Dick’s Sporting Goods Sees Profit Drop 10%
Dick’s Sporting Goods posted strong growth in sales in its most recently ended quarter, but gave an assessment that was downbeat for the rest of the year as it is contending with closeout sales from its rivals.
Sales at its existing stores moved up 0.5% in line with the forecast by the company and reversing a drop during the fourth quarter.
Total sales were up 6% to over $1.66 billion. Shares at the retailer were up 7.6% in midday trading on Friday. The stock has increased this season by 16%.
With The Sports Authority officially liquidating its stores during the summer, Dick’s forecasted that its earnings and sales at some stores would decline in the upcoming months.
That is a great deal said Edward Stack the CEO who also warned that the company would not benefit from the problems of its rivals.
Dick’s posted profit that surpassed $56.91 million for the quarter.
Inventories were up 7.3% during the period, which was higher than the growth of 6%, from the same period one year ago due to goods made for the cold weather not being needed for much of March and April.
The sporting goods industry has come under pressure of recent after Sports Authority based in Colorado filed Chapter 11 bankruptcy protection during March and since has moved to completely liquidate all 400 plus stores, after ending its plans to reorganize.
Dick’s, based in Pittsburgh, operates 647 of its name brand locations and other specialty stores nationwide, said it would evaluate the opportunities it had due to a rival leaving the market.
Sears, Kohl’s and Macy’s all announced closings of stores. Dick is interested in buying leases from them or from Sports Authority,
Dick’s announced that it would be inquiring about acquiring the leases from a few of the locations of Sports Authority.
Of the stores that Sports Authority are closing Dick’s noted that currently 200 are within 5 miles of an existing Dick’s location and 350 within just 10 miles and that Dick’s has plans to market heavily to the customers that no longer have a Sports Authority store to shop at.
The chain announced that it remains on track for plans it has to bring its e-commerce operating under its own roof and will be completed by January of 2017.
For its second quarter, Dick’s forecast earnings between 62 cents and 72 cents per share, which was sharply less that analysts exceptions. Same store sales were expected to drop.