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RetailDick's Sporting Goods

Warm Weather is Taking its Toll on Dick’s Sporting Goods

By
John Kell
John Kell
Contributing Writer and author of CIO Intelligence
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By
John Kell
John Kell
Contributing Writer and author of CIO Intelligence
Down Arrow Button Icon
November 17, 2015, 3:14 PM ET
Dick's Sporting Goods Declines as Forecast Trails Estimates
Photographer: Craig Warga/Bloomberg via Getty ImagesPhotograph by Craig Warga — Bloomberg via Getty Images

Last year, Fortune gave Dick’s Sporting Goods credit for not blaming cold weather on poor sales during the early spring. At the time, the athletic and outdoor gear purveyor said it wouldn’t hide behind poor weather and simply said that sales for its golf business were crummy.

But this fall, its golf business is on firmer footing, and Dick’s (DKS) now finds itself lamenting warm weather, which it says hurt sales for outerwear, fleece, compression gear to keep athletes warm, and hunting boots.

Wall Street was disappointed by the results, with Dick’s missing on both its sales and bottom line as the company lowered its full-year earnings guidance. Dick’s now sees a profit between $2.85 to $3 per share, down from its prior target of $3.13 to $3.21. Same-store sales only increased 0.4% during the quarter, while analysts had hoped for a 1.9% bump.

Slowing sales also led to a problematic 13% increase in inventory. Dick’s is already warning investors that it’s off to a slow start for the key holiday sales quarter.

To face those woes, the retailer said it have to be more promotional, resulting in pressure on profit margins. Dick’s is also working with vendors to slow orders for goods that aren’t selling well right now. In the hunting category, for example, it can hold off on orders of hard goods like guns and ammunition. Instead of marking those goods down at the retail level, Dick’s is planning to just delay the orders for next spring.

And if the weather finally turns cooler, chief operating officer Andre Hawaux says Dick’s is well positioned.

“If it does get cold, we’ve got the inventory, we’ve got the right product,” he promised investors during a conference call. In some markets where the temperature has dropped, Hawaux said, the response from shoppers has been favorable to the retailer’s assortment.

Other pockets of the business are performing well. E-commerce sales jumped 18% in the third quarter, and sales are strong for Dick’s Calia brand, a newer line backed by singer Carrie Underwood. The company has also deepened its investments with hot brands like Nike (NKE) and Under Armour (UA). And in the latest period, sales grew for the athletic apparel and footwear made by those manufacturers.

About the Author
By John KellContributing Writer and author of CIO Intelligence

John Kell is a contributing writer for Fortune and author of Fortune’s CIO Intelligence newsletter.

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