DICK’S Sporting Goods Inc. (NYSE:DKS) is anticipated to demonstrate year-over-year growth in sales and earnings with the upcoming release of its fourth-quarter fiscal 2023 results on Mar 14. The Zacks Consensus Estimate for fiscal fourth-quarter revenues stands at $3.8 billion, reflecting a 4.2% increase from the figures reported in the year-ago quarter.
The consensus estimate for fiscal fourth-quarter earnings is $3.34, indicating a 14% rise compared to the year-ago reported number. Over the past 30 days, the consensus mark has experienced a 1.2% increase.
Looking at fiscal 2024, the Zacks Consensus Estimate for earnings sits at $12.41 per share, implying a 3.1% growth from the previous year. Additionally, the consensus estimate for fiscal 2024 revenues is $12.9 billion, signaling a 4% growth from the prior-year quarter’s reported figure. The consensus estimate for fiscal 2024 earnings moved up by a penny in the past seven days.
In the last reported quarter, DICK’S Sporting exceeded earnings expectations with a surprise of 16.8%. However, it has a trailing four-quarter negative earnings surprise of 0.04%, on average.
DICK’S Sporting has been leveraging its strengths in operational execution and store expansion initiatives, leading to positive trends in the sporting industry. The company’s merchandising strategies and store-related efforts have been instrumental in tapping into the growing demand for key product categories, including footwear, athletic apparel, and team sports. This has translated into increased comparable store sales (comps) driven by healthy transaction growth and higher average tickets.
Management anticipates comps growth of 0.5-2% for fiscal 2023, with our model predicting a 1.5% increase for the fourth quarter of fiscal 2023 and a 2% increase for fiscal 2023 overall.
Despite these successes, DICK’S Sporting faces challenges from escalating operating costs and expenses amid a high inflationary environment. Factors such as higher SG&A rates, driven by wage increases and investments in talent, technology, and marketing, may weigh on the company’s margin performance. However, the company expects the gross margin rate to improve in the fourth quarter of fiscal 2023.
Adjusted gross margin is expected to expand by 210 basis points year over year to 34.5% for the fiscal fourth quarter and by 40 basis points to 35% for fiscal 2023. On the other hand, adjusted SG&A expenses are projected to increase, with a 120-basis-point rise to 24.1% for the fiscal fourth quarter and a 170-basis-point increase to 24.1% for fiscal 2023. This may offset some of the growth in gross margin, leading to a slight decline in adjusted operating margin for fiscal 2023.
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