A shopping cart is parked outside a Dick’s Sporting Goods store in Daly City, California on August 26, 2020.
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Dick’s Sporting Goods said on Wednesday that customers were spending extra money on recent sneakers and sporting goods, prompting the retailer to boost its full-year profit forecast.
Shares rose about 7% in premarket trading.
According to StreetAccount, the most important sporting goods retailer’s comparable sales rose 5.3 percent in the primary quarter, well above the two.4 percent growth expected by analysts.
The company said the expansion was because of increased transactions, meaning more customers are shopping at Dick’s, and better average ticket values, showing shoppers are also spending more.
Here’s how Dick’s performed in its first fiscal quarter in comparison with Wall Street expectations (based on an analyst survey conducted by LSEG):
- Earnings per share: $3.30 versus expected $2.95
- Revenue: $3.02 billion in comparison with expected $2.94 billion
The company reported net income for the three-month period ended May 4 was $275 million, or $3.30 per share, in comparison with $305 million, or $3.40 per share, a 12 months earlier.
Revenue increased to $3.02 billion, a rise of about 6% from $2.84 billion within the previous 12 months.
Due to the strong quarter, Dick’s raised its full-year forecast.
The retailer now expects earnings per share between $13.35 and $13.75, up from the previous range of $12.85 to $13.25. That’s above the $13.25 analysts had expected, in line with LSEG.
CEO Lauren Hobart said she expects “strong demand from athletes” in the approaching quarters, underscoring the corporate’s prospects. Still, the revenue forecast is slightly weak following the retailer’s better-than-expected first-quarter sales.
Dick’s now expects comparable sales to rise 2 percent to three percent, in comparison with its previous forecast of 1 percent to 2 percent. The low end of that range is simply the two percent growth expected by analysts, in line with StreetAccount.
According to LSEG, Dick’s expects annual sales of between $13.1 billion and $13.2 billion, which is according to estimates of $13.16 billion.
A lift for shoes and clothing
Over the past 12 months, stubborn inflation and high rates of interest have caused consumers to carry back on non-essential goods similar to recent clothes and shoes, but in recent weeks, the clothing and footwear markets have shown some signs of life.
Dick’s performance shows that customers are willing to pay for brand spanking new releases and other classics from major brands similar to Nikeupset, Adidas and On Running and spend money on things they might not necessarily need but are nice to have.
Similar trends were observed at other retailers. Last week Ross Stores, Ralph Lauren, Urban Outfitters And TJX Companies all reported positive comparable sales. Goal mentioned that apparel was a brilliant spot in an otherwise gloomy quarter after the retailer reported sluggish apparel sales within the year-ago period. Demand for brand spanking new Hoka sneakers and UGG boots led to a 21% jump in sales at Deckersand myself Shoe Carnivalwhich is aimed more at lower-income consumers, reported revenue growth of about 7%, beating Wall Street estimates, in line with LSEG.
More insights into consumer health and the impact this has on the apparel and footwear markets will follow. Abercrombie & Fitch And American Eagle each will announce their results afterward Wednesday, while Foot Locker, Birkenstock And gap will report on Thursday.
Read Dick’s full earnings announcement Here.
— Additional reporting by Robert Hum of CNBC
