Dicks Sporting Goods (DKS) Slides on Lower Projections

Shares of Coraopolis, Pennsylvania based Dicks Sporting Goods (DKS) fell sharply on Tuesday, down $9.56 per share to $43.60, on volume of 15,736,044 shares. The fall represented a 17.98% decline in the price of the stock. Though the company saw significant growth in both earnings and revenues in the first quarter, they warned that both would likely come in below expectations for the balance of the year. The company cited weakness in both its golf and hunting divisions.

Founded in 1948, Dicks Sporting Goods is the largest authentic full-line sporting goods retailer in the US, offering a broad assortment of brand name sporting goods equipment, apparel and footwear in a specialty store environment. The company owns and operates golf specialty retailer, Golf Galaxy, LLC. For the 2014 fiscal year ended January 31, 2014, the company had earnings of $337.6 million on revenues of $6.21 billion. The company has 34,300 employees and operates 566 retail outlets. On Tuesday, the company reported its first quarter results for the quarter ended on May 3rd. The company reported earnings of $61.3 million, or $.50 per share. In March the company projected earnings to come in between $.51 and $.53 per share. Net sales for the first quarter increased 7.9% to $1.4 billion. The closely watched same store sales figure came in at +1.5%, but company guidance had originally project that it would come in between 3% and 4%. Weakness in same stores was concentrated in the golf and hunting divisions. While same store sales for Dicks Sporting Goods came in at a more respectable 2.3% for the quarter, the company;s Golf Galaxy subsidiary saw a drop of 10.4% for it's same store sales. Further contributing to the slide in the stock price were projections of continued weakness, especially in the golf division. The company expects 2nd quarter earnings to come in 20% to 25% below investor expectations, and full year earnings at 10% below what the company had originally projected. While the company had originally expected modest improvement in it's golf sales after a difficult first quarter in 2013, the sector is now expected to see continued significant decline. The company's hunting business has also proven to be even weaker than original expectations. Analysts have been expecting second quarter earnings of .$82 per share, but the company announced on Tuesday that they will be in the range of $.62 and $.67 per share. In March, the company projected full year earnings of between $3.03 and $3.08 per share. It now projects full year earnings to come in at between $2.70 and $2.85 per share. "Our difficulties this quarter were isolated to two categories: golf and hunting," said Edward W. Stack, Chairman and CEO, and son of company founder Dick Stack . "After a very challenging first quarter in golf last year, we expected some further headwinds and only modest improvement, but instead we saw a continued significant decline. In the case of hunting, we planned the business down based on last year's catalysts, but it was even weaker than expected." Other News Dicks Sporting Goods Inc. Dick's Sporting Goods Upgraded At Sterne Agee And Intiated At CRT Capital Analyst Sam Poser is out also with a Buy rating on Dick's along with a $64 price target. Dick's to Open New Field & Stream Store Company announced the opening of a new Field & Stream store in Erie, Pennsylvania. Other Stocks in the News FDA approves Merck's heart-attack prevention drug Zontivity, was found to reduce rates of death from cardiovascular trauma by 17%. How IBM made it harder to sue Big Blue Employment attorneys and human-resources experts are watching IBM.

Published on May 21, 2014
By Kevin Mercadante

Copyrighted 2020. Content published with author's permission.

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