By Sara Germano And Tess Stynes
After a difficult year, Dick's Sporting Goods Inc. said Tuesday
it expects its golf business to turn around in 2015.
Dick's executives said they expect the golf business to hit
bottom during the fourth quarter--winter is traditionally a slow
period for the category--before returning to profitability next
year.
The sporting-goods retailer's Golf Galaxy division has been hurt
by weak demand, leading Dick's to cut hundreds of jobs in the
division earlier this year. Comparative same-store sales at Golf
Galaxy locations dropped 8.9% for the period ended Nov. 1, while
namesake stores posted growth of 1.7%.
Still, Chief Executive Edward Stack reiterated that the
specialty chain, acquired by Dick's in 2007, is profitable despite
negative comparable sales.
"We have been very clear about this, we are not exiting the golf
business, we are not exiting the Golf Galaxy business," he
said.
Already, some golf-equipment vendors are hoping for a
turnaround. TaylorMade, a golf division of Germany-based Adidas AG,
for the first time unveiled its entire 2015 collection of clubs at
an event in New York last week. By unveiling its lineup all at
once, TaylorMade said it would help better gauge future demand,
which is important after both golf retailers and manufacturers were
stuck with excess inventory this year.
Dick's said it was "cautiously optimistic" about new products it
was receiving from golf manufacturers and called out new Titleist
915 drivers as having promising pre-sale orders.
The Pittsburgh-based retailer's earnings fell 1.5% to $49.2
million for the period compared with a year earlier. Revenue grew
9% to $1.53 billion.
Dick's, which had announced a shift to allocate more store space
to growing categories like women's and youth athletic apparel, said
it took approximately 1,000 square feet of space per single-level
store away from golf merchandise earlier this year. Some space also
was taken from fitness and bike merchandise sections, executives
said.
That bet on women's and youth athletic apparel has begun to pay
off, with sales increasing in the double-digits for two consecutive
quarters, the company said.
Mr. Stack said Dick's hunting business, weakened by a decline in
sales of both guns and ammunition, is "not rebounding as quickly as
we had anticipated," though they expect sales to be flat next
quarter as comparisons begin to ease from a record hunting sales
surge in 2013.
Gross margin fell to 29.6% from 30.3%, as overhead costs rose
7.2%. Dick's said it expects fourth-quarter margins to face
pressure from an expected promotional holiday period as well as
higher shipping costs related to its e-commerce business.
Dick's raised the lower end of its fiscal-year earnings estimate
by a 5 cents a share and said it now expects a profit of $2.75 to
$2.85 a share for the year. But the company also trimmed the upper
end of its forecast for same-store sales growth by a percentage
point and now expects a rise of 1% to 2%.
Write to Sara Germano at sara.germano@wsj.com and Tess Stynes at
tess.stynes@wsj.com
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