Dick's Sporting Goods CEO blames slowing sales on nice weather

Runner stretching dick's sporting goods adDick’s Sporting Goods on FacebookDick’s Sporting Goods says warm weather is hurting sales.

While one may expect that unseasonably warm weather would be good news for a sporting goods chain, Dick’s says that the opposite is true.

Shares of Dick’s Sporting Goods crashed after the company reported missing expectations in the third quarter, something CEO Edward Stack blamed on what he called “funky weather.”

Same-store sales increased 0.4% in the quarter, missing the company’s guidance of an increase of 1 to 3%. Adjusted earnings of $US0.45 per share missed expectations by one penny, on sales of $US1.64 billion, less than analysts’ expected $US1.66 billion.

The comparatively toasty fall meant that seasonal purchases such as winter sportswear and hunting supplies were down, typically major areas of growth during this time of year at the company.

While Dick’s said that areas including athletic footwear, apparel, and accessories have been unaffected by the warm weather and posted positive comparable sales, these gains could not make up for the scourge of the warm weather.

Investors may have been willing to chalk up the quarter as a bout of bad weather and hold onto their shares, if not for the fact that Dick’s believes the heat wave is going to negatively impact the rest of the year as well.

Dick’s now predicts that fourth-quarter adjusted earnings per share will be $US1.10 to $US1.25, below analyst expectations of $US1.42. That means the company’s full-year earnings are down to $US2.85 to $US3.00 per share, from $US3.13 to $US3.21.

The company is concerned that the warm weather will continue, meaning that seasonal offerings such as hunting gear may remain unsold. Dick’s is currently working to return slow-selling merchandise, as total inventory was 13.1% higher at the end of the quarter compared to the same period last year.

Complicating the issue is what Stack calls a “more promotional environment” for the holiday season. As competitors slash prices for Black Friday and holiday sales, Dick’s is going to have to do the same, resulting in a likely drop in overall revenue.

The company’s shares plummeted after reporting earnings, falling by as much as 17% to $US33.55, after closing at $US40.78 on Monday. Following the company’s earnings call, stock partially rebounded, but remained down, at $US36.44 at 12:00 p.m.

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