DICK'S Sporting Goods Reports Second Quarter Results

"We are extremely excited about the future of our business. Our newest DICK'S concepts, DICK'S House of Sport and our next generation 50,000 square foot DICK'S store, are yielding powerful results. We haven't seen growth opportunities like these since we went public in the early 2000s." 

"We are pleased with our strong sales performance for the second quarter led by robust transaction growth and continued market share gains. Within the quarter, sales accelerated significantly in July, and we remain confident in delivering positive comp sales for 2023. While we posted another double-digit EBT margin, our Q2 profitability was short of our expectations due in large part to the impact of elevated inventory shrink, an increasingly serious issue impacting many retailers. Despite moderating our 2023 EPS outlook, the enthusiasm we have for our business and the confidence we have in our long-term growth opportunities have never been stronger."

Lauren Hobart, President and Chief Executive Officer

Second Quarter Operating Results

(dollars in millions, except per share data)

13 Weeks Ended

Change ⁽¹⁾

July 29, 2023

July 30, 2022

Net sales

$              3,224

$              3,112

$         111

3.6 %

Comparable store sales

1.8 %

(5.1) %

Income before income taxes (% of net sales) ⁽²⁾

10.1 %

13.7 %

(362) bps

Net income

$                 244

$                 319

$          (74)

(23) %

Earnings per diluted share

$                2.82

$                3.25

$       (0.43)

(13) %

Non-GAAP earnings per diluted share ⁽³⁾

$                2.82

$                3.68

$       (0.86)

(23) %

Year-to-Date Operating Results

(dollars in millions, except per share data)

26 Weeks Ended

Change ⁽¹⁾

July 29, 2023

July 30, 2022

Net sales

$               6,066

$                5,813

$        253

4.4 %

Comparable store sales

2.6 %

(6.6) %

Income before income taxes (% of net sales) ⁽²⁾

10.8 %

13.1 %

(228) bps

Net income

$                  549

$                  579

$         (30)

(5) %

Earnings per diluted share

$                 6.23

$                 5.70

$       0.53

9 %

Non-GAAP earnings per diluted share ⁽³⁾

$                 6.23

$                 6.50

$      (0.27)

(4) %

Balance Sheet

(in millions)

As of

July 29, 2023

As of

July 30, 2022

$

Change ⁽¹⁾

% Change ⁽¹⁾

Cash and cash equivalents

$                1,902

$                1,896

$             6

— %

Inventories, net

$                2,851

$                2,996

$        (145)

(5) %

Total debt ⁽⁴⁾

$                1,483

$                1,850

$        (368)

(20) %

Capital Allocation

(in millions)

$

Change ⁽¹⁾

% Change ⁽¹⁾

July 29, 2023

July 30, 2022

Share repurchases ⁽⁵⁾

$                 260

$                 361

$         (101)

(28) %

Dividends paid ⁽⁶⁾

$                 189

$                   83

$          106

128 %

Gross capital expenditures

$                 249

$                 168

$            81

48 %

Net capital expenditures ⁽³⁾

$                 218

$                 138

$            79

57 %

 Principal paid in connection with exchange of Convertible
     Senior Notes  ⁽⁷⁾

$                   —

$                 200

$         (200)

^1. 

Column may not recalculate due to rounding.

^2. 

Also referred to by management as earnings before income taxes margin ("EBT margin").

^3. 

In the fiscal 2023 period, there were no non-GAAP adjustments to reported earnings per diluted share. For additional information for fiscal 2022, see GAAP to non-GAAP reconciliations included in a table later in the release under the heading "GAAP to Non-GAAP Reconciliations."

^4. 

Fiscal 2022 included debt with a carrying value of $368 million related to the Company's Convertible Senior Notes, which were fully retired as of April 18, 2023. The Company had no outstanding borrowings under its revolving credit facility in 2023 and 2022.

^5. 

During the 26 weeks ended July 29, 2023, the Company repurchased 2.0 million shares of its common stock at an average price of $131.00 per share, for a total cost of $260.4 million under its share repurchase program. The Company has $1.2 billion remaining under its authorization as of July 29, 2023.

^6.

In the fiscal 2023 and fiscal 2022 periods, the Company declared and paid quarterly dividends of $1.00 per share and $0.4875 per share, respectively.

^7.

During the first quarter of 2023, the Company retired the remaining $59.1 million of aggregate principal amount outstanding of the Convertible Senior Notes and related bond hedge and warrant transactions for 1.7 million shares of the Company's common stock. Refer to the Company's Form 8-K filed with the SEC on April 24, 2023 for additional information. During the 26 weeks ended July 30, 2022, the Company exchanged $200 million aggregate principal amount of Convertible Senior Notes and unwound the corresponding portion of the convertible bond hedge and warrants for $200 million of cash and 3.5 million shares of the Company's common stock. 

●  $11.33 to $12.13

○  Includes approximately $0.20 per diluted share for the 53^rd week

○  Based on approximately 87 million diluted shares outstanding

○  Based on an effective tax rate of approximately 21%

●  $11.50 to $12.30 on a non-GAAP basis, which eliminates the impact of
    severance expected to be incurred as part of our business optimization

Comparable store sales

●  Flat to positive 2.0% on a 52-week basis

Capital expenditures

●  $670 to 720 million on a gross basis

●  $550 to 600 million on a net basis

26 Weeks Ended July 29, 2023

26 Weeks Ended July 30, 2022

DICK'S
Sporting
Goods

Specialty
Concept Stores
⁽¹⁾

Total ⁽²⁾

DICK'S
Sporting
Goods

Specialty
Concept Stores
⁽¹⁾

Total ⁽²⁾

Beginning stores

728

125

853

730

131

861

Q1 New stores

—

—

—

—

1

1

—

1

1

1

1

Stores acquired ⁽³⁾

—

12

12

—

—

Closed stores

3

3

6

1

3

4

Ending stores

725

⁽⁴⁾

135

860

730

130

860

Relocated stores

10

1

11

3

1

4

 Square Footage:

 (in millions)

DICK'S Sporting Goods
⁽¹⁾

Specialty Concept
Stores ⁽²⁾

Total ^{(3) (6)}

Q1 2022

38.7

3.6

42.3

Q2 2022

38.8

3.6

42.4

Q3 2022

38.8

3.9

42.7

Q4 2022

39.2

3.4

42.6

Q1 2023 ⁽⁵⁾

39.2

3.4

42.6

Q2 2023 ⁽⁵⁾

39.0

3.4

42.4

⁽¹⁾

 Includes our Golf Galaxy, Public Lands, Going Going Gone! and other specialty concept stores. As of July 29, 2023, we operated 97 Golf Galaxy stores, 7 Public Lands stores, 16 Going Going Gone! stores, and other specialty concept stores. In some markets, we operate DICK'S Sporting Goods stores adjacent to our specialty concept stores on the same property with a pass-through for our athletes. We refer to this format as a "combo store" and include combo store openings within both the DICK'S Sporting Goods and specialty concept store reconciliations, as applicable. As of July 29, 2023, the Company operated 16 combo stores.

⁽²⁾

Excludes Warehouse Sale store locations that are temporary in nature, which the Company operated 38 and 19 as of July 29, 2023 and July 30, 2022, respectively.

⁽³⁾

Represents Moosejaw store locations acquired by the Company during the first quarter of fiscal 2023, which average approximately 4,000 square feet per store.

⁽⁴⁾

As of July 29, 2023, includes ten DICK'S House of Sport stores, including seven new openings during the second quarter of fiscal 2023, which were converted from prior combo store locations.

⁽⁵⁾

Includes square footage from 3 and 13 Field & Stream store closures as of July 29, 2023 and April 29, 2023, respectively, as we plan in the near-term to convert them into DICK'S House of Sport stores, expanded DICK'S Sporting Goods stores, or other specialty concept stores.

⁽⁶⁾

Column may not add due to rounding.

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

(In thousands, except per share data)

13 Weeks Ended

July 29,
2023

% of

Sales ⁽¹⁾

July 30,
2022

% of

Sales

Net sales

$         3,223,643

100.00 %

$           3,112,419

100.00 %

Cost of goods sold, including occupancy and
   distribution costs

2,114,167

65.58

1,991,037

63.97

GROSS PROFIT

1,109,476

34.42

1,121,382

36.03

Selling, general and administrative expenses

775,590

24.06

657,368

21.12

Pre-opening expenses

22,127

0.69

3,836

0.12

INCOME FROM OPERATIONS

311,759

9.67

460,178

14.79

Interest expense

14,384

0.45

25,494

0.82

Other (income) expense

(28,499)

(0.88)

7,363

0.24

INCOME BEFORE INCOME TAXES

325,874

10.11

427,321

13.73

Provision for income taxes

81,543

2.53

108,819

3.50

NET INCOME

$             244,331

7.58 %

$              318,502

10.23 %

EARNINGS PER COMMON SHARE:

Basic

$                   2.90

$                    4.21

Diluted

$                   2.82

$                    3.25

NUMERATOR USED TO COMPUTE EARNINGS PER
   COMMON SHARE:

Basic

$             244,331

$              318,502

Diluted

$             244,331

$              326,494

WEIGHTED AVERAGE COMMON SHARES
   OUTSTANDING:

Basic

84,142

75,610

Diluted

86,783

100,389

⁽¹⁾ Column does not add due to rounding

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

(In thousands, except per share data)

26 Weeks Ended

July 29,
2023

% of

Sales

July 30,
2022

% of

Sales

Net sales

$          6,065,823

100.0 %

$           5,812,624

100.0 %

Cost of goods sold, including occupancy and
   distribution costs

3,927,731

64.75

3,706,528

63.77

GROSS PROFIT

2,138,092

35.25

2,106,096

36.23

Selling, general and administrative expenses

1,469,494

24.23

1,272,661

21.89

Pre-opening expenses

31,216

0.51

6,736

0.12

INCOME FROM OPERATIONS

637,382

10.51

826,699

14.22

Interest expense

29,427

0.49

51,136

0.88

Other (income) expense

(46,206)

(0.76)

16,385

0.28

INCOME BEFORE INCOME TAXES

654,161

10.78

759,178

13.06

Provision for income taxes

105,181

1.73

180,117

3.10

NET INCOME

$               548,980

9.05 %

$               579,061

9.96 %

EARNINGS PER COMMON SHARE:

Basic

$                     6.57

$                     7.63

Diluted

$                     6.23

$                     5.70

NUMERATOR USED TO COMPUTE EARNINGS PER
   COMMON SHARE:

Basic

$               548,980

$               579,061

Diluted

$               549,317

$               595,262

WEIGHTED AVERAGE COMMON SHARES
   OUTSTANDING:

Basic

83,607

75,895

Diluted

88,224

104,509

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - UNAUDITED

(In thousands)

July 29,
2023

July 30,
2022

January 28,
2023

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$             1,901,903

$             1,895,521

$             1,924,386

Accounts receivable, net

139,842

83,151

71,286

Income taxes receivable

13,795

1,277

8,187

Inventories, net

2,851,366

2,995,963

2,830,917

Prepaid expenses and other current assets

115,138

100,761

128,410

Total current assets

5,022,044

5,076,673

4,963,186

Property and equipment, net

1,520,678

1,321,737

1,312,988

Operating lease assets

2,269,101

2,071,084

2,138,366

Intangible assets, net

62,993

85,553

60,364

Goodwill

250,503

245,857

245,857

Deferred income taxes

24,278

55,873

41,189

Other assets

207,767

208,498

230,246

TOTAL ASSETS

$            9,357,364

$            9,065,275

$             8,992,196

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable

$             1,320,662

$             1,489,321

$            1,206,066

Accrued expenses

597,740

503,759

508,573

Operating lease liabilities

499,189

482,195

546,755

Income taxes payable

52,699

12,673

29,624

Deferred revenue and other liabilities

305,389

294,003

350,428

Total current liabilities

2,775,679

2,781,951

2,641,446

LONG-TERM LIABILITIES:

Revolving credit borrowings

—

—

—

 Senior Notes

1,482,794

1,481,886

1,482,336

 Convertible Senior Notes

—

368,478

58,271

Long-term operating lease liabilities

2,276,037

2,096,410

2,117,773

Other long-term liabilities

178,493

163,041

167,747

Total long-term liabilities

3,937,324

4,109,815

3,826,127

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:

Common stock

602

522

585

Class B common stock

236

236

236

Additional paid-in capital

1,419,628

1,384,949

1,416,847

Retained earnings

5,255,787

4,493,516

4,878,404

Accumulated other comprehensive loss

(277)

(85)

(252)

Treasury stock, at cost

(4,031,615)

(3,705,629)

(3,771,197)

Total stockholders' equity

2,644,361

2,173,509

2,524,623

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$            9,357,364

$            9,065,275

$             8,992,196

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

(In thousands)

26 Weeks Ended

July 29,
2023

July 30,
2022

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$           548,980

$            579,061

Adjustments to reconcile net income to net cash provided by operating
activities:

Depreciation and amortization

168,900

164,269

Amortization of deferred financing fees and debt discount

1,210

2,601

Deferred income taxes

16,911

8,416

Stock-based compensation

28,006

26,694

Other, net

(1,464)

6,852

Changes in assets and liabilities:

Accounts receivable

(30,311)

(28,971)

Inventories

16,254

(698,354)

Prepaid expenses and other assets

(10,088)

(9,430)

Accounts payable

14,404

189,082

Accrued expenses

14,004

(90,127)

Income taxes payable / receivable

17,671

877

Construction allowances provided by landlords

30,995

29,273

Deferred revenue and other liabilities

(35,648)

(35,280)

Operating lease assets and liabilities

(86,331)

(43,219)

Net cash provided by operating activities

693,493

101,744

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures

(248,560)

(167,693)

Proceeds from sale of other assets

27,500

14,261

Other investing activities

(47,719)

(17,580)

Net cash used in investing activities

(268,779)

(171,012)

CASH FLOWS FROM FINANCING ACTIVITIES:

Principal paid in connection with exchange of Convertible Senior Notes

(137)

(200,000)

       Payments on finance lease obligations

(401)

(361)

Proceeds from exercise of stock options

13,332

13,997

Minimum tax withholding requirements

(96,992)

(35,147)

Cash paid for treasury stock

(260,438)

(392,882)

Cash dividends paid to stockholders

(189,110)

(82,937)

Increase in bank overdraft

86,574

18,917

Net cash used in financing activities

(447,172)

(678,413)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

(25)

(3)

NET DECREASE IN CASH AND CASH EQUIVALENTS

(22,483)

(747,684)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

1,924,386

2,643,205

CASH AND CASH EQUIVALENTS, END OF PERIOD

$         1,901,903

$         1,895,521

DICK'S SPORTING GOODS, INC.

GAAP to NON-GAAP RECONCILIATIONS - UNAUDITED

Non-GAAP Earnings Per Share Reconciliation

(in thousands, except per share amounts)

13 Weeks Ended July 30, 2022

Net income

After tax
interest from
Convertible
Senior Notes ⁽²⁾

Numerator used
to compute
earnings per
diluted share

Weighted
average
diluted
shares

Earnings per
diluted
share

GAAP Basis

$    318,502

$                7,992

$                326,494

100,389

$               3.25

% of Net Sales

10.23 %

0.26 %

10.49 %

Convertible Senior Notes ⁽¹⁾

—

(7,992)

(7,992)

(13,881)

Non-GAAP Basis

$    318,502

$                     —

$                318,502

86,508

$               3.68

% of Net Sales

10.23 %

— %

10.23 %

⁽¹⁾

Adjustment eliminates the impact of assumed share settlement of the Convertible Senior Notes as required by "the if-converted method" under GAAP. The Company retired its Convertible Senior Notes without dilutive effect, due to cash payments for principal, shares received from its convertible bond hedge and shares repurchased to offset share settlement of remaining $59.1 million principal during the 13 weeks ended April 29, 2023. Accordingly, the Company believes reflecting the notes as debt more closely represents the economics of the transaction.

⁽²⁾

The provision for income taxes for non-GAAP adjustments was calculated at 26% which approximated the Company's blended tax rate.

26 Weeks Ended July 30, 2022

Net income

After tax
interest from
Convertible
Senior Notes ⁽²⁾

Numerator used
to compute
earnings per
diluted share

Weighted
average
diluted
shares

Earnings per
diluted
share

GAAP Basis

$    579,061

$               16,201

$                595,262

104,509

$                5.70

% of Net Sales

9.96 %

0.28 %

10.24 %

Convertible Senior Notes ⁽¹⁾

—

(16,201)

(16,201)

(15,481)

Non-GAAP Basis

$    579,061

$                      —

$                579,061

89,028

$                6.50

% of Net Sales

9.96 %

— %

9.96 %

⁽¹⁾

Adjustment eliminates the impact of assumed share settlement of the Convertible Senior Notes as required by "the if-converted method" under GAAP. The Company retired its Convertible Senior Notes without dilutive effect, due to cash payments for principal, shares received from its convertible bond hedge and shares repurchased to offset share settlement of remaining $59.1 million principal during the 13 weeks ended April 29, 2023. Accordingly, the Company believes reflecting the notes as debt more closely represents the economics of the transaction.

⁽²⁾

The provision for income taxes for non-GAAP adjustments was calculated at 26% which approximated the Company's blended tax rate.

Reconciliation of Gross Capital Expenditures to Net Capital Expenditures

(in thousands) 
 

The following table represents a reconciliation of the Company's gross capital expenditures to its capital expenditures, net
of tenant allowances. 

26 Weeks Ended

July 29,
2023

July 30,
2022

Gross capital expenditures

$               (248,560)

$                (167,693)

Construction allowances provided by landlords

30,995

29,273

Net capital expenditures

$               (217,565)

$                (138,420)

Reconciliation of Non-GAAP Net Income and Earnings Per Diluted Share Guidance

(in millions, except per share amounts)

53 Weeks Ended February 3, 2024

Low End

High End

Income
before
income taxes

Net
Income ⁽²⁾

Earnings per
diluted share

Income
before
income taxes

Net
Income ⁽²⁾

Earnings per
diluted share

GAAP Basis

$                1,239

$          986

$                 11.33

$                1,327

$       1,055

$                    12.13

Business optimization ⁽¹⁾

20

15

20

15

Non-GAAP Basis

$                1,259

$       1,001

$                 11.50

$                1,347

$       1,070

$                    12.30

⁽¹⁾

Adjustment eliminates the impact of severance incurred as part of our business optimization.

⁽²⁾ 

The provision for income taxes for non-GAAP adjustments was calculated at 26%, which approximates the Company's blended tax rate.