Dick's Sporting Goods, Inc. beat expectations and announced Tuesday that its fiscal fourth-quarter profits more than doubled.
The sporting goods store, which sells merchandise from brands like Nike, Adidas, Reebok and Under Armour, reported net income of $41.5 million, or $0.33 per share, up from $16.9 million, or $0.14 per share, in the same period a year ago.
The company's earnings performance exceeded expectations of between $0.24 to $0.26 per share.
In the third quarter, we generated sales and earnings meaningfully above our expectations while increasing our margins and further strengthening our balance sheet, said Edward W. Stack, chairman and CEO of Dick's, in a statement.
Sales rose 9.3 percent to $1.18 billion, which also beat analysts' expectations. This was due in large part to identical-store sales, which grew 4.1 percent to beat the company's expectation of between 1 and 2 percent.
The company also said it would pay shareholders 50 cents per share in its first annual dividend. Regular quarterly dividends are scheduled to begin next year.
Our board's decision to initiate a dividend demonstrates its confidence in the company's financial strength and growth potential, Stack said.
Off the strong third-quarter results, Dick's raised its full-year earnings forecast from $1.94 to $1.96 per share to an expected $2.01 to $2.03 per share.
However, Dick's said it foresees sales remaining nearly flat, which seems to be a conservative estimate considering the company's 9.3 percent increase in sales last year.
With healthy dose of uncertainty around consumer spending getting in to the holiday season, I think conservatism is the prudent way to go, Canaccord Genuity analyst Camilo Lyon told Reuters.
I think like most retailers going into the holiday season, Dick's Sporting needs to focus on having trend-right merchandise and appropriate amount of inventory on hand to satisfy consumer demand.
Off the earnings report, shares of Dick's jumped 4.55 percent to 41.38 as of 2:10 p.m. ET.