Warm Weather Hurts Dick’s Sporting Goods In Q4

dick's store
Dick's Sporting Goods.
Courtesy photo.

Uncooperative weather during the winter months continues to be the story for footwear-and-apparel companies reporting fourth-quarter earnings.

Mega sporting-goods retailer Dick’s Sporting Goods Inc. said an unseasonably warm winter was to blame for its softer earnings, which missed Wall Street’s forecasts and were on the low end of the firm’s own guidance.

In Q4, the company reported net income of $129 million, or $1.13 per diluted share, a 17 percent decline from the year-ago same quarter when net income totaled $155.5 million, or $1.30 per diluted share. Market watchers had predicted diluted EPS of $1.15.

Revenues advanced 3.2 percent year-over-year, to $2.24 billion, from $2.16 billion in the comparable quarter. Analysts had forecast revenue of $2.28 billion.

Given the challenging conditions we faced with the unseasonably warm weather, we operated quite well in the fourth quarter, generating earnings within our guided range and driving results in important growth categories,” said Dick’s Chairman and CEO Edward Stack in a release. “In 2015, we grew our omnichannel platform by maintaining strong new-store productivity and driving our e-commerce business. We ended the year with a strong balance sheet and returned over $420 million to shareholders through dividends and share repurchases.”

Wall Street had expected the retailer’s Q4 comps to decline by about 1 percent, but Dick’s fell below those estimates as well, posting a comp decline of 2.5 percent. In the prior year’s same quarter, comps had gained 3.4 percent.

For the full year, Dick’s posted a profit decline of 4 percent, to $330.4 million, or $2.83 per diluted share. Net sales, in 2015, increased 6.7 percent, to $7.3 billion.

Looking ahead to the FY16, the company expects consolidated diluted EPS in the range of $2.85 to $3.00. Consolidated same-store sales are expected to be flat to an increase of 2 percent, compared to a decrease of 0.2 percent in 2015.

CEO Stack noted the retailer would prioritize its e-commerce initiatives in the year ahead. The company said that its e-commerce penetration for the fourth quarter was 15.7 percent of total net sales, compared to 14.4 percent during the fourth quarter of 2014.

In 2016, we will continue to make strategic investments in our business to grow our leadership position in the industry and build meaningful momentum for 2017 and beyond,” Stack said. “These investments are expected to have an approximate $50 to 55 million impact on earnings in 2016 and include enhancing the shopping experience in our stores, building brand equity in a significant way through our partnership with the United States Olympic Committee and Team U.S.A. and transitioning our ecommerce business to our own platform.”