Dick's Sporting Goods stock jumps on earnings beat

Yahoo Finance Live anchor Diane King Hall discusses the rise of Dick's Sporting Goods stock on Q1 earnings, the company's growth outlook, and consumer spending trends.

Video Transcript

RACHELLE AKUFFO: Well, we're on retail detail again this morning, as the last of the retailers report their results this week. Dick's Sporting Goods is out today posting strong results. Unlike what we saw last week with Foot Locker. "Yahoo Finance's" Diane King Hall is here to weigh in. Hi, Diane.

DIANE KING HALL: Hey, Rachelle. Well, let's start with a check on shares of Dick's. They are a little bit higher in response to posting better than expected numbers on its top and bottom line. But they've trimmed the gains that we saw earlier in the session. So up just about a little over a half of a percent now.

The sports retailer says, earnings totaled $305 million in the first quarter or $3.40 a share. That's up from the same time a year ago. Sales top $2.8 billion. CEO Lauren Hobart said, quote, "Even as consumers face macroeconomic uncertainties, our athletes have continued to prioritize sport and rely on Dick's to meet their needs."

I just listened to the earnings call. And these are some of the items that stood out to me. They talked about-- they did acknowledge the macroeconomic realities. They said, it does remain uncertain. But they believe they'll continue to deliver on sales and growth. They got a lot of compliments from analysts on their numbers. Because if you compare and contrast them to Foot Locker, you mentioned Foot Locker earlier, they did much better.

Dick's results stand in stark contrast to Foot Locker, which you may recall posted an 11% drop in sales. The question is, did Foot Locker lean too heavily on Nike and its lineup? Back in 2022, it bought 65% of its inventory from Nike. And it reiterated its partnership with the brand in March. Foot Locker also said it may have to discount more to incentivize shoppers. And so I want to pull out a couple more items from the Dick's earnings call, Rachelle, where they were asked about their relationship with Nike.

Lauren says, she doesn't feel they have an over inventory of Nike. Again, Dick's share price was doing better going into the earnings call. But there wasn't really anything that stuck out. It seems to be more of a general downtrend in the market that is affecting Dick's and just worries about the retail sector, in general. They were asked if the consumer is weakened. They said, basically, their consumer has not. Their consumer, they said, from low income to high income shoppers has remained strong.

They reiterated their presence with athletes purchasing from them. So they had strong numbers. Their comps were up 3.4% same store sales. So Dick's definitely stands in stark contrast to Foot Locker, though, it's not having a big run up in terms of its share price currently.

Earlier in the session, it did. We'll see how things shake out throughout the day, Rachelle.

RACHELLE AKUFFO: It's true. You just have to wait and see how investors digest all of this. And so to that point, Dick's didn't disappoint. But let's broaden it out to where some of the other trends that we're seeing have emerged this earnings season when it comes to the retail sector.

DIANE KING HALL: Yeah. You had some varying trends. You had a tale of two retailers, basically. Now, shoppers did spend less at some retailers. And there was a focus on necessities and not discretionary. Walmart was certainly the beneficiary of the focus on necessities. And that was really due to grocery.

Now, Target did beat when it reported its results. But it acknowledged and talked about the struggle with the impact of organized crime on its results. So really, what we've seen in terms of the retailers is those retailers that focus on necessities are doing well. And there were retailers that acknowledged there have been some trade down. Now, Dick's today said, they didn't notice much trade down in terms of people trading away from certain brand names for other brand names.

So they said, their differentiation of their inventory stood out. So that's something that definitely benefited them. But, again, other retailers pointed out that their struggle was with consumers trading down, Rachelle.

RACHELLE AKUFFO: Indeed. Still seeing that divergence. As you mentioned, the tale of two retailers. Great stuff. Thank you so much, Diane.