Dick’s corrects $23 million accounting error

Pittsburgh Post-Gazette

Dick’s Sporting Goods stock dipped 4 percent on Friday after the company acknowledged that it had overstated an adjusted earnings figure by $23.4 million in its fourth quarter financial report on March 7.

The Findlay-based sporting goods retailer said in a filing with the U.S. Securities and Exchange Commission that a “computation error” led to incorrect figures when the company showed how its earnings were impacted by onetime payments.

The company discovered it had inadvertently included its asset impairment charges in two places, in effect double-counting the costs, said Lee Belitsky, chief financial officer for Dick’s Sporting Goods.

Mr. Belitsky emphasized that those calculations occurred outside of the company’s official earnings reported using generally accepted accounting principles, knownas GAAP.

“It’s a correction of a supplemental reporting table,” Mr. Belitsky said in an interview. “The correction does not affect our reported earnings, earnings per share, and it doesn’t affect our financial statement as filed” in March.

However, “Since it was incorrect and it had been provided to investors, we figured we would correct that,” he said.

Friday’s corrected filing showed Dick’s adjusted earnings before interest, tax, depreciation and amortization — or adjusted EBITDA — rose 4 percent for the year, rather than 7 percent. During the fourth quarter, that figure rose 11 percent, not the 19 percent the company reported in March.

The impairment charges related primarily to the closure of 10 Golf Galaxy stores that overlapped with sales areas of former Golfsmith stores, which Dick’s Sporting Goods picked up at the former golf retailer’s bankruptcy auction last year.

The company reported the onetime cost of store closures was actually $9.4 million, not $33.8 million.

Though the company’s stock took a hit, analysts agreed the correction seemed minor.

“Assuming the error is a result of a simple miscalculation or double-counting, this doesn’t have any impact on the fundamental drivers behind Dick’s investment story,” said Chen Grazutis, a Bloomberg Intelligence analyst covering apparel and footwear.

“Dick’s remains a very strong retail operator that is able to deliver positive results in a very challenging market, and this incident probably [won’t] change that.”

The company’s stock traded down to $48.06 at the closing bell Friday.

Dick’s is scheduled to release earnings for the first quarter Tuesday, before the markets open.