Dick’s Sporting Goods Surges After Boosting Annual Forecastby
Retailer looks to benefit from demise of Sports Authority
CEO says athletic chain is focused on ‘displaced market share’
Dick’s Sporting Goods Inc. jumped as much as 10 percent in early trading after boosting its annual forecast, a sign the chain will benefit from the demise of rival Sports Authority Inc.
The company now expects earnings of $2.90 to $3.05 a share, compared with a forecast of as much as $2.90 in May. Same-store sales -- a closely watched measure -- will gain 2 percent to 3 percent, Dick’s said in a statement Tuesday. It had previously said that the sales might decline 1 percent.
The rosier guidance follows second-quarter results that handily beat analysts’ estimates. Dick’s, the largest sporting-goods chain in the U.S., is trying to navigate the liquidation of what was once its biggest competitor, Sports Authority. Though the bankruptcy has pushed heavily discounted merchandise into the marketplace, Dick’s expects to benefit from increased share on the industry. It’s also turning some former Sports Authority locations into Dick’s stores.
“We are pleased with our second-quarter results, particularly in light of the liquidation activity,” Chief Executive Officer Edward Stack said in the statement. “Looking ahead, we are focused on capturing the displaced market share and remain confident in our ability to strengthen our leadership position.”
Dick’s rose as high as $60.40 in New York trading, the biggest intraday increase since May 19. That follows a 55 percent gain this year through Monday’s close.
One weak spot for Dick’s was golf: Same-store sales at its Golf Galaxy chain declined 4.3 percent last quarter. Analysts had predicted a 1.5 percent drop.
The golf industry is trying to pull out of a slump, caused in part by fewer younger players sticking with the sport. The Golfsmith International chain is considering filing for bankruptcy as it seeks a new owner, people with knowledge of the situation said earlier this month.
Dick’s said on Tuesday that it’s committed to golf, which remains profitable for the company.