According to Business Insider, Dick’s Sporting Goods Inc. (NYSE:DKS) missed earnings estimates and sent shares plummeting down over 18 percent after open on Tuesday.
The sporting goods retailer posted net income rose to $112.4 million, or $1.03 a share, from $91.4 million, or 82 cents a share, a year ago. Quarterly profit was 96 cents per share, 4 cents below estimates from Thomson Reuters. Sales rose 9.6 percent to $2.157 billion from last year, but fell short under estimates of $2.161 billion, according to Thomson Reuters. Consolidated same-store sales rose 0.1 percent, significantly lower than the company's previous guidance of 2 to 3 percent growth and missing estimates by Thomson Reuters forecast for 1.7 percent growth.
Dick’s faces many other retailers within its sector such as Under Armor, Footlocker, and Nike, which dominate sporting goods market and poses a huge competition to Dick’s.
Declining sales especially in hunting and licensed sports apparel as well as other factors also hurt the company’s earnings.
"By design, we will be more promotional and increase our marketing efforts for the remainder of the year, as we will aggressively protect our market share," CEO Edward Stack said.
As Dick’s posts poor second quarter results, the company has lowered its guidance for the rest of the fiscal year.
"We have updated our outlook to reflect these investments. We continue to believe retail disruption creates opportunities for us as we look long-term."
Dick's expects to earn between $2.80 to $3 a share for the fiscal year, but analysts’ consensus by Thomson Reuters were calling for adjusted earnings of $3.09 per share. Same-store sales for the year are now expected to either remain the same or drop to low-single digit rate.
Dick's also said it expects to open 43 new stores and relocate seven locations by the end of the year.
While retailers have been facing fierce competition lately, Stack believes that a growth strategy will pay off and ultimately turn around the company.