Dick's Sporting Goods Cites Under Armour's Distribution Strategy Change In Q2 Miss

Retailer Dicks Sporting Goods Inc DKS on Wednesday reported its second-quarter results, which came in below expectations on the top- and bottom-line. Within the earnings report the company highlighted concerning performance for a notable brand it sells, Under Armour Inc UAA.

What Happened

Dick's Sporting Goods said it earned 96 cents per share in the quarter on revenue of $2.177 billion, which is short of the $1.06 per share and $2.24 billion the Street was expecting. The company did say it saw a double-digit growth in online sales, private brands and athletic apparel -- except Under Armour.

Dick's Sporting Goods CEO Ed Stack said the company continues to see "significant declines" in Under Armour sales as a direct result of the apparel maker's decision to expand its distribution strategy.

Why It's Important

During the quarter same-store sales fell 4 percent, which the company attributed to a decision to focus less on slow growth, low margin hunt and electronics products.

Coupled with Under Armour's distribution strategy shift, investors sent Under Armour's stock lower by more than 8 percent early Wednesday morning. Shares traded around $33.36 in the pre-market session.

Shares of Under Armour moved lower by more than 3.3 percent to $20.25.

What's Next

Under Armour says it's "confident" sales can improve next year as the headwinds which impacted the second quarter are expected to ease.

"We have made great progress in executing our strategic framework, particularly in delivering productivity improvements, which are leading to real savings that are being reinvested in long-term growth initiatives such as eCommerce and Team Sports HQ," said Lauren R. Hobart, President of DIck's Sporting Goods. "Additionally, we continue to develop a leading omni-channel experience for athletes through improvements in our in-store and online experiences."

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Photo credit: Mike Mozart/Wikimedia.