Dick’s maintains expansion amid cautious profit view
PITTSBURGH — The combination of new store growth, a 2.5% same-store sales increase and expanding gross margins enabled Dick’s Sporting Good to produce earnings per share of 52 cents and exceed analysts’ estimates by two cents. However, a cautious outlook regarding the future caused the company’s third quarter profit forecast to be two cents less than analysts forecast, and same-store sales were projected to grow in the low single digits.
“While some may view our top line guidance as being conservative, we believe that the current instability in many global markets and the uncertainty in the domestic macro economic environment, warrant a cautious outlook,” said Dick’s chairman and CEO Ed Stack. “With our proven ability to execute on our margin expansion opportunities and to manage inventory and expenses, we’ve maintained our earnings expectations for the second half of the year."
In fact, full year profit forecast was adjusted to reflect the better-than-expected second quarter results. Full year profits are now expected to fall in a range of $1.94 to $1.96 from earlier guidance that ranged from $1.91 to $1.93.
Second quarter sales increase 6.6% to $1.3 billion due to the 2.5% comp increase, and the addition of eight new Dick’s Sporting Goods stores. The company ended the quarter with 455 Dick’s stores and 81 Golf Galaxy stores.
“In the second quarter, we delivered profitable growth that exceeded our earnings projections while continuing to strengthen our balance sheet,” Stack said. “While top line sales started slow in the quarter, June and July comps accelerated at a pace above our quarterly target of approximately 3%.”
Stack also noted that the company made marked progress in developing all of its growth drivers by adding productive, profitable stores, building the e-commerce business and expanding overall margin rates.
“As a result, we are well positioned to continue to meaningfully grow our business,” Stack said.
Much of that growth will come in the third quarter when Dick’s expects to open an additional 18 stores, or half of the planned full year opening schedule of 36 stores.