Dick’s sees profit hike in Q4, but sales take hit

Noting that it has been only two weeks since Dick’s Sporting Goods announced plans to change gun sales policies, Chairman and CEO Ed Stack said on Tuesday that it’s too early to tell what effect the announcement has had on sales.

But given that the company’s hunting segment had been lagging over several quarters due to soft demand, it’s no surprise that executives discussing earnings with analysts Tuesday warned that weak gun sales could cut into the company’s 2018 outlook.

The Findlay-based chain said on Feb. 28 that it would pull assault-style rifles from its 35 specialty Field & Stream locations — a move it had already made with its namesake stores in 2012. It also would no longer sell high-capacity magazines or sell firearms to anyone under 21 years old.

Mr. Stack said on Tuesday that despite some possible backlash, “We were actually surprised by the outpouring of supportthat we received from this.”

For 2018, Dick’s expects earnings per share in a range of $2.80 to $3 and consolidated samestore sales — a key measure that tracks stores open longer than a year — “to be flat to a low-single digit decline.”

Victor Ahluwalia, an analyst at CFRA, said the company’s prediction that sales could stay flat for 2018 isn’t being too conservative. He noted that brickand-mortar retailers are getting pressured by online sellers, as well as brands such as Nike deciding to sell directly to consumers as well as through traditional retailers.

“It’s a challenging environment,” he said.

Thecompany’s shares dipped in early trading, but then closed at $32.88, up 32 cents.

In the fourth quarter, Dick’s reported net income climbed to $116 million, or $1.11 per share, compared to the year-ago quarter, when the company reported $90.2 million, or 81 cents per diluted share.

At those stores open at least a year, sales slipped 2 percent during the holiday quarter. That compares to fourth quarter 2016, when same-store sales increased 5 percent.

Dick’s said it also saw sales slow in performance tracking accessories such as Fitbits across the industry. However, its private label brands showed traction.

For the full year, net income hit $323.4 million, or $3.01 per share, up from $287.4 million, or $2.56 per diluted share in the previous year.

“In 2018, we will continue to aggressively adapt our apparel business by allocating more premium space in our stores to our own brands ... as well as the brands that are performing well and have differentiated assortments,” Mr. Stack told analysts on Tuesday, noting that companies like Nike, Adidas and Callaway have brought innovative products to stores.