Dick’s Sporting Goods Raises 2024 Guidance

Image Source: Dick’s Sporting Goods

By Brian Nelson, CFA

On November 26, Dick’s Sporting Goods (DKS) reported better than expected third quarter results with revenue and non-GAAP earnings per share coming in above expectations. Net sales in the quarter advanced 0.5%, powered by a 4.2% in comparable store growth, which lapped 1.9% growth in the same period a year ago. Non-GAAP earnings per share fell 4%, to $2.75, but this was weakened by an unfavorable impact from a calendar shift to the tune of $0.35. Adjusted for this, non-GAAP earnings per share increased 8.8% in the quarter. Management was upbeat in the press release:

Our strong third quarter results demonstrate the significant momentum we have in our business. We continue to make strategic investments such as our House of Sport and DICK’S Field House concepts, where we are redefining sports retail and creating strong engagement with our athletes, brand partners and communities, that will fuel our long-term growth. Sport continues to have a strong influence on culture, and culture on sport, and our House of Sport concept is uniquely positioned to meet the needs of athletes as they look for the best of performance as well as the lifestyle of sport.

We are very proud of our Q3 results and our performance year-to-date. Our third quarter comp sales grew 4.2%, driven by a continued focus on our strategic pillars and great execution from our team. We had an excellent back-to-school season and continued to gain market share. As a result of our strong performance in the quarter and the continued confidence we have in our business, we are again raising our full year outlook. We believe our differentiated product, quality service and powerful omni-channel experience will resonate well with our athletes this holiday season.

Dick’s Sporting Goods’ year-to-date performance has been impressive. Year-to-date, net sales increased 4.8%, while comparable sales were up 4.7%, lapping 2.5% growth during the same period a year ago. Year-to-date, the company bought back $170 million in shares, while it paid $273 million in dividends. Dick’s Sporting Goods’ margins expanded nicely year-to-date, while non-GAAP net income increased 10% and non-GAAP earnings per share advanced 15% year-to-date. The company ended the quarter with roughly a net-neutral balance sheet, with cash and cash equivalents of $1.46 billion and total debt of $1.48 billion.

For the 39 weeks ended November 2, 2024, cash flow from operations was $680.3 million, while capital spending came in at $565.6 million, resulting in free cash flow of $114.7 million. Looking to all of 2024, management raised its guidance for comparable store sales growth to the range of 3.6%-4.2%, up from 2.5%-3.5% previously. Net sales are targeted at $13.2-$13.3 billion, up from $13.1-$13.2 billion previously. Dick’s Sporting Goods also raised its 2024 earnings per diluted share guidance to the range of $13.65-$13.95, up from $13.55-$13.90 previously. We liked Dick’s Sporting Goods’ quarterly performance and increased full year guidance, and the stock remains a key idea in the Dividend Growth Newsletter portfolio.

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