Dick's Sporting Goods shares soar to record high after earnings crush estimates and company offers upbeat guidance

By Ciara Linnane

Dick's also raised its quarterly dividend by 10% to $1.10 a share

Dick's Sporting Goods Inc.'s stock rose 15% Thursday, after the sporting-goods retailer crushed estimates for its fiscal fourth quarter and offered upbeat guidance for 2024.

The stock was headed for a fresh record high and was on track to deliver its biggest one-day gain in almost three years. The last time it rose that much as May 26, 2021, when it closed up 16.9%.

The Pittsburgh-based company (DKS) also raised its quarterly dividend by 10% to $1.10 a share, with the new dividend payable April 12 to shareholders of record as of March 29.

D.A. Davidson analysts said Dick's was one of very few big box names in its coverage to guide above consensus.

The numbers "show a company that is executing very well in what is stilla difficult environment, and we believe this should be enough to sustain the considerable year to date outperformance," analysts led by Michael Baker wrote in a note to clients. D.A. Davidson has a buy rating on the stock.

Dick's posted net income of $296 million, or $3.57 a share, for the quarter to Feb. 3, compared with $236 million, or $2.60 a share, in the year-earlier period.

Adjusted per-share earnings came to $3.85, well ahead of the $3.36 FactSet consensus.

Sales rose 7.8% to $3.876 billion, also ahead of the $3.790 billion FactSet consensus. Same-store sales rose 2.8%, while FactSet expected a 0.8% rise.

Executive Chair Ed Stack said even without the extra week, the fourth quarter was the biggest for sales in the history of the company and helped drive gross margin expansion.

"We are proud of our progress in repositioning our portfolio through House of Sport, our next generation 50,000 square foot DICK'S store and Golf Galaxy Performance Center," Stack said in a statement.

The company also completed a business optimization plan in the period and incurred pretax charges of $84.8 million, mostly due to the elimination of jobs at its customer-support center and improvements made at the outdoor-specialty business.

CEO Lauren Hobart said the company will accelerate investment in growth strategies to capture more share of a fragmented $140-billion-dollar industry.

The consumer "has held up incredibly well," Hobart told analysts on the company's earnings call, according to a FactSet transcript.

"We saw that in Q4. We saw it all last year, where we didn't see a trade-down from best to better, better to good,' she said. "We saw growth across all income demographics. So, we do have a healthy consumer, and they are increasingly choosing DICK'S to meet their needs."

For 2024, Dick's is expecting EPS of $12.85 to $13.25 on sales of $13.0 billion to$13.13 billion. The FactSet consensus is for EPS of $12.90 and sales of $13.130 billion.

Same-store sales are expected to rise 1% to 2%, while FactSet calls for a 1.8% gain.

The stock has gained 26% in the last 12 months, while the S&P 500 has gained 31.8%.

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-Ciara Linnane

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03-14-24 1336ET

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