Revenue Beat Sends Dick’s Stock SoaringNov 22, 2023
Cost-cutting is finally starting to bite
After a real cruel summer, Dick’s Sporting Goods is ascendant this morning thanks to a huge revenue and earnings beat. Let’s unpack the numbers.
Dick’s smashed expectations on both sides of the ball by generating a strong $2.85 EPS from $3.04 billion in revenue. This is a great reversal after Dick’s languished under inventory costs over the summer.
FOCUSED ON FUNDAMENTALS
Dick’s is now a year deep into their cost-cutting plan, and that finally appears to be paying dividends. Layoffs in August and new inventory measures have finally allowed for profitability growth while a stronger-than-normal back-to-school season propelled revenue to way better heights. But, more importantly, high-end products and cheaper essentials are keeping revenue lift alive at DKS. Dick’s now expects a decent lift to full-year revenue and a much-improved EPS thanks to even better cost management in Q4. Sometimes that’s all the market needs.
WHY IT MATTERS
As consumer spending slowly dries up, retailers are being pushed further and further into a difficult position. What we’re seeing now is that it is possible for some retailers to manage their way out of this decline. The cost-cutting at Dick’s is a really strong example of how companies can still find growth in this environment. Of course, DKS still has a ways to go to reclaim the heights they hit in Q2, but the market is back on board with their roadmap. Dick’s stock rose over 8% in early trading.