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Dick’s Sporting Goods, Inc. (NYSE: DKS ) ended fiscal 2022 on a positive note, with stronger-than-expected fourth-quarter numbers sending shares of the sporting goods retailer to record highs. Strong investor confidence also reflects the company’s decision to increase the amount it returns to shareholders.
Dividends increase
In a move that will bring cheers to shareholders, the company this week more than doubled its quarterly dividend to $1.00 per share, offering a yield of 2.7%. Now the stock will attract more income investors. Market watchers, for the most part, are positive about the outlook for stocks, which look set for another strong year after setting new records this week. DKS is currently trading well above its 52-week moving average.
Dick’s Sporting Goods Inc. Q4 2022 Earnings Call Transcript
While the company has not been immune to the challenges facing the broader retail sector – from the pandemic to the economic slowdown and rising interest rates to high inflation – it has done a good job of navigating through the headwinds. Encouraging, resilience will continue in the future. That said, supply chain issues and inventory challenges will remain a concern in the near term.
Outlook
For fiscal 2023, management expects earnings per share to be in the range of $12.9 to $13.8, and targets capital expenditures of between $670 million and $720 million, gross. CapEx will focus on improving the store experience and extending in-store special elements such as batting cages and golf simulators to other locations. Earnings estimates were higher than consensus estimates.
From Dick’s Sporting Goods’ Q4 2022 earnings call:
“Along with the enhanced service, we have used different in-store elements powered by technology to provide an unparalleled athlete experience. In-store elements of the experience such as HitTrax batting cages, TrackMan golf simulators, and full-service premium footwear decks , inspire confidence in our athletes and reinforce the power of our expertise. This strategy, in combination with our personal marketing machine and brand building efforts, works.
Changes in customer behavior, marked by a return to discretionary spending after cutting spending in the pandemic era – with sports and fitness products a priority for many – will continue to drive growth for Dick’s. Stable demand also gives companies the pricing power they need to lift margins.
Strong Q4
In the last three months of fiscal 2022, Dick’s same-store sales rose 5.3%, which translated to 7% in net sales to $3.6 billion. However, adjusted earnings fell about 20% to $2.93 per share in the holiday quarter. The company has a good track record of beating the market’s quarterly earnings estimates, and that trend continued in the most recent quarter. Sales and Comps also came in above estimates.
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Management expects store expansion initiatives and traffic recovery to accelerate sales growth this year, and there will be an increase in margins and net profit. It is looking for a continued modest increase in comparable sales during the year.
In a significant move that will accelerate market share growth, Dick’s recently entered into a partnership with the National Collegiate Athletic Association, under which the company will be the last official sporting goods store partner.
Shares of Dick’s have been on a spiral since mid-2022, and they often beat the market. The stock traded up 1% in the final hour of Wednesday’s session, hovering just below the $150 mark.
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