Photo: Dick's Sporting Goods.
What: Shares of Dicks Sporting Goods (DKS +5.11%) fell as much as 18% on Tuesday morning, following a weak third-quarter earnings report paired with disappointing guidance for the crucial holiday quarter.
So what: In the third quarter, the sporting goods chain saw sales rising 7.6% year over year to $1.6 billion. On the bottom line, adjusted earnings rose 10% to $0.45 per diluted share.
The sales performance was just below Wall Street's consensus estimates and earnings came up a penny short. More hauntingly, Dick's same-store sales growth was below management's own expectations and earnings fell at the very bottom of the company's official guidance range.
Looking ahead, CEO Ed Stack sees "a more promotional environment" in the fourth quarter, setting the stage for potential same-store sales shrinkage and something like 10% lower earnings year over year. The $1.17 midpoint of Dick's fourth-quarter EPS guidance is also far below the current Street view, which calls for $1.43 per share.
Now what: Stack managed to find a silver lining on all this gloom, of course.
"Strength in athletic footwear, accessories and athletic apparel was moderated by the impact of record warm weather in more seasonal categories," he said in a prepared statement. "With strong operational discipline, we generated earnings per share within our guided range."
Dick's is stepping up its online business ambitions, lifting its e-tailing sales from 7.3% of total sales in the year-ago quarter to 8% today. Doing the math, that amounts to $131 million in the just-reported quarter and $111 million in 2014 -- an 18% improvement.
The company is heading down a useful track here, with solid top-line growth to show for it. But perhaps Stack should look into accelerating this effort rather than expanding the traditional store network.
The stock is now trading at fresh multi-year lows, stretching back to prices not seen since 2011.
