**Dick’s Sporting Goods Q2 Sales Boosted by Comps, Profit Hit by Inventory Shrinkage**
Dick’s Sporting Goods reported a 6.9% increase in second-quarter sales, driven by strength in its core categories of apparel, footwear, and hardlines. However, the company’s profitability was impacted by inventory shrinkage, which reduced gross margin by 130 basis points.
**Key Financial Highlights:**
* Net sales: $3.14 billion, up 6.9% from $2.93 billion in Q2 2022.
* Comparable store sales: up 7.5%.
* Gross margin: 30.1%, down 130 basis points from 31.4% in Q2 2022.
* Operating income: $318.4 million, down 18.4% from $388.8 million in Q2 2022.
* Net income: $204.4 million, down 24.5% from $271.2 million in Q2 2022.
* Diluted EPS: $2.64, down 24.5% from $3.51 in Q2 2022
**Performance by Category:**
* Apparel: 7.6% comparable sales growth.
* Footwear: 6.6% comparable sales growth.
* Hardlines: 7.8% comparable sales growth
**Inventory Shrinkage Impact:**
Dick’s Sporting Goods experienced a significant increase in inventory shrinkage during the quarter, which the company attributed to organized retail crime and other factors. This led to a $105 million pre-tax loss, or $0.97 per diluted share.
**Outlook:**
For the full year 2023, Dick’s Sporting Goods expects net sales to be in the range of $13.4 billion to $13.7 billion, representing growth of approximately 6.5% to 8.5%. Comparable store sales are projected to increase by 4.5% to 6.5%. The company also anticipates gross margin to be around 30.2% to 30.4%.
**CEO’s Comments:**
“Our second-quarter results reflect the strength of our business and the resilience of our team. We delivered solid sales growth across all three of our major categories, driven by our focus on providing exceptional customer service and offering a wide assortment of high-quality products,” said Lauren Hobart, CEO of Dick’s Sporting Goods. “However, our profitability was impacted by the significant increase in inventory shrinkage, which is a growing industry-wide challenge. We are taking aggressive steps to address this issue and protect our margins.”
**Analyst Commentary:**
Analysts were mixed in their reactions to Dick’s Sporting Goods’ second-quarter results. Some praised the company’s strong sales growth, while others expressed concern about the impact of inventory shrinkage on profitability. Overall, most analysts maintained a positive outlook on the company’s long-term prospects.
**Additional Takeaways:**
* Dick’s Sporting Goods plans to open 10 to 15 new stores in fiscal 2024..
* The company recently launched a loyalty program called ScoreCard, which has attracted over 4 million members..
* Dick’s Sporting Goods continues to invest in its omnichannel capabilities, including curbside pickup and same-day delivery.
Overall, Dick’s Sporting Goods’ second-quarter results were a mixed bag. While sales growth remained strong, inventory shrinkage weighed on profitability. The company’s long-term prospects remain positive, as it continues to execute on its growth strategies and address inventory challenges..
