DICK'S Sporting Goods Reports Third Quarter Results

PITTSBURGH, Nov. 18, 2014 /PRNewswire/ -- DICK'S Sporting Goods, Inc. DKS, the largest U.S. based full-line omni-channel sporting goods retailer, today reported sales and earnings results for the third quarter ended November 1, 2014.

Third Quarter Results

The Company reported consolidated net income for the third quarter ended November 1, 2014 of $49.2 million, or $0.41 per diluted share, compared to the Company's expectations provided on August 19, 2014 of $0.38 to 0.42 per diluted share. For the third quarter ended November 2, 2013, the Company reported consolidated net income of $50.0 million, or $0.40 per diluted share.

Net sales for the third quarter of 2014 increased 9.0% to approximately $1.5 billion. Consolidated same store sales increased 1.1%, compared to the Company's guidance of an approximate 1 to 3% increase. Same store sales for DICK'S Sporting Goods increased 1.7%, while Golf Galaxy decreased 8.9%. Third quarter 2013 consolidated same store sales increased 3.3%, adjusted for the shifted retail calendar due to the 53^rd week in 2012.

"Our third quarter earnings were at the higher end of our guidance, but continued pressures in golf and hunting kept our comp sales at the lower end of our expectations," said Edward W. Stack, Chairman and CEO. "The balance of our business, excluding golf and hunting, continued to deliver strong results, posting a 4.6% comp increase for the quarter. The performance in these other categories, such as women's and youth apparel, are good indicators that our recent actions to reallocate space and payroll within our stores are paying off."

Omni-channel Development

eCommerce penetration for the third quarter of 2014 was 7.3% of total sales, compared to 6.5% in the third quarter last year.

In the third quarter, the Company opened 24 new DICK'S Sporting Goods stores, one new Golf Galaxy store and seven new Field & Stream stores. The Company also relocated one DICK'S Sporting Goods store and one Golf Galaxy store, remodeled five DICK'S Sporting Goods stores and closed one DICK'S Sporting Goods store. As of November 1, 2014, the Company operated 597 DICK'S Sporting Goods stores in 46 states, with approximately 32.0 million square feet and 80 Golf Galaxy stores in 29 states, with approximately 1.4 million square feet.

Store count, square footage and new stores are listed in a table later in the release under the heading "Store Count and Square Footage."

In the beginning of the fourth quarter, the Company opened six new DICK'S Sporting Goods stores, completing its 2014 store development program. The Company opened a total of 45 net new DICK'S Sporting Goods stores, one new Golf Galaxy store and eight new Field & Stream stores. The Company also relocated five DICK'S Sporting Goods stores and two Golf Galaxy stores and remodeled five DICK'S Sporting Goods stores in 2014. The Company also plans to close two Golf Galaxy stores that are at the end of their leases during the fourth quarter.

Balance Sheet

The Company ended the third quarter of 2014 with approximately $78 million in cash and cash equivalents and approximately $281 million in outstanding borrowings under its revolving credit facility. This compares to cash and cash equivalents of approximately $66 million and $116 million of borrowings under its $500 million revolving credit facility at the end of the third quarter of 2013. Over the course of the last 12 months, the Company utilized capital to invest in omni-channel growth, including Field & Stream, and returned over $410 million to shareholders through share repurchases and quarterly dividends.

Total inventory was 12.4% higher at the end of the third quarter of 2014 as compared to the end of the third quarter of 2013, including inventory to support the Company's Field & Stream stores, and inventory for the upcoming holiday season.

Year-to-Date Results

The Company reported consolidated non-GAAP net income for the 39 weeks ended November 1, 2014 of $192.2 million, or $1.58 per diluted share. For the 39 weeks ended November 2, 2013, the Company reported consolidated non-GAAP net income of $199.3 million, or $1.59 per diluted share.

On a GAAP basis, the Company reported consolidated net income for the 39 weeks ended November 1, 2014 of $188.7 million, or $1.55 per diluted share. For the 39 weeks ended November 2, 2013, on a GAAP basis, the Company reported consolidated net income of $199.0 million, or $1.58 per diluted share. The GAAP to non-GAAP reconciliations are included in a table later in the release under the heading "Non-GAAP Net Income and Earnings Per Share Reconciliations."

Net sales for the 39 weeks ended November 1, 2014 increased 9.1% from last year's period to $4.7 billion due to the opening of new stores coupled with a consolidated same store sales increase of 2.0%.

Capital Allocation

In the third quarter of 2014, the Company repurchased approximately 1.6 million shares of its common stock at an average cost of $45.98 per share, for a total cost of $75.0 million. To date, the Company has repurchased $455.6 million of common stock under its $1 billion share repurchase authorization.

On November 13, 2014, the Company's Board of Directors authorized and declared a quarterly dividend in the amount of $0.125 per share on the Company's Common Stock and Class B Common Stock. The dividend is payable in cash on December 26, 2014 to stockholders of record at the close of business on December 5, 2014.

Current 2014 Outlook

The Company's current outlook for 2014 is based on current expectations and includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as described later in this release. Although the Company believes that the expectations and other comments reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations or comments will prove to be correct. 

• Full Year 2014
  • Based on an estimated 121 million diluted shares outstanding, the Company now anticipates reporting consolidated non-GAAP earnings per diluted share of approximately $2.75 to 2.85, excluding a gain on the sale of an asset and golf restructuring charges. For the 52 weeks ended February 1, 2014, the Company reported consolidated earnings per diluted share of $2.69.
  • Consolidated same store sales are now expected to increase approximately 1 to 2%, compared to a 1.9% increase in fiscal 2013.
• Fourth Quarter 2014
  • Based on an estimated 120 million diluted shares outstanding, the Company currently anticipates reporting consolidated earnings per diluted share of approximately $1.18 to 1.28 in the fourth quarter of 2014, compared to consolidated earnings per diluted share of $1.11 in the fourth quarter of 2013.
  • Consolidated same store sales are currently expected to increase approximately 1 to 3% in the fourth quarter of 2014, as compared to a 7.3% increase in the fourth quarter of 2013, adjusted for the shifted retail calendar due to the 53^rd week in 2012.
• Capital Expenditures
  • In 2014, the Company anticipates capital expenditures to be approximately $340 million on a gross basis and approximately $245 million on a net basis. In 2013, capital expenditures were approximately $286 million on a gross basis and approximately $238 million on a net basis.

Conference Call Info

The Company will host a conference call today at 10:00 a.m. Eastern Time to discuss the third quarter results. Investors will have the opportunity to listen to the earnings conference call over the internet through the Company's website located at www.DICKS.com/Investors. To listen to the live call, please go to the website at least fifteen minutes early to register and download and install any necessary audio software.

In addition to the webcast, the call can be accessed by dialing (877) 443-5743 (domestic callers) or (412) 902-6617 (international callers) and requesting the "DICK'S Sporting Goods Earnings Call."

For those who cannot listen to the live webcast, it will be archived on the Company's website for approximately 30 days. In addition, a dial-in replay of the call will be available. To listen to the replay, investors should dial (877) 344-7529 (domestic callers) or (412) 317-0088 (international callers) and enter confirmation code 10054576. The dial-in replay will be available for approximately 30 days following the live call.

Forward-Looking Statements Involving Known and Unknown Risks and Uncertainties

Except for historical information contained herein, the statements in this release or otherwise made by our management in connection with the subject matter of this release are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) and involve risks and uncertainties and are subject to change based on various important factors, many of which may be beyond our control. Our future performance and financial results may differ materially from those included in any such forward-looking statements and such forward-looking statements should not be relied upon by investors as a prediction of actual results. You can identify these statements as those that may predict, forecast, indicate or imply future results, performance or advancements 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 other words with similar meanings. Forward-looking statements include statements regarding, among other things, the Company's expectations that its recent actions to reallocate space and payroll are driving results, the Company's future performance, growth in the omni-channel network, number of new store openings and capital expenditures.

The following factors, among others, in some cases have affected and in the future could affect our financial performance and actual results, and could cause actual results for fiscal 2014 and beyond to differ materially from those expressed or implied in any forward-looking statements included in this release or otherwise made by our management: economic and financial uncertainties may cause a decline in consumer spending; intense competition in the sporting goods industry; changes in consumer demand or shopping patterns; limitations on the availability of attractive store locations and/or lease terms; unauthorized disclosure of sensitive or confidential customer information; risks relating to our private brand offerings; disruptions with our eCommerce services provider or of our information systems; access to adequate capital; changing laws and regulations affecting our business including the regulation of consumer products; factors affecting our vendors; litigation risks; foreign trade issues and currency exchange rate fluctuations; the loss of our key executives, especially Edward W. Stack, our Chairman and Chief Executive Officer; protection of our intellectual property; ability to attract and retain qualified business leaders; disruption at our distribution centers; developments with sports leagues, professional athletes or sports superstars; weather and seasonality of our business; risks associated with strategic investments or acquisitions; risks associated with being a controlled company; our anti-takeover provisions; our current intention to issue quarterly cash dividends; and our share repurchase activity, if any.

Known and unknown risks and uncertainties are more fully described in the Company's Annual Report on Form 10-K for the year ended February 1, 2014 as filed with the Securities and Exchange Commission ("SEC") on March 28, 2014 and in other reports filed with the SEC. In addition, we operate in a highly competitive and rapidly changing environment; therefore, new risk factors can arise, and it is not possible for management to predict or assess the impact of all such risk factors. Forward-looking statements included in this release are made as of the date of this release. We do not assume any obligation and do not intend to update any forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required by the securities laws.

About DICK'S Sporting Goods, Inc.

Founded in 1948, DICK'S Sporting Goods, Inc. is a leading omni-channel sporting goods retailer offering an extensive assortment of authentic, high-quality sports equipment, apparel, footwear and accessories. As of November 1, 2014, the Company operated 597 DICK'S Sporting Goods locations across the United States, serving and inspiring athletes and outdoor enthusiasts to achieve their personal best through a blend of dedicated associates, in-store services and unique specialty shop-in-shops dedicated to Team Sports, Athletic Apparel, Golf, Lodge/Outdoor, Fitness and Footwear.

Headquartered in Pittsburgh, PA, DICK'S also owns and operates Golf Galaxy, Field & Stream and True Runner specialty stores. DICK'S offers its products through a content-rich eCommerce platform that is integrated with its store network and provides customers with the convenience and expertise of a 24-hour storefront. DICK'S Sporting Goods, Inc. news releases are available at www.DICKS.com/Investors. The Company's website is not part of this release.

Contacts:

Anne-Marie Megela, Vice President – Treasury Services and Investor Relations, or
Scott W. McKinney, Director of Investor Relations
DICK'S Sporting Goods, Inc.
investors@dcsg.com
(724) 273-3400

 

 

 

 

 

 

 

Non-GAAP Financial Measures

In addition to reporting the Company's financial results in accordance with generally accepted accounting principles ("GAAP"), the Company believes that certain non-GAAP financial information provides users of the Company's financial information with additional useful information in evaluating operating performance between reporting periods. 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 www.DICKS.com/Investors.

 

 

 

 

 

Adjusted EBITDA

Adjusted EBITDA should not be considered as an alternative to net income or any other generally accepted accounting principles measure of performance or liquidity. Adjusted EBITDA, as the Company has calculated it, may not be comparable to similarly titled measures reported by other companies. Adjusted EBITDA is a key metric used by the Company that provides a measurement of profitability that eliminates the effect of changes resulting from financing decisions, tax regulations, capital investments and certain non-recurring, infrequent or unusual items.

 

 

Reconciliation of Gross Capital Expenditures to Net Capital Expenditures

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

 

 

SOURCE DICK'S Sporting Goods, Inc.