Will the positive story of DICK’S Sporting (DKS) continue despite the misfortunes? – December 20, 2021
DICK Sporting Goods, Inc. (DKS – Free Report) appears to be well positioned, driven by favorable customer demand and improved product mix. The sporting goods retailer benefited from its strong digital business. These benefits contributed to the company’s results in the third quarter of fiscal 2021, in which both top and bottom results improved year over year and exceeded Zacks’ consensus estimates.
In the fiscal third quarter, adjusted profit was up 59% year-over-year, driven by strong sales and improved gross margin. Adjusted profit was also more than six-fold from the third quarter of fiscal 2019.
Net sales increased 13.9% year over year, driven by improved in-store sales and a strong online salon. The measure also increased 40% compared to the third quarter of fiscal 2019. Consolidated same-store (coms) sales increased 12.2% compared to build-up growth of 23.2% and 6% in the third quarter of fiscal 2020 and the third quarter of fiscal 2019, respectively.
Speaking of its online business, the company’s focus on driving larger sales through large investments bodes well. He witnessed a strong online show, driven by strong demand and improved omnichannel capabilities, including curbside pickup services and BOPIS.
E-commerce sales jumped 97% from the third quarter of fiscal 2019 and grew 1% year-over-year. E-commerce accounted for almost 19% of net sales in the current quarter, compared to 13% in the third quarter of fiscal 2019 and around 21% compared to the third quarter of fiscal 2020. The online unit benefited from services such as in-store and curbside pickup. , reduced promotions, faster delivery and a better payment experience. Its mobile platform also remains a key growth driver.
On the store front, DICK’S Sporting remains on track with outlet expansion plans. Its first two House of Sport DICK stores in Rochester, NY, and Knoxville, TN, have received positive responses from customers. The two Golf Galaxy performance centers, featuring TrackMan and BioMech golf technologies, also perform well. The company opened two Public Lands stores in Pittsburgh and Columbus.
As a result, store sales increased 31% compared to the third quarter of fiscal 2019 and store mixes increased 15% year over year. DKS previously revealed its intention to open six DICK’S Sporting Goods stores and eight specialty concept stores in fiscal 2021.
Management has raised its vision for fiscal 2021. Fiscal 2021 sales are expected to be between $ 12,120 million and $ 12,190 million, up from the previously mentioned $ 11,520 to $ 11,720 million. Comparable store sales are expected to increase 24-25%, up from 18-20% previously. Adjusted earnings are expected to be between $ 14.6 and $ 14.8, reflecting a marked improvement from $ 12.45 to $ 12.95 per share mentioned earlier.
For FY2021, the gross margin is expected to be higher than reported for FY2020 and 2019 thanks to improved merchandise margins and lower fixed costs. General and administrative expenses are likely to decrease compared to the figures published for fiscal years 2020 and 2019 due to the increase in sales. Adjusted EBT is expected to be in the range of $ 1.89 to $ 1.92, up from the previously mentioned $ 1.61 – $ 1.67.
As a result, shares of Zacks Rank # 3 (Hold) have jumped 95.6% year-to-date against the industry’s 1.3% decline.
Image source: Zacks Investment Research
However, DICK’S Sporting has witnessed an increase in compensation and security spending associated with the COVID-19 crisis. In the fiscal third quarter, selling and administrative expenses included $ 15 million in security costs related to COVID. He also predicts that high freight spending and supply chain issues will persist into the fiscal fourth quarter.
The company’s growing online sales, strong demand and in-store initiatives are likely to maintain its exceptional exposure. Zacks’ consensus estimate for its earnings for fiscal 2021 is set at $ 14.48 per share, indicating a 0.2% increase in the past seven days. Additionally, an VGM score of A and a long-term earnings growth rate of 12.8% add to the stock’s optimism.
Here’s how the other stocks behaved
We have highlighted three top-ranked stocks in the Retail – Wholesale sector, namely Boot Grange Holdings (BOOT – Free report), Tractor supply company (TSCO – Free report) and Capri’s farms (CPRI – Free report).
Boot Barn Holdings, the lifestyle retailer of western and work shoes, clothing and accessories, currently sports a Zacks Rank 1 (strong buy). BOOT shares have climbed 159% year-to-date. You can see The full list of today’s Zacks # 1 Rank stocks here.
Zacks ‘consensus estimate for Boot Barn Holdings’ sales and earnings per share (EPS) for the current year suggests growth of 54.4% and 183.3%, respectively, from figures released l ‘last year. BOOT has a surprise profit for the last four quarters of 35.3%, on average.
Tractor Supply, a rural lifestyle retailer in the United States, currently has a Zacks Rank # 1. The company has a surprise earnings for the last four quarters of 22.8% on average. TSCO shares have jumped 62.9% year-to-date.
Zacks’ consensus estimate for Tractor Supply’s sales and EPS for the current year suggests growth of 19% and 23.9%, respectively, over the previous year’s numbers. TSCO has an expected EPS growth rate of 9.6% over three to five years.
Capri Holdings, which operates membership warehouses, currently holds a Zacks Rank # 1. The company has a surprise earnings for the last four quarters of 1024.9% on average. CPRI shares are up 46.4% year-to-date.
Zacks ‘consensus estimate for Capri Holdings’ sales and EPS for the current fiscal year suggests growth of 12.6% and 1.2% respectively compared to figures released last year. CPRI has an expected EPS growth rate of 56.4% over three to five years.