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Dick’s Sporting Goods (NYSE:DKS) shares continued to fall on Wednesday – following Tuesday’s 25% decline – as Bank of America downgraded the sporting goods retailer after it reported a weak second-quarter and cut its guidance for the rest of the year.
Analyst Robby Ohmes lowered his rating on Dick’s Sporting Goods (DKS) shares to neutral from buy, noting that the firm sees “increased risks” to both sales and the company’s margin outlook as spending returns to normal in categories that outperformed during the pandemic, including outdoor apparel and equipment, along with bicycles. Additionally, Ohmes said that years of high grocery inflation are starting to impact discretionary purchases while other forms of discretionary spending, such as travel and entertainment continue to see strength.
Ohmes also noted that Dick’s (DKS) may need to take further actions to reduce inventory in seasonal and other products that could negatively impact gross margins in the second-half of the year and expenses are on the rise, given higher spending on wages, advertising, technology and store growth, including the company’s House of Sports chain.
Looking ahead, Dick’s (DKS) said it expects full-year comparable sales growth of 0% to 2%, compared to the estimate of 1.4% growth. Full-year earnings per share are forecast to fall within a range between $11.33 and $12.13 per share, well below the prior outlook of $12.90 to $13.80 per share.
Analysts expect the company to earn $12.03 per share for the full-year.
Dick’s Sporting Goods (DKS) shares slipped nearly 2% in pre-market trading on Wednesday.
Analysts are universally bullish on Dick’s Sporting Goods (DKS). It has a BUY rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha’s quant system, which consistently beats the market, rates DKS a BUY.