DKS tops expectations, raises guidance as it takes more market share
1min read Dick's Sporting Goods (DKS) delivered a strong Q2, beating expectations on both revenue and earnings. The company reported net sales of $3.47 billion, exceeding the estimate of $3.43 billion, representing a 7.8% year-over-year increase. Earnings per share (EPS) came in at $4.37, significantly surpassing the expected $3.86. This robust performance was driven by market share gains and effective execution despite a challenging consumer environment.
Guidance for FY24 was raised, reflecting the company’s confidence in its business momentum. DKS now expects full-year EPS to range between $13.55 and $13.90, up from the previous range of $13.35 to $13.75. Comparable sales growth guidance was also increased to 2.5%-3.5%, compared to the previous range of 2.0%-3.0%. This improved outlook underscores the company's belief in sustained growth moving forward.
Key drivers behind DKS's strong performance included increases in both traffic and average transaction size, as well as gross margin expansion to 36.7%, beating estimates of 35.8%. The operating margin also grew to 13.5%, ahead of the expected 12.2%, driven by better cost control and SG&A leverage. The company continues to gain market share through its omni-channel athlete experience and a differentiated product assortment.
Dick’s noted the success of its unique national and private brand offerings, along with its House of Sport concept and e-commerce capabilities, which have been key growth areas. The company highlighted its off-mall locations that support convenient services like BOPIS (Buy Online, Pickup In-Store) and curbside pickup as significant contributors to sales growth.
On key metrics, comparable sales increased by 4.5%, surpassing the estimate of 3.48%. Inventory rose by 11.5% year-over-year, compared to the 7.8% increase in sales, which management attributed to preparations for upcoming sales seasons. Despite the inventory build-up, the company remains well-positioned with strong demand for its offerings.
While the raised guidance signals confidence, DKS remains conservative in its outlook for the second half of the year. The implied EPS forecast for 2H24 falls slightly below expectations, which might raise questions about the level of caution implied by the guidance. However, overall, DKS's performance in Q2 demonstrates its resilience and strong market positioning.
