Dick’s Sporting Goods Inc.’s fourth-quarter results were dinged by struggles with the Under Armour Inc. brand and the hunting category, according to executives who spoke on the Tuesday earnings call.
The sporting goods retailer’s stock plunged 11% in very active trade Tuesday, enough to pace the S&P Mid Cap 400 index’s losers. Volume spiked to over nine million shares, compared with the full-day average of about 1.9 million shares.
The company reported fiscal fourth-quarter net income that fell from a year ago, and adjusted earnings that beat expectations. Net sales and same-store sales also fell, but less than analysts had forecast.
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The full-year 2019 outlook for earnings per share was $3.15 to $3.35, compared with the FactSet consensus of $3.34, while same-store sales guidance of flat to up 2% compared with expectations of a 0.5% rise.
“Under Armour continues to be difficult, but we mentioned now for the second quarter in a row that our apparel business is a positive,” said Chief Financial Officer Lee Belitsky on the post-earnings conference call with analysts. “So we’ve been able to replace the lost Under Armour apparel business with other brands in the stores at this point.”
Chief Executive Edward Stack was optimistic about the prospects for the brand.
“As I indicated in the last call, we’re much more enthusiastic about the Under Armour business going forward,” he said. “We’ve made some changes to the assortment, Under Armour has been very helpful with that and we see a very different trajectory from Under Armour going forward.”
Athletes are a key target for Dick’s Sporting Goods, with Stack saying the response has been positive from e-commerce marketing and other initiatives, and gains in categories like apparel, outdoor equipment, fitness, private labels, and athletic footwear.
However, hunters weren’t so keen on the retailer during the quarter, with guns, ammunition, firearm accessories and hunting apparel declining. According to Stack, the hunting and electronics categories hurt same-store sales by 3%.
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In February 2018, Dick’s Sporting Goods raised the minimum age for gun purchase to 21.
The company also removed the entire hunting category from 10 stores late in the third quarter where it was underperforming, according to Stack, “and replaced it with a more compelling assortment.”