Dick’s Sporting Goods Q2 same-store sales up 3.2 percent

REPORT_ Dick’s Sporting Goods reported consolidated non-GAAP net income for

the second quarter ended August 2, 2014 of 81.7 million dollars, or 0.67 dollars per diluted share, excluding golf restructuring charges, compared to the company's expectations provided on May 20, 2014 of 0.62 to 0.67 dollars per diluted share. For the second quarter ended August 3, 2013, the Company reported consolidated non-GAAP net income of 88.9 million dollars, or 0.71 dollars per diluted share.

On a GAAP basis, the Company reported consolidated net income for the second quarter ended August 2, 2014 of 69.5 million dollars, or 0.57 dollars per diluted share. For the second quarter ended August 3, 2013, the company reported consolidated net income of 84.2 million dollars, or 0.67 dollars per diluted share. Net sales for the second quarter of 2014 increased 10.3 percent to approximately 1.7 billion dollars. Consolidated same store sales increased 3.2 percent, compared to the company's guidance of an approximate 1 to 3 percent increase.

Same store sales for Dick’s Sporting Goods increased 4.1 percent, while Golf Galaxy decreased 9.3 percent. Second quarter 2013 consolidated same store sales decreased 0.4 percent, adjusted for the shifted retail calendar due to the 53rd week in 2012.

“Our second quarter results came in at the high end of our expectations,” said Edward W. Stack, Chairman and CEO, adding, “As anticipated, the golf and hunting businesses continued to experience negative comps. However, excluding these two categories, the remainder of the business delivered a 7.8 percent same store sales increase.”

In the second quarter, the company recorded pre-tax charges totaling 20.4 million dollars related to the restructuring of its golf business. These actions were taken to align the cost structure with current and expected trends in golf. “We have consolidated our Golf Galaxy merchandising, marketing and store operations into Dick’s Sporting Goods. In addition, we have eliminated specific staff in our golf area within our Dick’s Sporting Goods stores. These changes are necessitated by the current and expected trends in golf. We will invest these cost savings into other aspects of our store operations and into the growth areas of our business,” added Stack.

Ecommerce penetration for the second quarter of 2014 was 6.3 percent of total sales, compared to 5.6 percent in the second quarter last year. In the second quarter, the company opened eight new Dick’s Sporting Goods stores and one new Field & Stream store. The company also relocated three Dick’s Sporting Goods stores during the second quarter. As of August 2, 2014, the company operated 574 Dick’s Sporting Goods stores in 46 states and 79 Golf Galaxy stores in 29 states.

The Company reported consolidated non-GAAP net income for the 26 weeks ended August 2, 2014 of 143 million dollars, or 1.17 dollars per diluted share. For the 26 weeks ended August 3, 2013, the Company reported consolidated non-GAAP net income of 149.4 million dollars, or 1.19 dollars per diluted share. On a GAAP basis, the company reported consolidated net income for the 26 weeks ended August 2, 2014 of 139.5 million dollars, or 1.14 dollars per diluted share. For the 26 weeks ended August 3, 2013, on a GAAP basis, the company reported consolidated net income of 149 million dollars, or 1.18 dollars per diluted share.

Net sales for the 26 weeks ended August 2, 2014 increased 9.2 percent from last year's period to 3.1 billion dollars due to the opening of new stores coupled with a consolidated same store sales increase of 2.4 percent.

For the second half of 2014, the company is cautiously optimistic although it does expect, due to the cautious consumer, an increase in promotional activity with margins and advertising expense continuing to be under pressure and impacting earnings per diluted share by approximately 0.04 dollars. The company currently anticipates reporting consolidated non-GAAP earnings per diluted share of approximately 2.70 dollars to 2.85 dollars, excluding a gain on the sale of an asset and golf restructuring charges. For the 52 weeks ended February 1, 2014, the company reported consolidated earnings per diluted share of 2.69 dollars.

Consolidated same store sales are currently expected to increase approximately 1 to 3 percent, compared to a 1.9 percent increase in fiscal 2013. The company now expects to open approximately 46 new Dick's Sporting Goods stores, relocate five Dick’s Sporting Goods stores and remodel five Dick’s Sporting Goods stores in 2014. The company also expects to open approximately eight new Field & Stream stores, relocate two Golf Galaxy stores and open one new Golf Galaxy store in 2014.

Based on an estimated 121 million diluted shares outstanding, the company currently anticipates reporting consolidated earnings per diluted share of approximately 0.38 dollars to 0.42 dollars in the third quarter of 2014, compared to consolidated earnings per diluted share of 0.40 dollars in the third quarter of 2013. Consolidated same store sales are currently expected to increase approximately 1 to 3 percent in the third quarter of 2014, as compared to a 3.3 percent increase in the third quarter of 2013. The company expects to open approximately 24 new Dick’s Sporting Goods stores, relocate one Dick’s Sporting Goods store and remodel five DICK's Sporting Goods stores in the third quarter of 2014. The company also expects to open seven new Field & Stream stores and one new Golf Galaxy store, and relocate one Golf Galaxy store in the third quarter of 2014.