Shares of Dick’s Sporting Goods tumbled after the retailer missed earnings and sales estimates because the warm winter hurt sales.
Net income for the fourth quarter was $128 million, or $1.13 cents a diluted share, down from $155 million, or $1.30 cents, a year ago. This was at the low end of the guided range of $1.10 to $1.25 a share and missed the FactSet estimate of $1.15. The stock is dropping more than 3 percent in early trading to $43.
Net sales for the three months ending Jan. 30 increased 3.7 percent to $2.24 billion from $2.1 billion a year earlier, but short of the FactSet estimate of $2.27 billion. Consolidated same-store sales decreased 2.5 percent, lower than the previous guidance of negative 2 percent to a positive 1 percent. This was also much lower than last year’s same-store sales increase of 3.4 percent.
For the full year, the company’s net earnings dropped to $330 million from last year’s $344 million.
“Given the challenging conditions we faced with the unseasonably warm weather, we operated quite well in the fourth quarter, generating earnings within our guided range and driving results in important growth categories,” said Edward W. Stack, chief executive officer.
Looking ahead, Dick’s is forecasting earnings per share for the full year of 2016 to be in the range of $2.85 to $3. Same-store sales are projected to be flat to an increase of 2 percent. For the current first quarter, Dick’s expects to report diluted EPS between 48 and 50 cents, which is lower than last year’s 53 cents and FactSet’s estimate of 54 cents.
Dick’s plans to make strategic investments in the business by enhancing the stores and building up the brand through its relationship with the U.S. Olympic team. The company also plans to transition its e-commerce business to its own platform as its e-commerce business grows.
Dick’s stock has dropped 21 percent for the past year, but in the last month started to reverse course and rose 16 percent. There is speculation that the bankruptcy filing by Sports Authority will boost the business at Dick’s. It has not said whether it will make a bid for its rival, or seek to buy any Sports Authority sites.