Higher prices are not deterring consumers from flocking to Dick's Sporting Goods (DKS, Financial), which reported significant top and bottom-line growth in Q1 (April). The sporting goods retailer saw solid growth in transactions and average ticket sizes, prompting it to raise its FY25 (January) earnings, revenue, and comp guidance.
DKS has been a consistent performer this year, overcoming excessive inventory issues and heightened promotional activity in 2023. The company's strategy of remodeling stores to larger footprints with experiential features like rock climbing walls and batting cages has paid off, allowing it to capture additional market share in Q1.
- DKS attracted more customers, resulting in another strong quarter with adjusted EPS of $3.30, marking its third consecutive quarter of double-digit growth. Revenues reached $3.02 billion, a 6.2% year-over-year increase, and same-store sales grew by 5.3%, accelerating from the previous quarter. Footwear, athletic apparel, and hardlines saw pronounced growth.
- EBIT margins remained robust, compressing by just 21 basis points year-over-year to 11.3%. The slight dip was due to higher shrink, which impacted merchandise margins. However, DKS had warned investors about this in March, and the shrink was less than initially expected.
- As a result, DKS raised its EBIT margin forecast for FY25, projecting moderate year-over-year expansion to 11.1% compared to 10.9%. The company also increased its other forecasts, expecting adjusted EPS of $13.35-13.75 (up $0.50 from its previous outlook), revenues of $13.1-13.2 billion (up slightly from $13.0-13.13 billion), and comps of +2-3% (up a point from its prior guidance of +1-2%).
- DKS plans to open 6 more House of Sport locations and 14 additional next-gen stores this year. Despite the digital retail trend, DKS remains committed to expanding its physical retail presence, as consumers enjoy experiencing sporting goods in person. This strategy is likely to continue driving profitable growth, especially in the long term.
By delivering strong results and positive transaction growth, DKS continues to showcase its competitive edge in the sporting goods industry. Despite reduced consumer purchasing power due to inflation, DKS proves that customers are still willing to spend, prioritizing their expenditures. This is in contrast to competitors like Academy Sports + Outdoors (ASO, Financial) and Hibbett (HIBB, Financial), which have underperformed this year.
