Dick's Sporting Goods (DKS) Sees Non-Cash Impairment Charge; Q4 Comps Down 8.6%
Dick's Sporting Goods, Inc. (NYSE: DKS) today announced that it expects to record a pre-tax non-cash impairment charge based upon unaudited, preliminary year-end estimates in the range of approximately $165 to 180 million that will decrease net income by $144 to 153 million, or approximately $1.29 to 1.37 per diluted share in fiscal 2008. The deterioration of the economy, combined with projections of a continuing trend, has created a shortfall in the fair value estimations for certain assets, such as goodwill, property and equipment, and other intangible assets below their current book value.
The Company's estimated pre-tax non-cash impairment charge consists of approximately $140 to 150 million for goodwill and other intangible assets acquired as part of the Golf Galaxy acquisition in February 2007 and approximately $25 to 30 million for the write-down of Golf Galaxy, Dick's Sporting Goods, and Chick's Sporting Goods store assets.
Same store sales for Q4 fell 8.6%.
Excluding the asset impairment charge described above, the Company anticipates that fourth quarter 2008 consolidated earnings per diluted share will be at least at the midpoint of its previously-announced estimated range of $0.49 to 0.56 per diluted share excluding costs from the Golf Galaxy and Chick's Sporting Goods integration, or $0.47 to 0.54 per diluted share including the Golf Galaxy and Chick's Sporting Goods integration costs. As expected, the Company ended fiscal 2008 without any outstanding borrowings on its revolving credit facility and reduced its inventory per square foot in line with the fourth quarter decline in comparable store sales.
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