Many brick-and-mortar retailers had a tough holiday season this year, as stiff competition from online retailers and extreme winter weather across many parts of the US put a drag on store traffic. However, several large chains bucked the trend, delivering figures that came in ahead of the consensus. One of these was Dick's Sporting Goods (NYSE:DKS), its most recent earnings report showing considerable strength. Suppliers such as Under Armour (NYSE:UAA) got a boost from the report, as did competitor Hibbett Sports (NASDAQ:HIBB).


Beating guidance
Dick's raised its fourth-quarter outlook on Monday, with projections coming in well above analyst expectations as well as the company's own previous guidance. Fourth-quarter same-store sales were apparently up around 7%, which is an excellent figure, the company stating that holiday season sales came in well above expectations. This despite an intensely promotional competitive environment and cautious consumer spending for the period.

Fourth-quarter guidance is now as follows. The company expects diluted earnings per share to be between $1.10 and $1.11 versus a previous range of $1.04 to $1.07. This is up from earnings per share of $1.03 last year. The 7% same-store sale increase smashed earlier projections of a 3%-4% rise, having risen only 1.2% last year. In the words of CEO Edward Stack: "We enter 2014 with a robust and growing omni-channel network and exciting merchandising opportunities, which we believe will translate into double-digit earnings growth."

One of Dick's Sporting Goods' suppliers, Under Armour, also reported very strong fourth-quarter results. Revenue jumped an impressive 35% to hit $682 million for the period, blowing past the $620 million consensus estimate. Net income surged 28% to $0.59 per share, easily beating the $0.53 consensus. The company actually benefited from the cold winter weather, selling more cold-weather gear and footwear. For the full year, revenue and net income are expected to grow by 23% and 24%, respectively.

A broader trend?
Competitor Hibbett Sports has also been delivering solid growth in recent times, although the company stumbled a bit on its third-quarter report. While quarterly EPS beat by a penny, net income dropped some 7%, which did not please investors at all. For the rest, the report actually didn't look too bad. Sales were up 2.5%, with comp-store sales up a solid 4.8%.

Most of the drop in net income was due to increased expenses, up 8.6% overall, mostly consisting of higher wages and benefits. In any case, the company is optimistic about the future, planning to increase the number of stores in the US from around 900 to 1,500 over the long term. What seems to generally be aiding sporting-goods chains is the fact that many consumers prefer actually being able to see and touch, perhaps even smell, the sporting equipment they want to buy. This has allowed the industry to avoid some of the sting from cheaper online retailers.

The bottom line
Dick's Sporting Goods came out with some impressive numbers for its fourth-quarter report. Performing better than most other retailers for the period, the company posted some very solid same-store sales growth. Suppliers like Under Armour also got a boost from the news, the company having delivered a very good report of its own recently. Indeed, the industry as a whole seems to be doing well, as consumers seem to prefer being able to try out their sporting goods before buying them, which gives these types of stores an edge over online retailers.

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