Dick’s Stock Down On Declining Profits

Dick’s Sporting Goods’ share price fell more than 4 percent this morning following the company’s Q1 earnings release showing a 10 percent decline in profits year-over-year. The Coraopolis, Pa.-based sporting-goods retailer did, however, see gains in net sales (9 percent) and same-store sales (2 percent). But its Galaxy Golf stores, down 11 percent, continue to weigh on margins.

Net Income: The company’s profits for the first quarter, ended May 2, 2015, were $63.3 million, down 10 percent from the year-ago quarter’s profits of $70 million.

EPS: Earnings per share declined year-over-year, to 53 cents, compared with the year-ago quarter’s 57 cents.

Net Revenue: Dick’s revenues rose 9 percent year-over-year, to $1.6 billion, from last year’s Q1 revenues of $1.4 billion.

Hit, Miss or Beat: The company’s performance hit Wall Street’s estimates and also landed within the company’s expectations provided on March 3, 2015. Analysts polled by Yahoo Finance had predicted revenues of $1.6 billion and EPS of 53 cents, while the company had guided an expected EPS range of 49 cents to 53 cents.

Executive Insights: “We are pleased with our first-quarter results as we generated earnings at the high end of our expectations, despite a slow start to the spring season,” said Dick’s CEO Edward Stack, in a release. “I am confident in our full-year outlook as we remain focused on growing our business through driving store productivity, adding new stores in new and underpenetrated markets, expanding and controlling our e-commerce business, and further developing our Field & Stream specialty concept.”

On footwear: “The basketball business continues to be very good. We expect the cleat business to continue to be good and our allocations have improved, yes.”
— CEO Stack on the May 19 conference call

On the declining golf segment: “The Golf Galaxy business is a little more than 3 percent of the business on a total standpoint. We think that [in the] longer term, golf is going to be an okay business. We think there are other areas that are going to grow at a faster rate than golf, but we think golf’s an important part of our business and we’re going to stay in the golf business.”
— CEO Stack on the May 19 conference call

Looking Ahead: The company raised the low end of its full-year 2015 earnings-per-diluted-share guidance to $3.12 to 3.20, up from $3.10 to 3.20 previously.

Analyst Insights: “Despite the continued drag from golf and port/weather headwinds during the quarter, comps at core Dick’s stores indicate solid trends in the underlying business.” — Citi Research analyst Kate McShane in a May 19 report.

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