Dick’s Sport­ing Goods stock takes hit

Com­pany is­sues dim out­look for 2018

Pittsburgh Post-Gazette - - Business -

Pitts­burgh Post-Gazette

Dick’s Sport­ing Goods on Tues­day is­sued its out­look for fis­cal 2018 early, not­ing that with planned in­vest­ments in the com­pany and a tough re­tail en­vi­ron­ment, its earn­ings per share could slide 20 per­cent in the com­ing year.

The dim out­look pushed the Find­lay-based com­pany’s stock down 2.77 per­cent to close at $25.59.

“Be­cause of the con­fi­dence we have in our busi­ness long term, we plan to make sig­nif­i­cant in­vest­ments in our busi­ness in Q4 and into next year,” Ed­ward Stack, chair­man and CEO, told an­a­lysts on a third-quar­ter earn­ings call.

“This will have a short-term neg­a­tive im­pact on our earn­ings. How­ever, we ex­pect these in­vest­ments will pay mean­ing­ful div­i­dends in the fu­ture,” he said.

In­vest­ments in­clude e-com­merce, in-store tech­nol­ogy and in Dick’s pri­vate la­bel brands, as well as Dick’s Team Sports HQ, a plat­form that pro­vides tools like free on­line reg­is­tra­tion, team web­sites and a mo­bile app that teams can use to sched­ule.

Third-quar­ter earn­ings re­sults beat an­a­lysts’ ex­pec­ta­tions. Dick’s re­ported con­sol­i­dated net in­come hit $36.9 mil­lion, or 35 cents per share, ver­sus $48.9 mil­lion, or 44 cents per share, a year ago. An­a­lysts had been look­ing for 26 cents per share. Overall, net sales climbed 7.4 per­cent to about $1.94 bil­lion. Con­sol­i­dated same store sales, a key indi­ca­tor track­ing stores that have been open longer than a year, slipped 0.9 per­cent. The com­pany ex­pected a low sin­gle-digit de­crease.

On­line sales for the third quar­ter rose about 16 per­cent.

In a note, Susque­hanna Fi­nan­cial Group’s Sam Poser wrote that the firm agrees the in­vest­ments are nec­es­sary even though they will sting 2018 earn­ings. “How­ever, we be­lieve that [Dick’s Sport­ing Goods] man­age­ment must also in­vest in more sub­tle con­sumer re­la­tion­ship en­hanc­ing en­deav­ors. With­out the more sub­tle in­vest­ments, it will likely be dif­fi­cult ... to

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