Earnings Preview: Dick's Sporting Goods

| About: Dick's Sporting (DKS)

Dick's Sporting Goods (NYSE:DKS) is expected to report Q2 earnings before market open Thursday, Aug. 21, with a conference call scheduled for 10:00 am ET.


Analysts are looking for a profit of 36c on revenue of $1.1B. The consensus range is 33c to 38c for EPS, and revenue of $1.05B to $1.16B, according to First Call. In May, the company predicated Q2 EPS 34c to 38c and same-store sales down 4% to 7%; the company also forecast FY08 EPS $1.22 to $1.36 vs. First Call consensus of $1.26 and FY08 SSS down 3% to 5%.

Analyst Views

Retailers have had many challenges as consumers cut back on discretionary spending amid rising food and gas prices and declining home values. Additionally, years after being acquired by Dick's, the headquarters of Golf Galaxy will close, the company said. Several jobs, including Golf Galaxy's co-founder and CEO Randy Zanatta, are affected in Minnesota from the closure.

Goldman Sachs analyst David Korstin wrote that the credit situation facing the consumer is still deteriorating, house prices are falling sharply, and unemployment is rising. Korstin said that he believed the Consumer Discretionary sector would benefit from bank recapitalizations and fiscal stimulus, but "our thesis was clearly wrong in hindsight." At the same time, the analyst upgraded shares to Buy from Neutral based on long-term earnings growth and the impact from difficult business conditions on smaller competitors. An Oppenheimer analyst believes gas prices probably hurt Dick's during the summer. Over the long-term, Oppenheimer believes the company will dominate its market, but they think the company now lacks sales visibility.