DICK'S Sporting Goods Reports Third Quarter Results; Delivers 6.0% Increase in Same Store Sales and Raises Full Year Guidance

PITTSBURGH, Nov. 26, 2019 /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 third quarter ended November 2, 2019.

Third Quarter Results

The Company reported consolidated net income for the third quarter ended November 2, 2019 of $57.6 million, or $0.66 per diluted share. The Company reported consolidated net income for the third quarter ended November 3, 2018 of $37.8 million, or $0.39 per diluted share.

On a non-GAAP basis, the Company reported consolidated net income for the third quarter ended November 2, 2019 of $44.8 million, or $0.52 per diluted share. Third quarter 2019 non-GAAP results exclude the gain on sale of subsidiaries, charges related to the exit of eight Field & Stream stores, and a non-cash asset impairment. The GAAP to non-GAAP reconciliations are included in a table later in the release under the heading "GAAP to Non-GAAP Reconciliations."

Net sales for the third quarter of 2019 increased 5.6% to approximately $1.96 billion. Consolidated same store sales increased 6.0%.  Third quarter 2018 consolidated same store sales decreased 3.9%, adjusted for the calendar shift due to the 53^rd week in fiscal 2017, which the Company believes is the best view of its business.

"We are very pleased with our strong third quarter results, as we delivered a 6.0% comp sales increase and meaningful gross margin expansion. We saw increases in both average ticket and transactions, as well as growth across each of our three primary categories of hardlines, apparel and footwear," said Edward W. Stack, Chairman and Chief Executive Officer. "As we head into the holiday season, we remain very enthusiastic about our business, and we are pleased to increase our full year sales and earnings outlook for the third time this year."

Lauren R. Hobart, President, added, "The momentum in our stores continued to build with our focus on service standards, recognition of great results and stronger marketing. Combining this with the successful openings of our new eCommerce fulfillment centers and enhanced website functionality, we continue to build one of the best omni-channel experiences in retail."

Omni-channel Development

eCommerce sales for the third quarter of 2019 increased 13%. eCommerce penetration for the third quarter of 2019 was approximately 13% of total net sales, compared to approximately 12% during the third quarter of 2018.

In the third quarter, the Company opened six new DICK'S Sporting Goods stores and one new Golf Galaxy store, completing its 2019 store development program. The Company also exited eight Field & Stream stores, which were subleased to Sportsman's Warehouse, and closed one Golf Galaxy Store. As of November 2, 2019, the Company operated 733 DICK'S Sporting Goods stores in 47 states, with approximately 38.8 million square feet, 95 Golf Galaxy stores in 32 states, with approximately 2.0 million square feet, and 27 Field & Stream stores in 16 states, with approximately 1.2 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."

Balance Sheet

The Company ended the third quarter of 2019 with approximately $87.6 million in cash and cash equivalents and approximately $719.3 million in outstanding borrowings under its revolving credit facility. Over the course of the last 12 months, the Company continued to invest in omni-channel growth, while returning over $495 million to shareholders through share repurchases and quarterly dividends.

Total inventory increased 17.1% at the end of the third quarter of 2019 as compared to the end of the third quarter of 2018. This planned increase was due primarily to strategic investments to support key growth categories.

Year-to-Date Results

The Company reported consolidated net income for the 39 weeks ended November 2, 2019 of $227.6 million, or $2.53 per diluted share. For the 39 weeks ended November 3, 2018, the Company reported consolidated net income of $217.3 million, or $2.18 per diluted share.

On a non-GAAP basis, the Company reported consolidated net income for the 39 weeks ended November 2, 2019 of $215.8 million, or $2.39 per diluted share, which excludes the gain on sale of subsidiaries, non-cash asset impairments, charges related to the exit of eight Field and Stream stores, and the favorable settlement of a litigation contingency. The GAAP to non-GAAP reconciliations are included in a table later in the release under the heading "GAAP to Non-GAAP Reconciliations."

Net sales for the 39 weeks ended November 2, 2019 increased 3.3% to approximately $6.14 billion. Consolidated same store sales increased 3.1%. Consolidated same store sales decreased 3.5% for the 39-weeks ended November 3, 2018, adjusted for the calendar shift due to the 53^rd week in 2017, which the Company believes is the best view of its business.

Capital Allocation

On November 21, 2019, the Company's Board of Directors authorized and declared a quarterly dividend in the amount of $0.275 per share on the Company's Common Stock and Class B Common Stock. The dividend is payable in cash on December 31, 2019 to stockholders of record at the close of business on December 13, 2019.

During the third quarter of 2019, the Company repurchased approximately 2.8 million shares of its common stock at an average cost of $35.07 per share, for a total cost of $99.5 million. Under the five-year share repurchase program authorized by the Board of Directors in March 2016, the Company has repurchased approximately $933 million of common stock and has approximately $67 million remaining under the program. On June 12, 2019, the Company's Board of Directors authorized an additional five-year share repurchase program of up to $1 billion of the Company's common stock. The Company plans to continue to purchase under the 2016 program until it is exhausted or expired.

Full Year 2019 Outlook

• Based on an estimated 89 million average diluted shares outstanding, the Company currently projects earnings per diluted share to be approximately $3.63 to 3.73. The Company reported earnings per diluted share of $3.24 for the 52 weeks ended February 2, 2019.
• The Company's earnings per diluted share guidance includes approximately $30 million of net investments in business transformation initiatives.
• The Company's earnings per diluted share guidance includes the expected impact from all tariffs currently in effect, as well as any new tariffs slated to go into effect.

• The Company currently projects non-GAAP earnings per diluted share to be approximately $3.50 to 3.60.  This excludes the gain on sale of subsidiaries, non-cash asset impairments, charges related to the exit of eight Field & Stream stores, and the favorable settlement of a litigation contingency.

• The Company is continuing the strategic review of its hunt business, including Field & Stream.

• Consolidated same store sales are currently expected to increase 2.5% to 3%, compared to a 3.1% decrease in 2018.

• In 2019, the Company anticipates capital expenditures to be approximately $230 million on a gross basis and approximately $200 million on a net basis. In 2018, capital expenditures were $198 million on a gross basis and $170 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 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.

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 consolidated non-GAAP net income, non-GAAP earnings per diluted share, 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. Management also uses certain 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. These forward-looking 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 2019 outlook for earnings and sales; investments in business transformation initiatives; the impact of tariffs; capital expenditures; and 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: changes in consumer discretionary spending; investments in omni-channel growth not producing the anticipated benefits within the expected time-frame or at all; risks relating to private brands and new retail concepts; investments in business transformation initiatives not producing the anticipated benefits within the expected time-frame or at all; the amount devoted to strategic investments and the timing and success of those investments; the integration of strategic acquisitions being more difficult, time-consuming, or costly than expected; the results of the strategic review of the hunt business, including Field & Stream; inventory turn; changes in the competitive market and competition amongst retailers, including an increase in promotional activity; 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 existing tax, labor, foreign trade and other laws and regulations, including those imposing new taxes, surcharges, or tariffs; 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; factors affecting vendors, including supply chain and currency risks; talent needs and the loss of Edward W. Stack, Chairman and Chief Executive Officer; developments with sports leagues, professional athletes or sports superstars; weather-related disruptions and seasonality of the Company's business; and risks associated with being a controlled company.

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 29, 2019 and the Quarterly Report filed with the SEC on August 29, 2019. 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.

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 2, 2019, the Company operated 733 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 teammates, 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 and Field & Stream specialty stores, as well as GameChanger, a youth sports mobile app for scheduling, communications and live scorekeeping. 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. For more information, visit the Investor Relations page at dicks.com.

Contacts: 
Investor Relations:
Nate Gilch, Director of Investor Relations
DICK'S Sporting Goods, Inc. 
[email protected] 
(724) 273-3400

Media Relations:
(724) 273-5552 or [email protected]

Store Count and Square Footage

The stores that opened during the third quarter of 2019 are as follows:

The following represents a reconciliation of beginning and ending stores and square footage for the periods indicated:

Store Count:

Square Footage:
(in millions)

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.

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

(Dollars in thousands, except per share amounts)

SOURCE DICK'S Sporting Goods, Inc.