Dick’s Sporting Goods Inc. handily beat its guidance for consolidated net income and same-store sales growth in the second quarter ended July 30 thanks to double-digit growth in online sales.
The company said net income reached $91.4 million, or $0.82 per diluted share, compared to the company’s expectations provided on May 19, 2016 of $0.62 to 0.72 per diluted share. In the second quarter a year ago, the retailer reported consolidated net income of $90.8 million, or $0.77 per diluted share.
Net sales for the second quarter of 2016 increased 7.9 percent to approximately $2.0 billion. Consolidated same store sales increased 2.8 percent, compared to the company’s guidance of negative 4.0 percent to negative 1.0 percent. Same- store sales for Dick’s Sporting Goods increased 3.0 percent, while Golf Galaxy decreased 4.3 percent. Second quarter 2015 consolidated same store sales increased 1.2 percent.
“We are pleased with our second quarter results, particularly in light of the liquidation activity in the market,” said Edward W. Stack, Chairman and CEO. “Looking ahead, we are focused on capturing the displaced market share and remain confident in our ability to strengthen our leadership position.”
E-commerce penetration for the second quarter of 2016 was 8.5 percent of total net sales, compared to 7.3 percent during the second quarter of 2015.
In the second quarter, the company opened five new Dick’s Sporting Goods stores. The company also relocated two Dick’s Sporting Goods stores. Additionally, the company closed three Dick’s Sporting Goods stores and one Golf Galaxy store. As of July 30, 2016, the company operated 649 Dick’s Sporting Goods stores in 47 states, with approximately 34.6 million square feet, 72 Golf Galaxy stores in 29 states, with approximately 1.3 million square feet, and 21 Field & Stream stores in ten states, with approximately 1.1 million square feet.
Balance Sheet
Dick’s Sporting Goods ended the period with approximately $112 million in cash and cash equivalents and $152 million in outstanding borrowings under its revolving credit facility. Over the course of the last 12 months, the company continued to invest in omni-channel growth, while returning over $380 million to shareholders through share repurchases and quarterly dividends.
Total inventory increased 6.2 percent at the end of the second quarter of 2016 as compared to the end of the second quarter of 2015. This increase includes the impact of cold-weather merchandise from fiscal 2015 being held for the 2016 winter season.
Current 2016 Outlook
Based on an stock buybacks and other factors, DKS now anticipates consolidated earnings per diluted share for the fiscal year in the range of $2.90 to 3.05, compared with $2.83 for the 52 weeks ended Jan. 30, 2016. The guidance excludes costs the company expects to incur to convert former The Sports Authority (“TSA”) stores acquired at a bankruptcy auction to Dick’s Sporting Goods stores. These costs will be known once the company determines which of the 31 TSA store leases it will retain or reject.
Consolidated same store sales are currently expected to increase approximately 2 to 3 percent, compared to a 0.2 percent decrease in fiscal 2015.
The company expects to open approximately 36 new Dick’s Sporting Goods stores and relocate approximately nine Dick’s Sporting Goods stores in fiscal 2016, including 34 in in the current third quarter ended Oct. 31. It also plans to open approximately nine new Field & Stream stores and two new Golf Galaxy stores, largely adjacent to existing Dick’s Sporting Goods stores.
