Dick's Outlines Growth Strategy, Targeting $10B in Sale by End of 2017
DICK'S Sporting Goods, Inc. (NYSE: DKS) today detailed its long-term plan and key strategies to deliver sales and operating profit growth and drive shareholder value over the next five years.
During its Analyst Day meeting, the Company presented a sales target of $10 billion by the end of fiscal 2017, representing a 5-year compounded annual growth rate (CAGR) of approximately 11% from fiscal 2012 sales of $5.8 billion. The Company is focused on driving profitable growth and believes it can expand its operating margin by approximately 150 bps to 10.5% in fiscal 2017, from 9.0% in fiscal 2012, through both the expansion of gross margin and leverage of SG&A expenses.
The key drivers of the Company's long-term growth are expected to be DICK'S Sporting Goods stores, eCommerce growth through the Company's omni-channel platform and the Field & Stream brand.
DICK'S Sporting Goods Stores
The Company anticipates growing its store base to over 800 DICK'S Sporting Goods stores by the end of fiscal 2017, an increase of approximately 300 stores from the 518 stores at the end of fiscal 2012. DICK'S Sporting Goods has developed a range of prototypes depending on market characteristics, including its traditional 50,000 sq. ft. single-level stores, 35,000 sq. ft. smaller market stores and 80,000 sq. ft. two-level stores. The Company's merchandising strategy will continue to emphasize its strong vendor relationships, exclusive product and high growth categories such as Youth and Women's. Additionally, the Company will continue to strategically remodel its existing stores to keep them fresh and productive, focusing on key initiatives such as vendor shops and shared service footwear decks.
The Company also discussed its plan to grow eCommerce sales to approximately $1.1 billion by the end of fiscal 2017, from $292 million in fiscal 2012. The Company is planning to internally control its eCommerce platform, beginning with Golf Galaxy and Field & Stream in 2014 and DICK's Sporting Goods by the end of fiscal 2017. Key strategies for driving omni-channel growth include assortment and content expansion, leveraging diverse marketing channels to generate traffic, driving multi-channel loyalty, capitalizing on the trends in mobile and tablet usage, driving conversion and optimizing the supply chain.
Field & Stream
The Company announced plans to grow its Field & Stream outdoor specialty concept to approximately 55 stores and $750 million in sales by the end of fiscal 2017, capitalizing on its heritage in this category and a core outdoor market estimated at over $30 billion. These stores will bring a differentiated experience to the market, focusing on respected national brands, shop-in-shops and specialty store level services.
Capital Allocation Strategy
DICK'S Sporting Goods also reaffirmed its capital allocation strategy to provide returns to shareholders through investing in the business, repurchasing shares and paying dividends. To drive the growth of the business the Company expects to invest approximately $1.8 billion in capital expenditures over the next five years, primarily in new stores, store remodels and eCommerce. In addition to its quarterly dividend, the Company's existing up to $1 billion 5-year share repurchase authorization provides the capacity to both offset dilution and also acquire shares opportunistically.
"We are excited about the profitable long-term growth opportunities across our business in our DICK'S Sporting Goods stores, on-line and through our Field & Stream concept," said Edward W. Stack, Chairman and CEO.
Mr. Stack continued, "To support our long-term goals, we intend to make meaningful investments in our business in the near-term. We are timing these investments to stay ahead of our needs and to produce sustainable, long-term advantages. Even with approximately $1.8 billion of capital expenditures to support our $10 billion sales target, we expect to expand our operating margins."
Mr. Stack concluded, "In addition to focusing on our customers and our communities, we are laser focused on driving shareholder value over the next five years by investing in the long-term growth of the business, repurchasing shares and paying quarterly dividends."
Webcast Replay Information An archived replay of the webcast of the event will be available for approximately 30 days on the DICK'S Sporting Goods Investor Relations website at www.DicksSportingGoods.com/investors.
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