Dick's Sporting Goods soars past holiday quarter estimates, raises dividend 10%

Dick's Sporting Goods raised its dividend by 10% on Thursday as the company posted its largest sales quarter in its history and projected another year of growth.

The company's shares jumped more than 10% in morning trading.

CEO Lauren Hobart said on an earnings call Thursday that Dick's sales growth came from bigger tickets — either higher prices or more expensive items — as its transactions were flat.

Many retailers benefited from a 53rd week in fiscal 2023, but Dick's said it still broke records during its fiscal fourth quarter even without those extra days.

Here's how the athletic apparel retailer did compared with what Wall Street was anticipating, based on a survey of analysts by LSEG, formerly known as Refinitiv:

The company's reported net income for the three-month period that ended Feb. 3 was $296 million, or $3.57 per share, compared with $236 million, or $2.60 a share, a year earlier. Excluding one-time items related to impairment charges and inventory write-offs, Dick's reported earnings per share of $3.85. 

Sales rose to $3.88 billion, up about 8% from $3.60 billion a year earlier.

 "With our industry-leading assortment and strong execution, we capped off the year with an incredibly strong fourth quarter and holiday season," Hobart said in a statement. 

"We are guiding to another strong year in 2024. We plan to grow both our sales and earnings through positive comps, higher merchandise margin and productivity gains," she added.

During the quarter, same-store sales rose 2.8%, well ahead of the 0.8% lift that analysts had expected, according to StreetAccount. "Growth in transactions" and market share gains drove the increase, said Executive Chairman Ed Stack. 

For fiscal 2024, Dick's is expecting earnings per share to be between $12.85 and $13.25, compared with estimates of $12.90, according to LSEG. It's forecasting revenue between $13 billion and $13.13 billion, roughly in line with estimates of $13.13 billion, according to LSEG. 

The company expects same store sales to rise by 1% to 2%. 

Following the strong quarter, Dick's raised its quarterly dividend 10% to $1.10 per share. 

While Dick's expects earnings to come in roughly in line with or beat Wall Street's estimates for 2024, it said it expects some challenges in the current quarter. CFO Navdeep Gupta said the company anticipates an "unfavorable" trend in gross margin relative to the prior-year period due to higher rates of shrink.

The industry term captures inventory lost due to factors including internal or external theft and damage. Dick's cited shrink in cutting its earnings forecast last year.

On the call Thursday, Hobart said the company is "working with loss prevention, local law enforcement, and moving products to the back of the store that are high shrinks."

Headed into the holiday season, Dick's raised its sales and earnings outlook for the full year but struck a cautious tone about the crucial holiday shopping period, saying repeatedly it was optimistic for the things "within our control." 

"We are being conservative on the low end of our guidance," Hobart said on a call with analysts after Dick's third-quarter results were announced. "We compete with everyone in the world during the fourth quarter, and also the consumer is going through an awful lot, and we're just trying to be cautious."

Read the full earnings release here.