DKS Earnings Dive

March 13, 2024

Dick’s Sporting Goods is set to report earnings Thursday (March 14) before the bell.

For Dick's, LikeFolio metrics show overperformance vs. peers when it comes to eCommerce (+3% YoY) and slightly improving mention volume on a YoY basis (+2%).

The catch?

The stock is up more than +60% over the last 6 months alone.

Last quarter, sales grew by +2.8% YoY and the company issued cautious guidance: "we compete with everyone in the world during the fourth quarter, and also the consumer is going through an awful lot, and we're just trying to be cautious."

These projections and LikeFolio data place DKS right in line with what the street expects.

This is a company, like Target, that was greatly impacted by organized retail crime and theft as well as excess inventory. Investors will be watching to see if it can continue to get these issues under control, as they negatively impact margins, (absent the shrink headwind, its merchandise margin would have increased over 70 basis points in Q3).

Any improvements on this front are likely to send shares higher.

Dick's is leaning into athletes and the outdoors -- it see's golf as a long-term growth opportunity (the company owns the Golf Galaxy banner, whose mentions are up +13% YoY) and it wants to take a bigger chunk out of the $40 billion outdoor industry.

The long-term bullish bet is based on the idea that an active lifestyle is now a need and not a want, helping to shield Dick's from downturns in discretionary spending as consumers prioritize their health.

For earnings, it looks like Dick's had a nice holiday season but not out of this world. Most improvements we see on the data front are on a 30-day Moving Average as teams sports pick up this spring. Sidelined for now, but this is a solid name long-term, especially if it wrangles shrink and inventory.

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