Dick's Sporting Goods Inc. (DKS) shares plunged lower Wednesday, and then reversed course to rise more than 10%, after the biggest U.S. sporting goods retailer cautioned that "evolving macroeconomic conditions" would clip both near-term sales and its full-year profit forecast.
Dick's posted adjusted earnings of $2.85 per share for the three months ending in April, a 24.8% decrease from the same period last year that topped Street forecasts by 38 cents. Group revenues were also lower, falling 7.5% from last year's pandemic rebound to around $2.7 billion, but that figure also topped analysts' estimates of a $2.58 billion tally.
Same store sales, however, were down 8.4% from last year, and Dick's said that trend would likely continue, forecasting 2022 comps of between -8% and -2%. Dicks also slashed its earnings forecast to a range of $9.15 to $11.70 per share, down from its prior estimate of $11.70 to $13.10 per share.
"We are pleased with our first quarter results as our team continued to move with agility and execute well in a highly dynamic environment," said CEO Lauren Hobart. "Over the past two years, we have demonstrated our ability to adeptly manage through the pandemic and other challenges - and we are confident in our continued ability to adapt quickly and execute through uncertain macroeconomic conditions."
"Dick's has a unique and powerful position in the marketplace, and we remain confident in our strategies and our ability to deliver long-term sales and earnings growth," she added.
Dick's shares were marked 11% higher in early Wednesday trading following the earnings release to change hands at $79.20 each. The stock hit a one-year low of $63.45 earlier in the session and was marked 18% lower from last night's close in pre-market dealing.
Nike (NKE) shares were also affected, falling 2.35%, as investors shaved estimates for shoe sales as part of the group's marketing and distribution partnership with Dick's that was inked last year.
Inflation, input cost pressures and supply chain snarls have taken their toll on the U.S. retail sector this quarter, culminating in disappointing first quarter earnings and outlooks from giants Walmart (WMT), Target (TGT) and Amazon (AMZN) this month.
The S&P 500 Retailing Group is down around 24% so far this quarter, its worst performance since 1990, as investors expect more pain to come from both the Fed's rate-based inflation fight and the highest nominal domestic gas prices on record, which continue to pinch household budgets and discretionary spending.
U.S. retail sales growth steadied in April, data from the Commerce Department indicated earlier this week, as record high gas prices and surging inflation failed to deter spending in the world's biggest economy.
Inflationary pressures remain acute, however, even as the Commerce Department's headline April reading eased from a 40-year high to 8.1%, with so-called core inflation, which strips-out volatile components such as food and energy prices, rising 6.2%, near the highest since February of 1991.
