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Dick’s Sporting Goods down after beating Q3 earnings, e-commerce growth plateauing

Yahoo Finance Live’s Brian Sozzi and Julie Hyman break down the stock dip Dick’s Sporting Goods is experiencing after it beat Q3 earnings estimates and its e-commerce sales growth slowed.

Video Transcript

JULIE HYMAN: But let’s turn to retail this morning. We were just talking about Best Buy and what that company reported. Another company out with an earnings this morning was Dick’s Sporting Goods. And that company reported that comparable sales rose 12.2%. That is much better than analysts had been predicting. The shares, though, are trading lower. And you a bit of a, few head scratchers this morning here. The company, it looks like the earnings beat estimates, revenue beat estimates here. So I’m not sure what’s going on here. Maybe do we have another margin story here Brian Sozzi?

BRIAN SOZZI: Well, if one is looking for a market top or has visions of a pullback here in the market, you look at the earnings reactions to very strong quarters from Best Buy and here, same thing for Dick’s Sporting Goods, another very strong quarter for this company. Absolutely blew it out of the water and you’re seeing the stock pull back on the results. So it has me thinking maybe we have reached some type of short term top. We’ll save that discussion for later.

Dick’s Sporting Goods, same store sales up 12.2%, last year up 23.2%. I mean, these are not normal gains. And in many respects reflects what Dick’s Sporting Goods is doing here Julie, reinventing the golf department for them, putting in a lot more simulators. People actually go in there and buy clubs and balls inside the store instead of online, which is a good thing. And just upgrading the look and feel of these stores so people want to go in there and buy stuff. And it’s showing up in the results.

E-commerce sales up 1%. That is pretty good considering the gains last year at the height of the pandemic. And another retailer coming out here with upbeat holiday quarter guidance. Really surprising to see the market reaction here.

JULIE HYMAN: Yeah. I wonder– it’s one of the things that I did notice is that e-commerce growth has been slowing down for the company. Online sales were up by only 1%. Now they comprise about 21% of the company’s sales. Maybe that’s something that is a little bit disappointing for folks. But again, it’s hard to exactly figure out what’s going on here.

BRIAN SOZZI: If you’re, a retailer like Dick’s to see your operating margins go from 15.28% from 10.20% last year, in an inflationary environment year, not just for goods and transportation, but of course labor, that is a home run quarter. I would be shocked if you see analyst downgrades in the coming days.

JULIE HYMAN: Yeah. Well, we’ll keep an eye on that for sure.