Dive Brief:

• Dick's Sporting Goods Inc. on Tuesday beat analyst expectations for the third quarter as it continued to capitalize on the struggles of rivals in the sporting goods segment.

• Dick’s reported Q3 net income of $48.9 million, with earnings per diluted share of 44 cents; non-GAAP earnings were 48 cents per share, topping guidance of between 39 and 42 cents per share and beating analysts’ expectations for 42 cents. Same-store sales rose 5.2%.

• Shares of Dick's nevertheless dropped 2.3% in Tuesday pre-market trading after the retailer forecast Q4 adjusted earnings in the range of $1.19 to $1.31 per share, missing the FactSet consensus for $1.32 per share.

Dive Insight:

Dick’s is sitting pretty in the wake of rivals’ troubles. This year the retailer acquired bankrupt Sports Authority's intellectual property for $15 million and leases for 31 Sports Authority stores for another $8 million. Dick’s said Tuesday it would retain 22 of those leases for conversion to Dick’s Sporting Goods stores and that it will leverage the customer information it purchased to improve its marketing efforts during the fourth quarter.

Dick's also paid $43 million to acquired some assets of bankrupt golf retailer Golfsmith and will convert the 30 Golfsmith stores it now owns to its Golf Galaxy brand by the end of the fourth quarter. 

Dick's is additionally benefiting from the popularity of sports apparel even among those who don’t necessarily participate in sports or fitness activities, and Chairman and CEO Edward W. Stack said he expects its good fortune to extend into the holidays.

"We are very pleased with our third quarter results, which were driven by a 5.2% comp sales increase and gross margin expansion,” Stack said in a statement. “We realized meaningful market share gains and saw growth across each of our three primary categories of hardlines, apparel and footwear, while maintaining tight control of our inventory. Looking ahead, we believe our assortment and marketing will help us to continue to capture displaced market share this holiday.”

While Dick's doubled down on its golf business with its purchase of Golfsmith's U.S. stores, the retailer's Golf Galaxy same-store sales decreased 3.3%. Flagship Dick's stores saw same-store sales rise 5.5%. Q3 e-commerce sales were 9.6% of total net sales, compared to 8% during the third quarter of 2015.

The company opened 27 new Dick's Sporting Goods stores in the third quarter, along with seven new Field & Stream stores, and two new Golf Galaxy stores. It also relocated four Dick's stores and closed one Field & Stream location. At the end of the quarter, Dick's Sporting Goods operated 676 Dick's stores in 47 states, with approximately 36.1 million square feet, 74 Golf Galaxy stores in 29 states, with approximately 1.4 million square feet, and 27 Field & Stream stores in 13 states, with approximately 1.3 million square feet.