SBD/August 15, 2017/Finance

Dick's Sporting Goods Shares Fall Sharply After Company Lowers '17 Projection

Dick's Sporting Goods shares this morning "plummeted" after the sporting goods retailer "missed Wall Street expectations" and lowered its '17 outlook, according to Cheddar Berk & Thomas of CNBC.com. Dick's "hoped to benefit from rivals' bankruptcies, including those of City Sports and Sports Authority, but competition from specialty retailers like Under Armour and Foot Locker remains a threat." The Pittsburgh-based company recently "launched a private-label clothing line, called Second Skin, that aims to compete directly with Under Armour's niche." But "it's too soon to tell if the line will help boost sales." During Q2 '17, Dick's net income rose to $112.4M, or $1.03 a share, from $91.4M, "or 82 cents a share, a year ago." But on an adjusted basis, quarterly profit was 96 cents per share, 4 cents "below estimates from Thomson Reuters." Sales did rise 9.6% to $2.157B from last year, but analysts were "expecting revenue to reach" $2.161B. Dick's said that "weakness in hunting and licensed sports apparel, among other factors, also hurt" their results. Same-store sales for the year are "now expected to be between flat to down at a low-single digit rate." In '16, Dick's same-store sales rose 3.5% (CNBC.com, 8/15). At presstime, shares of Dick's were trading at $27.71, down 20.7% from the close of business yesterday (THE DAILY).

OMINOUS FUTURE? CNBC’s Jim Cramer noted Dick’s wants to maintain market share by being "really promotional." Cramer: "When you mention the word 'promotional,' you’re finished. ... That’s like saying 'by design we’re going to take our stock down'" ("Squawk on the Street," CNBC, 8/15). SW Retail Advisors President Stacey Widlitz said the brands selling at Dick's are all "selling on Amazon" ("Squawk Alley," CNBC, 8/15). CNBC’s Courtney Reagan said Dick’s is missing across the board with their revenue numbers and "providing a forecast that’s sharply below analysts' consensus because it’s decided deeper discounting is necessary to hold onto market share" ("Squawk on the Street," CNBC, 8/15).
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