Published on 27 May 2024 on Zacks via Yahoo Finance

Here's How DICK'S Sporting (DKS) Looks Ahead of Q1 Earnings

DICK’S Sporting Goods Inc. DKS is expected to register year-over-year sales growth when it releases first-quarter fiscal 2024 results on May 29. The Zacks Consensus Estimate for revenues is pegged at $2.9 billion, indicating growth of 3.5% from the year-ago quarter’s reported figure.The consensus estimate for earnings is pegged at $2.94 per share, which suggests a decline of 13.5% from the year-ago reported number. The consensus mark has moved down a couple of cents in the past seven days.In the last reported quarter, the company delivered an earnings surprise of 14.9%. It has a trailing four-quarter earnings surprise of 3.1%, on average.

Factors to Note

DICK’S Sporting has been benefiting from strength in its businesses, strong operational execution and store expansion initiatives. The company’s robust strategies, including merchandising initiatives and store-related efforts, also appear encouraging. Strong demand for its key product categories, driven by differentiated assortments across footwear, athletic apparel and team sports, has been aiding its top-line performance.Healthy transaction growth and higher average tickets have been contributing to a solid comparable store sales (comps) performance. These factors are likely to have boosted the company’s top-line performance. Our model predicts comps growth of 2.8%. Gross margin rates have been benefiting from reduced merchandise margin rates due to the normalization of pricing activity. Additionally, lower supply-chain costs have been aiding the gross margin performance for a while.However, escalating operating costs and expenses amid a high inflationary environment have been concerns. The company has also been witnessing rising SG&A rates, driven by higher wage rates, and increased investments in talent, technology and marketing. These limitations are likely to have hurt the company’s bottom-line performance. As a percentage of sales, we expect adjusted SG&A expenses to increase 10 basis points (bps) to 24.5%. In dollar terms, SG&A expenses are expected to rise 3.7% year over year.