Barrons doesnt really blame the gun deal on its drop however, but still.
Dick's Sporting Goods (DKS) stock was slumping more than 11% on Tuesday afternoon, after downbeat guidance overshadowed the retailer's fourth-quarter earnings report.
The back story. Even with Tuesday's decline, Dick's shares have still climbed nearly 10% since the start of 2019 (though the shares are still off just under 1% in the trailing 12-month period). Athletic and 'athleisure' apparel have been a bright spot in retail, but Dick's -- like so many bricks-and-mortar peers -- has struggled in recent years to fend off online competition. Upbeat results from rivals such as Foot Locker (FL) show the category overall is still healthy -- that puts even more pressure on companies like Dick's to show they're still on top of their game.
What's new. Dick's said it earned $1.07 a share on revenue of $2.49 billion in the fourth quarter. Analysts were looking for per-share earnings of $1.06 and revenue of $2.48 billion. Consolidated same-store sales fell 2.2% in the period, while gross margins narrowed to 27.9%.
For the full year, the company sees EPS of $3.15 to $3.35, compared with the $3.35 consensus estimate. Dick's said the year will include about 23 cents per share of reinvestment in its business. It expects same-store sales will be flat to up 2%, after a 3.1% decline in 2018.
Looking ahead. The stock's drop may be puzzling, given the headline top- and bottom-line beats. But those results were mitigated by other factors, such as the lower margin and higher net interest expense. The disappointing forecast didn't do much to reassure investors that Dick's is back on the right foot.
Along with many retailers, Dick's was having a fairly good 2018 until the fourth-quarter rout gutted the sector's year-to-date gains. So despite a strong holiday season and high consumer confidence, retailers are once again having to prove they're still relevant in the shifting shopping landscape.
Dick's year-to-date performance is nearly in line with the SPDR S&P Retail ETF's (XRT) 10.1% gain, but peers have shown the market isn't prone to patience when retailers make missteps. So it is no surprise the market isn't cutting the stock much slack today.
Still, Dick's is in a better position than it was a few years ago, when pessimism pervaded the athletic space, even powerhouse Nike (NKE). Dick's has pivoted away from guns, delivered some strong results, and believes comps will finally turn positive in the second quarter. It is also gearing up to offer competitive shipping speeds for online sales.
Yet the margin decline will leave some wondering how dearly Dick's is paying to keep up, and the company's 2019 gains have left it with less room for error.
Dick's stock was down 11.9% to $34.28 in recent trading, and the day's losses put it on track to notch its biggest percentage decline since August 2017.
