Dick's is emerging as the biggest victor from the demise of its chief competitor. At an auction in late June, the company beat out fellow sporting goods competitors for the right to Sport's Authority Holdings's brand name and other intellectual property. The transaction cost Dick's a meager $15 million. For an additional $8 million, Dick's also won 31 Sports Authority store leases. The impact of the proceedings is expected to have long-term benefits but will have little bearing on tomorrow's report.
Analysts at Estimize are looking for earnings per share of 69 cents, down 10 percent from the same period last year. That estimate has dropped 11 percent since Dick's most recent report in May. Revenue is anticipated to grow by 4 percent to $1.9 billion, a marked slowdown from previous quarters.
The auction winnings complement the company's current strategy for expansion. Management has indicated that it expects to add 36 new Dick's Sporting Goods stores this year while relocating another nine. This doesn't include the 31 Sports Authority store leases acquired in June.
More importantly, Dick's has been growing its e-commerce platform to fend off competitive threats. During the first quarter, reported online sales accounted for 9.2 percent of total sales, compared to 8.5 percent from a year earlier. This number should continue to rise as the company devotes more resources to this important and growing part of the business.
Guidance last quarter would suggest earnings prospects still remain bleak though. Same-store sales are projected to be down 1 percent to 4 percent after growing 0.5 percent last quarter.