Dick's Sporting Goods (DKS) will report Q1 earnings tomorrow (7:30 ET last quarter) with a conference call to follow at 10 AM ET.

Current Cap IQ consensus estimates Q1 EPS of $0.58 (-1.7% Y/Y) on revs of $1.9 bln (-0.5% Y/Y) with comps down 1.3%

Last quarter, DKS beat on EPS and reported revs in-line. Q4 comps fell 2.2% versus -3.4% estimate while FY20 EPS guidance was in-line.

  • FY20 guidance calls for EPS of $3.15-3.35 (includes $0.23/share of net investments in business transformation initiatives) on comps in the range of ~flat to an increase of 2%

    • Gross margin rates expected to be ~ flat to down slightly, driven by anticipated double-digit sales growth in the eCommerce, which has lower gross margin rate and from the fulfillment center investments. 

  • The Street expects FY 20 EPS of $3.26 on revs of $8.55 bln (+1%). 

  • Notes from Q4's call

    • As a % of total net sales, online business increased to 23% compared to 19%

      • 17% increase in ecommerce

    • Apparel and athletic footwear each delivered low single-digit comp increases

    • Double digit declines in hunt and electronics

      • DKS will remove hunt from ~125 additional Dick's stores in 2019

      • Comps would've been +0.8% ex hunt and electronics

    • DKS has invested in fulfillment capabilities and is building two new eCommerce centers in NYC and California

Gross profit in the 27.87% of net sales, a 168 bp decline vs last 

The decline in gross margin was driven by higher shipping,fulfillment and freight costs as a result of strong eCommerce growth and by occupancy deleverage.

TECHS:

DKS trades at a PE of 11.6x vs peer Hibbett (HIBB 11x) who was up more than 20% following its earnings last week

Short interest has almost doubled from 14% before the Q4 report to 26% as of April 15.

TRADE: JUN21 32P OR 30P