Dick’s (DKS) Stock Stumbles on Weak Same-Store Sales Outlook

Dick’s Sporting Goods Inc. (NYSE:DKS) started in 1948 as a small fishing tackle store in New York. In the 1980s, the children of founder Richard Dick Stack bought the business from their father. In the following decades, the company expanded rapidly to become a leading sporting goods retailer, offering a wide range of sports equipment and accessories.

The behavior and buying patterns of people changed in 2020 following the Covid-19 pandemic. For instance, many started spending more time on health and fitness activities, fueling the demand for sporting goods. Being the leading retailer in the space, DKS also capitalized on the trend and its stock’s value rose nearly 20 percent last year despite the difficult operating environment.

The growth was also reflected in Dick’s financial results for the fourth quarter. The company on Tuesday reported earnings of $2.21 per share for the three months ended January 30, significantly higher than 81 cents per share in the comparable period of 2019. On an adjusted basis, the company earned $2.43 per share, easily beating the consensus forecast of $2.30 per share.

Revenue jumped 19.8 percent on a year-over-year basis to $3.13 billion, while analysts on average were looking for revenue of $3.07 billion. E-commerce sales in the quarter climbed 57 percent and represented 32 percent of the overall sales.

Looking forward, Dick’s projected adjusted profit in the range of $4.40 per share to $5.20 per share and revenue between $9.544 billion to $9.935 billion for fiscal 2021. The forecast was in line with the consensus forecast.

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However, the company expects its same-store sales to either decline 2 percent or grow 2 percent in the current year. The projection is well below the same-store sales growth of about 10 percent in 2020. DKS shares fell more than 6 percent on Tuesday following the weak same-store sales outlook.

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