Dick's Sporting Goods Q2 Results Top Estimates, Backs FY14 Growth View

(RTTNews) - Dick's Sporting Goods, Inc. (DKS) reported Monday a decline in second-quarter profit, reflecting margin pressure, despite higher comparable store sales. Adjusted earnings per share and top line beat analysts' estimates.

Looking ahead, the omni-channel sporting goods retailer sees third-quarter earnings in line or below market view, and said it is cautiously optimistic about its second half. However, the company backed its fiscal 2014 forecast for earnings and same store sales growth.

In pre-market activity, Dick's shares were gaining $2.34 or 5.38 percent, and trading at $45.85.

For the second quarter, the company's net income slipped to $69.47 million or $0.57 per share from $84.16 million or $0.67 per share a year ago.

The latest results included pre-tax charges totaling $20.4 million related to the restructuring of its golf business in order to align the cost structure with current and expected trends in golf. Meanwhile, the prior year's results included an asset impairment charge.

Adjusted net income, which excluded items, was $81.7 million or $0.67 per share, while prior year's adjusted net income was $88.9 million or $0.71 per share.

On average, 29 analysts polled by Thomson Reuters expected the company to report earnings of $0.65 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales increased 10.3 percent to $1.69 billion from $1.53 billion a year earlier. Analysts were looking for sales of $1.65 billion.

Consolidated same store sales increased 3.2 percent, compared to last year's same store sales decrease of 0.4 percent. Same store sales for Dick'S Sporting Goods increased 4.1 percent, while Golf Galaxy decreased 9.3 percent.

Gross profit increased from last year, while gross margin dropped to 29.76 percent from 31.30 percent last year.

Chairman and CEO Edward Stack said, "Our second quarter results came in at the high end of our expectations. As anticipated, the golf and hunting businesses continued to experience negative comps. However, excluding these two categories, the remainder of the business delivered a 7.8 percent same store sales increase."

Looking ahead for the third quarter, Dick's currently expects consolidated earnings per share of about $0.38 to $0.42, compared to last year's $0.40 per share, while analysts project third-quarter earnings of $0.42 per share.

Consolidated same store sales for the quarter are currently expected to increase approximately 1 to 3 percent, as compared to a 3.3 percent increase last year.

For the second half of 2014, the company is cautiously optimistic though it does anticipate, due to the cautious consumer, an increase in promotional activity with margins and advertising expense continuing to be under pressure and impacting earnings per share by nearly $0.04.

Further ahead for fiscal 2014, the company continues to expect consolidated adjusted earnings per share of around $2.70 to $2.85. This is compared to last year's earnings of $2.69 per share. Analysts currently estimate annual earnings per share of $2.79.

Consolidated same store sales for the year are still expected to increase approximately 1 percent to 3 percent, compared to a 1.9 percent increase in fiscal 2013.