Dick’s Sporting Goods (NYSE:DKS) continued in the first quarter to post profit and sales growth, reporting Tuesday a 13% increase in earnings despite lower same-store sales.
But Dick’s, the top sports retailer in the U.S., missed its own revenue estimate and plans to add less-expensive products to counter headwinds.
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“In the first quarter, we generated earnings in line with our original guidance, but were not pleased with our sales results, which came in below our expectations,” Chairman and Chief Executive Edward Stack said in a statement. “To drive sales and preserve margins in the near-term, we will work with our vendor partners, particularly in golf, to provide value offerings.”
The company bought the rights to Callaway Golf’s (NYSE:ELY) Top-Flite brand last year in an effort to become more competitive in the golf market. It also owns retailer Golf Galaxy.
Stack added that work at 75% of the stores in line to be remodeled will be completed by the end of the second quarter.
In the latest period, Dick’s said its profit rose to $64.8 million from $57.2 million in the year-ago period. On a per-share basis, earnings checked in at 52 cents versus 45 cents. Adjusted earnings, which exclude an impaired-asset recovery related to JJB Sports, were 48 cents a share.
The company in March provided downbeat guidance for earnings of 47 cents to 49 cents a share.
Net sales climbed 4.1% to $1.33 billion, coming up short of Wall Street expectations of $1.36 billion.
Gross margin rose to 30.9% from 30.8%.
Consolidated same-store sales fell 3.8%, beyond the 1% to 2% decline Dick’s expected. At namesake Dick’s Sporting Goods, comparable store sales narrowed 3.2%. Golf Galaxy same-store sales were down 12%.
Dick’s is expecting per-share earnings of 75 cents to 77 cents on same-store sales growth of 2% to 3% in the current quarter, while it backed its full-year outlook. Analysts were looking for second-quarter earnings guidance of 76 cents a share.
Shares were down 14 cents at $52.07 in early morning trading.