Dick’s Sporting Goods boosts forecast again

Retailer cautious on the economy

Dick’s Sporting Goods Inc. boosted its outlook for a second- straight quarter while cautioning that it is being cautious because of the uncertain economic environment.

Comparable-store sales, or sales in stores that have been open at least a year, are now expected to fall 1.5% to 3% this year, up from the prior forecast for a decline of as much as 6%. Earnings excluding some items are now seen in a range of $11.50 to $12.10, compared with a low of $10 previously.

The forecast revisions are higher than Wall Street was looking for but still lower than the Findlay-based retailer’s guidance from eight months ago. Analysts had high expectations ahead of Tuesday’s results, in part because of a strong report last week from competitor Foot Locker Inc.

Dick’s Sporting Goods’ shares were up more than 10% at market close Tuesday. The stock has outperformed other sporting-goods retailers this year.

The company earlier this year slashed its sales and profit forecasts, with executives attributing the move to an abundance of caution about the health of U.S. consumers, though at the time no slowdown had materialized. The company had raised its outlook on both metrics last quarter as well.

The retailer said its new forecast still includes “an appropriate level of caution” due to the economic environment. Discretionary spending has taken a hit as higher prices for essential items such as food and housing take up more of shoppers’ budgets.

In the third quarter, Dick’s said it attracted more shoppers and they also shelled out more money. Comparable-store sales increased 6.5% in the period, while analysts had been looking for a 3.1% decline.

At the same time, gross margin of 34.2% came in short of the 34.9% average estimate. Increased promotional activity has been a concern for analysts as companies across the retail industry grapple with higher inventory levels and are forced to offer discounts to move the goods. Elevated freight and labor costs also remain a challenge.