Investors unhappy as Dick’s warns sales could fall
Dick’s Sporting Goods warned Tuesday that sales are expected to fall despite its plans to increase discounts, compounding concerns about its emphasis on stores at a time when more customers are shopping online.
Sales of hunting goods, licensed products and athletic apparel undermined Dick’s during the period, offsetting growth in footwear, golf and online sales. As other sporting goods chains have gone out of business, Dick’s had been hoping to benefit from the industry consolidation.
The sporting goods sector’s largest retailer fell short of expectations for second-quarter sales, triggering a sell-off in the company’s stock.
Sales at stores open at least a year were up only 0.1% despite the company’s projected growth of 2% to 3%.
Dick’s shares had plunged 23.04% to $26.86 when trading ended for the day.
“Pricing in the marketplace has become unpredictable and at times irrational,” CEO Edward Stack said in a call Tuesday with investors. “The retail market is currently in flux. The environment is highly competitive and dynamic.”
However, as the company’s competitors struggle, Stack added, “We continue to believe this disruption translates into opportunity for our business long term. ... As our industry continues to consolidate, we believe we will become stronger.”
But investors seemed to be concerned that disruption could sweep through Dick’s, as well.
Ominously, the company warned that third-quarter samestore sales would fall “in the low single-digits” after having increased 5.2% in the third quarter of 2016.
For the full fiscal year, the retailer projected same-store sales of a “low single-digit decline” to flat.
On the whole, though, the company’s expansion continues to add to sales and earnings. The chain said it expects to open 43 new Dick’s locations, relocate seven Dick’s stores, open eight new Golf Galaxy locations, relocate one Golf Galaxy store and open eight new Field & Stream locations.