Dick’s Sporting Goods fell three cents short of analysts’ profit forecast in the fourth quarter thanks to a 1.2% same store sales increase partially caused by unseasonably warm weather and soft sales of big ticket items.
Sales for the 14 week period ended February 2, increased 12% to $1.8 billion compared to the 13 week period the prior year. The company’s consolidated same store sales increase of 1.2% was driven by a 54.2% increase in online sales, offset by a 2.2% decrease at Dick's Sporting Goods stores and a 1.3% increase at Golf Galaxy stores.
Company chairman and CEO, Ed Stack, said the company experienced continued momentum in athletic footwear and apparel along with better than expected hunting sales, but noted those gains were somewhat offset by lower than expected sales in outerwear and cold weather accessories and a significant decline in the fitness category.
"As a result of the unusually warm weather conditions, including during peak selling periods in December, we significantly reduced our inventory levels of cold weather merchandise to align with lower consumer demand and avoid carrying over excess inventory after a second year in a row of warm weather," Stack said. "While this was a prudent move that enabled us to effectively manage inventory and protect our margins, it did limit our ability to capture sales in January when temperatures dropped and snowfall increased."
As for the significant decline in fitness, Stack said the company understood the issues that contributed to lower than expected sales of treadmills and elliptical products and was taking actions to correct them. He did not elaborate on the issues or the corrective actions.
Profits during the quarter increased 16.7% to $129.7 million and earnings per share grew to $1.03 from 88 cents during the fourth quarter the prior year, at the low end of guidance provided in mid-November that called for profits in the range of $1.03 to $1.05.
After opening seven new Dick’s stores in the fourth quarter, the company ended the year with 518 Dick’s stores and 81 Golf Galaxy stores. Those numbers will get bigger in the coming year as Dick’s plans to open roughly 40 new Dick’s stores, one Golf Galaxy store and experiment with new concepts. The company said it will open two new stores branded as True Runner and two new stores under the banner of Field & Stream which the company acquired last year.