Analyst Warns Dick's Sporting Goods Guidance Could Be At Risk

Dicks Sporting Goods Inc DKS’s peers had a rough quarter.

Hibbett Sports, Inc. HIBB and Cabelas Inc CAB saw comp decreases of about 10 percent each, while Big 5 Sporting Goods Corporation BGFV posted significant deceleration in the category.

By UBS estimates, Dick’s is expected to fare a bit better, with comps forecasted at 1.5 percent. But it won’t be without a little pain.

“While DKS probably benefitted from fewer competing stores in 2Q, we think there were offsets that weighed on its SSS [same-store sales],” UBS analyst Michael Lasser wrote in a Thursday note.

What’s The Issue?

The combination of poor weather and a perceived peak in the athleisure trend compound the unseen effects of Dick’s scattered focus.

“DKS has had a lot going on, creating the potential for distractions due to the TSA and Golfsmith conversions, the Second Skin launch, vendor consolidation and management turnover,” Lasser wrote (see his track record here).

The company likely benefited from a 17-percent decline in the number of competitors within five minutes, but this improvement will be less pronounced than a 32-percent first-quarter drop.

Chronic Pains

Dick’s trials don’t appear to be over. “Our checks indicate football is down significantly,” Lasser wrote. At the same time, he expects an annual decline in third-quarter same store sales, as last year saw a boost from the Cubs’ World Series victory and The Sports Authority’s closures.

“Still, it should be better positioned than other sporting goods retailers to weather the storm,” Lasser said.

UBS has a Neutral rating on the stock with a $45 price target. At the time of publication, Dick’s was trading down 7.5 percent at $34.14.

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