Dick’s Sporting Goods Pops Despite Lower Forecast

Shares of Dick’s Sporting Goods were moving higher on Wednesday despite the company issuing a lower forecast.

Fortunately, Wall Street was more focused on the company announcing that outdoor hobbies would outlast the pandemic.

On a call with analysts, Chief Executive Officer Lauren Hobart said she had confidence in Dick’s longer-term business strategy and in maintaining profitability.

Share prices had sunk to a 52-week low before rallying and were up more than 11% in early afternoon trading.

The company trimmed its financial outlook for the year amid uncertain economic conditions, but the retailer said it isn’t yet seeing any dramatic shifts in its business. With 40-year-high inflation and ongoing supply chain challenges, the company did also say it had a “cautious” outlook for the year.

Hobart said the company has several advantages buoying its business. Its private-label brands have gained traction with customers. She said pressure to mark down excess items remains low. And consumers have embraced outdoor hobbies such as hiking and golfing during the Covid pandemic.

“They are running. They are walking, they’re playing golf,” Hobart explained. “The pandemic surging categories that we’ve all been talking about … we believe they all have long-term growth potential.”

The company said it now expects to earn between $9.15 and $11.70 per share, on an adjusted basis, this fiscal year, compared with a prior range of $11.70 to $13.10. Analysts had been looking for adjusted earnings per share of $12.56, according to Refinitiv estimates.

Same-store sales are expected to be down 2% to 8%, versus prior expectations for sales to be flat to down 4%. Analysts were calling for a year-over-year decline of 2.5%, according to FactSet.

For the fiscal first quarter, the company reported earnings per share adjusted of $2.85 compared to $2.48 expected, per Refinitiv. Revenue at $2.7 billion was higher than the $2.59 billion, per Refinitiv.

Dick’s said its loyalty members accounted for more than 70% of sales and its stores fulfilled over 90% of transactions.

“We believe our inventory at plus 40% actually is very healthy, and we are very pleased with it,” Hobart also added.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.