KSS Kohls Corporation

By Joshua Jamerson 

Dick's Sporting Goods Inc. on Tuesday boosted its earnings forecast for the year, as a less-than-feared impact from closeout sales at Sports Authority Inc. spurred a surprise increase in profit and same-store sales in the second quarter.

In May, Dick's had offered a bleak view for the year, as it contended with Sports Authority liquidating its stores throughout the summer, possibly making Dick's prices seem less attractive.

But those effects had less of an impact than expected, the company said on Tuesday. The price of shares in the sporting-goods seller consequently rose 7.4% to $58.96 in afternoon trading.

Dick's posted a quarterly profit of $91.4 million, or 82 cents a share, compared with $90.8 million, or 77 cents, a year earlier. The company had previously guided for earnings between 62 cents and 72 cents a share.

Revenue climbed 7.9% to $1.97 billion. Analysts were looking for around $1.88 billion, according to a survey by Thomson Reuters.

For the current quarter, the company said it expects earnings of 39 cents to 42 cents a share, above analysts' projections for 38 cents a share. Same-store sales are expected to rise between 2% to 3%. For the full year, the company now sees earnings between $2.90 and $3.05 a share, compared with the previously forecast range of $2.60 to $2.90.

Dick's said its stores near Sports Authority locations benefited later in the period, as shelves at its financially pressed competitor's stores started to empty.

Chief Executive Edward Stack said despite pressure at the start of the quarter, Dick's stores started to pick up market share as the period progressed. "As you can imagine, over the first several weeks, all the good stuff got cherry-picked pretty good," Mr. Stack said on a conference call Tuesday with analysts.

In March, Sports Authority filed for chapter 11 bankruptcy proceedings.

With a major competitor out of the way, executives at Dick's believe the company is poised to pick up much of its market share. But Mr. Stack warned results in the current quarter may be hurt by some residual effects of Sport Authority's liquidations. Still, he predicted virtually no impact on the fourth quarter.

Mr. Stack also pointed to higher merchandise sales spurred by sports championships won by the Pittsburgh Penguins professional ice hockey team and the Cleveland Cavaliers.

The Cavaliers, led by LeBron James, won the 2016 National Basketball Association title in June. The city of Cleveland hadn't won a championship in a major sport for more than 50 years.

"These were markets where the excitement was so strong that it drove championship-label products higher," said Efraim Levy, an equity analyst with S&P Global.

Pittsburgh-based Dick's better-than-expected results came as retailers such as Macy's Inc. and Kohl's Corp. in recent weeks posted declining sales, as consumers have been shifting their spending from brick-and-mortar retailers to online shopping.

Dick's said online shopping made up 8.5% of total sales during the three months that ended in July, compared with 7.3% in the year-ago quarter. And Dick's has sought to take advantage of a retail environment that has favored sporty clothes more than sporting gear, with executives outlining plans last year to expand the chain's casual-sportswear lines.

Sales at existing stores rose 2.8% in the July period. The company had projected same-store sales would decline between 1% and 4%.

Last week, Dick's said Teri List-Stoll was no longer its finance chief and that chief operating officer André Hawaux would fill the role on an interim basis until a successor is found. The company made the announcement in a regulatory filing and didn't provide further details about Ms. List-Stoll's departure or its timing, just ahead of its second-quarter earnings release.

On Tuesday's call, Mr. Stack said the timing made sense given the coming budget season, but he didn't elaborate on the reasoning behind her departure.

Write to Joshua Jamerson at joshua.jamerson@wsj.com

(END) Dow Jones Newswires

August 16, 2016 13:44 ET (17:44 GMT)

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