A shopping cart sits in front of a Dick's Sporting Goods store on August 26, 2020 in Daly City, California.
Justin Sullivan | Getty Images News | fake images
Dick's Sporting Goods on Wednesday said customers are spending more on new sneakers and sports gear, prompting the retailer to raise its full-year profit guidance.
Shares rose about 7% in premarket trading.
Comparable sales at sports department stores grew 5.3% during their fiscal first quarter, well above the 2.4% growth analysts were expecting, according to StreetAccount.
The company said the growth was driven by higher transactions, meaning more customers are shopping at Dick's, and higher average ticket values, showing shoppers are also spending more.
Here's how Dick's fared in its fiscal first quarter compared to what Wall Street anticipated, according to a survey of analysts by LSEG:
- Earnings per share: $3.30 vs. $2.95 expected
- Revenue: $3.02 billion vs. $2.94 billion expected
The company's reported net income for the three months ended May 4 was $275 million, or $3.30 per share, compared with $305 million, or $3.40 per share, a year before.
Sales rose to $3.02 billion, up about 6% from $2.84 billion a year earlier.
The strong quarter led Dick's to raise its full-year guidance.
The retailer now expects earnings per share to be between $13.35 and $13.75, up from its previous range of $12.85 to $13.25. That's above the $13.25 that analysts were expecting, according to LSEG.
CEO Lauren Hobart said she expects “strong demand from athletes” in the coming quarters, underscoring the company's prospects. Still, sales guidance falls a bit flat after they beat the retailer's revenue in the first quarter.
Dick's now expects comparable sales to increase between 2% and 3%, compared to a previous forecast of between 1% and 2%. The lower end of that range is only in line with the 2% growth that analysts were expecting, according to StreetAccount.
Dick's expects full-year revenue to be between $13.1 billion and $13.2 billion, which is also in line with estimates of $13.16 billion, according to LSEG.
A shakeup for footwear and clothing
Over the past year, consumers hit by persistent inflation and high interest rates have pulled out discretionary items like new clothing and shoes, but the apparel and footwear markets have shown some signs of life in recent weeks.
Dick's performance indicates that consumers are willing to pay for new releases and other staples from big brands like Nikehoka, adidas and On Running, and they're spending on things they may not necessarily need, but are nice to have.
Similar trends were seen at other retailers. Last week, Ross Stores, ralph lauren, urban providers and TJX Companies all reported positive comparable sales. Even Aim mentioned that apparel was a bright spot in an otherwise dark quarter after the retailer saw sluggish apparel sales in the year-ago period. Demand for new Hoka sneakers and UGG boots drove a 21% increase in sales in Deckersand even shoe carnivalwhich caters more to low-income consumers, posted sales growth of about 7%, above Wall Street estimates, according to LSEG.
More data is yet to come on the state of consumer health and the impact it is having on the apparel and footwear markets. Abercrombie & Fitch and American Eagle both report earnings later on Wednesday, while shoe drawer, Birkenstock and Gap will report on Thursday.
Read Dick's full earnings release here.
—Additional reporting by CNBC's Robert Hum
