Dick’s Sporting Goods shares were down 17 percent mid-day in response to news that golf clubs are sitting unsold in the Findlay company’s stores and that ammunition sales have slowed even more than expected as fears about potential gun control legislation have eased.
“The balance of our business is quite good,” Chairman and CEO Edward W. Stack assured analysts on a conference call to discuss first quarter results this morning.
But the hits from disappointing results in both golf and hunting merchandise were hard enough that the company decided sales challenges would likely continue past the first quarter and it needed to lower its full year earnings projections.
“We don’t feel we’ve found the bottom yet,” Mr. Stack said, after disclosing that golf category sales missed the company’s goals by $34 million during the quarter. He said the decline came from a combination of new technology in merchandise that core golfers haven’t embraced and fewer golf rounds being played.
Dick’s posted a profit of $70 million, or 57 cents per share, in the three months ended May 3. That compares to $64.8 million, or 52 cents per share, during the same quarter a year ago.
Excluding a one-time gain on the sale of an asset, Dick’s earned $61.3 million, or 50 cents per share. That was lower than the company’s projections of earnings in the range of 51 to 53 cents per share, and two cents below the consensus analyst estimated as calculated by Thomson Financial.
Net sales rose 7.9 percent to $1.4 billion. Sales in stores open at least a year were up 1.5 percent, but below the company’s predictions that it would see a 3 to 4 percent increase.
Sales in the company’s namesake Dick’s Sporting Goods stores that have been open at least a year rose 2.3 percent in the quarter, but dropped 10.4 percent in its Golf Galaxy stores.
Bright spots included sales of women’s apparel and youth athletic clothing, as well as footwear sales. The company said its ecommerce business has grown to 7 percent of total sales, up from 5.8 percent this time last year.
Looking ahead, Dick’s is projecting that golf sales will continue to lag through the year, although hunting sales should stabilize.
The company now expects adjusted earnings per share in the range of $2.70 to $2.85 for the year, excluding a gain on the sale of an asset. That’s lower than earning projections of earnings in the range of $3.03 to $3.08 per share. Analysts had been looking for earnings on the high end of that range.
Dick’s shares were trading at $44.09 at mid-day, down $9.07 from Monday’s close.
Teresa F. Lindeman: email@example.com or at 412-263-2018.