Dick's CEO Edward W. Stack said the company plans to invest this year in enhancing the shopping experience in its stores and in marketing its partnership with the U.S. Olympic Committee.
By Teresa F. Lindeman / Pittsburgh Post-Gazette
Dick’s Sporting Goods is already running the numbers on markets where rival sporting goods retailer The Sports Authority plans to close stores as part of its bankruptcy reorganization.
The goal is to grab market share wherever possible, whether through taking over leases or pumping up marketing in affected areas.
“We want that business to come to us versus somebody else,” Edward W. Stack, chairman and CEO of the Findlay retailer, told analysts Tuesday on a conference call to discuss fourth-quarter earnings.
The Sports Authority’s decision last week to file bankruptcy and close as many as 140 stores is just one of the significant factors in play this year, Mr. Stack said, as he explained his company’s plans to invest in strategic moves meant to seize opportunities and to respond to market forces.
“There’s a lot going on in this marketplace,” he said, noting that a chain called City Sports closed last year in the Northeast and that the Golfsmith chain is closing stores.
Dick’s said investments expected to have an impact of between $50 million and $55 million on earnings this year include plans to enhance the shopping experience in its stores as well as its partnership with the U.S. Olympic Committee that includes offering flexible jobs to about 200 Olympic hopefuls.
“The Olympics are one of the few mass sporting events that appeal equally to men and women,” said Mr. Stack, who sees the global sporting competition as a way to broaden awareness of the brand that has been steadily expanding across the U.S.
“We’re doing what’s right for the business long term and not from one quarter to the next,” he said.
Dick’s did not have a great fourth quarter, as unseasonably warm weather hit sales of jackets, fleece and boots. The company reported a profit of $129 million, or $1.13 per share, during the three months ended Jan. 30, compared to $155.5 million, or $1.30 per share, during the same period a year earlier.
Analysts had been looking for earnings per share of $1.15.
Net sales rose 3.7 percent to $2.2 billion, but sales at stores that have been open at least a year fell 2.5 percent — more than the company had projected.
“As I’ve always said, if we’re playing golf in Pittsburgh on Dec. 15, it’s going to be a relatively tough quarter,” Mr. Stack said. “And they were playing in December in Pittsburgh.”
He said Dick’s was forced to offer aggressive markdowns to clear out cold-weather merchandise, although the company did pack up some items like black gloves and black ski pants -— merchandise that doesn’t change much from year to year — to sell next winter.
For the full year, net income was $330.4 million, or $2.83 per share, compared to $344.2 million, or $2.84 per share, during the year-ago period.
On an adjusted basis, net income hit $2.87 per share, two cents below what analysts were looking for.
Net sales for the year rose 6.7 percent to $7.3 billion, driven in part by new store openings. Sales in stores open at least a year fell 0.2 percent.
Looking ahead, Dick’s is projecting full year earnings in the range of $2.85 to $3 per share.
That’s below analysts’ estimates of $3.23 per share.
After falling in pre-market trading, Dick’s shares closed at $44.56, up 22 cents..
Teresa F. Lindeman: firstname.lastname@example.org or 412-263-2018.
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