While CNBC's Jim Cramer acknowledged Dick's Sporting Goods reported a rough quarter, he thinks Wall Street's reaction was a little extreme. The company's stock tumbled a little over 24% during Tuesday's session.
"I agree it was bad, but now it's down 25% bad? Uh-uh, that's wrong," Cramer said, referring to the stock's cumulative drops on Tuesday and Wednesday. "I think the problems with Dick's are now baked into the estimates while the longer-term growth opportunities are being ignored," he added.
Dick's reported $2.82 earnings per share, significantly less than the $3.81 per share that analysts expected, according to Refinitiv. Revenue came in slightly lower at $3.22 billion versus the $3.24 billion expected. And the athletic goods retailer lowered its profit forecast for the rest of the year.
During the company's conference call, CEO Lauren Hobart attributed the company's disappointing quarter in part to excess inventory and shrink, citing inventory lost due to theft or internal issues. It was the first reference the retailer has made to shrink in a press release in nearly 20 years.
Cramer stressed that Dick's declining stock price isn't reason alone to buy. Investors need a solid thesis to own the company, and he thinks there's potential. It currently trades at about $100 a share.
Cramer mentioned Dick's growing "Galaxy Golf" business and its new "House of Sport" stores that include large areas for footwear, batting cages for baseball products, hitting bays for golf, as well as rock-climbing walls. He said he thinks Dick's new app GameChanger could be a boon for the company. Intended for kids' sports, the app can help with scorekeeping, live streaming and team management.
"These aren't just stores, they're experiences," he said. "They also adjust them depending on the region. For example, at one of Dick's House of Sport locations in Minnesota, they had a focus on fishing equipment."
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