Dick’s Sporting Goods’ strong results and outlook are offset by inventory concerns

The Key Takeaways

• Dick's Sporting Goods beat profit and sales estimates, but shares lost ground on concerns about growing inventory levels.
• The retailer reported a good back-toschool season with a gain in market share.
• Dick's raised its full-year guidance for earnings, revenue, and comparable store sales.

Dick’s Sporting Goods’ (DKS) reported better-than expected results. The company also increased its forecasts due to strong back-to school sales and the optimism for the coming holiday shopping season. Shares of Dick’s Sporting Goods (DKS) fell due to concerns over the inventory level.

Sporting goods retailer, Sports Direct reported a third-quarter earnings per share of $2.75 with revenues up by 0.5% at $3.06 billion. Both were above expectations. Sales in comparable stores grew by 4,2% from 1,9% the year prior. 

CEO Lauren Hobart said Dick’s “had an excellent back-to-school season and continued to gain market share.” She also added that she believes the company. “our differentiated product, quality service and powerful omni-channel experience will resonate well with our athletes this holiday season."

However, CFO Navdeep Gupta noted in a transcript of the earnings call provided by AlphaSense that Dick’s inventory level increased 13% from 2023. Even so, he argued that the firm’s investment "is in some of our strongest product offerings, and we believe our inventory is clean and well-positioned as we enter the fourth quarter."

Dick’s now sees full-year EPS of $13.65 to $13.95, versus the earlier forecast of $13.55 to $13.90. It anticipates sales of $13.2 billion to $13.3 billion, up from the previous $13.1 billion to $13.2 billion. Comparable store sales are predicted to grow 3.6% to 4.2%, compared to its earlier outlook of 2.5% to 3.5%.

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