Dick's Sporting Goods' sees consumers from all income brackets buying more

By Tomi Kilgore

Stock soars into record territory, after another big earnings beat

Shares of Dick's Sporting Goods Inc. sprinted into record territory Wednesday, after the sporting goods retailer reported another big quarterly earnings beat, boosted by growth in transactions and average ticket.

"Because of our strong [fiscal first-quarter] performance, our expectations for continued robust demand from athletes and the confidence we have in our business, we are raising our full year outlook," said Chief Executive Lauren Hobart.

When asked on the post-earnings call with analysts if there was a shift in trends across customers in different income brackets, Hobart said, according to an AlphaSense transcript:

'We saw growth across all of our income demographics, and we didn't see a trade down from best, better, better to goods, so pretty consistent across all the income demographics of cohorts.'CEO Lauren Hobart

The stock (DKS) soared 16.6% in midday trading, to put it on track to close above its current record closing price of $224.86 seen on March 28, 2024. It was also headed for the biggest one-day gain since it ran up 16.9% on May 26, 2021.

Net income for the quarter to May 4 fell to $275.3 million, or $3.30 a share, from $304.6 million, or $3.40 a share, in the same period a year ago.

Excluding nonrecurring items, adjusted earnings per share were also $3.30, well above the FactSet consensus of $2.96. That marked the third-straight quarter that margin of the EPS beat was in the double-digit percentage range.

Net sales grew 6.2% to $3.02 billion, above the FactSet consensus of $2.94 billion.

Comparable-store sales, or sales of stores open at least 14 months, rose 5.3% to beat expectations of 2.4% growth. That was the third straight quarter that percentage growth was more than double what was expected.

"During the quarter, we saw more athletes purchase from us, and they spent more each trip compared to the prior year," CEO Hobart said.

The company raised its guidance ranges for EPS to $13.35 to $13.75 from $12.85 to $13.25 and for same-store sales growth to 2% to 3% from 1% to 2%.

D.A. Davidson analyst Michael Baker reiterated the buy rating he's had on the stock for at least the past three years, saying the company "does it again."

"[T]he company delivered a big beat once again due mostly to share gains, which drove a better-than-expected comps," Baker wrote in a note to clients.

He said that a low tax rate - 19.6% - and other "below the line" items also helped, but even adjusting for those, "profits were better than expected."

The stock has run up 54.7% year to date, while the SPDR S&P Retail ETF XRT has gained 3.9% and the S&P 500 index has advanced 10.6%.

-Tomi Kilgore

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05-29-24 1150ET

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