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A shopping cart sits outside a Dick's Sporting Goods store on August 26, 2020 in Daly City, California.
Justin Sullivan | Getty Images News | Getty Images
Dick's sporting goods Wednesday said customers are spending more on new sneakers and sporting goods, prompting the retailer to raise its full-year profit forecast.
Shares rose about 7% in premarket trading.
The major sporting goods retailer's comparable sales grew 5.3% during its first fiscal quarter, well above the 2.4% that analysts expected, according to StreetAccount.
The company said the growth was driven by more transactions, which means more customers are shopping at Dick's, and higher average ticket values, which shows shoppers are also spending more.
Here's how Dick's did in the first fiscal quarter, compared to what Wall Street expected, based on a survey of analysts by LSEG:
- Profit per share: $3.30 vs. $2.95 expected
- Gain: $3.02 billion versus $2.94 billion expected
The company's reported net income for the three-month period ended May 4 was $275 million, or $3.30 per share, compared to $305 million, or $3.40 per share, a year earlier.
Revenue rose to $3.02 billion, up about 6% from $2.84 billion a year earlier.
The strong quarter prompted Dick's to raise expectations for the full year.
The retailer now expects earnings per share to be between $13.35 and $13.75, compared to the previous range of $12.85 to $13.25. According to LSEG, that is higher than the $13.25 that analysts had expected.
CEO Lauren Hobart said she expects “strong demand from athletes” in the coming quarters, underscoring the company's prospects. Still, sales expectations fall somewhat flat following the retailer's first-quarter sales decline.
Dick's now expects comparable sales to rise between 2% and 3%, compared to previous expectations of a 1% to 2% increase. The lower end of that range only matches the 2% growth that analysts expected, according to StreetAccount.
Dick's expects full-year sales of between $13.1 billion and $13.2 billion, which is also in line with estimates of $13.16 billion, according to LSEG.
A shock to shoes and clothes
Over the past year, consumers, crushed by persistent inflation and high interest rates, have turned to durable items like new clothes and shoes, but the clothing and shoe markets have shown some signs of life in recent weeks.
Dick's performance indicates that consumers are willing to spend money on new releases and other products from major brands such as NikeHoka, Adidas and On Running, and spend money on things they may not necessarily need, but are nice to have.
Similar trends were observed at other retailers. Last week, Ross Stores, Ralph Lauren, Urban Outfitters And TJX Companies all reported positive comparable sales. Even Goal mentioned that apparel was a bright spot in an otherwise bleak quarter, after the retailer saw sluggish apparel sales in the year-ago period. Demand for new Hoka sneakers and UGG boots drove a 21% increase in sales Deckerseven Shoes Carnivalwhich focuses more on lower-income consumers, saw sales grow about 7%, higher than Wall Street estimates, LSEG said.
There will be more insights to come about the state of consumer health and the impact it is having on the apparel and footwear markets. Abercrombie & Fitch And American Eagle both report earnings later on Wednesday Foot Locker, Birkenstock And Hole will report on Thursday.
Read Dick's full earnings call here.
– Additional reporting by CNBC's Robert Hum