What happened
Shares of Dick's Sporting Goods (DKS 3.74%) jumped more than 10% over the past week, according to data from S&P Global Market Intelligence, after the retailer doubled its dividend.
So what
Dick's net sales rose 7.3% year over year to $3.6 billion, driven by a 5.3% rise in comparable-store sales. Both metrics topped Wall Street's projections, which had called for revenue of $3.45 billion and comp growth of 2.1%. Dick's is benefiting as more people prioritized health and fitness during the pandemic. The sporting goods retailer is also gaining market share as its less financially sound rivals struggle.
Still, supply chain challenges and inventory overages took a toll on Dick's profit margins. Its adjusted net income, in turn, declined by 27% to $258 million. And its adjusted earnings per share, aided by stock buybacks, decreased by a somewhat more moderate 20% to $2.93. That, too, was better than analysts' estimates, which had called for adjusted per-share profits of $2.88.
Now what
Management expects Dick's full-year earnings per share to improve to between $12.90 and $13.80 in 2023, up from $12.04 in 2022. "As planned, we continued to address targeted inventory overages, and as a result, our inventory is in great shape as we start 2023," CEO Lauren Hobart said in a press release.
This projected profit growth prompted Dick's to raise its annualized dividend by a whopping 105% to $4.00 per share.
"In 2023, we will grow both our sales and earnings through positive comps, a return to square footage growth, and higher merchandise margin," Hobart said. "Our consistent performance and financial strength position us to increase the rate of investment in our business to fuel long-term growth opportunities and also return significant capital to shareholders."
