Dick's Sporting Goods, Inc. (NYSE: DKS) reported its first quarter results ended April 30, 2016, topping analysts’ forecasts. While its competitor, Sport Authority, once the nation’s largest sporting goods retailer, will close all its remaining stores nationwide.
The first-quarter net income of Dick’s Sporting Goods was $57 million, decreased 10% compared with $63 million of last year. However, diluted earnings per share was 50 cents, surpassing analysts’ expectation of 49 cents per diluted share.
Net sales in the first quarter rose 6.1% from $1.6 billion in the same period last year to $1.7 billion, beating the estimates of $1.6 billion. Same-store sales increased 0.5% in the first quarter, which was almost the same with expectations.
"We are pleased to have delivered first quarter earnings at the high end of our expectations in a challenging retail environment," Dick's Sporting Goods Chairman and CEO, Edward W. Stack said. He also mentioned that the liquidation in its competitors would influence the short-term revenues, and the company had adjusted their guidance to deal with the dynamic. Edward also said that they have confidence in capturing market shares and strengthening their leadership position in the long term.
Dick's Sporting Goods forecasted earnings per share in the second quarter to be 62 cents to 72 cents per share. The company also lowered the guidance for 2016, and expected the full-year EPS to be $2.60 to $2.90 per share, decreased from the prior estimates of $2.85 to $3.00 per share.
While Dick's Sporting Goods reported Q1 results that was better than expectation, Sports Authority, one of its competitors, was facing a serious situation.
After first filing for bankruptcy in March, Sports Authority announced on Wednesday that the company is going to close all stores after failing to reach an agreement with creditors and lenders.
Sports Authority, once the largest sporting goods retailer, was actually struggling with the debt related to a leveraged buyout in which the company was bought by a hedge fund 10 years ago. The company also faced with competition from Amazon and other websites by major sports leagues that sell team goods directly.
"Someone who wants to shop in a brick-and-mortar store and try on the baseball glove, or get the feel of a golf club, wants a better shopping experience," said Larry Perkins, an expert in retail reorganizations. "That's not Sports Authority any more."
The store closing will start at the end of May, and will end up to three months. The store had 14,500 employees, two-thirds of which were part-time workers, when the company filed for bankruptcy.
Dick's Sporting Goods also suggested in the reports that they will probably bid on some of Sports Authority stores that will be on sale.