Dick's Sporting Goods hits all-time highs after outpacing top and bottom line expectations
1min read Dick's Sporting Goods (DKS) demonstrated strong resilience in the face of a challenging consumer environment, as the company managed to surpass market expectations for the fourth quarter (Q4) of 2023. Shares have pressed higher by 4% in pre-market trade, hitting an all-time high of $194. This represented a break above the $190 area which had previously capped shares. Holding above this $190 level will be critical.
The sporting goods retailer reported earnings per share (EPS) of $3.85, which was $0.49 better than the consensus estimate of $3.36. Revenue for the quarter rose 7.8% year-over-year (YoY) to $3.88 billion, exceeding the $3.79 billion consensus estimate.
One of the primary contributors to DKS's success in Q4 was the 2.8% increase in comparable store sales. This growth was driven by both increased traffic and higher average transaction values. The company's operating margin also expanded to 10.8%, beating estimates of 10.0%. This expansion can be attributed to a combination of factors, including the lapping of clearance activity in the previous year and lower freight costs. Gross margin improved by 220 basis points (bps) to 34.6%, while the selling, general, and administrative (SG&A) ratio deleveraged by 70 bps to 23.7%.
Looking ahead, DKS has issued in-line guidance for the full-year (FY) 2025, with expectations for EPS in the range of $12.85 to $13.25, compared to the $12.90 consensus estimate. The company anticipates FY 2025 revenue to be in the range of $13.0 billion to $13.13 billion, compared to the $13.13 billion consensus estimate. In terms of comparable store sales growth for the full year, Dick's Sporting Goods expects it to be in the range of 1.0 % to 2.0%. which places the midpoint blow the 1.85% expectations.
As part of its growth strategy, the company's Board of Directors authorized and declared a quarterly dividend of $1.10 per share on the company's Common Stock and Class B Common Stock. This marked a 10% increase to the dividend.
Key areas of interest for stakeholders include the drivers of the sales strength, the level of promotions and inventory clearance, and expectations for the first quarter of 2024 . These details are expected to be discussed in the upcoming earnings call.
Overall, DKS's strong Q4 performance and in-line guidance for the future demonstrate the company's resilience and ability to navigate challenging market conditions. The company's focus on unique assortments, differentiated private brands, and e-commerce initiatives, combined with its off-mall locations, have contributed to its growth and market share gains. As we await further details from the company's earnings call, its 4Q23 results and solid guidance have encouraged analysts to believe that DKS will continue to make progress in the category.