Dick's Sporting Goods Inc. ( DKS - Analyst Report ) narrowed its earnings guidance range for fourth quarter and fiscal 2011 expecting a lower same-store sales and inventories during the quarter, which were affected by unfavorable winter weather in most markets. However, despite anticipating soft sales, the company is confident about meeting its expectations.

The company now anticipates earnings between 87 cents and 88 cents per share for fourth-quarter 2011 instead of 87 cents to 89 cents forecasted earlier. Dick’s is expecting earnings growth of approximately 15% to 16% from the prior-year quarter’s earnings of 76 cents per share. The current Zacks Consensus Estimate came in at 88 cents per share, which is at the higher end of the company’s guidance range.

For fiscal 2011, management forecasted earnings in the range of $2.01 to $2.02 per share compared with its earlier projection of $2.01 to $2.03. The company anticipates earnings growth of approximately 23% to 24% from its previous fiscal earnings of $1.63 per share. The current Zacks Consensus Estimate is pegged at $2.02 per share, which is at the higher end of the company’s guidance range.

Moreover, same-store sales for fourth quarter is expected to grow in the range of low negative to low positive compared with a growth of flat to positive 1%, forecasted earlier. The company registered a growth of 9.4% in same-store sales during the prior-year period. For fiscal 2011, the company expects same-store sales growth to approach 2% instead of approximately 2%, forecasted earlier. In fiscal 2010, Dick’s same-store sales grew by 7.4%.

In a separate development, Dick’s Sporting Goods has announced a new up to $200 million share repurchase program, which will expire in 2013. The company will use cash in hand for financing the repurchases.

Fiscal 2011, so far

The first three quarters of fiscal 2011 have been a great success for the company. During the first three quarters of fiscal 2011, the company’s improved operating leverage and rising comparable sales have positively influenced its quarterly performance and hence have beaten its own expectations. Comparable sales in the first quarter inched up 2.1%, resulting in a rise of approximately 36% in earnings per share. During the second quarter, Dick’s earnings per share surged approximately 21%, primarily driven by a rise of 2.5% in comparable sales. The momentum continued in the third quarter as Dick’s reported a rise of 45.5% in third-quarter 2011 earnings on the heels of strong growth in comparable sales of 4.1%.

Our Take

Dick’s remains the dominant player in the industry with significant store expansion and potential share gain opportunities in the U.S. We remain optimistic about the company’s competitive position and consistency of earnings growth.

However, the sporting goods market is highly competitive in nature and Dick’s failure to compete effectively in terms of price, quality or product will thwart its growth potential. The company faces competition from Foot Locker Inc. ( FL - Snapshot Report ) and Wal-Mart Stores Inc. ( WMT - Analyst Report ) .

Dick's Sporting Goods currently has a short-term Zacks #3 Rank (Hold). We maintain our long-term Outperform recommendation on the company.