DKS Dicks Sporting Goods Inc

"Our strong Q3 comps demonstrate the impact of our strategies and our commitment to innovation. We are confident in the future of our business and believe our results demonstrate how we are successfully differentiating ourselves in the marketplace."

"We are pleased with our third quarter results. With our best-in-class athlete experience and differentiated assortment, we had a very strong back-to-school season and continued to gain market share as consumers prioritize DICK'S Sporting Goods to meet their needs. Our Q3 comps were driven by increases in both transactions and average ticket, and we delivered double-digit EBT margin on a non-GAAP basis. As a result of our strong Q3 performance, we are raising our full year outlook, which balances the confidence we have in our key strategies with an acknowledgment of the uncertain macroeconomic environment. We're excited for the upcoming holiday season and the product, service and experience we are providing to our athletes."

Lauren Hobart, President and Chief Executive Officer

Third Quarter Operating Results

(dollars in millions, except per share data)

13 Weeks Ended

Change ⁽¹⁾

October 28,
2023

October 29,
2022

Net sales

$               3,042

$              2,959

$            84

2.8 %

Comparable store sales

1.7 %

6.5 %

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

8.8 %

10.3 %

(145) bps

Non-GAAP income before income taxes (% of net sales) ^{(2) (3)}

10.6 %

10.3 %

28 bps

Net income

$                  201

$                 228

$            (27)

(12) %

Non-GAAP net income ⁽³⁾

$                  240

$                 228

$             11

5 %

Earnings per diluted share

$                 2.39

$                2.45

$         (0.06)

(2) %

Non-GAAP earnings per diluted share ⁽³⁾

$                 2.85

$                2.60

$          0.25

10 %

Year-to-Date Operating Results

(dollars in millions, except per share data)

39 Weeks Ended

Change ⁽¹⁾

October 28,
2023

October 29,
2022

Net sales

$               9,108

$                8,771

$         337

3.8 %

Comparable store sales

2.3 %

(2.6) %

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

10.1 %

12.1 %

(199) bps

Non-GAAP income before income taxes (% of net sales) ^{(2) (3)}

10.7 %

12.1 %

(141) bps

Net income

$                  750

$                   808

$          (57)

(7) %

Non-GAAP net income ⁽³⁾

$                  789

$                   808

$          (19)

(2) %

Earnings per diluted share

$                 8.63

$                  8.17

$        0.46

6 %

Non-GAAP earnings per diluted share ⁽³⁾

$                 9.08

$                  9.11

$       (0.03)

— %

Balance Sheet

(in millions)

As of

October 28,
2023

As of

October 29,
2022

$

Change ⁽¹⁾

% Change
⁽¹⁾

Cash and cash equivalents

$                1,406

$                1,438

Inventories, net

$                3,283

$                3,361

Total debt ⁽⁴⁾

$                1,483

$                1,634

$         (151)

(9) %

Capital Allocation

(in millions)

39 Weeks Ended

$

Change ⁽¹⁾

% Change
⁽¹⁾

October 28,
2023

October 29,
2022

Share repurchases ⁽⁵⁾

$                 649

$                 361

$           288

80 %

Dividends paid ⁽⁶⁾

$                 271

$                 124

$           147

119 %

Gross capital expenditures

$                 410

$                 274

$           135

49 %

Net capital expenditures ⁽³⁾

$                 369

$                 238

$           131

55 %

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

$                   —

$                 421

$          (421)

^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 2022 period, there were no non-GAAP adjustments to reported EBT margin or net income. For additional information, 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 $152 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 39 weeks ended October 28, 2023, the Company repurchased 5.4 million shares of its common stock at an average price of $119.24 per share, for a total cost of $648.6 million under its share repurchase program. The Company has $780 million remaining under its authorization as of October 28, 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 fiscal 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 39 weeks ended October 29, 2022, the Company exchanged $421 million aggregate principal amount of Convertible Senior Notes and unwound the corresponding portion of the convertible bond hedge and warrants for $421 million of cash and 7.8 million shares of the Company's common stock. 

2023 Outlook

●       $11.45 to 12.05

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

○        Based on approximately 86 million diluted shares outstanding

○        Based on an effective tax rate of approximately 21%

●        $12.00 to 12.60 on a non-GAAP basis, which excludes approximately $62.5 million of business optimization charges

Comparable store sales

●        Positive 0.5% 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

39 Weeks Ended October 28, 2023

39 Weeks Ended October 29, 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

Q2 New stores

—

1

1

1

1

2

Q3 New stores

1

9

10

3

6

Stores acquired ⁽³⁾

—

12

12

—

—

Closed stores

3

7

2

3

5

Ending stores

725

⁽⁴⁾

144

869

732

136

868

Relocated stores

2

18

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

39.0

3.4

42.4

Q3 2023

39.2

3.6

42.7

⁽¹⁾

Includes our Golf Galaxy, Public Lands, Going Going Gone! and other specialty concept stores. As of October 28, 2023, we operated 104 Golf Galaxy stores, 7 Public Lands stores, 17 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 October 28, 2023, the Company operated 16 combo stores.

⁽²⁾

Excludes Warehouse Sale store locations that are temporary in nature, of which the Company operated 41 and 42 as of October 28, 2023 and October 29, 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. The Company plans to close ten of the previously acquired Moosejaw store locations by early 2024.

⁽⁴⁾

As of October 28, 2023, includes twelve DICK'S House of Sport stores, including two new openings during the third quarter of fiscal 2023, which were either converted or relocated from prior store locations.

⁽⁵⁾

Includes square footage from 13 Field & Stream store closures as of April 29, 2023, as we planned 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 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

October 28,
2023

% of

Sales

October 29,
2022

% of

Sales ⁽¹⁾

Net sales

$          3,042,405

100.00 %

$           2,958,861

100.00 %

Cost of goods sold, including occupancy and
     distribution costs

1,980,942

65.11

1,946,438

65.78

GROSS PROFIT

1,061,463

34.89

1,012,423

34.22

Selling, general and administrative expenses

776,037

25.51

679,747

22.97

Pre-opening expenses

12,482

0.41

7,212

0.24

INCOME FROM OPERATIONS

272,944

8.97

325,464

11.00

Interest expense

14,382

0.47

26,131

0.88

Other income

(10,084)

(0.33)

(4,826)

(0.16)

INCOME BEFORE INCOME TAXES

268,646

8.83

304,159

10.28

Provision for income taxes

67,540

2.22

75,703

2.56

NET INCOME

$               201,106

6.61 %

$               228,456

7.72 %

EARNINGS PER COMMON SHARE:

Basic

$                     2.46

$                     2.94

Diluted

$                     2.39

$                     2.45

NUMERATOR USED TO COMPUTE EARNINGS PER
     COMMON SHARE:

Basic

$               201,106

$               228,456

Diluted

$               201,106

$               236,928

WEIGHTED AVERAGE COMMON SHARES
     OUTSTANDING:

Basic

81,772

77,789

Diluted

84,291

96,681

⁽¹⁾ Column does not recalculate due to rounding

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

(In thousands, except per share data)

39 Weeks Ended

October 28,
2023

% of

Sales ⁽¹⁾

October 29,
2022

% of

Sales ⁽¹⁾

Net sales

$           9,108,228

100.00 %

$           8,771,485

100.00 %

Cost of goods sold, including occupancy and
     distribution costs

5,908,672

64.87

5,652,966

64.45

GROSS PROFIT

3,199,556

35.13

3,118,519

35.55

Selling, general and administrative expenses

2,245,530

24.65

1,952,408

22.26

Pre-opening expenses

43,698

0.48

13,948

0.16

INCOME FROM OPERATIONS

910,328

9.99

1,152,163

13.14

Interest expense

43,809

0.48

77,267

0.88

Other (income) expense

(56,288)

(0.62)

11,559

0.13

INCOME BEFORE INCOME TAXES

922,807

10.13

1,063,337

12.12

Provision for income taxes

172,721

1.90

255,820

2.92

NET INCOME

$              750,086

8.24 %

$               807,517

9.21 %

EARNINGS PER COMMON SHARE:

Basic

$                    9.04

$                   10.55

Diluted

$                    8.63

$                     8.17

NUMERATOR USED TO COMPUTE EARNINGS PER
      COMMON SHARE:

Basic

$              750,086

$               807,517

Diluted

$              750,423

$               832,190

WEIGHTED AVERAGE COMMON SHARES
     OUTSTANDING:

Basic

82,995

76,527

Diluted

86,913

101,900

⁽¹⁾ Column does not recalculate due to rounding

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - UNAUDITED

(In thousands)

October 28,
2023

October 29,
2022

January 28,
2023

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$             1,406,214

$             1,437,997

$             1,924,386

Accounts receivable, net

140,791

87,191

71,286

Income taxes receivable

9,118

4,082

8,187

Inventories, net

3,282,911

3,361,057

2,830,917

Prepaid expenses and other current assets

104,963

96,135

128,410

Total current assets

4,943,997

4,986,462

4,963,186

Property and equipment, net

1,569,703

1,342,786

1,312,988

Operating lease assets

2,243,025

2,025,149

2,138,366

Intangible assets, net

56,754

84,946

60,364

Goodwill

245,857

245,857

245,857

Deferred income taxes

30,817

58,945

41,189

Other assets

192,173

212,455

230,246

TOTAL ASSETS

$            9,282,326

$            8,956,600

$             8,992,196

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

Accounts payable

$            1,630,402

$            1,473,424

$             1,206,066

Accrued expenses

550,006

500,246

508,573

Operating lease liabilities

485,033

487,119

546,755

Income taxes payable

42,010

32,664

29,624

Deferred revenue and other liabilities

281,943

268,677

350,428

Total current liabilities

2,989,394

2,762,130

2,641,446

LONG-TERM LIABILITIES:

Revolving credit borrowings

—

—

—

 Senior Notes

1,483,026

1,482,110

1,482,336

 Convertible Senior Notes

—

152,006

58,271

Long-term operating lease liabilities

2,264,941

2,026,774

2,117,773

Other long-term liabilities

160,261

156,408

167,747

Total long-term liabilities

3,908,228

3,817,298

3,826,127

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:

Common stock

568

570

585

Class B common stock

236

236

236

Additional paid-in capital

1,430,802

1,399,694

1,416,847

Retained earnings

5,374,573

4,682,663

4,878,404

Accumulated other comprehensive loss

(462)

(362)

(252)

Treasury stock, at cost

(4,421,013)

(3,705,629)

(3,771,197)

Total stockholders' equity

2,384,704

2,377,172

2,524,623

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$            9,282,326

$            8,956,600

$             8,992,196

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

(In thousands)

39 Weeks Ended

October 28,
2023

October 29,
2022

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$            750,086

$            807,517

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

Depreciation and amortization

271,368

250,522

Amortization of deferred financing fees and debt discount

1,786

3,558

Deferred income taxes

10,372

5,344

Stock-based compensation

39,552

37,579

Other, net

9,182

15,879

Changes in assets and liabilities:

Accounts receivable

(25,831)

(36,699)

Inventories

(415,291)

(1,063,448)

Prepaid expenses and other assets

(2,253)

(936)

Accounts payable

256,141

178,633

Accrued expenses

(21,473)

(94,177)

Income taxes payable / receivable

11,659

19,023

Construction allowances provided by landlords

40,624

36,100

Deferred revenue and other liabilities

(56,835)

(58,613)

Operating lease assets and liabilities

(104,373)

(64,663)

Net cash provided by operating activities

764,714

35,619

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures

(409,527)

(274,307)

Proceeds from sale of other assets

27,500

14,261

Other investing activities

(51,298)

(32,885)

Net cash used in investing activities

(433,325)

(292,931)

CASH FLOWS FROM FINANCING ACTIVITIES:

Principal paid in connection with exchange of Convertible Senior Notes

(137)

(420,558)

Payments on finance lease obligations

(609)

(548)

Proceeds from exercise of stock options

13,924

19,953

Minimum tax withholding requirements

(97,956)

(43,227)

Cash paid for treasury stock

(648,554)

(392,882)

Cash dividends paid to stockholders

(270,596)

(123,823)

Increase in bank overdraft

154,577

13,469

Net cash used in financing activities

(849,351)

(947,616)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

(210)

(280)

NET DECREASE IN CASH AND CASH EQUIVALENTS

(518,172)

(1,205,208)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

1,924,386

2,643,205

CASH AND CASH EQUIVALENTS, END OF PERIOD

$         1,406,214

$         1,437,997

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 October 28, 2023

Gross profit

Selling, general
and
administrative
expenses

Income before
income taxes

Net income ⁽²⁾

Earnings
per diluted
share

GAAP Basis

$         1,061,463

$            776,037

$             268,646

$        201,106

$              2.39

% of Net Sales

34.89 %

25.51 %

8.83 %

6.61 %

Business optimization charges ⁽¹⁾

6,323

(46,174)

52,497

38,848

Non-GAAP Basis

$         1,067,786

$            729,863

$             321,143

$        239,954

$              2.85

% of Net Sales

35.10 %

23.99 %

10.56 %

7.89 %

⁽¹⁾

Includes $23.3 million of severance-related costs, $22.9 million of non-cash impairments of store and intangible assets and a $6.3 million write-down of inventory.

⁽²⁾

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

39 Weeks Ended October 28, 2023

Gross profit

Selling, general
and
administrative
expenses

Income before
income taxes

Net income ⁽²⁾

Earnings
per diluted
share

GAAP Basis

$        3,199,556

$        2,245,530

$            922,807

$       750,086

$             8.63

% of Net Sales

35.13 %

24.65 %

10.13 %

8.24 %

Business optimization charges ⁽¹⁾

6,323

(46,174)

52,497

38,848

Non-GAAP Basis

$        3,205,879

$        2,199,356

$            975,304

$       788,934

$             9.08

% of Net Sales

35.20 %

24.15 %

10.71 %

8.66 %

⁽¹⁾

Includes $23.3 million of severance-related costs, $22.9 million of non-cash impairments of store and intangible assets and a $6.3 million write-down of inventory.

⁽²⁾

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

13 Weeks Ended October 29, 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

$   228,456

$                8,472

$                236,928

96,681

$                2.45

% of Net Sales

7.72 %

0.29 %

8.01 %

Convertible Senior Notes ⁽¹⁾

—

(8,472)

(8,472)

(8,825)

Non-GAAP Basis

$   228,456

$                     —

$                228,456

87,856

$                2.60

% of Net Sales

7.72 %

— %

7.72 %

⁽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.

39 Weeks Ended October 29, 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

$    807,517

$              24,673

$                   832,190

101,900

$                 8.17

% of Net Sales

9.21 %

0.28 %

9.49 %

Convertible Senior Notes ⁽¹⁾

—

(24,673)

(24,673)

(13,262)

Non-GAAP Basis

$    807,517

$                      —

$                   807,517

88,638

$                 9.11

% of Net Sales

9.21 %

— %

9.21 %

⁽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. 

39 Weeks Ended

October 28,
2023

October 29,
2022

Gross capital expenditures

$               (409,527)

$               (274,307)

Construction allowances provided by landlords

40,624

36,100

Net capital expenditures

$               (368,903)

$               (238,207)

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

(dollars 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

$            1,232

$          980

$                11.45

$            1,297

$       1,032

$                    12.05

% of Net Sales

9.7 %

10.0 %

Business optimization ⁽¹⁾

63

46

63

46

Non-GAAP Basis

$            1,295

$       1,026

$                12.00

$            1,360

$       1,078

$                    12.60

% of Net Sales

10.2 %

10.6 %

⁽¹⁾

Adjustment eliminates the impact of charges 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.