The impact of impairment charges related to an investment in British retailer JJB Sports in April caused Dick’s Sporting Goods Inc.’s second-quarter net income to fall.
In the period ended July 28, the Pittsburgh-based sporting goods retailer earned a net income of $53.7 million, or 43 cents, down 27.3 percent from $73.8 million, or 59 cents, in the same period a year ago.
Revenue advanced 10 percent to $1.44 billion, from $1.31 billion, on the back of a 3.8 percent increase in consolidated same-store sales for the period.
The firm acknowledged Tuesday that the company’s performance has weakened because of the economic crisis in Europe.
“Originally we made an investment in JJB of a little more than $30 million … in the form of convertible debt instruments. We thought there would be potential great upside but … JJB has had a very difficult time [with what’s] happening in Europe,” Edward Stack, Dicks’ chairman and CEO, said on a call with analysts Tuesday. We felt that it was the prudent thing to do to fully impair these assets at this time. We will monitor the situation and hopefully the management team there can turn that business around.”
Excluding the impact of the impairment charge, earnings per share came in at 65 cents. Analysts were expecting EPS of 64 cents on revenue of $1.44 billion.
“We plan to drive continued long-term profitable growth by investing in new stores, developing our omnichannel capabilities and increasing our margins through inventory management, an emphasis on private brands and the continued shift of our product mix to higher-margin merchandise categories,”
For the full year, Dick’s expects EPS to range from $2.47 to 2.51. Consolidated same-store
sales are expected to rise between 4 percent and 5 percent.
The company ended the second quarter with $350.4 million in cash and $14.4 million in