Holiday Outlook Disappoints for Dick’s Sporting Goods

Despite producing third-quarter sales and profit that topped market watchers’ forecasts, Dick’s Sporting Goods shares remain under pressure today — down nearly 9 percent, to $55.51, as of 12:15 p.m. ET.

The Pittsburgh-based firm’s weak Q4 outlook is likely the culprit behind the sell-off.

The company currently anticipates reporting earnings per diluted share in the range of $1.15 to 1.27 and adjusted diluted EPS in the range of $1.19 to 1.31 in the fourth quarter of 2016. Consolidated same-store sales are currently expected to increase approximately 3 to 6 percent.

Investors may have been hoping for more blockbuster numbers from the firm this holiday season.

Nevertheless, the company’s performance in the third quarter continued to show the firm taking advantage of the collapse of several of its sporting goods peers, including Sports Authority, City Sports and Sport Chalet. (Dick’s purchased bankrupt Sports Authority’s intellectual property and 31 store leases earlier this year and plans to reopen three former Sports Authority stores as Dick’s Sporting Goods locations in Q4.)

Edward Stack, Dick’s chairman and CEO, said he was particularly pleased with the company’s comp growth of 5.2 percent during the quarter.

We realized meaningful market share gains and saw growth across each of our three primary categories of hardlines, apparel and footwear, while maintaining tight control of our inventory,” Stack said in a statement. “Looking ahead, we believe our assortment and marketing will help us to continue to capture displaced market share this holiday.”

The company reported net income of $48.9 million, 44 cents per diluted share, a gain of 3.6 percent, over the comparable period when net income was $47.2 million, or 41 cents per diluted share. Adjusted net income was $53.6 million, or 48 cents per diluted share, which topped forecasts for diluted EPS of 42 cents.

Net sales for the quarter increased 10.2 percent, to $1.81 billion, topping forecasts for net sales of $1.77 billion.

For the full year, Dick’s said it now expects to report earnings per diluted share in the range of $2.91 to 3.03, compared to the updated guidance it provided in Q2, which raised expectations to diluted EPS of $2.90 to 3.05. The firm raised its adjusted diluted EPS forecasts to a range of $2.99 to 3.11 and its consolidated same store sales guidance to an increase of 3 to 4 percent. The prior guidance predicted an increase of 2 to 3 percent.

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