21 May Dick’s SG Tops Guidance In Q1
Dick’s Sporting Goods reported earnings slid 9.5 percent in its first quarter due to a “slow start to the spring season,” but results still came in at the high end of guidance. Same-store sales increased 1.0 percent. At the Dick’s Sporting Goods chain, comps increased 1.8 percent, while Golf Galaxy’s decreased 11.0 percent.
First-quarter highlights:
– Consolidated earnings per diluted share totaled $0.53 during the first quarter of 2015, at the high end of guidance of $0.49 to 0.53
– Consolidated same store sales for the first quarter increased 1.0 percent
– Company repurchased $150 million of common stock and also declared a $0.1375 per share quarterly dividend
– Company raises the low end of its full year 2015 earnings per diluted share guidance to $3.12 to 3.20, up from $3.10 to 3.20 previously
First Quarter Results
The company reported consolidated net income of $63.3 million for the first quarter ended May 2, 2015, or $0.53 per diluted share, compared to the company’s expectations provided on March 3, 2015 of $0.49 to 0.53 per diluted share. For the first quarter ended May 3, 2014, the company reported consolidated non-GAAP net income of $61.3 million, or $0.50 per diluted share, excluding a gain on the sale of an asset.
On a GAAP basis, the company reported consolidated net income for the first quarter ended May 3, 2014 of $70.0 million, or $0.57 per diluted share. The GAAP to non-GAAP reconciliation is included in a table later in the release under the heading “Non-GAAP Net Income and Earnings Per Share Reconciliations.”
Net sales for the first quarter of 2015 increased 8.8 percent to approximately $1.6 billion. Consolidated same store sales increased 1.0 percent, compared to the company’s guidance of approximately flat to an increase of 2 percent. Same store sales for Dick’s Sporting Goods increased 1.8 percent, while Golf Galaxy decreased 11.0 percent. First quarter 2014 consolidated same store sales increased 1.5 percent.
“We are pleased with our first quarter results as we generated earnings at the high end of our expectations, despite a slow start to the spring season,” said Edward W. Stack, Chairman and CEO. “I am confident in our full-year outlook as we remain focused on growing our business through driving store productivity, adding new stores in new and under-penetrated markets, expanding and controlling our e-commerce business, and further developing our Field & Stream specialty concept.”
Omni-channel Development
E-commerce penetration for the first quarter of 2015 was 8.5 percent of total sales, compared to 7.0 percent during the first quarter of 2014.
In the first quarter, the company opened nine new Dick’s Sporting Goods stores and one new Field & Stream store. The company also relocated one Dick’s Sporting Goods store and one Golf Galaxy store. As of May 2, 2015, the company operated 612 Dick’s Sporting Goods stores in 46 states, with approximately 32.7 million square feet, 78 Golf Galaxy stores in 29 states, with approximately 1.4 million square feet and eleven Field & Stream stores in six states, with approximately 0.6 million square feet.
Store count, square footage and new stores are listed in a table later in the release under the heading “Store Count and Square Footage.”
Balance Sheet
The company ended the first quarter of 2015 with approximately $81 million in cash and cash equivalents and approximately $51 million in outstanding borrowings under its revolving credit facility. Over the course of the last 12 months, the company utilized capital to invest in omni-channel growth and returned over $385 million to shareholders through share repurchases and quarterly dividends. Total inventory increased 9.7 percent at the end of the first quarter of 2015 as compared to the end of the first quarter of 2014.
Capital Allocation
In the first quarter of 2015, the company repurchased approximately 2.6 million shares of its common stock at an average cost of $57.09 per share, for a total cost of $150 million. Since starting its $1 billion share repurchase authorization at the beginning of fiscal 2013, the company has repurchased over $605 million of common stock, and has approximately $395 million remaining under the authorization.
On May 14, 2015, the company’s Board of Directors authorized and declared a quarterly dividend in the amount of $0.1375 per share on the company’s Common Stock and Class B Common Stock. The dividend is payable in cash on June 30, 2015 to stockholders of record at the close of business on June 12, 2015.
Current 2015 Outlook
The company’s current outlook for 2015 is based on current expectations and includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as described later in this release. Although the company believes that the expectations and other comments reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations or comments will prove to be correct.
Full Year 2015
Based on an estimated 118 million diluted shares outstanding, the company currently anticipates reporting consolidated earnings per diluted share of approximately $3.12 to 3.20. The company’s earnings per share guidance contemplates the $150 million of share repurchases executed in the first quarter of 2015. For the 52 weeks ended January 31, 2015, the company reported non-GAAP consolidated earnings per diluted share of $2.87, excluding a gain on the sale of an asset and golf restructuring charges. On a GAAP basis, the company reported consolidated earnings per diluted share of $2.84 for the 52 weeks ended January 31, 2015.
Consolidated same store sales are currently expected to increase 1 to 3 percent, compared to a 2.4 percent increase in fiscal 2014.
The company expects to open approximately 45 new Dick’s Sporting Goods stores and relocate seven Dick’s Sporting Goods stores in 2015. The company also expects to open approximately nine Field & Stream stores and relocate one Golf Galaxy store in 2015.
Second Quarter 2015
Based on an estimated 118 million diluted shares outstanding, the company currently anticipates reporting consolidated earnings per diluted share of approximately 73 to 76 cents in the second quarter of 2015, compared to second quarter 2014 non-GAAP consolidated earnings per diluted share of 67 cents, excluding golf restructuring charges. On a GAAP basis, the company reported consolidated earnings per diluted share of $0.57 in the second quarter of 2014.
Consolidated same store sales are currently expected to be approximately flat to an increase of 2 percent in the second quarter of 2015, as compared to a 3.2 percent increase in the second quarter of 2014.
The company expects to open approximately seven new Dick’s Sporting Goods stores and one new Field & Stream store in the second quarter of 2015.
Capital Expenditures
In 2015, the company anticipates capital expenditures to be approximately $245 million on a net basis and approximately $365 million on a gross basis. In 2014, capital expenditures were approximately $247 million on a net basis and approximately $349 million on a gross basis.
