Lance Armstrong Ruins Dicks Sporting Goods Inc (DKS)’s Fourth Quarter: NIKE, Inc. (NKE)

Page 1 of 2

Monday morning, sporting goods retailer Dicks Sporting Goods Inc. (NYSE:DKS) announced results for its fourth quarter. Revenue fell short of consensus expectations, growing 12% year-over-year to $1.8 billion, even though the firm had an extra selling week. Earnings per share fell well short of expectations, growing 17% year-over-year to $1.03 per share, even though the company had $0.03 added by the extra week of retailing.

Dicks Sporting Goods Inc. (NYSE:DKS) had been on a roll throughout most of 2011 and 2012, but same-store sales growth totaled just 1.2% year-over-year growth during the fourth quarter. Same-store sales at Dick’s Sporting Goods locations actually dipped 2.2%, though Golf Galaxy’s same-store sales increased 1.3%, and e-commerce sales soared 54%.

Dicks Sporting Goods Inc (NYSE:DKS)Management identified hunting as a strong driver during the quarter, even though supplies of ammo were constrained. Athletic apparel and footwear were also strong, with basketball shoes and cleats performing well. Unfortunately for the company, this strength was offset by a warm winter December in which the company chose to draw down inventories.

However, because the firm decided to clear inventory, it did not have ample product for when the weather got cold and snowfall accelerated in January. Further, fitness sales were weak, which the firm blamed mostly on Lance Armstrong and his decision to come clean about his doping. Management specifically stated:

“…the Livestrong brand is a little bit more than 50% of our treadmill and elliptical business. And unfortunately, when the news came out about Lance and the issues that he had and that being confirmed, people had a very negative reaction to the Livestrong brand, unfortunately. Even though with Lance … he’s no longer with the foundation, the foundation does great work, the customers had a very negative reaction to the Livestrong brand. And the business with Livestrong treadmills and ellipticals, which, as I said, were over 50% of our business, just stopped.”

When the news was released, the market wondered whether it would be NIKE, Inc. (NYSE:NKE) taking some blows to revenue. However, the LiveStrong apparel line is a tiny portion of the firm’s overall revenue mix, and the brand has done a wonderful job of absorbing any impact. Michael Jordan, Kobe Bryant, Michael Vick, Oscar Pistorious, and Tiger Woods have all had their fair share of private life debacles (some worse than others), but NIKE, Inc. (NYSE:NKE) has done a fantastic job simply dissociating from the athlete or ignoring it.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

5 Retirement Mistakes To Avoid (and Einstein’s Famous Quote)

11 Smartest People in the World

6 Films About the Financial World You Need To Watch (While “The Wolf” is Not Around)

Warren Buffett and Billionaires Are Crazy About These 7 Stocks

The Top 10 States With Fastest Internet Speeds

10 Best Places to Visit in USA in August

Top 10 Cities to Visit Before You Die

Top 10 Genetically Modified Food In the US

15 Highest Grossing Movies Opening Weekend

5 Best Poker Books For Beginners

10 Strategies Hedge Funds Use to Make Huge Returns

Top 10 Fast Food Franchises to Buy

10 Best Places to Visit in Canada

Best Summer Jobs for Teachers

10 Youngest Hedge Fund Billionaires

Top 10 One Hit Wonders of the 90s

Fastest Growing Cities In America

Top 10 U.S. Cities for Freelancers

Top 9 Most Popular Free iPhone Apps

Top 10 Least Expensive Private Business Schools in the US

Top 15 Most Expensive Countries in the World – 2014

Top Businesses to Invest In

Top 5 Things You Might Be Doing Wrong With Your Business

Top 5 Strategic Technology Trends in 2014

Top Rags to Riches Stories

Parenting Behavior That Promotes Future Leaders

Top 5 Mistakes Made by Small Businesses

Top 5 Most Common and Potentially Devastating Financial Blunders

Top 5 Highest Paying Jobs for Web Designers

Top 6 Most Respected Professions that Also Pay Well

Top 5 Pitfalls Investors Should Avoid

Top 6 Lawyers and Policy Makers Under 30

Top 6 New Year’s Resolutions for Entrepreneurs

Top 7 Locations to Check in on Facebook

Top 5 Mistakes made by Rookie eBay Sellers

Top 7 eBook Publishers in 2013

Top 6 Health Industry Trends in 2014

5 Lessons for Entrepreneurs from Seth Godin

Top 5 Success Tips from Jordan Belfort – the Wolf of Wall Street

Best Master’s in Finance Degree Programs

Top 6 Earning Celebrities Over 50

The most expensive sports to play

Top 7 Earning Celebrities Under 25

Best 7 Online Courses to Take: Free Finance MOOCs

Top 6 Bad Habits that Promote Failure

20 Most Valuable Soccer Teams in the World in 2013

12 Most Expensive Countries for Foreign Students

Top 30 Most Influential Women in the World

Top 20 Most Expensive New Year Eve Shows

Top 5 Best Vocational Careers

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!