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Mar 12, 2013
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Dick's Sporting Goods misjudges demand and profit misses

By
Reuters
Published
Mar 12, 2013

Dick's Sporting Goods Inc reported lower-than-expected fourth-quarter results after misjudging demand for cold weather merchandise due to mild temperatures early in the season.

The company said that as a result of its decision to cut inventory of cold weather gear, it was unable to capture sales in January when temperatures dropped and snowfall increased.

(photo: Dick's Sporting Goods) - DR

Dick's, whose shares fell more than 8 percent in early trading, said it would likely report a first-quarter profit of 47 cents to 49 cents per share, below the average analyst estimate of 50 cents per share.

The company said investments in marketing, mobile and e-commerce platforms and remodeling its stores would reduce full-year earnings by 12 cents per share to $2.84 to $2.86 per share.

Analysts were expecting full-year earnings of $2.92 per share, according to Thomson Reuters I/B/E/S.

Net income for the fourth quarter rose to $129.7 million, or $1.03 per share, from $111.1 million, or 88 cents per share, a year earlier.

Revenue rose 12 percent to $1.8 billion in the fourth quarter, short of analysts' average forecast of $1.86 billion.

Comparable store sales at its Dick's Sporting Goods stores fell 2.2 percent in the quarter ended February 2, also hurt by lower sales of fitness equipment such as treadmills.

"We understand the issues that contributed to the sales decline and are taking action to correct them," Chief Executive Edward Stack said in a statement, without elaborating.

Same-store sales at Golf Galaxy stores rose 1.3 percent, while eCommerce sales rose 54.2 percent. The company did not provide a figures for actual sales.

The company, which sells footwear, gear and apparel of brands such as Nike, Adidas and Under Armour, operated 518 namesake and 81 Golf Galaxy stores as of February 2.

Analysts had expected a profit of $1.06 a share, according to Thomson Reuters I/B/E/S.

Dick's also said that its board had authorized a share repurchase program of up to $1 billion over the next five years.

Shares of the Pittsburgh-based company were trading at $46.50 Monday. The stock was the biggest percentage loser on the New York Stock Exchange.

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