Dick's Sporting Goods Rises After Boosting Full-Year Outlook

(Bloomberg) -- Dick’s Sporting Goods Inc. jumped in premarket trading after the company raised its full-year earnings outlook on the back of better-than-expected first-quarter results.

• The new forecast for 2019 earnings per share is a range of $3.20 to $3.40, up from $3.15 to $3.35, the Pittsburgh-based retailer said. Analysts anticipated $3.27, on average. First-quarter earnings and sales also topped predictions.

Key Insights

• Three months ago, Dick’s said it was removing hunting gear and guns from about 125 stores nationwide, about 17% of the chain. It’s unclear how much that decision has helped or hurt business this year. Guns are a big driver for other types of sales, and the company’s stance cost it $150 million in 2018. That said, guns have lower margins, and foot traffic rose at the first 10 stores where Dick’s fully removed hunting products.
• Margins for the quarter stayed flat at 29.3%, better than estimated. That’s an important metric for the company, given the shift away from guns and Dick’s increasing emphasis on private brands. Those brands, including outdoor label Field & Stream and Calia, the women’s clothing line done in collaboration with country star Carrie Underwood, have better margins.

• Athletic apparel, especially footwear, faces considerable uncertainty given the possibility of increased tariffs on Chinese goods coming next month. Dick’s wasn’t among the roughly 170 footwear makers and retailers that signed an open letter to President Donald Trump this month warning him that the proposed import tariffs would be “catastrophic” for consumers and the U.S. economy as a whole.

Market Reaction

• Dick’s shares rose as much as 8.3% in premarket trading Wednesday. Though it has fallen a bit over the past six weeks, the stock is up 15% so far this calendar year.

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