Investing.com – Dick’s Sporting Goods slumped Tuesday as the retailer’s downbeat outlook and weak margin growth offset better-than-expected fourth-quarter results.
Dick’s Sporting Goods (NYSE:DKS) reported fourth-quarter earnings of $1.07 per share, down from $1.22 a year earlier, on revenue of $2.49 billion, down from $2.66 billion a year earlier.
That beat estimates from Investing.com for earnings of $1.06 a share on revenue of $2.48 billion, but shares fell 10% as the retailer delivered a dour outlook for 2019 same-store sales growth.
Dick’s guided 2019 earnings per share in the range of $3.15 to $3.35 and same-store sales flat to up 2%.
Analysts also highlighted narrower gross margins as a pain point for the stock, but said margin growth would improve. Dick’s said it would remove the hunt category from an additional 125 stores in 2019 after removing it from 10 stores late in the third quarter of last year.
“Gross margin narrowed 120 basis points to 27.9%, missing consensus,” said CFRA, an independent research provider. “That said, we see headwinds from phasing to meaningfully abate and be a long-term positive for margins in FY 21.”
“The decision, in our view, gives DKS the opportunity to optimize assortment and floor space to higher-margin categories, such as private labels,” CFRA said.