Shares of Dick's Sporting Goods (DKS 1.43%) were moving higher today after the sporting goods retailer posted better-than-expected results in its fourth-quarter earnings report, as well as raised its dividend by 10%.
The update showed that Dick's was continuing to execute during a challenging time for discretionary retailers as well as sporting goods peers like Foot Locker.
As of 2:12 p.m. ET, the stock was up 15.6%.
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Dick's impresses again
In a difficult macro environment, Dick's reported comparable sales growth of 2.4%, which drove revenue up 7.8% to $3.88 billion, including an extra week in the quarter, which was better than estimates of $3.8 billion.
The company completed a "business optimization" in the fourth quarter that it said would help streamline its overall cost structure, and it incurred $84.8 million in restructuring charges related to layoffs and the optimization of its outdoor specialty business, including the integration of Moosejaw and Public Lands operations.
Gross margin in the quarter improved by 200 basis points to 34.4%, reflecting strong inventory control, as inventories rose less than 1% in the quarter. As a result, adjusted pre-tax profit margin rose from 9.7% to 11%, and adjusted earnings per share jumped 31% to $3.85, which topped expectations at $3.35.
CEO Lauren Hobart said:
We are guiding to another strong year in 2024. We plan to grow both our sales and earnings through positive comps, higher merchandise margin, and productivity gains. With the continued success of our new store formats and our omnichannel experience, we will accelerate our investment in our growth strategies to drive our business forward and continue gaining market share in a fragmented $140-billion-dollar industry.
Dick's also raised the quarterly dividend 10% to $1.10 a share.
What's next for Dick's Sporting Goods?
Dick's is calling for continued modest growth into 2024, forecasting 1% to 2% comparable sales growth and revenue of $13 billion to $13.13 billion, which would represent growth of flat to 1% and short of estimates at $13.13 billion. On the bottom line, it sees earnings per share of $12.85-$13.25, which compares to $12.91 and estimates and the consensus at $12.90.
Dick shares have nearly doubled this year, but the valuation looks reasonable, and the company has been aggressively buying back stock. Dick's looks like a good bet to continue outperforming as it consolidates the large sporting goods industry.
