our margins have improved significantly over last year, [and] the apparel side of our business is comp’ed positively throughout the second quarter. … Looking back at our golf business from the beginning of the year, we have experienced sequential improvement in our comp sales. We have increased our inventory levels to begin the third quarter, supporting the accelerated sale in our outdoor category and to better capture the back to school business this year. At the end of Q3, we anticipate sales and inventory growth to more closely approximate each other.”

Looking Ahead: Dick’s raised its full-year 2015 earnings per diluted share guidance to $3.13 to $3.21.

Analyst Insights: “We think comps were likely driven by strength in footwear (both athletic and brown shoe) and ongoing strength in apparel and outdoor, possibly offset by weakness in team sports. … We expect Dick’s to trade higher today given the recent pressure on the stock, better-than-feared 2Q comps and the strong cost control exhibited in 2Q.”
— Kate McShane, Citi Research analyst.