Dick’s Sporting Goods has rolled out a business improvement plan after trimming its 2023 outlook in light of weak Q2 results.
The sporting goods giant posted net sales of 3.2 billion, up from 3.6 percent the prior year. Net income for Q2 was $244 million, or $2.82 per share, versus $319 million and $3.25 per share a year prior. Analysts surveyed by Yahoo were looking for revenues of $3.23 billion and EPS of $3.81. Comp sales grew 1.8 percent in the quarter.
Shares for the retailer were down more than 19 percent in premarket trading.
In light of the results, Dick’s downgraded its outlook for 2023 and now expects full-year earnings per diluted share of between $11.33 and $12.13. Comparable-store sales are still projected to be between flat and up 2 percent.
Dick’s CEO and president Lauren Hobart said Q2 profits were impacted by elevated inventory shrink, or when stores have fewer products than recorded in inventory books, largely driven by organized retail crime.
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The executive said that sales picked up in July, and she expects to see positive comp sales for the year.
“Despite moderating our 2023 EPS outlook, the enthusiasm we have for our business and the confidence we have in our long-term growth opportunities have never been stronger,” Hobart said.
The retailer also said it would undergo a “business optimization” plan to align its “talent, organizational design and spending” while simplifying its cost structure overall. As part of this plan, Dick’s said it eliminated some roles, mainly in its customer support center, on Aug 21. This is expected to yield about $20 million in severance expenses in Q3. Cost savings from these cuts are expected to be offset by further investments in talent over the next year.
This strategic plan is expected to be completed by the end of fiscal year 2023 and could incur a one-time cost of between $25 million and $50 million.
In Q2, Dick’s opened seven new House of Sport locations, a store concept that offers multi-sport experiences inside and outside the store. The company plans to add between 75 to 100 of these concept stores nationwide by 2027.
“We are extremely excited about the future of our business,” said Ed Stack, executive chairman. “Our newest Dick’s concepts, Dick’s House of Sport and our next generation 50,000-sq.-ft. Dick’s store, are yielding powerful results. We haven’t seen growth opportunities like these since we went public in the early 2000s.”
