Dick's is the latest sporting goods retailer to slash guidance

With the sporting goods competition dropping like flies, Dick's Sporting Goods Inc. (ticker: DKS) was unable to take advantage of the opportunity in the second quarter. On Tuesday, Dick's reported disappointing second-quarter earnings and lowered its full-year guidance in the face of what it calls a "challenging retail environment."

[Read: 3 Things Impacting Retail Stocks Into 2017.]

Dick's reported earnings per share of 96 cents, just shy of consensus analyst estimates of $1. Revenue for the quarter was $2.157 billion, slightly below Wall Street expectations of $2.161 billion.

While the top- and bottom-line numbers were disappointing, same-store sales were even more troubling. DKS reported growth of only 0.1 percent, well short of analyst forecasts of 1.7 percent growth.

The real reason DKS stock is down another 20 percent on Tuesday, however, is the guidance cut. Dick's had previously guided for full-year EPS in a range between $3.65 and $3.75. Now the company expects to report EPS between $2.80 and $3.&

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Athletic apparel stocks Nike (NKE) and Under Armour (UA, UAA) both traded lower on Tuesday as evidence of a weakening sporting goods market continues to mount.

Investors had been optimistic that Dick's could benefit from a handful of high-profile bankruptcies in the sporting goods space in recent years, including Sports Authority, City Sports and Gander Mountain. Unfortunately, even with less competition from brick-and-mortar rivals, the company hasn't been immune to online pressures facing the entire retail industry.

For now, Dick's CEO Edward Stack says the company will be doing whatever it takes to hold onto its market share, including cutting prices.

"By design, we will be more promotional and increase our marketing efforts for the remainder of the year, as we will aggressively protect our market share," Stack said.

"We continue to believe retail disruption creates opportunities for us as we look long-term."

UBS analyst Michael Lasser predicted a guidance cut from DKS last week. After rivals Hibbett Sports, Inc. (HIBB) and Cabelas Inc (CAB) both cut guidance by roughly 10 percent each, Lasser saw the writing on the wall.

"DKS is operating in a tough sporting goods retail landscape," Lasser said. "While it's managing the environment better than its brick and mortar peers, it isn't fully immune from the external environment."

[Read: A Pre-Emptive Autopsy of Sears Stock.]

UBS maintains a "neutral" rating and $45 price target for Dick's stock.

Copyright 2017 U.S. News & World Report

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