Dick's Says Under Armour, New Gun-Sales Policy Dragged on Results -- Update
August 29 2018 - 5:57PM
Dow Jones News
By Allison Prang
Dick's Sporting Goods Inc. said weaker sales of Under Armour
Inc. apparel and a decision to pull back from the hunting business
dragged on the retailer's latest quarterly results.
Comparable-store sales fell 4%, Dick's said. Not adjusting for
the 53rd week last year, the company's same-store sales declined
1.9%.
The weaker-than-expected results bucked a trend in the retail
sector, which largely has benefited from a surge in consumer
spending fueled by a booming economy.
Consumer confidence for August, measured by the Conference
Board's consumer confidence index, was the highest its been in
about 18 years. That sentiment, along with other factors, has
powered companies such as Walmart Inc. and Target Corp. to their
best quarterly results in more than a decade.
Dick's said part of the company's sales problems were a result
of Under Armour's decision to sell in more stores including Kohl's.
Under Armour declined to comment.
Also hurting sales was Dick's decision to tighten its policy on
gun sales after 17 people were killed in a February shooting at a
Parkland, Fla., high school. The retailer halted sales of any
firearms to people under age 21 at all of its 845 Dick's and Field
& Stream stores, and stopped selling assault-style weapons at
Field & Stream.
Under Armour's results accounted for three percentage points of
declining sales at Dick's, while weakness in the hunting and
electronics categories contributed two percentage points of
decline. When excluding Under Armour and the hunting and
electronics business, comparable-store sales fell 1%.
"Notwithstanding these challenges, the health of our core
business is relatively strong, and we're confident sales trends
will improve next year as these headwinds are expected to subside,"
Dick's Chief Executive Edward Stack said on a call with analysts to
discuss the results.
Shares in Dick's, up 26% year to date, were off less 1% on
Wednesday afternoon.
Mr. Stack said hunting is a low-margin business that was
underperforming. As Dick's clears out products from more stores, he
said, it will use the space to expand into more profitable areas
such as baseball gear.
Mr. Stack also said Under Armour is likely to be "much less of a
drag" in 2019. Dick's plans to expand a merchandise line with the
actor Dwayne "The Rock" Johnson that is sold by only Dick's and
Under Armour, Mr. Stack said on the call. He said "there hasn't
been any meaningful change in the relationship" between the
companies.
Net income rose 6.2% to $119.4 million for the company's second
quarter ended Aug. 4, compared with a year earlier. Dick's reported
earnings of $1.20 a share, up from $1.03 a share. Analysts polled
by Thomson Reuters had expected the company to post earnings of
$1.05 a share.
Net sales rose 1% to $2.18 billion. Analysts had expected $2.24
billion.
Dick's said it expects its earnings for the year to be between
$3.02 a share and $3.20 a share. The company had previously
expected earnings of between $2.92 and $3.12 a share. The company
said it now expects same-store sales to fall between 3% and 4%. It
had previously expected same-store sales to be roughly flat to down
by a low-single-digit percentage. Dick's now expects net capital
expenditures to be $225 million for the year. It had previously
expected them to be $250 million.
Selling, general and administrative expenses rose 5.3% to $495.3
million.
Write to Allison Prang at allison.prang@wsj.com
(END) Dow Jones Newswires
August 29, 2018 17:42 ET (21:42 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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