Earnings of Dick’s Sporting Goods (DKS) increased in the first quarter, aided by strong e-commerce growth and far exceeded estimates. The market responded positively to the impressive results and upward revision of full-year earnings outlook, driving the company’s stock up over 25% in the early trading hours.
The sports apparel retailer said its net income rose to $60.1 million, or $0.59 per share, from $58.2 million, or $0.52 per share, last year. On an adjusted basis, first quarter earnings were $0.54 per share, which came in above analysts’ forecast.
Net sales advanced 4.6% annually to $1.91 billion during the quarter, benefitting significantly from a 24% growth in e-commerce sales. Meanwhile, comparable store sales, on a calendar-adjusted basis, declined 2.5%, hurt by the continuing softness in electronic sales and disruptions in sporting activities due to unfavorable weather conditions.
“Product newness, strength in our private brands and a more refined assortment led to a much healthier business, with fewer promotions and cleaner inventory throughout the quarter. We believe these benefits will continue as we further optimize our assortments,” said Dick’s CEO Edward Stack.
Encouraged by the strong results, the company raised its earnings guidance for fiscal 2018 to the range of $2.92 to 3.12 per share, from the previous guidance of $2.80 to $3.00 per share. Full-year comparable store sales are currently forecast to be flat to a low single-digit decline.
During the first quarter, Dick’s repurchased 3.3 million shares for about $108 million, and opened eight new stores. Going forward, the company plans to open 19 new stores and relocate four others in the current fiscal year.
Reflecting the widespread softness in store performance in the early months of the year, Dick’s rival Foot Locker (DL) last week reported a 2.8% decline in same store sales in the first quarter. However, earnings increased 1.5% to $1.38 per share, aided by a modest rise in sales.
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