Dick's Sporting Goods
First-quarter net income at Dick's fell 4% to $20.8 million, or $0.18 per share. Net sales jumped 11% from last year to $912.1 million, although same-store sales dropped by 3.8%. Unfortunately, comps for its Golf Galaxy concept plunged by 7.4% on a pro forma basis.
Not only did the results fall short of Wall Street analysts' expectations, but Dick's outlook for next quarter and all of 2008 didn't give anybody much reason for jubilation. Dick's said to expect earnings of $1.22 per share to $1.36 per share in 2008 (compared to $1.33 per share in 2007). It also said it believes comps will decrease by 3% to 5% during the year.
In the second quarter, Dick's sees earning $0.34 per share to $0.38 per share, down from $0.41 per share this time last year. Comps are expected to fall by 4% to 7%.
Dick's news certainly precipitated a significant drop in its share price, but it also sent some shudders through some other stocks that touch the sporting goods market. For example, Under Armour
Back in March, when I took at a look at Dick's Sporting Goods' fourth-quarter results, I thought anybody who was interested in the stock might want to wait and see if a better price arose, since I also thought that this consumer discretionary segment could suffer in an economic slowdown. And indeed, a better price has presented itself.
Then again, it looks like Dick's is going to have a tough time this year, so I can't say I'm exactly ultra-bullish on this stock. After all, consumers are nervous and pulling back, and showing signs of nesting. Investors might be a little better served looking at stocks that provide home-centric entertainment -- after all, speaking of a different type of gamer, Activision
For the time being, though, I'm not sure I believe Dick's stock is a good defensive play for investors' portfolios.