Dick’s Sporting Goods’ weak performance was driven by a number of factors including markdown activities in outdoor, increased theft and softness in apparel, according to Shore Capital research analysts Eleonora Dani and Clive Black.
The company itself blames an increase in retail theft as the reason why it saw reduced profits in the second quarter of the year. CEO Lauren Hobart believes organised retail crime and theft is an increasingly serious issue impacting many retailers in the industry.
Dick’s Sporting Goods Q2 highlights
- Delivered 3.6% net sales growth of $3.2bn from $3.1bn last year
- Earnings before taxes (EBT) was down 10.1% compared to 13.7% in the prior year period
- Dick’s Sporting Goods reported a net income of $244bn, down from $319bn the prior year
The company delivered 1.8% growth in second-quarter comparable store sales, driven by a 2.8% increase in transactions and continued market share gains
The retailer’s gross margins of 34.4% fell 5% from the same period in the last year and it reported adjusted earnings per share of $2.82 compared to $3.25.
For the full year, Dick’s Sporting Goods revised its profit guidance to a range of $11.50 to $12.30 and the retailer now forecasts its comparable sales to remain flat or inch up 2.0% this year.
Dani and Black suggest “this demonstrated the company’s confidence in the resilience of its customers base market positioning, underpinned by the sales momentum seen in July as the back-to-school season started strong”.
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Despite moderating its 2023 EPS outlook and its Q2 profitability falling short of Dick’s expectations the company remains hopeful.
Hobart says: “We are pleased with our strong sales performance for the second quarter led by robust transaction growth and continued market share gains..
“Within the quarter, sales accelerated significantly in July, and we remain confident in delivering positive comp sales for 2023.
“The enthusiasm we have for our business and the confidence we have in our long-term growth opportunities have never been stronger.”