Dick's (NYSE:DKS) Surprises With Q2 Sales

Sporting goods retailer Dick’s Sporting Goods (NYSE:DKS) announced better-than-expected results in Q2 CY2024, with revenue up 7.8% year on year to $3.47 billion. On the other hand, the company’s full-year revenue guidance of $13.15 billion at the midpoint came in slightly below analysts’ estimates. It made a GAAP profit of $4.37 per share, improving from its profit of $2.82 per share in the same quarter last year.

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Started as a hunting supply store, Dick’s Sporting Goods (NYSE:DKS) is a retailer that sells merchandise for traditional sports as well as for fitness and outdoor activities.

Sports & Outdoor Equipment Retailer

Some of us spend our leisure time vegging out, but many others take to the courts, fields, beaches, and campsites; sports equipment retailers cater to the avid sportsman as well as the weekend warrior. Shoppers can find everything from tents to lawn games to baseball bats to satisfy their athletic and leisure needs along with competitive prices and helpful store associates that can talk through brands, sizing, and product quality. This is a category that has moved rapidly online over the last few decades, so these sports and outdoor equipment retailers have needed to be nimble and aggressive with their e-commerce and omnichannel presences.

Sales Growth

Dick's is larger than most consumer retail companies and benefits from economies of scale, giving it an edge over its competitors.

As you can see below, the company’s annualized revenue growth rate of 9.5% over the last five years was mediocre despite closing stores, implying that growth was driven by higher sales at existing, established stores.

This quarter, Dick's reported solid year-on-year revenue growth of 7.8%, and its $3.47 billion in revenue outperformed Wall Street’s estimates by 1.1%. Looking ahead, Wall Street expects revenue to remain flat over the next 12 months, a deceleration from this quarter.

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Same-Store Sales

Same-store sales growth is a key performance indicator used to measure organic growth and demand for retailers.

Dick’s demand within its existing stores has generally risen over the last two years but lagged behind the broader consumer retail sector. On average, the company’s same-store sales have grown by 4% year on year. Given its declining store count over the same period, this performance stems from higher e-commerce sales or increased foot traffic at existing stores, which is sometimes a side effect of reducing the total number of stores.

In the latest quarter, Dick’s same-store sales rose 4.5% year on year. This growth was an acceleration from the 2% year-on-year increase it posted 12 months ago, which is always an encouraging sign.

Key Takeaways from Dick’s Q2 Results

We enjoyed seeing Dick's exceed analysts’ gross margin expectations this quarter. We were also excited its EPS outperformed Wall Street’s estimates. On the other hand, its full-year revenue guidance was underwhelming. Overall, this quarter had some key positives. The market seemed to focus on the negatives, and the stock traded down 3.5% to $224 immediately following the results.

So should you invest in Dick's right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.