Dick’s Sporting Goods (DKS) topped analysts’ expectations on its earnings number for the second quarter of 2018 but missed the mark on sales, sending shares crashing by nearly 12% during pre-market hours and the stock continued to trade in the negative territory after the market opened.
Net sales grew 1% to $2.18 billion versus the prior-year period. Comparable sales, adjusted for calendar shifts, dropped 4%. Excluding the shifts, the comp sales decline was 1.9%. Sales were hurt by declines in Under Armour sales due to changes in their distribution strategy. The company remains optimistic that sales will gain strength going forward as the challenges slowly start to dissipate.
Net income rose to $119.4 million or $1.20 per share from $112.4 million or $1.03 per share in the prior-year period.
E-commerce sales increased 12% during the quarter and comprised around 11% of total sales. Inventory decreased 6.4% at the end of Q2 2018 compared to last year.
During the quarter, the Coraopolis-based retailer opened five new Dick’s Sporting Goods stores. For the full year, the company is expected to open 19 new Dick’s Sporting Goods stores and relocate four Dick’s Sporting stores. Two relocations are reportedly set to take place during September in the states of Indiana and Arizona.
For full-year 2018, Dick’s raised its diluted EPS outlook to a range of $3.02 to $3.20 from the previous range of $2.92 to $3.12. Comparable sales are expected to decline 3% to 4%. The company expects to incur capital spending of around $225 million for the year.
Meanwhile, specialty retailer American Eagle Outfitters (AEO) also reported earnings results for its second quarter today. Despite the upbeat results, shares of American Eagle Outfitters fell more than 10% on weak guidance.