Dick's Sporting Goods blows past earnings estimates but issues cautious guidance ahead of 2024 election

Dick’s Sporting Goods on Wednesday blew past Wall Street’s earnings estimates in its fiscal second quarter and while the retailer did raise its full-year guidance as a result, the new outlook fell flat up against expectations. 

The sporting goods store comes behind a string of other retailers that issued muted or cautious guidance for the back half of the fiscal year as companies prepare for the presidential election in November and what some fear could lead to a slowdown in consumer spending. 

Here’s how Dick’s did compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

• Earnings per share: $4.37 vs. $3.83 expected
• Revenue: $3.47 billion vs. $3.44 billion expected

The company’s reported net income for the three-month period that ended Aug. 3 was $362 million, or $4.37 per share, compared with $244 million, or $2.82 per share, a year earlier. 

Sales rose to $3.47 billion, up about 8% from $3.22 billion a year earlier. Comparable sales climbed 4.5% — ahead of the 3.6% that analysts had expected, according to StreetAccount.

In a statement, CEO Lauren Hobart said comparable sales were driven by both transactions and tickets — indicating more people are coming to Dick’s stores and spending more while they’re there.

For fiscal 2024, Dick’s is now expecting diluted earnings per share to be between $13.55 and $13.90, up from previous guidance of $13.35 to $13.75 per share. At the midpoint, Dick’s only raised its earnings guidance by about 18 cents, even though its fiscal second-quarter earnings came in 54 cents higher than expected. At the low end, Dick’s earnings guidance falls a bit short of the $13.79 that analysts had expected, according to LSEG. 

Dick’s maintained its sales guidance of $13.1 billion to $13.2 billion, which also fell flat compared with the $13.24 billion that analysts were looking for, according to LSEG. The company did raise its projections for comparable sales growth and is now expecting them to grow between 2.5% and 3.5%, up from previous guidance of 2% to 3%. The high end of the guidance is ahead of the 3% growth that analysts had expected, according to StreetAccount. 

Last week, the company disclosed in a securities filing that it was the victim of a cyberattack and “certain confidential information” was breached. Dick’s said that it activated its “cybersecurity response plan” as a result and engaged with external experts to investigate and isolate the threat.

In its filing, Dick’s said it didn’t have any knowledge of the breach disrupting business operations and based on the information it had, it didn’t believe the incident was material.

This time last year, Dick’s shocked investors when it said that theft – along with aggressive markdowns for languishing inventory – would impact its full-year profit expectations, sending its stock down 24%. At the time, profits were down about 23% but given Wednesday’s earnings beat, it appears as if those woes are now behind the company. 

A number of other retailers – including Target and Walmart – said over the last couple of weeks that shrink, or lost inventory from a range of factors including theft and damage, had moderated. One of the top issues that retailers said they were facing throughout 2023, shrink appears to be in the rearview mirror for some after making investments into operations, technology and a reduction in the use of self-checkout machines. 

Over the last few weeks, a range of retailers put out second-quarter numbers that beat expectations but issued guidance for the last two quarters of 2024 that were either muted or poor compared with the company’s performance. Retailers have been bracing themselves for the upcoming election in November and the impact it could have on consumer spending. Beyond the election, there’s also uncertainties tied to the Federal Reserve’s expected rate cut and the impact that could have on discretionary spending. 

Dick’s is slated to discuss its results with analysts and share more insights on its guidance at 8 a.m. ET.