Dick’s Sporting Goods Inc. (NYSE:DKS) has increased its profit forecast, citing robust demand for sports gear that has outweighed concerns about a potential slowdown in spending leading up to the holiday season. The retailer now anticipates profit, excluding certain items, to reach as high as $12.60 per share this year, up from the previous estimate of $12.30, as revealed in a statement on Tuesday. This upward revision comes despite challenges faced earlier in the year when theft significantly impacted results in the second quarter.
In the third quarter, ending on Oct. 28, profit and sales surpassed analyst expectations. Dick’s earned praise for achieving a rare “beat and raise” among retailers this earnings season, indicating positive momentum as the company approaches the holiday season. According to Wells Fargo analyst Will Gaertner, this performance has set Dick’s Sporting Goods apart in a positive light.
Following this announcement, the company’s shares surged as much as 12% in New York, marking their most substantial intraday gain in a year and a half. Despite experiencing fluctuations throughout the year, the stock has shown resilience, maintaining an approximately 500% increase since the end of March 2020.
CEO Lauren Hobart has shifted the company’s focus towards cost-cutting in recent months, a departure from the previous strategy of expanding stores and square footage during the pandemic-driven boom. Dick’s Sporting Goods plans to open 10 new locations in the upcoming year. Hobart highlighted the extensive work undertaken to optimize the business during a conference call with analysts on Tuesday. The management currently reviews operations and expects to complete it by the end of the fiscal year.
Addressing ongoing challenges related to “inventory shrink,” which includes issues like shoplifting and employee theft, Chief Financial Officer Navdeep Gupta emphasized that combating these challenges remains a top priority for the company. Despite these challenges, Dick’s Sporting Goods appears to be on a positive trajectory, buoyed by strong demand and strategic adjustments to its business model.
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