Dick’s Sporting Goods Inc., which reports fourth-quarter results before market open Tuesday, is expected to sidestep the spending weakness that has affected many retailers this earnings season.
“[Dick’s Sporting Goods] trends have likely been resilient in the face of a wavering consumer,” said UBS analyst Michael Lasser in a note released Monday. “We think the combination of sound execution and a compelling product assortment enabled [Dick’s] to gain significant share during [the fourth quarter].”
The analyst also described the company’s stock as a “rock” in contrast to other names in the retail sector. “[Dick’s] shares seem to have a lot of pull to want to move higher,” he wrote, pointing to the company’s third-quarter results last year. “There were blemishes in the print. Yet, the stock rallied 10.1% on the day of the release, showing that the market has a favorable view of this retailer’s outlook.”
Related: As consumers pull back on discretionary spending, what’s next for retail?
In its third quarter, Dick’s
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topped estimates with positive same-store sales and also delivered an upbeat outlook. The company’s stock has risen 15.1% in the last three months, outpacing the S&P 500’s
SPX,
gain of 1.2%.
UBS has a neutral rating for Dick’s Sporting Goods.
One of the key trends of this retail earnings season has been a pullback in discretionary spending as consumers refocus their budgets amid an uncertain macroeconomic environment.
Related: Costco still showing strength despite discretionary-spending pullback, analysts say
But in a note released last month, D.A. Davidson analyst Michael Baker wrote that sporting goods have been holding up well. In a separate note, the analyst also described Dick’s as one of the retail sector’s best stock performers since the start of the pandemic. The company’s stock has climbed 262.8% in the last three years, compared with the S&P 500’s gain of 37.3%.
Analysts surveyed by FactSet expect Dick’s Sporting Goods to report earnings of $3.26 a share, or $3.19 on an adjusted basis, and sales of $3.646 billion.
In a recent report, analytics company Placer.ai said that Dick’s Sporting Goods and sporting-apparel retailer Hibbett Inc.
HIBB,
have seen foot traffic increase from 2019, before the COVID-19 pandemic hit. During the fourth quarter of 2022, Dick’s foot traffic was up 0.8% compared with 2019, while Hibbett’s was up 28%.
Now read: Hibbett profit and sales fall below estimates as shoppers buy footwear but shun apparel
“The two chains’ emphasis on expansion over the past few years has likely contributed to their consistently outperforming foot traffic,” wrote Placer.ai. “[Dick’s] has also been leaning into partnerships, teaming up with brands like Peloton and Stanley to bring a wider customer base into their stores.”
However, last week, Hibbett Inc.’s fiscal fourth-quarter earnings and its guidance for the current year fell short of estimates. The Birmingham, Alabama-based company’s results were weighed down by supply-chain issues and promotional activity.
Of 27 analysts surveyed by FactSet, 13 have an overweight or buy rating, 13 have a hold rating and one has an underweight rating for Dick’s Sporting Goods.
Additional reporting by Ciara Linnane.
