Dicks Sporting Goods Appears Unaffected By Gun Decision, Reports Blowout Q1

Athletic apparel retailers are on quite the roll.

Dicks Sporting Goods Inc DKS shares are soaring after reporting a big first-quarter earnings beat and raised fiscal 2018 guidance Wednesday. The report comes five days after Foot Locker Inc. FL reported a Q1 beat that drove a 20-percent rally in the stock.

What Happened 

Dicks Sporting Goods delivered earnings of 59 cents per share, beating estimates by 14 cents. Sales eclipsed estimates by $20 million and came in at $1.91 billion. The company projects fiscal 2018 EPS of $2.92-$3.12, up from the previous target of $2.80-$3. Same-store sales decreased 2.5 percent in the quarter.

Why It's Important 

Chairman and CEO Edward Stack credited product newness, strength in Dicks' private label brands and a more refined, cleaner inventory assortment with less promotional activity as main drivers for the quarter. 

"Our strong first-quarter earnings reflect improved execution against our merchandising strategy, which resulted in higher merchandise margins,” Stack said. "We are also continuing to see the results of investments in our digital experience, and we will continue to invest as we build the best omnichannel experience for all athletes."

What's Next 

The Q2 report report comes three months after the company made the decision to stop selling all assault-style rifles in its stores following the Parkland school shooting in Florida. Initially, Stack said it would be too early to tell how the decision would affect the company’s financial performance in the long term, but that it would not be positive from a traffic and sales standpoint.

After seeing profit rise 3.2 percent to $60.1 million in the quarter, it appears the decision may not have hurt Dicks as much as analysts predicted. On Tuesday, CANACCORD Genuity lowered its sales and earnings estimates for Dicks, citing weakness in the hunting category as a catalyst.

CNBC said the reason for runup in Dicks shares is largely due to hedge funds scrambling to cover their bets against the stock.

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