Dick’s Sporting Goods Earnings Call Insights: Golf Business and Weather Impact

Dick’s Sporting Goods (NYSE:DKS) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.

Golf Business

Gary Balter – Credit Suisse: Ed, do you emphasize that do you want to get more back to a value equation and you specifically mentioned golf, what you are seeing that’s says that that’s necessary in your stores specifically in that space?

Edward W. Stack – Chairman & CEO: Well, golf business, Gary, it’s kind of little bit – as we said was one of the areas that had been more impacted from a sales standpoint and number of vendors are starting to work on promotions in order to drive some business. So we are in the process of working with them to (indiscernible) our opinion and to work with them on how to best support the golf business to try to drive these sales. We thought it would somewhat difficult to anniversary what happened in the golf business last year, but because there is some factors it was a little bit worse than we had anticipated which has been pretty well chronicled. But this is one of the areas that we think we got an up until some pent-up demand and we want to go after that pent-up demand with some better promotion. So that we don’t have some of these people deferring these purchases towards next year.

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Gary Balter – Credit Suisse: Then just extending out passionately when you look at other categories by extending our past calls?

Edward W. Stack – Chairman & CEO: Clearly there are some other areas that we are looking at some of these promotions as we’ve talked about the fitness business, especially cardio business has continued to be difficult and we are working through some promotions to exit out of this LIVESTRONG, the LIVESTRONG product as we start to transition into another brand.

Weather Impact

Brian Nagel – Oppenheimer: First question just on weather. I know that was the big issue in the quarter, but I apologize if you addressed this in your prepared comments. But weather was obviously an issue for sales through Q1. But as weather improved in various markets did you see sales pick up maybe some color around that?

Edward W. Stack – Chairman & CEO: Well, we didn’t, weather has certainly had an impact we didn’t call out the weather as a specific issue because we didn’t want to hide behind the weather. We’ve got a responsibility to drive sales and earnings irrespective of the weather. We did under the circumstances I think the team did a very good job of driving those earnings numbers. As we have seen weather gets better, there has been a change in the sales trend, yes.

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Brian Nagel – Oppenheimer: Do you want to quantify that all or…?

Edward W. Stack – Chairman & CEO: We never really for competitive – we’ve never gotten to that level of detail to actually say that it got better in the – as the weather got better is different for the disclosures that we’ve provided in the past, and under these circumstances I think we should do that. As it got better in different parts of the countries, it certainly had a meaningful impact to sales…

Brian Nagel – Oppenheimer: Then the second question, on the LIVESTRONG product. I guess this was called out in Q4. So the comments that you are making today about further phasing down that product, I think you said by Q3, should we take that as kind of an incremental negative versus what we heard in the fourth quarter call or is this base gets continuation of the effort you put forth two months ago?

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Edward W. Stack – Chairman & CEO: With the continuation – I thought we indicated in the call that fitness business was important in the fourth quarter, but it’s very important in the first quarter also now with New Year’s resolutions and that. And the LIVESTRONG brand being 50% of that total cardio business, which is the biggest part of the fitness business, it does continue to have an impact. And we expect to continue to have an impact through the second quarter and I think we’ll be in good shape going to the third quarter. But we’ve indicated we’d be out of all of these issues by the – in the fitness side, by the end of the third quarter. I actually think it will be earlier than that.

Brian Nagel – Oppenheimer: And is that bringing in a competing brand or is it actually the process deemphasizing category within your stores?

Edward W. Stack – Chairman & CEO: It’s bringing in a different brand.

A Closer Look: Dick’s Sporting Goods Earnings Cheat Sheet>>

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