Dick’s Sporting Goods, Inc.New York Stock Exchange: DKS) ended its fiscal year 2022 positively, with the sporting goods retailer’s share price hitting a record high as fourth-quarter numbers beat expectations. The strong investor confidence also reflects the company’s decision to significantly increase returns to shareholders.
Dividend increase
In a move to cheer up shareholders, the company more than doubled its quarterly dividend this week to $1.00 per share, yielding 2.7%. Stocks may now attract more income investors. Market watchers are generally positive on the stock’s outlook and look set to head into an even stronger year after setting new records this week. DKS is currently trading well above its 52-week average.
Dick’s Sporting Goods Inc. Fourth Quarter 2022 Earnings Presentation
The company is no stranger to challenges facing the broader retail industry, from pandemics to economic slowdowns to rising interest rates and high inflation, but it has weathered headwinds well. Encouragingly, resilience is likely to continue for the foreseeable future. That said, supply chain issues and inventory issues remain concerns in the short term.
Outlook
Management expects earnings per share in the range of $12.9 to $13.8 for fiscal 2023 and is targeting capital expenditures of $670 million to $720 million on an aggregate basis. Capital expenditures will focus on improving the in-store experience and expanding special in-store elements such as batting cages and golf simulators to more locations. Earnings forecast beats consensus expectations.
From Dick’s Sporting Goods’ Q4 2022 earnings call:
“In addition to our enhanced services, we leverage unique technology-enabled in-store elements to deliver an unparalleled athlete experience. The experiential in-store element instills confidence in athletes and reinforces the power of expertise, and these strategies, combined with our personalized marketing engine and brand-building efforts, work well.”
A shift in customer behavior, marked by a return to discretionary spending after pandemic-era spending cuts, will continue to fuel Dick’s growth, with sports and fitness products a priority for many. Stable demand also gives companies the pricing power they need to turn a profit.
Strong Q4
In the last three months of 2022, Dick’s Existing store sales up 5.3%This means net sales increased 7% to $3.6 billion. However, adjusted earnings for the holiday quarter were down about 20% to $2.93 per share. The company has a track record of exceeding the market’s quarterly earnings expectations, a trend that has continued in its most recent quarter. Sales and comps also exceeded expectations.
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Management expects store expansion initiatives and a rebound in traffic to catalyze sales growth this year, which will lift margins and net income accordingly. The company expects continued modest growth in sales at the same level during the year.
In a key move to accelerate market share growth, Dick’s recently entered into a partnership with the National Collegiate Athletic Association. This makes Dick’s the official sporting goods retail partner of the latter.
Dick’s stock has been on an upward spiral since mid-2022, outperforming the market quite often. The stock rose 1% in the final hours of Wednesday’s session, trading just below $150.
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