Sporting goods retailer Dick’s Sporting Goods reported a 9.7% increase in its second-quarter comparable store sales on Wednesday, driven by strong demand for athletic apparel and footwear. However, the company’s profit was hit by inventory shrinkage, leading to a decline in its gross margin..
Net sales for the quarter ended July 30, 2023, amounted to $3.1 billion, up from $2.83 billion in the prior-year period. Comparable store sales, a key metric for retailers, increased by 9.7%, with double-digit growth in both the athletic apparel and footwear categories..
However, the company’s gross margin fell to 30.5% from 32.2% in the previous year’s quarter, primarily due to increased inventory shrinkage. Dick’s Sporting Goods has been grappling with inventory shrinkage, which refers to the loss of inventory due to factors such as theft, damage, and administrative errors. The company noted that it has taken steps to address this issue, including implementing new security measures and improving its inventory management processes..
As a result of the lower gross margin, the company’s operating income decreased by 17.6% to $279.6 million. Net income also declined by 21.1% to $201.5 million, or $1.53 per diluted share..
Despite the profit decline, Dick’s Sporting Goods maintained a positive outlook for the remainder of the year. The company raised its full-year comparable store sales guidance to a range of 6% to 8%, up from its previous estimate of 3% to 5%..
