Dick's Sporting to cut back on inventory in first quarter
The company's shares rose 4 percent to their highest ever level at $47.40 on Tuesday on the New York Stock Exchange, but later shed some gains to trade at $46.20.
Dick's Sporting plans to get rid of some piled-up inventory by discounting and returning merchandise to vendors. The company ended the year with higher inventory as some winter merchandise remained unsold at its stores.
"We believe the margin impact from clearance activity will be contained within the first quarter," Chief Financial Officer Timothy Kullman said on a call with analysts.
The company forecast first-quarter profit of 36-38 cents a share. Analysts were expecting 36 cents a share, according to Thomson Reuters I/B/E/S.
Pittsburgh-based Dick's Sporting sees same-store sales rising 3-4 percent in the first quarter.
"Opportunities for accelerating square footage growth, and continued progress in growing the e-commerce business should continue to drive sales in the short and long term," Citigroup analyst Kate McShane wrote in a client note.
E-commerce business at Dick's sporting rose about 52 percent in the fourth quarter.
"Looking forward we believe the setup is in place for Dick's Sporting to provide potential EPS upside nearly all year with management taking a conservative tack to guidance," JPMorgan analyst Christopher Horvers said in a client note.
Dick's Sporting, which sells branded merchandise like athletic footwear and apparel under brands such as Nike Inc (NKE.N), Adidas AG (ADSGn.DE) and Under Armour Inc (UA.N), reported fourth-quarter results in line with analysts' expectations.
The stock has gained more than a quarter in value since it trimmed the top end of its fourth-quarter earnings outlook in January, at a time when the market expected worse due to a warmer winter.
Dick's Sporting, which operates 480 namesake and 81 Golf Galaxy stores, also plans to open about 40 new stores this year and is targeting opening half of these in new markets.
(Reporting by Meenakshi Iyer in Bangalore; Editing by Viraj Nair)
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