Dick's Sporting Goods (DKS, Financial) released its first-quarter 2021 financial results on May 26 before the market opened. The company's earnings and revenue rose year-over-year and surpassed Wall Street's expectations courtesy of digital sales and the return of kids' sports.
The company's shares climbed 8.1% in premarket trading to $90.95 following the earnings announcement.
Snapshot of the quarter
The Coraopolis, Pennsylvania-based company posted adjusted earnings per share of $3.79 in the first quarter, which exceeded last year's loss of $1.71 per share. Analysts had predicted adjusted EPS of $1.12. Revenue of $2.92 billion was up 119% on a year-over-year basis and beat analysts' projections of $2.18 billion.
Comparable store sales increased 115% in the reported quarter. That compares with a 29.5% comps decline reported in the first quarter of the previous year as a result of temporary store closures.
CEO Edward W. Stack had the following to say:
"We are very pleased to deliver another exceptionally strong quarter, achieving record first quarter sales and our highest-ever quarterly earnings, both significantly exceeding our expectations. The strength of our diverse category portfolio, supply chain, technology capabilities and omni-channel execution helped us continue to capitalize on strong consumer demand across golf, outdoor activities, home fitness and active lifestyle. We also saw a resurgence in our team sports business as kids began to get back out on the field after a year in which many youth sports activities were delayed or cancelled."
As a result of the pandemic, customers often refrained from going to the physical stores, which is why digital traffic gained momentum during the quarter. E-commerce sales, which include Curbside Contactless Pickup, jumped 14% during the quarter. The e-commerce segment made up roughly 20% of the first quarter sales, up from 13% in 2019.
Financials and liquidity position
At the end of the quarter, the company had cash and cash equivalents of $1.86 billion, with no outstanding borrowings under its $1.855 billion revolving credit facility. In order to strengthen its liquidity, Dick's issued $575 million worth of 3.25% Convertible Senior Notes in April last year, which enhanced its cash position by more than $500 million.
Inventory declined 4% during the first quarter, reflecting efforts to manage strong e-commerce demand.
During the quarter, the company bought back 1.03 million shares for $76.8 million. The average price per share was $74.59. The company is authorized to buy back another $954 million worth of shares under the stock buyback program.
The board of directors of the company announced a quarterly cash dividend of $0.3625 on May 21 on the company's common stock and Class B common stock. The dividend will be payable on June 25.
Guidance
Dick's has provided a financial forecast for full fiscal 2021. The company anticipates adjusted earnings to be between $8 and $8.70 per share. Revenue is projected to be in a range of $10.5 billion to $10.8 billion. Analysts are guiding for adjusted earnings of $5.32 per share on $9.8 billion in revenue.
Disclosure: I do not hold any positions in the stocks mentioned.
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