Shares of Dick’s Sporting Goods slid more than 20% on Tuesday after the company posted a quarterly earnings report that missed most analyst estimates. The stock also suffered after the Pittsburgh-based company provided a lower earnings outlook for the rest of the year.
Dick’s Sporting Goods posted an earnings of $1.55 per share for the second quarter with their net income coming in at $170.6 million beating most analyst estimates. The company’s net sales jumped by 9.6% to $2.16 billion meeting most expectations.
However, the company’s gross profit margin declined by almost 30% for the second quarter. The company also adjusted its full-year target earnings from previously giving an outlook of $3.65 to $3.75 per share to now at a range of $2.80 to $3 per share. Dick’s Sporting Goods also announced that its comparable sales outlook would be lower from its previous forecast of around 1 to 3 percent.
Their second quarter sales metric went up by only 0.1% missing most analyst estimates of 2% to 3% and Wall Street estimates of 1.8%. Dick’s Sporting Goods chief executive officer Edward Stack stated that the company’s gross profit margin is expected to be cut this year so that the company can keep or protect its market share.
However, he added that the company will be increasing its promotional and marketing efforts for the rest of the year which will be done so with the adjusted full year forecast. Stack also commented on the recent struggle of the retail industry stating that these offer the company more long-term opportunities.
The weaker full year earnings forecast concerned the markets regarding the current status of sporting retailers in the industry after Dick’s Sporting Goods lost as much as 23% during Tuesday’s market session sending most of its competitor’s shares down by as much as 4% during Tuesday’s trading.
According to the company, they will now be cutting the price of their products including athletic clothing, apparel, electronics, and other sporting and outdoor gear. This began during Father’s Day this year and was seen by the company to be very promotional. The new guarantee promotional will now offer their customers the lowest price they could find in a product.
According to Stack, the retail industry is currently in a panic mode in connection with pricing and that they believe this will continue to be promotional and going forward. The success of e-commerce companies such as Amazon and Walmart have challenged merchandise and retail companies recently. Stack commented regarding issue stating that the company will deal with the concern when it happens. Dick’s same store sales are expected to post a slow growth or an impending decline this year after only experiencing a sales growth of 3.5% last year.
Join the best forex broker and follow us for more up to date and latest stock market news.