Shares of Dick’s Sporting Goods fell 9.6 percent in midday trading on weak fourth-quarter outlook even though the company raised full-year guidance.
For the quarter ended Oct. 29, the company said net income was up 3.6 percent to $48.9 million, or 44 cents a diluted share, from $47.2 million, or 41 cents, a year ago. On an adjusted basis earnings per share was 48 cents, excluding costs to convert some of the Sports Authority stores to Dick’s Sporting Goods locations. Net sales increased 10.2 percent to $1.81 billion from $1.64 billion, with consolidated same-store sales up 0.4 percent.
The company easily beat Wall Street’s consensus of 42 cents on revenues of $1.77 billion for the quarter.
For the nine months, net income slipped 2.1 percent to $197.2 million, or $1.75 a diluted share, from $201.4 million, or $1.71, a year ago. Net sales rose 8.1 percent to $5.44 billion from $5.03 billion.
Edward W. Stack, chairman and chief executive officer, said, “We realized meaningful market share gains and saw growth across each of our three primary categories of hard-lines, apparel and footwear, which maintaining tight control of our inventory.”
In July, the company completed the purchased of Sport’s Authority’s intellectual property assets and the right to acquire 31 store leases. The company elected to retail 22 of certain sites to convert to the Dick’s nameplate. Earlier this month, Dick’s also completed the purchase of certain assets of Golfsmith International Holdings Inc., including its IP assets and rights to certain store leases, along with inventory for 30 stores. It currently operates 30 Golfsmith stores and plans to convert them to its Golf Galaxy brand by the end of the year.
For the fourth quarter, the company said diluted EPS is expected in the range of $1.15 to $1.27. That was below Wall Street’s consensus estimate of $1.32 for the quarter.
For the full year, it expects diluted EPS in the range of $2.91 to $3.03. The prior fiscal 2016 guidance for diluted EPS was $2.90 to $3.05, which the company provided when it posted second-quarter results in August.