Dick's Sporting Goods

  • Dick’s Sporting Goods, the largest sporting   goods retailer in the United States, posted its strongest fiscal   third-quarter earnings ever topping Wall Street estimates. The company also   raised its guidance for the full year.

  • Revenue   in Q3 increased 14% y-o-y to $2.75 billion. Same-store sales, at stores open   for at least 12 months, climbed 12.2%, beating analyst forecasts for a gain   of only 1.9%. Online sales rose just 1% year-on-year. However, on a two-year   basis online shopping is up 97% and now makes up 19% of revenues, from 13% in   2019.

  • Dicks   announced a tie-up with its biggest brand vendor, Nike, in the quarter to   allow customers to shop for exclusive Nike shoes and apparel on Dick’s   website. Net income rose 79% to $316.5 million, or $2.78 per share, from the   same period a year earlier. Excluding once-off items, Dick’s earned $3.19 per   share, ahead of the $1.97 that analysts had been expecting.

  • Dick’s   launched its own men’s athleisure brand, VRST this year, which it says, along   with other own brands, performed well in the quarter. Dick’s also this year   opened its largest store in Rochester, New York, (to attract walk-in   shoppers) called the House of Sport, which comes complete with an indoor   rock-climbing wall, putting green, health and wellness shop, and an astroturf   and athletics track outside. Shares are up over 125% year-to-date giving the   retailer a market cap of $11.28 bn.

  • Dick’s   Chief Executive Officer Lauren Hobart said that consumer demand has remained   strong after the back-to-school rush and summer season. Dick’s now expects   sales of between $12.12 billion and $12.19 billion for the full-year.   Previously, the sports goods retailer was expecting sales of $11.52 billion   to $11.72 billion. Dick’s is now forecasting earnings in the region of $12.88   to $13.06 per share. After adjusting for Covid-19-related expenses, that   would put earnings between $14.60 and $14.80 per share. Previously Dicks had   estimated full-year adjusted earnings to be between $12.45 and $12.95 per   share.

  • Dicks   is trading on price earnings multiple of 9.8x which is in line with that of   the US specialty retail average of 10.2x. The company has grown earnings   30.3% annually over the past 5 years but earnings are expected to come under   pressure in the coming years. The company has low debt and reasonable free   cash flows. Most metrics indicate it is a well-run business. Dick’s is on a   dividend yield of 1.37%, however, it has an unstable dividend track record.   And it is also concerning that insiders have been sellers of the stock over   the past 9 months. We are instead owners of Amazon.com in the retail space   but will keep an eye on this counter for any possible opportunities.

Dick's Sporting Goods