Dick's Sporting Goods, Inc. (DKS) on Tuesday reported a 13 percent increase in profit for the first quarter, reflecting higher revenues and the partial recovery of a previously impaired investment that helped offset lower consolidated same store sales. However, revenues missed analysts' expectations, while adjusted earnings per share matched their estimates.
Looking ahead, the sporting goods retailer forecast earnings for the second quarter in line with Street estimates and also reiterated its fiscal 2013 outlook.
Edward Stack, Chairman and CEO of Dick's Sporting Goods said, "In the first quarter, we generated earnings in line with our original guidance, but were not pleased with our sales results, which came in below our expectations. To drive sales and preserve margins in the near-term, we will work with our vendor partners, particularly in golf, to provide value offerings; we will aggressively execute our store remodel program, with approximately 75% of the identified stores expected to be completed by the end of the second quarter; and we will continue to tightly manage clearance inventory, which has declined meaningfully."
The Pennsylvania-based sporting goods retailer's sales grew 4.1 percent in the first quarter. eCommerce penetration was 5.8 percent of total sales in the quarter.
Adjusted for the shifted calendar due to the 53rd week in 2012, consolidated same store sales decreased 3.8 percent. Shifted same store sales for Dick's Sporting Goods decreased 3.2 percent and Golf Galaxy sales decreased 11.8 percent.
Unshifted consolidated same store sales for the quarter decreased 1.7 percent, consisting of a 1.3 percent decrease at Dick's Sporting Goods and a 7.4 percent decrease at Golf Galaxy. This compared to an 8.4 percent increase in consolidated same store sales for the year-ago period.
Gross profit margin for the quarter edged up to 30.87 percent from 30.79 percent in the same period last year.
Dick's Sporting Goods first-quarter net income increased to $64.82 million or $0.52 per share from $57.16 million or $0.45 per share in the prior-year period.
The latest quarter's results include an after-tax increase to net income of $4.3 million or $0.04 per share, resulting from an estimated partial recovery of its previously impaired JJB investment.
Excluding items, adjusted net income for the quarter was $60.48 million or $0.48 per share. On average, 29 analysts polled by Thomson Reuters expected the company to earn $0.48 per share for the latest quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter rose 4 percent to $1.33 billion from $1.28 billion in the prior-year period. Analysts had a consensus revenue estimate of $1.36 billion.
On May 20, Dick's Sporting board of directors authorized and declared a quarterly dividend of $0.125 per share on the company's common stock and Class B common stock. The dividend is payable in cash on June 28 to stockholders of record at the close of business on June 7.
Looking ahead to the second quarter, Dick's Sporting Goods forecasts earnings of about $0.75 to 0.77 per share. The company projects consolidated same store sales adjusted for the shifted calendar, due to the 53rd week in 2012, to increase about 2 percent to 3 percent in the quarter, or about 3.5 percent to 4.5 percent on an unshifted basis. Analysts expect the company to report earnings per share of $0.76 for the quarter.
For fiscal 2013, Dick's Sporting Goods reiterated its outlook for adjusted earnings per share of $2.84 to 2.86, excluding the partial recovery of a previously impaired asset. For the prior year, the company reported consolidated adjusted earnings per share of $2.53. Analysts expect the company to report earnings of $2.86 per share.
The company also reaffirmed its outlook for full-year consolidated same store sales to increase about 2 percent to 3 percent on a 52-week to 52-week comparative basis, compared to a 4.3 percent increase in fiscal 2012.
DKS closed Monday's regular trading at $52.21. In Tuesday's pre-market activity, the stock is down $0.71 or 1.36 percent to $51.50.
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