Dick’s Sporting Goods investors eye Q4 margins, inventory levels ahead of earnings report
Yahoo Finance Live reviews shares of retailer Dick’s Sporting Goods ahead of its fourth-quarter earnings report ahead of Tuesday’s closing bell.
video transcript
JOSH SCHAFER: All right, my game today is Dick’s Sporting Goods ahead of the company’s quarterly earnings report, which is expected to be released before Tuesday. Now the report will give us another insight into the consumer and potential demand weakness. But for Dick’s investors, this report will likely be all about margins. The Street expects Dick’s to report higher fourth-quarter revenue year-over-year, largely due to the advertising environment during the holiday season. But the key will be how much Dick’s has sacrificed on the bottom line to grow that sales and relieve inventory.
Now, last week’s credit card data from Citi shows Dick’s leading other sporting goods retailers, but in the same study, the company downgraded the stock from “buy” to “neutral,” noting that it expects pressure on gross margin to continue in the near term . Barclays is in the same camp, lowering expectations for global gross margins last month. The street consensus on that number is currently 33 and 1/2% gross margin. We’ll look at that tomorrow before the bell. That would be the sixth straight quarter, Dave, of margin declines for Dick’s. Some people thought they could turn the corner here. It doesn’t seem to be that far yet. Dick is up about 10% year over year. I look forward to tomorrow’s report.
DAVE BRIGGS: Yes, that’s just a few days after Morningstar named 10 stocks that they believe are currently overvalued, just 10. And Dick’s Sporting Goods was sadly one of those 10 that said they lacked an edge, and that sporting goods retail in general was minimal due to external competition. So no good news ahead of earnings for Dick’s. Do you have anything to add?
SEANA SMITH: Yes, of couse. I was just about to say that the environment is so tough for every retailer out there right now. We know Dick’s is trying to diversify its business. They had this recent acquisition of Moose Jaw just because the game is there for their online business, which is where Dick’s e-commerce sales haven’t been doing well, so they’re betting big there, betting on outdoor apparel, in the Hope this might change the trend there. But we will see.
DAVE BRIGGS: Hoping that COVID–
SEANA SMITH: Does it help.
DAVE BRIGGS: – Trending continues.
SEANA SMITH: Yes, exactly.
DAVE BRIGGS: A great buy from Walmart.