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DKS Beats on Q3 Earnings on Strong Back-to-School Season, Ups '24 View
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DICK'S Sporting Goods, Inc. (DKS - Free Report) posted impressive third-quarter fiscal 2024 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. While earnings declined year over year, sales improved from the prior year.
Adjusted EPS was $2.75, down 4% from the year-ago figure of $2.85. Also, the metric beat the Zacks Consensus Estimate for earnings of $2.68.
DICK'S Sporting Goods, Inc. Price, Consensus and EPS Surprise
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
The company’s strategic investments, including the innovative House of Sport and DICK'S Field House concepts, are redefining the sports retail landscape. The third quarter of fiscal 2024 saw an excellent back-to-school season and continued market share gains. Building on this strong performance and sustained confidence in the business, the company has raised its full-year outlook once again.
Management remains committed to digital innovation. During the reported quarter, over 5.5 million unique users engaged with GameChanger, reflecting a rise of 21% from the prior year. GameChanger allows the company to connect to athletes beyond the traditional shopping experience and provide differentiated on-trend products, thus strengthening leadership in sport.
The company’s shares have gained 13.5% in the past six months against the industry’s decline of 6.2%.
Net sales of $3.06 billion improved 0.5% year over year and surpassed the consensus estimate of $3.02 billion. The upside was driven by robust comps and healthy transaction growth.
Consolidated comps grew 4.2% year over year. Our model estimated comps to grow by 1%. The upside was driven by its four strategic pillars, including an omnichannel athlete experience, a differentiated product assortment, deep engagement with the DICK'S brand and knowledgeable, passionate teammates who provide exceptional service.
DKS Records Higher Margins & Expenses
Gross profit rose 3% year over year to $1.09 billion and surpassed our estimate of $1.04 billion. Meanwhile, the gross margin expanded 67 basis points (bps) year over year to 35.8%. This growth was primarily driven by an 84-bps improvement in merchandise margin due to a favorable sales mix and the quality of the assortment. These gains were partially offset by expected deleverage on occupancy costs resulting from the total sales caused by the calendar shift.
The adjusted SG&A expense rate of 25.8% fell 935 bps year over year. Adjusted SG&A expenses, in dollar terms, decreased 26.3% to $787.2 million, and was higher than our estimate of $736.9 million.
DKS’ Financial Health Snapshot
DICK’S Sporting ended the fiscal third quarter with cash and cash equivalents of $1.5 billion and no outstanding borrowings under the revolving credit facility. It had a total debt of $1.5 billion as of Nov. 2, 2024. Total inventory rose 13% year over year to $3.7 billion.
This Zacks Rank #2 (Buy) company repurchased 0.8 million shares under its share repurchase program for $170.3 million in the 39 weeks ended Nov. 2, 2024. It had $609.3 million remaining under its authorization as of the same date. It paid quarterly dividends of $273 million in the 39 weeks ended Nov. 2, 2024.
On Nov. 2, 2024, the company's board declared a quarterly cash dividend of $1.10 per share on its common and Class B common stock. This is payable on Dec. 4, 2024, to its stockholders of record as of Dec. 13, 2024.
In the fiscal third quarter, the company opened two DICK'S Sporting Goods and one Specialty Concept store. The total store count was 869, including 109 Golf Galaxy stores, eight Public Lands stores and 20 Going Going Gone! stores as of Nov. 2, 2024.
What to Expect From DKS in FY24?
Management raised its comps and EPS view for fiscal 2024. The company now expects comps growth to be 3.6-4.2% compared with the prior-expected growth of 2.5-3.5%. It now expects net sales to be $13.2-$13.3 billion compared with $13.1-$13.2 billion mentioned earlier.
DKS envisions adjusted earnings to be $13.65-$13.95 per share compared with the earlier guided $13.55-$13.90 per share. The adjusted EPS view assumes 83 million shares outstanding as of fiscal 2024. Also, the company’s effective tax rate is expected to be around 23%.
Management forecasts the gross margin to grow year over year. EBT margin is likely to be 11.2% at the midpoint. It expects modest deleveraged adjusted SG&A expenses year over year, thanks to strategic investments to aid growth in the long haul. DICK’S envisions pre-opening expenses for the fourth quarter of 2024 to be moderately higher than the last year, led by the timing and mix of its store openings.
Three Other Picks You Can’t Miss
We have highlighted three other top-ranked stocks in the broader sector, namely Deckers (DECK - Free Report) ,The Gap, Inc. (GAP - Free Report) and Abercrombie & Fitch Co. (ANF - Free Report) .
Deckers, a footwear and accessories dealer, currently sports a Zacks Rank #1 (Strong Buy). DECK delivered an average earnings surprise of 41.1% in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Deckers’ current financial-year sales and earnings indicates growth of 13.6% and 12.6%, respectively, from the year-ago reported figures.
Gap operates as an apparel retail company, which offers apparel, accessories and personal care products for men, women and children, presently flaunts a Zacks Rank #1.
The Zacks Consensus Estimate for The Gap’s current fiscal-year sales and earnings indicates growth of 0.7% and 38.5%, respectively, from the year-ago quarter’s reported numbers. GAP has a trailing four-quarter average earnings surprise of 101.2%.
Abercrombie, a leading casual apparel retailer, currently carries a Zacks Rank of 2. Abercrombie has a trailing four-quarter earnings surprise of 27.9%, on average.
The Zacks Consensus Estimate for ANF’s current financial-year sales and earnings indicates growth of 13.4% and 64.8%, respectively, from the year-ago reported figures.
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DKS Beats on Q3 Earnings on Strong Back-to-School Season, Ups '24 View
DICK'S Sporting Goods, Inc. (DKS - Free Report) posted impressive third-quarter fiscal 2024 results, wherein the top and bottom lines beat the Zacks Consensus Estimate. While earnings declined year over year, sales improved from the prior year.
Adjusted EPS was $2.75, down 4% from the year-ago figure of $2.85. Also, the metric beat the Zacks Consensus Estimate for earnings of $2.68.
DICK'S Sporting Goods, Inc. Price, Consensus and EPS Surprise
DICK'S Sporting Goods, Inc. price-consensus-eps-surprise-chart | DICK'S Sporting Goods, Inc. Quote
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
The company’s strategic investments, including the innovative House of Sport and DICK'S Field House concepts, are redefining the sports retail landscape. The third quarter of fiscal 2024 saw an excellent back-to-school season and continued market share gains. Building on this strong performance and sustained confidence in the business, the company has raised its full-year outlook once again.
Management remains committed to digital innovation. During the reported quarter, over 5.5 million unique users engaged with GameChanger, reflecting a rise of 21% from the prior year. GameChanger allows the company to connect to athletes beyond the traditional shopping experience and provide differentiated on-trend products, thus strengthening leadership in sport.
The company’s shares have gained 13.5% in the past six months against the industry’s decline of 6.2%.
Image Source: Zacks Investment Research
DKS’ Quarterly Performance: Key Metrics & Insights
Net sales of $3.06 billion improved 0.5% year over year and surpassed the consensus estimate of $3.02 billion. The upside was driven by robust comps and healthy transaction growth.
Consolidated comps grew 4.2% year over year. Our model estimated comps to grow by 1%. The upside was driven by its four strategic pillars, including an omnichannel athlete experience, a differentiated product assortment, deep engagement with the DICK'S brand and knowledgeable, passionate teammates who provide exceptional service.
DKS Records Higher Margins & Expenses
Gross profit rose 3% year over year to $1.09 billion and surpassed our estimate of $1.04 billion. Meanwhile, the gross margin expanded 67 basis points (bps) year over year to 35.8%. This growth was primarily driven by an 84-bps improvement in merchandise margin due to a favorable sales mix and the quality of the assortment. These gains were partially offset by expected deleverage on occupancy costs resulting from the total sales caused by the calendar shift.
The adjusted SG&A expense rate of 25.8% fell 935 bps year over year. Adjusted SG&A expenses, in dollar terms, decreased 26.3% to $787.2 million, and was higher than our estimate of $736.9 million.
DKS’ Financial Health Snapshot
DICK’S Sporting ended the fiscal third quarter with cash and cash equivalents of $1.5 billion and no outstanding borrowings under the revolving credit facility. It had a total debt of $1.5 billion as of Nov. 2, 2024. Total inventory rose 13% year over year to $3.7 billion.
This Zacks Rank #2 (Buy) company repurchased 0.8 million shares under its share repurchase program for $170.3 million in the 39 weeks ended Nov. 2, 2024. It had $609.3 million remaining under its authorization as of the same date. It paid quarterly dividends of $273 million in the 39 weeks ended Nov. 2, 2024.
On Nov. 2, 2024, the company's board declared a quarterly cash dividend of $1.10 per share on its common and Class B common stock. This is payable on Dec. 4, 2024, to its stockholders of record as of Dec. 13, 2024.
In the fiscal third quarter, the company opened two DICK'S Sporting Goods and one Specialty Concept store. The total store count was 869, including 109 Golf Galaxy stores, eight Public Lands stores and 20 Going Going Gone! stores as of Nov. 2, 2024.
What to Expect From DKS in FY24?
Management raised its comps and EPS view for fiscal 2024. The company now expects comps growth to be 3.6-4.2% compared with the prior-expected growth of 2.5-3.5%. It now expects net sales to be $13.2-$13.3 billion compared with $13.1-$13.2 billion mentioned earlier.
DKS envisions adjusted earnings to be $13.65-$13.95 per share compared with the earlier guided $13.55-$13.90 per share. The adjusted EPS view assumes 83 million shares outstanding as of fiscal 2024. Also, the company’s effective tax rate is expected to be around 23%.
Management forecasts the gross margin to grow year over year. EBT margin is likely to be 11.2% at the midpoint. It expects modest deleveraged adjusted SG&A expenses year over year, thanks to strategic investments to aid growth in the long haul. DICK’S envisions pre-opening expenses for the fourth quarter of 2024 to be moderately higher than the last year, led by the timing and mix of its store openings.
Three Other Picks You Can’t Miss
We have highlighted three other top-ranked stocks in the broader sector, namely Deckers (DECK - Free Report) ,The Gap, Inc. (GAP - Free Report) and Abercrombie & Fitch Co. (ANF - Free Report) .
Deckers, a footwear and accessories dealer, currently sports a Zacks Rank #1 (Strong Buy). DECK delivered an average earnings surprise of 41.1% in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Deckers’ current financial-year sales and earnings indicates growth of 13.6% and 12.6%, respectively, from the year-ago reported figures.
Gap operates as an apparel retail company, which offers apparel, accessories and personal care products for men, women and children, presently flaunts a Zacks Rank #1.
The Zacks Consensus Estimate for The Gap’s current fiscal-year sales and earnings indicates growth of 0.7% and 38.5%, respectively, from the year-ago quarter’s reported numbers. GAP has a trailing four-quarter average earnings surprise of 101.2%.
Abercrombie, a leading casual apparel retailer, currently carries a Zacks Rank of 2. Abercrombie has a trailing four-quarter earnings surprise of 27.9%, on average.
The Zacks Consensus Estimate for ANF’s current financial-year sales and earnings indicates growth of 13.4% and 64.8%, respectively, from the year-ago reported figures.