Dicks Sporting Goods, Inc. DKS

"We delivered a very strong second quarter. Powered by our compelling omni-channel athlete experience, differentiated product assortment, best-in-class teammate experience and our ability to create deep engagement with the DICK'S brand, we are driving sustained top-line momentum and gaining market share. Our Q2 comps were driven by growth in average ticket and transactions, and with growth in sales, gross margin expansion and SG&A leverage, we delivered EBT margin of nearly 14%. Because of our strong Q2 performance and the confidence we have in our business, we are again raising our full year outlook."

Second Quarter Operating Results

(dollars in millions, except per share data)

13 Weeks Ended

Change ⁽¹⁾

August 3, 2024

July 29, 2023

Net sales ⁽²⁾

$               3,474

$              3,224

$            250

7.8 %

Comparable sales ^{(2) (3)}

4.5 %

2.0 %

Income before income taxes ⁽⁴⁾

$                  482

$                 326

$            156

48 %

Income before income taxes ⁽⁴⁾ (% of net sales)

13.9 %

10.1 %

Effective tax rate

24.9 %

25.0 %

(12) bps

Net income

$                  362

$                 244

$            118

48 %

Earnings per diluted share ⁽²⁾

$                 4.37

$                2.82

$           1.55

55 %

26 Weeks Ended

Change ⁽¹⁾

August 3, 2024

July 29, 2023

Net sales ⁽²⁾

$               6,492

$               6,066

$            426

7.0 %

Comparable sales ^{(2) (3)}

4.9 %

2.7 %

Income before income taxes ⁽⁴⁾

$                  825

$                  654

$            171

26 %

Income before income taxes ⁽⁴⁾ (% of net sales)

12.7 %

10.8 %

192 bps

Effective tax rate

22.7 %

16.1 %

662 bps

Net income

$                  638

$                  549

$              89

16 %

Earnings per diluted share ⁽²⁾

$                 7.67

$                 6.23

$           1.44

23 %

Balance Sheet

(in millions)

As of

August 3, 2024

As of

July 29, 2023

$

Change ⁽¹⁾

%

Change ⁽¹⁾

$                 1,692

$                 1,902

Inventories, net

$                 3,178

$                 2,851

$            327

11 %

Total debt ⁽⁵⁾

$                 1,484

$                 1,483

$                1

— %

Capital Allocation

(in millions)

26 Weeks Ended

$

Change ⁽¹⁾

%

Change ⁽¹⁾

August 3, 2024

July 29, 2023

Share repurchases ⁽⁶⁾

$                   164

$                  260

$            (97)

(37) %

Dividends paid ⁽⁷⁾

$                   183

$                  189

$              (6)

(3) %

Gross capital expenditures

$                   372

$                  249

$           124

50 %

Net capital expenditures ⁽⁸⁾

$                   326

$                  218

$           108

50 %

1.

Column may not recalculate due to rounding.

2.

Due to the 53^rd week in fiscal 2023, there is a one-week shift in the fiscal 2024 calendar compared to the prior year, which favorably impacted net sales comparisons for the second quarter by approximately $95 million, or approximately $0.30 per diluted share, and the year-to-date period by approximately $140 million, or approximately $0.45 per diluted share. Comparable sales for fiscal 2024 are calculated by shifting the prior year period by one week to compare similar calendar weeks.

3.

Beginning in fiscal 2024, we revised our method for calculating comparable sales to include GameChanger revenue. Prior year information has been revised to reflect this change for comparability purposes. See additional details as furnished in Exhibit 99.2 of the Company's Current Report on Form 8-K, filed with the SEC on March 14, 2024.

4.

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

5.

The Company had no outstanding borrowings under its revolving credit facility in 2024 and 2023.

6.

During the 26 weeks ended August 3, 2024, the Company repurchased 0.8 million shares of its common stock under its share repurchase program at an average price of $204.40 per share, for a total cost of $163.6 million. The Company has $616.0 million remaining under its authorization as of August 3, 2024.

7.

The Company declared and paid quarterly dividends of $1.10 per share in fiscal 2024 and $1.00 per share in fiscal 2023.

8.

For additional information, see GAAP to non-GAAP reconciliations included in tables later in the release under the heading "GAAP to Non-GAAP Reconciliations."

Metric

2024 Outlook

Earnings per diluted share

●        $13.55 to 13.90

•         Based on approximately 83 million diluted shares outstanding

•         Based on an effective tax rate of approximately 23%

Net sales

●        $13.1 billion to 13.2 billion

Comparable sales

●        Growth of 2.5% to 3.5%

Capital expenditures

●        Approximately $900 million on a gross basis

●        Approximately $800 million on a net basis

26 Weeks Ended August 3, 2024

26 Weeks Ended July 29, 2023

DICK'S
Sporting
Goods

Specialty
Concept Stores
⁽¹⁾

Total ⁽²⁾

DICK'S
Sporting
Goods

Specialty
Concept Stores
⁽¹⁾

Total ⁽²⁾

Beginning stores

724

131

855

728

125

853

Q1 New stores

1

3

4

—

—

—

Q2 New stores

2

5

7

—

1

1

Stores acquired

—

—

—

—

12

12

Closed stores

2

3

5

3

3

6

Ending stores

725 ⁽³⁾

136

861

725

135

860

Relocated stores

5

1

6

10

1

11

 Square Footage:

 (in millions)

DICK'S Sporting Goods

Specialty Concept
Stores ⁽¹⁾

Total ⁽²⁾⁽⁴⁾

Q1 2023

39.2

3.4

42.6

Q2 2023

39.0

3.4

42.4

Q3 2023

39.2

3.6

42.7

Q4 2023

39.3

3.4

42.7

Q1 2024

39.4

3.5

42.9

Q2 2024

39.6

3.7

43.2

⁽¹⁾ 

Includes our Golf Galaxy, Public Lands, Going Going Gone! and other specialty concept stores. As of August 3, 2024, we operated 108 Golf Galaxy stores, 8 Public Lands stores, and 20 Going Going Gone! 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 August 3, 2024, the Company operated 19 combo stores.

⁽²⁾

Excludes temporary value chain locations, of which the Company operated 32 and 38 as of August 3, 2024 and July 29, 2023, respectively.

⁽³⁾ 

As of August 3, 2024, includes 14 DICK'S House of Sport stores, with two new openings during the first quarter of fiscal 2024, one of which was relocated from a prior store location.

⁽⁴⁾

Column may not recalculate due to rounding.

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

(In thousands, except per share data)

13 Weeks Ended

August 3,
2024

% of

Sales ⁽¹⁾

July 29,
2023

% of

Sales ⁽¹⁾

Net sales

$           3,473,635

100.00 %

$           3,223,643

100.00 %

Cost of goods sold, including occupancy and
     distribution costs

2,197,935

63.27

2,114,167

65.58

GROSS PROFIT

1,275,700

36.73

1,109,476

34.42

Selling, general and administrative expenses

796,673

22.93

764,788

23.72

Pre-opening expenses

8,931

0.26

32,929

1.02

INCOME FROM OPERATIONS

470,096

13.53

311,759

9.67

Interest expense

13,521

0.39

14,384

0.45

Other (income) expense

(25,756)

(0.74)

(28,499)

(0.88)

INCOME BEFORE INCOME TAXES

482,331

13.89

325,874

10.11

Provision for income taxes

120,101

3.46

81,543

2.53

NET INCOME

$              362,230

10.43 %

$               244,331

7.58 %

EARNINGS PER COMMON SHARE:

Basic

$                     4.50

$                     2.90

Diluted

$                     4.37

$                     2.82

WEIGHTED AVERAGE COMMON SHARES
     OUTSTANDING:

Basic

80,432

84,142

Diluted

82,814

86,783

⁽¹⁾ Column does not add due to rounding

Beginning in 2024, the Company included grand opening advertising costs within pre-opening expenses, which were historically included within selling, general and administrative expenses. Prior period amounts have been reclassified to conform to our current year presentation.

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

(In thousands, except per share data)

26 Weeks Ended

August 3,
2024

% of

Sales ⁽¹⁾

July 29,
2023

% of

Sales

Net sales

$           6,492,019

100.00 %

$          6,065,823

100.00 %

Cost of goods sold, including occupancy and
     distribution costs

4,121,025

63.48

3,927,731

64.75

GROSS PROFIT

2,370,994

36.52

2,138,092

35.25

Selling, general and administrative expenses

1,540,071

23.72

1,458,632

24.05

Pre-opening expenses

30,027

0.46

42,078

0.69

INCOME FROM OPERATIONS

800,896

12.34

637,382

10.51

Interest expense

27,357

0.42

29,427

0.49

Other (income) expense

(51,148)

(0.79)

(46,206)

(0.76)

INCOME BEFORE INCOME TAXES

824,687

12.70

654,161

10.78

Provision for income taxes

187,162

2.88

105,181

1.73

NET INCOME

$              637,525

9.82 %

$              548,980

9.05 %

EARNINGS PER COMMON SHARE:

Basic

$                     7.92

$                     6.57

Diluted

$                     7.67

$                     6.23

WEIGHTED AVERAGE COMMON SHARES
     OUTSTANDING:

Basic

80,507

83,607

Diluted

83,080

88,224

⁽¹⁾ Column does not add due to rounding

Beginning in 2024, the Company included grand opening advertising costs within pre-opening expenses, which were historically included within selling, general and administrative expenses. Prior period amounts have been reclassified to conform to our current year presentation.

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - UNAUDITED

(In thousands)

August 3,
2024

July 29,
2023

February 3,
2024

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$             1,691,899

$             1,901,903

$             1,801,220

Accounts receivable, net

168,495

139,842

114,877

Income taxes receivable

11,410

13,795

4,108

Inventories, net

3,178,024

2,851,366

2,848,797

Prepaid expenses and other current assets

130,707

115,138

121,047

Total current assets

5,180,535

5,022,044

4,890,049

Property and equipment, net

1,862,206

1,520,678

1,638,161

Operating lease assets

2,346,020

2,269,101

2,257,482

Intangible assets, net

56,520

62,993

56,663

Goodwill

245,857

250,503

245,857

Deferred income taxes

31,928

24,278

37,846

Other assets

212,893

207,767

185,694

TOTAL ASSETS

$            9,935,959

$            9,357,364

$              9,311,752

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable

$             1,426,650

$             1,320,662

$             1,288,728

Accrued expenses

604,372

597,740

551,369

Operating lease liabilities

489,511

499,189

492,856

Income taxes payable

58,454

52,699

54,508

Deferred revenue and other liabilities

342,019

305,389

364,933

Total current liabilities

2,921,006

2,775,679

2,752,394

LONG-TERM LIABILITIES:

Revolving credit borrowings

—

—

—

 Senior notes

1,483,734

1,482,794

1,483,260

Long-term operating lease liabilities

2,423,264

2,276,037

2,287,714

Other long-term liabilities

183,070

178,493

171,103

Total long-term liabilities

4,090,068

3,937,324

3,942,077

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:

Common stock

568

602

568

Class B common stock

236

236

236

Additional paid-in capital

1,463,498

1,419,628

1,448,855

Retained earnings

6,045,601

5,255,787

5,588,914

Accumulated other comprehensive loss

(465)

(277)

(329)

Treasury stock, at cost

(4,584,553)

(4,031,615)

(4,420,963)

Total stockholders' equity

2,924,885

2,644,361

2,617,281

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$            9,935,959

$            9,357,364

$              9,311,752

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

(In thousands)

26 Weeks Ended

August 3,
2024

July 29,
2023

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$            637,525

$           548,980

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

Depreciation and amortization

189,219

168,900

Amortization of deferred financing fees and debt discount

1,162

1,210

Deferred income taxes

5,918

16,911

Stock-based compensation

32,812

28,006

Other, net

2,443

(1,464)

Changes in assets and liabilities:

Accounts receivable

(34,396)

(30,311)

Inventories

(329,227)

16,254

Prepaid expenses and other assets

(10,464)

(10,088)

Accounts payable

141,555

14,404

Accrued expenses

5,450

14,004

Income taxes payable / receivable

(3,356)

17,671

Construction allowances provided by landlords

46,556

30,995

Deferred revenue and other liabilities

(22,501)

(35,648)

Operating lease assets and liabilities

(36,548)

(86,331)

Net cash provided by operating activities

626,148

693,493

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures

(372,105)

(248,560)

Proceeds from sale of other assets

8,775

27,500

Other investing activities

(3,548)

(47,719)

Net cash used in investing activities

(366,878)

(268,779)

CASH FLOWS FROM FINANCING ACTIVITIES:

Principal paid in connection with exchange of convertible senior notes

—

(137)

Payments on finance lease obligations

—

(401)

Proceeds from exercise of stock options

12,950

13,332

Minimum tax withholding requirements

(31,111)

(96,992)

Cash paid for treasury stock

(163,567)

(260,438)

Cash dividends paid to stockholders

(183,094)

(189,110)

(Decrease) increase in bank overdraft

(3,633)

86,574

Net cash used in financing activities

(368,455)

(447,172)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

(136)

(25)

NET DECREASE IN CASH AND CASH EQUIVALENTS

(109,321)

(22,483)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

1,801,220

1,924,386

CASH AND CASH EQUIVALENTS, END OF PERIOD

$         1,691,899

$         1,901,903

DICK'S SPORTING GOODS, INC.

GAAP to NON-GAAP RECONCILIATIONS - UNAUDITED

Non-GAAP Net Income and Earnings Per Share Reconciliations

(dollars in thousands, except per share amounts)

13 Weeks Ended August 3, 2024

Selling, general
and
administrative
expenses

Other
(income)
expense

Income
before
income taxes

Net income

Earnings per
diluted share

GAAP Basis

$                796,673

$       (25,756)

$       482,331

$       362,230

$                  4.37

% of Net Sales

22.93 %

(0.74) %

13.89 %

10.43 %

Deferred compensation plan
     adjustments ⁽¹⁾

(10,399)

10,399

—

—

Non-GAAP Basis

$                786,274

$        (15,357)

$       482,331

$       362,230

$                  4.37

% of Net Sales

22.64 %

(0.44) %

13.89 %

10.43 %

⁽¹⁾       Includes non-cash changes in fair value of employee deferred compensation plan investments held in rabbi trusts.

26 Weeks Ended August 3, 2024

Selling, general
and
administrative
expenses

Other
(income)
expense

Income
before
income taxes

Net income

Earnings per
diluted share

GAAP Basis

$             1,540,071

$       824,687

$       637,525

$                  7.67

% of Net Sales

23.72 %

(0.79) %

12.70 %

9.82 %

Deferred compensation plan
     adjustments ⁽¹⁾

(14,146)

14,146

—

—

Non-GAAP Basis

$             1,525,925

$       (37,002)

$       824,687

$       637,525

$                  7.67

% of Net Sales

23.50 %

(0.57) %

12.70 %

9.82 %

⁽¹⁾      Includes non-cash changes in fair value of employee deferred compensation plan investments held in rabbi trusts.

13 Weeks Ended July 29, 2023

Selling, general
and
administrative
expenses

Other
(income)
expense

Income
before
income taxes

Net income

Earnings per
diluted share

GAAP Basis

$                764,788

$       (28,499)

$       325,874

$       244,331

$                  2.82

% of Net Sales

23.72 %

(0.88) %

10.11 %

7.58 %

Deferred compensation plan
     adjustments ⁽¹⁾

(9,730)

9,730

—

—

Non-GAAP Basis

$                755,058

$        (18,769)

$       325,874

$       244,331

$                  2.82

% of Net Sales

23.42 %

(0.58) %

10.11 %

7.58 %

⁽¹⁾      Includes non-cash changes in fair value of employee deferred compensation plan investments held in rabbi trusts.

26 Weeks Ended July 29, 2023

Selling, general
and
administrative
expenses

Other
(income)
expense

Income
before
income taxes

Net income

Earnings per
diluted share

GAAP Basis

$             1,458,632

$       (46,206)

$        654,161

$       548,980

$                  6.23

% of Net Sales

24.05 %

(0.76) %

10.78 %

9.05 %

Deferred compensation plan
     adjustments ⁽¹⁾

(9,909)

9,909

—

—

Non-GAAP Basis

$             1,448,723

$       (36,297)

$        654,161

$       548,980

$                  6.23

% of Net Sales

23.88 %

(0.60) %

10.78 %

9.05 %

⁽¹⁾      Includes non-cash changes in fair value of employee deferred compensation plan investments held in rabbi trusts.

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 construction allowances. 

26 Weeks Ended

August 3,
2024

Gross capital expenditures

$                (372,105)

$               (248,560)

Construction allowances provided by landlords

46,556

30,995

Net capital expenditures

$               (325,549)

$                (217,565)