PITTSBURGH -- Dick’s Sporting Goods on Tuesday showed why it is the nation’s leading sporting goods retailer by producing record profits and a 9.4% same-store sales increase that extended to six its string of consecutive quarterly comp gains.
The hefty comp increase and the addition of 10 new stores during the quarter ended Jan. 29 enabled the company to grow sales by 13.6% to slightly more than $1.5 billion, and while net income grew at nearly 30% to a record $87.5 million. Earnings per share were dinged by a five-cent-a-share charge related to a litigation settlement, but still managed to grow by 27% to 71 cents a share from 56 cents the prior year. Another major contributor was an e-commerce business that grew by 36%.
Chairman and CEO Ed Stack said the company was able to produce the strong results while maintaining a focus on strengthening its balance sheet, which at the end of the year showed $546 million in cash and no borrowings under its credit facility.
“We have successfully navigated the storms of the recession and have executed our business plan by posting six consecutive quarters of same-stores sales gains, opening 26 new stores in 2010, expanding our margins rates and reducing inventory per square foot,” Stack said. “As a result, we are solidly positioned to generate further growth and increased operating margins in the coming years.”
As in prior reporting periods, sales growth is expected to come from increased productivity of existing units blended with an accelerated new store expansion program. In the first quarter, same-store sales are forecast in the range of 4% to 5% with three store openings planned. For the full year, the company is eyeing same-store sales growth of 3% with a total of 34 store openings planned in the Dick’s Sporting Goods format and three additional Golf Galaxy stores.
At the end of last year, there were 444 Dick’s Sporting Goods stores in 42 states and 81 Golf Galaxy stores in 30 states. From the sporting goods industry’s largest base of stores, Dick’s was able to produce total annual sales of $4.9 billion, a 10.4% increase from the prior year and a 7.4% same store sales increases. Full year profits increased 34.5% to $182 million.
The sales growth at Dick’s suggests the company continues to gain share in the fragmented sporting goods channel and comes amid uneven reports from other industry players. For example, the outdoor oriented Cabela’s chain reported a 7.3% increase in fourth quarter same-store sales, while operators of smaller format stores reported weak results. Hibbett Sporting Goods whose stores are predominantly located in the South said its fourth-quarter comps advanced a meager 1.3%, while Big 5 registered a 0.7% decline at its stores located in Western states.