Dick’s second-quarter profit falls and the retailer lowers its full-year outlook on theft fears
Dick's Sporting Goods profit fell in the second quarter, falling short of Wall Street expectations as the retailer cut its full-year profit outlook on the grounds that it was concerned about theft at its stores.
Shares fell nearly 24% in afternoon trade on Tuesday.
For the period ended July 29, Dick's earned $244 million, or $2.82 per share. A year earlier, the company made $319 million, or $3.25 per share.
Analysts polled by FactSet were expecting earnings of $3.81 per share.
“Our second-quarter profitability fell short of our expectations, due in large part to the impact of increased inventory depletion, an increasingly serious issue affecting many retailers,” President and CEO Lauren Hobart said in a statement.
GlobalData chief executive Neil Saunders said in a statement that a large part of Dick's quarterly profit decline appeared to be due to theft.
“We believe this is a particular concern for Dick's because many of the products it sells are desirable and have good resale value,” he said. “While the problem is not caused by Dick, management does not appear to have any immediate fixes to the problem which, if left unchecked, could continue to weigh on the bottom line.”
Many retailers struggle with theft concerns. In May, Target said theft is hurting its bottom line and that related losses are expected to be $500 million higher than last year, when theft losses were estimated at $700 million to $800 million. That means losses could top $1.2 billion this year.
During Target's second-quarter earnings call last week, CEO Brian Cornell told media and analysts that the first five months of this year saw a 120% increase in incidents of theft involving violence or threats of violence at the company's stores compared to the same period last year. to be recorded.
Macy's executives told analysts in a call following the release of second-quarter results on Tuesday that theft continues to be a “headwind” and the company is pursuing a variety of strategies, including testing new technologies and removing items that may have been compromised a popular target for theft are the exits from shops.
Dick revenue increased to $3.22 billion in the quarter from $3.11 billion. That missed Wall Street's estimate of $3.24 billion.
Sales in stores open for at least a year, a key indicator of a retailer's health, rose 1.8%. This compares to a 5.1% decline in the same period last year.
The Pittsburgh-based chain said it eliminated an unspecified number of jobs at its customer service center this week to reduce costs and expects to book $20 million in severance charges in the third quarter.
Dick's now forecasts full-year earnings in a range of $11.33 to $12.13 per share. The previous guidance was for earnings of between $12.90 and $13.80 per share.
