Dick's Sporting Goods' fiscal Q4 earnings rise 16.8% to US$129.7M as net sales climb 12% to US$1.8B; for full year, earnings rise 10.2% to US$290.7M, net sales grow 12% to US$5.8B

PITTSBURGH, Pennsylvania , March 11, 2013 (press release) –  Dick's Sporting Goods, Inc. (NYSE: DKS), the largest U.S.-based full-line sporting goods retailer, today reported sales and earnings results for the fourth quarter and full year ended February 2, 2013. Fourth Quarter Results (14 weeks compared to 13 weeks last year)

The Company reported consolidated net income for the 14 weeks ended February 2, 2013 of $129.7 million, or $1.03 per diluted share, compared to the Company's expectations provided on November 13, 2012 of $1.03 to 1.05 per diluted share. The fourth quarter includes approximately $0.03 per diluted share for the 14th week. For the fourth quarter ended January 28, 2012, the Company reported consolidated net income of $111.1 million, or $0.88 per diluted share. 

Net sales for the 14-week quarter of 2012 increased by 12.0% to $1.8 billion, driven by the growth of our store network, a 1.2% increase in consolidated same store sales on a 13-week to 13-week basis, and the inclusion of the 14th week of sales. The 1.2% consolidated same store sales increase consisted of a 2.2% decrease at Dick's Sporting Goods stores, a 1.3% increase at Golf Galaxy and a 54.2% increase in the eCommerce business.  By chain, including eCommerce business, Dick's Sporting Goods same store sales increased 1.2% and Golf Galaxy same store sales increased 1.3%.

"In the fourth quarter, we experienced continued momentum in athletic footwear and apparel along with strong sales in hunting that exceeded our expectations. These increases were partially offset by lower-than-anticipated sales in outerwear and cold weather accessories, as well as a significant decline in the fitness category," said Edward W. Stack, Chairman and CEO. "As a result of the unusually warm weather conditions, including during peak selling periods in December, we significantly reduced our inventory levels of cold weather merchandise to align with lower consumer demand and avoid carrying over excess inventory after a second year in a row of warm weather. While this was a prudent move that enabled us to effectively manage inventory and protect our margins, it did limit our ability to capture sales in January when temperatures dropped and snowfall increased."

Mr. Stack continued, "In fitness, the significant comp decline was a result of lower large-equipment sales like treadmills and ellipticals. We understand the issues that contributed to the sales decline and are taking action to correct them."

New Stores

In the fourth quarter, the Company opened seven new Dick's Sporting Goods stores, relocated one Dick's Sporting Goods store and repositioned one Golf Galaxy store. These stores are listed in a table later in the release under the heading "Store Count and Square Footage."

As of the end of the fourth quarter, the Company operated 518 Dick's Sporting Goods stores in 44 states, with approximately 28.2 million square feet and 81 Golf Galaxy stores in 30 states, with approximately 1.4 million square feet.

Balance Sheet

The Company ended fiscal 2012 with $345 million in cash and cash equivalents as compared to $734 million at the end of fiscal 2011, and did not have any outstanding borrowings under its $500 million revolving credit facility. Over the course of the past twelve months, the Company utilized capital to fund its $200 million share repurchase program, pay quarterly dividends, purchase its store support center, invest in JJB Sports, acquire intellectual property rights to the Top-Flite and Field & Stream brands,  build a distribution center and fund its $246 million special dividend.

Inventory per square foot was 0.7% higher at the end of the fourth quarter of 2012 as compared to the end of the fourth quarter of 2011.

Full Year 2012 Results (53 weeks compared to 52 weeks last year)

The Company reported consolidated non-GAAP net income for the 53 weeks ended February 2, 2013 of $318.3 million, or $2.53 per diluted share, excluding an impairment charge and including approximately $0.03 per diluted share for the 53rd week.  For the 52 weeks ended January 28, 2012, the Company reported consolidated non-GAAP net income of $253.9 million, or $2.02 per diluted share. 

On a GAAP basis, the Company reported consolidated net income for the 53 weeks ended February 2, 2013 of $290.7 million, or $2.31 per diluted share. For the 52 weeks ended January 28, 2012, the Company reported consolidated net income of $263.9 million, or $2.10 per diluted share.  The GAAP to non-GAAP reconciliation is included in a table later in the release under the heading "Non-GAAP Net Income and Earnings Per Share Reconciliation."

Net sales for the 53 weeks ended February 2, 2013 increased 12.0% from last year's 52-week period to $5.8 billion primarily due to a 4.3% increase in consolidated same store sales on a 52-week to 52-week comparable basis and the growth of the Company's store network.

"In 2012, we made several important investments for the future, including adding locations, acquiring established brands, developing and testing retail concepts, further building omni-channel capabilities, and creating new marketing strategies," said Mr. Stack. "All of these investments have strengthened our foundation and position us for continued growth. We're optimistic about our outlook for the coming year and excited about our long-term prospects for the future."

2013 Growth Investments

The Company will make meaningful investments for the long-term benefit of the business and its shareholders. In 2013, these growth investments include:

  • Strengthening its omni-channel platform, including investments in advanced mobile capabilities, the piloting of pick-up in-store, and growth of the eCommerce team,
  • Remodeling existing stores,
  • Implementing new systems, and
  • Developing new concepts.

In total, the Company expects these investments to have a $0.12 impact on earnings per diluted share in 2013. The Company's guidance takes these investments into consideration.

Current 2013 Outlook

The Company's current outlook for 2013 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 2013 – (52 Week Year) Comparisons to Fiscal 2012 – (53 Week Year) 
    • Based on an estimated 126 million diluted shares outstanding, the Company currently anticipates reporting consolidated earnings per diluted share of approximately $2.84 to 2.86. For the 53 weeks ended February 2, 2013, the Company reported consolidated non-GAAP earnings per diluted share of $2.53, excluding an impairment charge and including approximately $0.03 per diluted share for the 53rd week.  On a GAAP basis, the Company reported consolidated earnings per diluted share of $2.31 in 2012. 
    • Consolidated same store sales are currently expected to increase approximately 2 to 3% on a 52-week to 52-week comparative basis, compared to a 4.3% increase in fiscal 2012.
    • The Company expects to open approximately 40 new Dick's Sporting Goods stores, relocate one Dick's Sporting Goods store and complete four full and 75 partial remodels of Dick's Sporting Goods stores in 2013. The Company also expects to open one new Golf Galaxy store and relocate one Golf Galaxy store in 2013, both of which will be in the new, larger format.
    • The Company expects to open approximately two new True Runner stores and approximately two new Field & Stream stores in 2013.
  • First Quarter 2013
    • Based on an estimated 126 million diluted shares outstanding,the Company currently anticipates reporting consolidated earnings per diluted share of approximately $0.47 to 0.49 in the first quarter of 2013, compared to first quarter 2012 earnings per diluted share of $0.45.   
    • Consolidated same store sales adjusted for the shifted calendar due to the 53rd week in 2012 are currently expected to be approximately negative 2% to negative 1% in the first quarter of 2013, or approximately flat to 1% not adjusted, as compared to an 8.4% increase in the first quarter of 2012. 
    • The Company expects to open approximately two Dick's Sporting Goods stores in the first quarter of 2013.
  • Capital Expenditures
    • In 2013, the Company anticipates capital expenditures to be approximately $299 million on a gross basis and approximately $258 million on a net basis.

Dividend

As previously announced on February 19, 2013, 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 March 29, 2013 to stockholders of record at the close of business on March 8, 2013. 

Share Repurchase Program

The Company announced today that its Board of Directors authorized a share repurchase program of up to $1 billion of the Company's common stock over the next five years. The Company currently expects to finance the repurchases from cash on hand and if necessary, availability under its credit facility. The Company's guidance takes into consideration expected share repurchase activity sufficient to at least offset the dilutive effect of the issuance of shares expected from stock-based awards. The repurchases, which may be made in privately-negotiated transactions or in the open market as permitted by Securities Exchange Act Rule 10b-18, including pursuant to a Securities Exchange Act Rule 10b5-1 repurchase plan, could begin immediately and may occur from time-to-time in the future.  The Company may suspend or discontinue this repurchase program at any time.

Conference Call Info

The Company will be hosting a conference call today at 10:00 a.m. eastern time to discuss the fourth quarter and full year results.  Investors will have the opportunity to listen to the earnings conference call over the internet through the Company's website located at http://www.dickssportinggoods.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 (866) 652-5200 (domestic callers) or (412) 317-6060 (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 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 10025203. The dial-in replay will be available for 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, our continued profitable growth.

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 2013 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: ongoing economic and financial uncertainties may cause a decline in consumer spending; changes in the general economic and business conditions and in the specialty retail or sporting goods industry in particular; competition in the sporting goods industry; changes in consumer demand; limitations on the availability of attractive store locations; unauthorized disclosure of sensitive or confidential customer information; risks relating to our private brand offerings; access adequate capital; changing laws and regulations affecting our business including the regulation of firearms and ammunition; 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; disruptions with our eCommerce services provider or of our information systems; disruption at our distribution facilities; developments with sports leagues, professional athletes or sports superstars; weather and seasonality of our business; regional risks; risk associated with strategic investments or acquisitions; labor needs; 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 January 28, 2012 as filed with the Securities and Exchange Commission ("SEC") on March 16, 2012 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.

Dick's Sporting Goods, Inc. is an authentic full-line sports and fitness specialty omni-channel retailer offering a broad assortment of high quality, competitively-priced brand name sporting goods equipment, apparel and footwear in a specialty store environment. The Company also owns and operates Golf Galaxy, LLC, a golf specialty retailer.

As of February 2, 2013, the Company operated 518 Dick's Sporting Goods stores in 44 states, 81 Golf Galaxy stores in 30 states and eCommerce websites and catalog operations for Dick's Sporting Goods and Golf Galaxy. Dick's Sporting Goods, Inc. news releases are available at http://www.dickssportinggoods.com/investors. The Company's website is not part of this release.

Contact:

Timothy E. Kullman, EVP – Finance, Administration, and Chief Financial Officer or Anne-Marie Megela, Director, Investor Relations Dick's Sporting Goods investors@dcsg.com (724) 273-3400

 

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
               
  14 Weeks Ended   13 Weeks Ended
  February 2,   % of   January 28,   % of
  2013   Sales (1)   2012   Sales
               
Net sales $ 1,805,302   100.00%   $ 1,611,556   100.00%
Cost of goods sold, including   occupancy and distribution costs              
1,216,650   67.39   1,098,785   68.18
               
GROSS PROFIT 588,652   32.61   512,771   31.82
               
Selling, general and administrative   expenses 375,781   20.82   326,570   20.26
Pre-opening expenses 1,765   0.10   1,876   0.12
               
INCOME FROM OPERATIONS 211,106   11.69   184,325   11.44
               
Interest expense 725   0.04   3,365   0.21
Other income (1,632)   (0.09)   (951)   (0.06)
               
INCOME BEFORE INCOME TAXES 212,013   11.74   181,911   11.29
               
Provision for income taxes 82,264   4.56   70,835   4.40
               
NET INCOME $    129,749   7.19%   $    111,076   6.89%
               
EARNINGS PER COMMON SHARE:              
Basic $          1.06       $          0.92    
Diluted $          1.03       $          0.88    
               
WEIGHTED AVERAGE COMMON SHARES              
OUTSTANDING:              
Basic 122,875       120,928    
Diluted 126,409       126,316    
               
Cash dividends declared per share $        2.125       $         0.50    
               
(1)Column does not add due to rounding      
               
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
               
  53 Weeks Ended   52 Weeks Ended
  February 2,   % of   January 28,   % of
  2013   Sales(1)   2012   Sales
               
Net sales $ 5,836,119   100.00%   $ 5,211,802   100.00%
Cost of goods sold, including   occupancy and distribution costs              
3,998,956   68.52   3,616,921   69.40
               
GROSS PROFIT 1,837,163   31.48   1,594,881   30.60
               
Selling, general and administrative   expenses 1,297,413   22.23   1,148,268   22.03
Pre-opening expenses 16,076   0.28   14,593   0.28
               
INCOME FROM OPERATIONS 523,674   8.97   432,020   8.29
               
Impairment of available-for-sale   investments 32,370   0.55   -   -
Gain on sale of investment -   -   (13,900)   (0.27)
Interest expense 6,034   0.10   13,868   0.27
Other (income) expense (4,555)   (0.08)   26   0.00
               
INCOME BEFORE INCOME TAXES 489,825   8.39   432,026   8.29
               
Provision for income taxes 199,116   3.41   168,120   3.23
               
NET INCOME $    290,709   4.98%   $    263,906   5.06%
               
EARNINGS PER COMMON SHARE:              
Basic $          2.39       $          2.19    
Diluted $          2.31       $          2.10    
               
WEIGHTED AVERAGE COMMON SHARES              
OUTSTANDING:              
Basic 121,629       120,232    
Diluted 125,995       125,768    
               
Cash dividends declared per share  $          2.50       $          0.50    
               
(1)Column does not add due to rounding        
               
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(Dollars in thousands)
           
    February 2,     January 28,
    2013     2012
           
ASSETS          
CURRENT ASSETS:          
Cash and cash equivalents   $      345,214     $      734,402
Accounts receivable, net   34,625     38,338
Income taxes receivable   15,737     4,113
Inventories, net   1,096,186     1,014,997
Prepaid expenses and other current assets   73,838     64,213
Deferred income taxes   30,289     12,330
Total current assets   1,595,889     1,868,393
           
Property and equipment, net   840,135     775,896
Construction in progress - leased facilities   -     2,138
Intangible assets, net   98,903     50,490
Goodwill   200,594     200,594
Other assets:          
Deferred income taxes   4,382     12,566
Other   147,904     86,375
            Total other assets   152,286     98,941
TOTAL ASSETS   $    2,887,807     $    2,996,452
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
CURRENT LIABILITIES:          
Accounts payable   $      507,247     $      510,398
Accrued expenses   269,900     264,073
Deferred revenue and other liabilities   146,362     128,765
Income taxes payable   68,746     29,484
Current portion of other long-term debt and          
leasing obligations   8,513     7,426
Total current liabilities   1,000,768     940,146
LONG-TERM LIABILITIES:          
Other long-term debt and leasing obligations   7,762     151,596
Non-cash obligations for construction           
   in progress - leased facilities   -     2,138
Deferred income taxes   7,413     -
Deferred revenue and other liabilities   284,540     269,827
Total long-term liabilities   299,715     423,561
COMMITMENTS AND CONTINGENCIES          
STOCKHOLDERS' EQUITY:          
Common stock   981     964
Class B common stock   249     250
Additional paid-in capital   874,236     699,766
Retained earnings   911,704     932,871
Accumulated other comprehensive income   112     118
Treasury stock    (199,958)     (1,224)
Total stockholders' equity   1,587,324     1,632,745
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $    2,887,807     $    2,996,452
           
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(Dollars in thousands)
  Fiscal Year Ended
  February 2,    January 28,
  2013   2012
CASH FLOWS FROM OPERATING ACTIVITIES:      
       
  Net income $  290,709   $  263,906
  Adjustments to reconcile net income         
   to net cash provided by operating activities:      
Depreciation and amortization 125,096   116,581
Impairment of available-for-sale investments 32,370   -
Deferred income taxes (2,362)   25,152
Stock-based compensation 32,181   23,919
Excess tax benefit from exercise of stock options (64,767)   (20,768)
Tax benefit from exercise of stock options 4,864   664
Other non-cash items 372   1,382
Gain on sale of investment -   (13,900)
Changes in assets and liabilities:      
Accounts receivable (4,328)   (3,350)
Inventories (81,189)   (118,102)
Prepaid expenses and other assets (8,693)   (9,174)
Accounts payable (13,588)   73,950
Accrued expenses (5,576)   (21,410)
Income taxes payable / receivable 92,352   54,923
Deferred construction allowances 28,691   26,678
Deferred revenue and other liabilities 12,152   9,970
Net cash provided by operating activities 438,284   410,421
       

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