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Dick’s Q1 Hits Higher End Of Guidance

May 18, 2017 - Newswire

Dick’s Sporting Goods Inc. reported first-quarter earnings that arrived at the higher end of guidance, although same-store sales fell short. The retailer will also take a charge of $7 million in the second quarter related to the elimination of positions, primarily at the company’s store support center.

The company reported consolidated net income for the first quarter ended April 29, 2017 of $58.2 million, or 52 cents per diluted share, compared to the company’s expectations provided on March 7, 2017 of 48 to 53 cents per diluted share. For the first quarter ended April 30, 2016, the company reported consolidated net income of $56.9 million, or 50 cents per diluted share.

On a non-GAAP basis, the company reported consolidated net income for the first quarter ended April 29, 2017 of $60.3 million, or 54 per diluted share, compared to the company’s expectations provided on March 7, 2017 of 50 to 55 cents per diluted share. First-quarter 2017 non-GAAP results exclude costs incurred to convert former The Sports Authority (TSA) stores.

Net sales for the first quarter of 2017 increased 9.9 percent to approximately $1.8 billion. Consolidated same-store sales increased 2.4 percent, compared to the company’s guidance of an approximate 3 to 4 percent increase. First-quarter 2016 consolidated same store sales increased 0.5 percent.

“In the first quarter, we generated non-GAAP earnings per diluted share near the high end of our guidance. Despite a challenging retail environment, we realized growth across each of our three primary categories of hardlines, apparel and footwear, and were pleased with the performance of our newly relaunched eCommerce site,” said Edward W. Stack, chairman and chief executive officer. “We remain optimistic as we drive profitable growth on our new eCommerce platform, make marked progress on our new merchandising strategy and continue to capture market share.”

Stack continued, “Looking ahead, we continue to evaluate and adjust our business model, and are taking actions to reduce our expense structure in order to fund and develop our longer-term strategic initiatives.”

Omni-channel Development
Following the launch of the company’s new e-commerce platform at the beginning of the first quarter of 2017, e-commerce sales increased 11 percent. E-commerce penetration for the first quarter of 2017 was 9.3 percent of total net sales, compared to 9.2 percent during the first quarter of 2016.

In the first quarter, the company opened 15 new Dick’s Sporting Goods stores, two new Field & Stream stores and eight new Golf Galaxy stores. The company also relocated two Dick’s Sporting Goods stores, and closed one Golf Galaxy store. As of April 29, 2017, the company operated 691 Dick’s Sporting Goods stores in 47 states, with approximately 36.8 million square feet, 98 Golf Galaxy stores in 32 states, with approximately 2.1 million square feet, and 29 Field & Stream stores in 14 states, with approximately 1.4 million square feet.

Balance Sheet
The company ended the first quarter of 2017 with approximately $108 million in cash and cash equivalents and approximately $92 million in outstanding borrowings under its revolving credit facility. Over the course of the last 12 months, the company continued to invest in omni-channel growth while returning over $188 million to shareholders through share repurchases and quarterly dividends.

Total inventory increased 10 percent at the end of the first quarter of 2017 as compared to the end of the first quarter of 2016.

Capital Allocation
On May 11, 2017, the company’s Board of Directors authorized and declared a quarterly dividend in the amount of 17 cents per share on the company’s Common Stock and Class B Common Stock. The dividend is payable in cash on June 30, 2017 to stockholders of record at the close of business on June 9, 2017.

During the first quarter of 2017, the company repurchased approximately 0.5 million shares of its common stock at an average cost of $47.92 per share, for a total cost of $23 million. Since the beginning of fiscal 2013, the company has repurchased approximately $982 million of its common stock, and has approximately $1 billion remaining under its authorizations that extend through 2021.

Current 2017 Outlook

Second Quarter 2017


Based on an estimated 112 million diluted shares outstanding, the company currently anticipates reporting earnings per diluted share in the range of 98 cents to $1.03 in the second quarter of 2017. This is compared to earnings per diluted share of 82 cents in the second quarter of 2016.

  • The company has conducted a corporate reorganization to streamline its operations and reduce expense. In the second quarter, the company expects to record a pre-tax charge of approximately $7 million for severance and other employee-related costs associated with the elimination of positions, primarily at the company’s Store Support Center.
  • On a non-GAAP basis, the company currently anticipates reporting earnings per diluted share in the range of $1.02 to $1.07 in the second quarter of 2017, excluding severance and other employee-related costs.
  • Consolidated same-store sales are currently expected to increase approximately 2 to 3 percent in the second quarter of 2017, as compared to a 2.8 percent increase in the second quarter of 2016.
  • The company expects to open 13 new Dick’s Sporting Goods stores in the second quarter of 2017. These openings include former TSA stores that the company plans to convert to Dick’s Sporting Goods stores.

Full Year 2017


Based on an estimated 111 million to 112 million diluted shares outstanding, the company currently anticipates reporting earnings per diluted share in the range of $3.59 to $3.69, which includes approximately 5 cents per diluted share for the 53rd week. The company’s earnings per diluted share guidance includes the expectation of share repurchases to fully offset dilution in 2017.

  • The company reported earnings per diluted share of $2.56 for the 52 weeks ended January 28, 2017.
  • The company currently anticipates reporting non-GAAP earnings per diluted share in the range of $3.65 to $3.75. This excludes severance and other employee-related costs, as well as TSA conversion costs. Dick’s reported non-GAAP earnings per diluted share of $3.12 for the 52 weeks ended January 28, 2017.
  • Consolidated same-store sales are currently expected to increase approximately 1 to 3 percent on a 52-week to 52-week comparative basis, compared to an increase of 3.5 percent in 2016.
  • The company expects to open approximately 43 new Dick’s Sporting Goods stores and relocate approximately six Dick’s Sporting Goods stores in 2017. The company also expects to open approximately eight new Golf Galaxy stores, relocate one Golf Galaxy store and open eight new Field & Stream stores adjacent to new or relocated Dick’s Sporting Goods stores. These openings include former TSA and Golfsmith stores that the company plans to convert to Dick’s Sporting Goods and Golf Galaxy stores, respectively.

Under its former guidance, Dick’s expected earnings in the range of $3.63 to $3.73, non-GAAP adjusted earnings in the range of $3.65 to $3.75 and same-store sales climbing between 2 to 3 percent.

Capital Expenditures


In 2017, the company anticipates capital expenditures to be approximately $350 million on a net basis and approximately $465 million on a gross basis. In 2016, capital expenditures were $242 million on a net basis and $422 million on a gross basis.

Disclaimer: The opinions expressed within this article are the views of the writer and do not necessarily reflect the views and opinions of FDRA.