Add Dick’s Sporting Goods to the list of retailers feeling the impact of the macroeconomic challenges and lingering supply chain issues.
On Wednesday, the country’s largest sporting goods retailer reported net income for the first quarter ended April 30 of $260.6 million, or $2.47 a share, compared with net income of $361.8 million, or $3.41 a share, a year earlier. Excluding onetime items, the company earned $2.85 per share.
Comparable-store sales fell 8.4 percent in the period to $2.7 billion from $2.92 billion a year earlier and net sales dropped to $2.7 billion from $2.9 billion in the prior year’s quarter. The comps in the first quarter of last year, however, were up 117 percent and are still running “substantially above pre-COVID[-19] levels,” or 41 percent above 2019, according to Lauren Hobart, president and chief executive officer of Dick’s.
The company said it expects the “evolving macroeconomic conditions” to continue to impact business going forward, and as a result, it cut its forecast for the full fiscal year. Dick’s now expects to earn between $9.15 and $11.70 a share, on an adjusted basis, down from the prior projection of $11.70 to $13.10. And it is projecting that comp-store sales will drop between 8 percent and 2 percent for the year.
Hobart said the challenges are coming from all sides as inflation is “putting pressure on the consumer at the gas pump and in the grocery store,” and Dick’s is also facing “anticipated increases” in freight, labor and product costs.
Dick’s follows other large U.S.-based retailers that have reported disappointing results in recent days including Walmart, Target, Kohl’s and Abercrombie & Fitch. These weaker earnings reports are in sharp contrast to the strength being exhibited by higher-end companies such as Chanel and Ralph Lauren, indicating a dichotomy between companies that target a more luxury shopper versus those whose pocketbooks are being impacted by higher gas and grocery prices.
On the company’s earnings call, Hobart addressed the company’s performance, noting: “Like everyone else, we have been carefully monitoring the rapidly evolving macroeconomic environment and assessing our expectations based on our experience running our business across economic cycles. With this perspective, we believe it’s appropriate to be cautious and are, therefore, lowering our outlook for the year.
“To be clear, we expect our performance will continue to meaningfully exceed 2019 levels, reflecting the strength of our core strategies, and the changes we have made in our business over the past five years. [We are] the clear market leader and are well positioned to extend our lead and build on our competitive advantages in the years ahead.”
That will be driven by the “lasting lifestyle changes” of consumers who are now focused on “health and fitness and greater participation in sports and outdoor activities.”
She said over the past five years, Dick’s has transformed its assortment to focus more on “narrowly distributed” products that are “not as susceptible to promotion. In addition, the tools we have today to surgically adjust pricing are significantly more sophisticated than they were several years ago. With these fundamental changes, we are very confident that the majority of our merchandise margin rate expansion that we’ve driven over the past two years is sustainable.”
She noted that during the first quarter, the company’s stores proved to be a “hub” for shoppers, accounting for over 90 percent of total sales. And new retail concepts including Public Lands, Dick’s House of Sports and Golf Galaxy Performance Center “are delivering promising early results.”
The Pittsburgh-based Dick’s operates 858 stores in 47 states under the Dick’s Sporting Goods, Golf Galaxy and Public Lands nameplates as well as Going Going Gone, an off-price concept.