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DICK’S Sporting Goods Reports First Quarter Results; Reaffirms 2023 Outlook
Press Releases

DICK’S Sporting Goods Reports First Quarter Results; Reaffirms 2023 Outlook

– Delivers 5.3% Growth in First Quarter Net Sales –

– Delivers Strong Double-Digit EBT Margin of 11.6% –

  • Delivered 3.4% growth in first quarter comparable store sales, driven by a 2.7% increase in transactions as well as higher average ticket



  • Delivered earnings per diluted share of $3.40 compared to $2.47 or $2.85 on a non-GAAP basis during the prior year



  • Retired remaining $59 million aggregate principal and fully settled all outstanding amounts under the Convertible Senior Notes



  • Reaffirms 2023 outlook (53 week year) and continues to expect full year earnings per diluted share to be in the range of $12.90 to 13.80, including approximately $0.20 for the 53rd week, and comparable store sales to be in the range of flat to positive 2.0%

“Our strong start to 2023 demonstrates the sustained strength of our business. We are very enthusiastic about our strategies and continue to invest in our future to fuel long-term growth opportunities, including a return to square footage growth. I’d like to thank all our teammates for how they delivered in Q1 and for their dedication to DICK’S Sporting Goods.”

Ed Stack, Executive Chairman


“We are very pleased with our first quarter results. Even as consumers face macroeconomic uncertainties, our athletes have continued to prioritize sport and rely on DICK’S to meet their needs, and we continue to gain market share. Our Q1 sales grew 5.3%, driven by strong comps and healthy transaction growth, and we delivered another strong double-digit EBT margin. We remain confident in our ability to drive sales and profitability growth in 2023 and over the long term.”

Lauren Hobart, President and Chief Executive Officer

PITTSBURGH, May 23, 2023 /PRNewswire/ — DICK’S Sporting Goods, Inc. (NYSE: DKS), the largest U.S. based full-line omni-channel sporting goods retailer, today reported sales and earnings results for the first quarter ended April 29, 2023.

 

First Quarter Operating Results

(dollars in millions, except per share data)

13 Weeks Ended

Change (1)

April 29, 2023

April 30, 2022

Net sales

$              2,842

$              2,700

$         142

5.3 %

Comparable store sales

3.4 %

(8.4) %


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

11.6 %

12.3 %

(74) bps

Net income

$                 305

$                 261

$           44

17 %

Earnings per diluted share

$                3.40

$                2.47

$        0.93

38 %

Non-GAAP earnings per diluted share (3)

$                3.40

$                2.85

$        0.55

19 %

 

Balance Sheet

(in millions)

As of

April 29, 2023

As of

April 30, 2022

$

Change (1)

% Change

(1)

Cash and cash equivalents

$               1,643

$               2,251

$        (609)

(27) %

Inventories, net

$               3,034

$               2,825

$         209

7 %

Total debt (4)

$               1,483

$               1,948

$        (465)

(24) %

 

Capital Allocation

(in millions)

13 Weeks Ended

$

Change (1)

% Change

(1)

April 29, 2023

April 30, 2022

Share repurchases (5)

$                   58

$                   42

$            16

37 %

Dividends paid (6)

$                 105

$                   46

$            59

127 %

Gross capital expenditures

$                   85

$                   74

$            11

15 %

Net capital expenditures (3)

$                   61

$                   54

$              7

13 %

 Principal paid in connection with exchange of Convertible

      Senior Notes (7)

$                   —

$                 100

$         (100)


 

Notes




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 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 $466 million related to the Company’s Convertible Senior Notes, which were fully retired as of April 29, 2023. The Company had no outstanding borrowings under its revolving credit facility in 2023 and 2022.



5.

During the 13 weeks ended April 29, 2023, the Company repurchased 0.4 million shares of its common stock at an average price of $137.95 per share, for a total cost of $57.7 million under its share repurchase program. The Company has $1.4 billion remaining under its authorization as of April 29, 2023.



6.

In the 2023 and 2022 periods, 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 first quarter of 2022, the Company exchanged $100 million aggregate principal amount of Convertible Senior Notes and unwound the corresponding portion of the convertible bond hedge and warrants for $100 million of cash and 1.8 million shares of the Company’s common stock. 

Quarterly Dividend

On May 22, 2023, the Company’s Board of Directors authorized and declared a quarterly dividend in the amount of $1.00 per share on the Company’s common stock and Class B common stock. The dividend is payable in cash on June 30, 2023 to stockholders of record at the close of business on June 16, 2023.

Full Year 2023 Outlook (53 week year)

Coming off two consecutive record years in 2020 and 2021, the Company’s 2022 results provide a strong foundation upon which it will build in 2023 and in the years ahead. The Company’s Full Year Outlook for 2023 is presented below:

Metric

2023 Outlook

Earnings per diluted share

●  $12.90 to 13.80

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

○  Based on approximately 88 million diluted shares outstanding

○  Based on an effective tax rate of approximately 21%

○  Includes the impact of the Moosejaw acquisition

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

Store Count and Square Footage

The following tables summarize store activity for the periods indicated:


13 Weeks Ended April 29, 2023

13 Weeks Ended April 30, 2022

DICK’S

Sporting

Goods (1)

Specialty

Concept Stores

(2)

Total (3)

DICK’S

Sporting

Goods

Specialty

Concept Stores

(2)

Total (3)

Beginning stores

728

125

853

730

131

861

Q1 New stores

1

1

Stores acquired (4)

12

12

Closed stores

2

2

1

3

4

Ending stores

728

135

863

729

129

858

Relocated stores

1

1

1

1

 

 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



(1)

As of April 29, 2023, includes three DICK’S House of Sport stores.



(2)

Includes our Golf Galaxy, Public Lands, Going Going Gone! and other specialty concept stores. As of April 29, 2023, we operated 97 Golf Galaxy stores, 7 Public Lands stores, 15 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 April 29, 2023, the Company operated 16 combo stores.



(3)

Excludes temporary Warehouse Sale store locations, of which the Company operated 39 and 17 as of April 29, 2023 and April 30, 2022, respectively.



(4)

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



(5)

Includes square footage from 13 Field & Stream store closures 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.

Non-GAAP Financial Measures

In addition to reporting the Company’s financial results in accordance with generally accepted accounting principles (“GAAP”), the Company reports certain financial results that differ from what is reported under GAAP. These non-GAAP financial measures include non-GAAP earnings per diluted share, non-GAAP diluted shares outstanding, and net capital expenditures, which management believes provides investors with useful supplemental information to evaluate the Company’s ongoing operations and to compare with past and future periods. Furthermore, management believes that adjustments related to the Convertible Senior Notes and convertible bond hedge provided a more complete view of the economics of the instruments upon conversion. Management also uses these non-GAAP measures internally for forecasting, budgeting, and measuring its operating performance. These measures should be viewed as supplementing, and not as an alternative or substitute for, the Company’s financial results prepared in accordance with GAAP. The methods used by the Company to calculate its non-GAAP financial measures may differ significantly from methods used by other companies to compute similar measures. As a result, any non-GAAP financial measures presented herein may not be comparable to similar measures provided by other companies. A reconciliation of the Company’s non-GAAP measures to the most directly comparable GAAP financial measures are provided below and on the Company’s website at investors.DICKS.com.

Forward-Looking Statements Involving Known and Unknown Risks and Uncertainties

This release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified as those that may predict, forecast, indicate or imply future results or performance and by forward-looking words such as “believe”, “anticipate”, “expect”, “estimate”, “predict”, “intend”, “plan”, “project”, “goal”, “will”, “will be”, “will continue”, “will result”, “could”, “may”, “might” or any variations of such words or other words with similar meanings. These statements are subject to risks and uncertainties and change based on various important factors, many of which may be beyond the Company’s control. The Company’s future performance and actual results may differ materially from those expressed or implied in such forward-looking statements. Forward-looking statements should not be relied upon by investors as a prediction of actual results. Forward-looking statements include statements regarding, among other things, the Company’s future performance, including 2023 outlook for earnings, sales, and capital expenditures; the belief that we will continue to build off of a strong foundation; share repurchases and dividends.

Factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements include, but are not limited to: macroeconomic conditions, including inflationary pressures, rising interest rates, and disruption of supply chains, whether due to COVID-19, the conflict in Ukraine or otherwise, and the effectiveness of measures to mitigate such impact on our business; changes in consumer discretionary spending; changes in consumer demand or shopping patterns and the ability to identify new trends and have the right trending products in stores and online; changes in the competitive market and competition amongst retailers, including competition for talent and the level of competitive promotional activity; investments in omni-channel growth or other business transformation initiatives not producing the anticipated benefits within the expected time-frame or at all; risks relating to vertical brands and new retail concepts; the size of strategic investments and the timing and success of those investments; inventory turnover and supply chain disruptions; weather-related disruptions and seasonality of the Company’s business; changes in existing tax, labor, foreign trade and other laws and regulations, including those imposing new taxes, surcharges, and tariffs, and compliance with such laws and regulations; increasing labor and wage costs; limitations on the availability of attractive retail store sites; unauthorized disclosure of sensitive or confidential customer information; website downtime, disruptions or other problems with the eCommerce platform, including interruptions, delays or downtime caused by high volumes of users or transactions, deficiencies in design or implementation, or platform enhancements; disruptions or other problems with information systems; increasing direct competition from vendors (including shipping directly or through broadened distribution channels) and increasing product costs due to various reasons, including foreign trade issues, currency exchange rate fluctuations, and increasing prices for raw materials due to inflation; changes to the corporate tax rates or an imposition of excise tax with respect to share repurchase activity; risks associated with brick and mortar retail store model, including the ability to optimize our store lease portfolio and our distribution and fulfillment network; litigation risks and our ability to protect our trademarks and other intellectual property; our ability to hire and retain quality teammates, including store managers and sales associates; negative reactions from customers, vendors and shareholders regarding Company policy changes and advocacy efforts related to social and political issues; the loss of key personnel; risks related to our indebtedness; and the issuance of dividends.

For additional information on these and other factors that could affect the Company’s actual results, see the risk factors set forth in the Company’s filings with the Securities and Exchange Commission (“SEC”), including the most recent Annual Report filed with the SEC on March 23, 2023. The Company disclaims and does not undertake any obligation to update or revise any forward-looking statement in this press release, except as required by applicable law or regulation. Forward-looking statements included in this release are made as of the date of this release.

Conference Call Info 

The Company will host a conference call today at 10:00 a.m. Eastern Time to discuss the first quarter results. Investors will have the opportunity to listen to the earnings conference call over the internet through the Company’s website located at investors.DICKS.com. To listen to the live call, please go to the website at least fifteen minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live webcast, it will be archived on the Company’s website for approximately twelve months.

About DICK’S Sporting Goods, Inc.

DICK’S Sporting Goods (NYSE: DKS) creates confidence and excitement by inspiring, supporting and personally equipping all athletes to achieve their dreams. Founded in 1948 and headquartered in Pittsburgh, the leading omnichannel retailer serves athletes and outdoor enthusiasts in more than 850 DICK’S Sporting Goods, Golf Galaxy, Public Lands, Moosejaw, Going Going Gone! and Warehouse Sale stores, online, and through the DICK’S mobile app. DICK’S also owns and operates DICK’S House of Sport and Golf Galaxy Performance Center, as well as GameChanger, a youth sports mobile platform for live streaming, scheduling, communications and scorekeeping.

Driven by its belief that sports have the power to change lives, DICK’S has been a longtime champion for youth sports and, together with its Foundation, has donated millions of dollars to support under-resourced teams and athletes through the Sports Matter program and other community-based initiatives. Additional information about DICK’S business, corporate giving, sustainability efforts and employment opportunities can be found on dicks.com, investors.dicks.com, sportsmatter.org, dickssportinggoods.jobs and on Facebook, Twitter and Instagram.

Contacts:

Investor Relations:

Nate Gilch, Senior Director of Investor Relations

DICK’S Sporting Goods, Inc.

investors@dcsg.com

(724) 273-3400

Media Relations:

(724) 273-5552 or press@dcsg.com

Category: Earnings

 

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED

(In thousands, except per share data)




13 Weeks Ended



April 29,

2023


% of

Sales


April 30,

2022


% of

Sales










Net sales


$          2,842,181


100.00 %


$         2,700,205


100.00 %

Cost of goods sold, including occupancy and

distribution costs


1,813,564


63.81


1,715,491


63.53










GROSS PROFIT


1,028,617


36.19


984,714


36.47










Selling, general and administrative expenses


693,904


24.41


615,293


22.79

Pre-opening expenses


9,090


0.32


2,900


0.11










INCOME FROM OPERATIONS


325,623


11.46


366,521


13.57










Interest expense


15,043


0.53


25,642


0.95

Other (income) expense


(17,707)


(0.62)


9,022


0.33










INCOME BEFORE INCOME TAXES


328,287


11.55


331,857


12.29










Provision for income taxes


23,638


0.83


71,298


2.64










NET INCOME


$            304,649


10.72 %


$            260,559


9.65 %










EARNINGS PER COMMON SHARE:









Basic


$                    3.67




$                    3.42



Diluted


$                    3.40




$                    2.47












NUMERATOR USED TO COMPUTE EARNINGS PER

COMMON SHARE:









Basic


$            304,649




$            260,559



Diluted


$            304,986




$            268,768












WEIGHTED AVERAGE COMMON SHARES

OUTSTANDING:









Basic


83,071




76,181



Diluted


89,664




108,629



 

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS – UNAUDITED

(In thousands)




April 29,

2023


April 30,

2022


January 28,

2023

ASSETS







CURRENT ASSETS:







Cash and cash equivalents


$             1,642,680


$             2,251,338


$             1,924,386

Accounts receivable, net


132,788


76,253


71,286

Income taxes receivable


16,249


1,639


8,187

Inventories, net


3,034,202


2,824,832


2,830,917

Prepaid expenses and other current assets


117,070


102,603


128,410

Total current assets


4,942,989


5,256,665


4,963,186








Property and equipment, net


1,372,776


1,305,137


1,312,988

Operating lease assets


2,207,631


2,048,151


2,138,366

Intangible assets, net


63,600


86,160


60,364

Goodwill


250,398


245,857


245,857

Deferred income taxes


31,282


66,080


41,189

Other assets


239,136


211,750


230,246

TOTAL ASSETS


$              9,107,812


$             9,219,800


$             8,992,196








LIABILITIES AND STOCKHOLDERS’ EQUITY







CURRENT LIABILITIES:







Accounts payable


$             1,220,003


$              1,491,931


$            1,206,066

Accrued expenses


495,743


462,085


508,573

Operating lease liabilities


466,911


476,343


546,755

Income taxes payable


44,865


80,023


29,624

Deferred revenue and other liabilities


297,633


292,457


350,428

Total current liabilities


2,525,155


2,802,839


2,641,446

LONG-TERM LIABILITIES:







Revolving credit borrowings




 Senior Notes


1,482,565


1,481,664


1,482,336

 Convertible Senior Notes



466,026


58,271

Long-term operating lease liabilities


2,256,068


2,095,314


2,117,773

Other long-term liabilities


169,854


179,351


167,747

Total long-term liabilities


3,908,487


4,222,355


3,826,127

COMMITMENTS AND CONTINGENCIES







STOCKHOLDERS’ EQUITY:







Common stock


617


544


585

Class B common stock


236


236


236

Additional paid-in capital


1,405,767


1,368,211


1,416,847

Retained earnings


5,096,789


4,212,451


4,878,404

Accumulated other comprehensive loss


(345)


(89)


(252)

Treasury stock, at cost


(3,828,894)


(3,386,747)


(3,771,197)

Total stockholders’ equity


2,674,170


2,194,606


2,524,623

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY


$              9,107,812


$             9,219,800


$             8,992,196

 

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS – UNAUDITED

(In thousands)




13 Weeks Ended



April 29,

2023


April 30,

2022

CASH FLOWS FROM OPERATING ACTIVITIES:





Net income


$           304,649


$           260,559

Adjustments to reconcile net income to net cash used in operating activities:





Depreciation and amortization


82,348


79,673

Amortization of deferred financing fees and debt discount


637


1,371

Deferred income taxes


9,907


(1,791)

Stock-based compensation


12,809


15,177

Other, net


(1,464)


264

Changes in assets and liabilities:





Accounts receivable


(25,991)


(17,435)

Inventories


(166,582)


(527,223)

Prepaid expenses and other assets


(11,913)


(6,138)

Accounts payable


(99,959)


237,076

Accrued expenses


(70,362)


(132,185)

Income taxes payable / receivable


7,383


66,898

Construction allowances provided by landlords


23,684


19,891

Deferred revenue and other liabilities


(42,183)


(35,047)

Operating lease assets and liabilities


(71,343)


(21,391)

Net cash used in operating activities


(48,380)


(60,301)

CASH FLOWS FROM INVESTING ACTIVITIES:





Capital expenditures


(84,507)


(73,783)

Proceeds from sale of other assets


27,500


14,261

Other investing activities


(31,360)


(10,780)

Net cash used in investing activities


(88,367)


(70,302)

CASH FLOWS FROM FINANCING ACTIVITIES:





Principal paid in connection with exchange of Convertible Senior Notes


(137)


(100,000)

        Payments on finance lease obligations


(198)


(178)

Proceeds from exercise of stock options


12,370


12,665

Minimum tax withholding requirements


(94,695)


(33,287)

Cash paid for treasury stock


(57,701)


(67,909)

Cash dividends paid to stockholders


(104,783)


(46,081)

Increase (decrease) in bank overdraft


100,278


(26,467)

Net cash used in financing activities


(144,866)


(261,257)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS


(93)


(7)

NET DECREASE IN CASH AND CASH EQUIVALENTS


(281,706)


(391,867)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


1,924,386


2,643,205

CASH AND CASH EQUIVALENTS, END OF PERIOD


$         1,642,680


$         2,251,338

 

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 April 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

$       260,559

$                    8,209

$                    268,768

108,629

$                 2.47

% of Net Sales

9.65 %

0.30 %

9.95 %



Convertible Senior Notes (1)

(8,209)

(8,209)

(17,080)


Non-GAAP Basis

$       260,559

$                          —

$                    260,559

91,549

$                 2.85

% of Net Sales

9.65 %

— %

9.65 %





(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. 



13 Weeks Ended



April 29,

2023


April 30,

2022

Gross capital expenditures


$                  (84,507)


$                  (73,783)

Construction allowances provided by landlords


23,684


19,891

Net capital expenditures


$                  (60,823)


$                  (53,892)

 

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SOURCE DICK’S Sporting Goods, Inc.

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