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DICK’S Sporting Goods (DKS): Three noteworthy points from the retailer’s Q4 report

Consolidated same-store sales for FY2022 are expected to range between negative 4% to flat

Shares of DICK’S Sporting Goods (NYSE: DKS) were up over 8% on Wednesday. The company delivered better-than-expected earnings results for the fourth quarter of 2021 a day ago. The stock has gained 53% over the past 12 months. Here are three noteworthy points from the sporting goods retailer’s earnings report:

Solid results

Net sales increased 7.3% year-over-year to $3.35 billion in the fourth quarter, helped by same-store sales growth of nearly 6%. Comp sales growth was driven by strength in key categories like team sports, apparel and footwear as well as increases in average ticket and transactions. Average ticket rose 4.8% and transactions were up 1.1%.

Gross profit of $1.26 billion witnessed an improvement during the quarter helped by merchandise margin rate expansion, varied assortment and a favorable sales mix. Adjusted EPS rose 50% YoY to $3.64. Both the top and bottom line numbers surpassed expectations.

Dick's Sporting Goods reports Q4 2021 earnings results

Strong trends

During the fourth quarter, the company’s store comps increased 14%. E-commerce sales fell 11% versus last year. In Q4 2020, ecommerce sales were up 57%, driven by pandemic-fueled purchases. Ecommerce penetration reached 27% of net sales, down from 32% in Q4 2020 but up from 25% in Q4 2019.

During 2021, around 70% of the company’s online sales were fulfilled by its stores. Mobile penetration of ecommerce sales were more than 50% during the year. DKS currently holds an 8% market share, which is the largest among sporting goods retailers. Its total addressable market is estimated at $120 billion.

Looking ahead, as restrictions are lifted and things go back to normal, the company is expected to benefit from an increased interest in outdoor activities and a continued strong demand for its products.

Encouraging outlook

Dick’s Sporting has gained meaningful market share in its key categories and it believes it is well-positioned to continue gaining share in a large, growing and fragmented industry. During 2022, the company will focus on improving its existing strategies to drive profitable growth over the long term.

Consolidated same-store sales for FY2022 are expected to range between negative 4% to flat. Quarterly comps are expected to improve sequentially throughout the year. Adjusted EPS is estimated to be $11.70-13.10. The outlook was better than what analysts had been predicting.

EBT is estimated to range between $1.43 billion and $1.6 billion. EBT margin is expected to be approx. 12.5% at the midpoint. Capital spending is estimated to range between $340-365 million. The company plans to use Capex mainly for improving existing stores, investments in technology and new store growth.

Click here to read the full transcript of Dick’s Sporting Goods Q4 2021 earnings conference call

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