DICK'S Sporting Goods Reports First Quarter Results

PITTSBURGH, May 19, 2016 /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 30, 2016.

First Quarter Results

The Company reported consolidated net income for the first quarter ended April 30, 2016 of $56.9 million, or $0.50 per diluted share, compared to the Company's expectations provided on March 8, 2016 of $0.48 to 0.50 per diluted share. For the first quarter ended May 2, 2015, the Company reported consolidated net income of $63.3 million, or $0.53 per diluted share.

Net sales for the first quarter of 2016 increased 6.1% to approximately $1.7 billion. Consolidated same store sales increased 0.5%, compared to the Company's guidance of approximately flat to an increase of 1%. Same store sales for DICK'S Sporting Goods increased 0.4%, while Golf Galaxy increased 1.7%. First quarter 2015 consolidated same store sales increased 1.0%.

"We are pleased to have delivered first quarter earnings at the high end of our expectations in a challenging retail environment," said Edward W. Stack, Chairman and CEO. "The consolidation that is occurring among sporting goods retailers is creating a unique time in the industry. Given the expected near-term liquidation activity in the market, we have adjusted our guidance to contemplate this dynamic. Over the longer term, we remain confident in our ability to aggressively capture displaced market share and to strengthen our leadership position."

Omni-channel Development

eCommerce penetration for the first quarter of 2016 was 9.2% of total net sales, compared to 8.5% during the first quarter of 2015.

In the first quarter, the Company opened three new DICK'S Sporting Goods stores and two new Field & Stream stores. The Company also relocated three DICK'S Sporting Goods stores. As of April 30, 2016, the Company operated 647 DICK'S Sporting Goods stores in 47 states, with approximately 34.5 million square feet, 73 Golf Galaxy stores in 29 states, with approximately 1.4 million square feet, and 21 Field & Stream stores in ten states, with approximately 1.1 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 first quarter of 2016 with approximately $92 million in cash and cash equivalents and approximately $158 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 $322 million to shareholders through share repurchases and quarterly dividends.

Total inventory increased 7.3% at the end of the first quarter of 2016 as compared to the end of the first quarter of 2015. This increase includes the cold-weather merchandise the Company packed away for the 2016 winter season.

Capital Allocation

On May 13, 2016, the Company's Board of Directors authorized and declared a quarterly dividend in the amount of $0.15125 per share on the Company's Common Stock and Class B Common Stock. The dividend is payable in cash on June 30, 2016 to stockholders of record at the close of business on June 10, 2016.

During the first quarter of 2016, the Company repurchased approximately 1.1 million shares of its common stock at an average cost of $46.81 per share, for a total cost of $50 million. Since starting its initial $1 billion share repurchase authorization at the beginning of fiscal 2013, the Company has repurchased approximately $863 million of common stock, and has approximately $137 million remaining under this authorization. On March 16, 2016, the Board of Directors authorized a five-year share repurchase program of up to $1 billion of the Company's common stock. The Company will continue to purchase under the 2013 program until it is exhausted or expired.

Current 2016 Outlook

The Company's current outlook for 2016 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 2016
    • Based on an estimated 111 to 112 million diluted shares outstanding, the Company currently anticipates reporting consolidated earnings per diluted share in the range of $2.60 to 2.90. The Company's consolidated earnings per diluted share guidance contemplates expected liquidation activity in the market. It also includes the expectation of approximately $100 to 200 million of share repurchases in 2016. The Company reported consolidated earnings per diluted share of $2.83 for the 52 weeks ended January 30, 2016. On a non-GAAP basis, the Company reported consolidated earnings per diluted share of $2.87, excluding a litigation settlement charge, for the 52 weeks ended January 30, 2016.

    • Consolidated same store sales are currently expected to be in the range of negative 1.0% to positive 1.0%, compared to a 0.2% decrease in fiscal 2015.

    • The Company expects to open approximately 36 new DICK'S Sporting Goods stores and relocate approximately nine DICK'S Sporting Goods stores in 2016. The Company also expects to open approximately nine new Field & Stream stores and two new Golf Galaxy stores in 2016, largely adjacent to new or relocated DICK'S Sporting Goods stores.

  • Second Quarter 2016       
    • Based on an estimated 112 million diluted shares outstanding, the Company currently anticipates reporting consolidated earnings per diluted share in the range of $0.62 to 0.72 in the second quarter of 2016, contemplating expected liquidation activity in the market. This is compared to consolidated earnings per diluted share of $0.77 in the second quarter of 2015.

    • Consolidated same store sales are currently expected to be in the range of negative 4.0% to negative 1.0% in the second quarter of 2016, as compared to a 1.2% increase in the second quarter of 2015.

    • The Company expects to open approximately five new DICK'S Sporting Goods stores and relocate two DICK'S Sporting Goods stores in the second quarter of 2016.

  • Capital Expenditures
    • In 2016, the Company anticipates capital expenditures to be approximately $230 million on a net basis and approximately $420 million on a gross basis. In 2015, capital expenditures were $204 million on a net basis and $370 million on a gross basis.

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.

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 10085740. 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

This release contains forward-looking statements within the meaning of the securities laws. These forward-looking statements are subject to risks and uncertainties and change based on various important factors, many of which may be beyond our control. Our 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, capturing market share, making the right strategic investments, capital expenditures, outstanding borrowings in future periods and share repurchases.

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: the weather; changes in consumer discretionary spending; our development of an eCommerce platform; success of our transition to our own eCommerce platform; inventory turn; changes in the competitive market and competition amongst retailers; changes in consumer demand or shopping patterns and our ability to identify new trends and have the right trending products in our stores and on our website; limitations on the availability of attractive retail store sites; omni-channel growth; unauthorized disclosure of sensitive or confidential customer information; risks relating to our private brand offerings and new retail concepts; disruptions with our eCommerce service provider or our information systems; factors affecting our vendors, including supply chain and currency risks; talent needs and the loss of Edward W. Stack, our Chairman and Chief Executive Officer; disruptions of our information systems; developments with sports leagues, professional athletes or sports superstars; weather-related disruptions and seasonality of our business; and risks associated with being a controlled company.

For additional information on these and other factors that could affect our actual results, see our risk factors, which may be amended from time to time, set forth in our filings with the SEC, including our most recent Annual Report filed with the Securities and Exchange Commission on March 25, 2016. 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 April 30, 2016, the Company operated more than  645 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, True Runner and Chelsea Collective 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. For more information, visit the Press Room or Investor Relations pages at DICKS.com.

Contacts:

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

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

 

 

DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

(In thousands, except per share data)




13 Weeks Ended



April 30,
 2016


% of 
Sales(1)


May 2,
 2015


% of

Sales(1)










Net sales


$

1,660,343



100.00

%


$

1,565,308



100.00

%

Cost of goods sold, including occupancy and distribution costs


1,164,546



70.14



1,096,320



70.04











GROSS PROFIT


495,797



29.86



468,988



29.96











Selling, general and administrative expenses


398,568



24.01



360,736



23.05


Pre-opening expenses


6,518



0.39



6,340



0.41











INCOME FROM OPERATIONS


90,711



5.46



101,912



6.51











Interest expense


1,131



0.07



634



0.04


Other income


(2,067)



(0.12)



(2,150)



(0.14)











INCOME BEFORE INCOME TAXES


91,647



5.52



103,428



6.61











Provision for income taxes


34,770



2.09



40,083



2.56











NET INCOME


$

56,877



3.43

%


$

63,345



4.05

%










EARNINGS PER COMMON SHARE:









Basic


$

0.51





$

0.54




Diluted


$

0.50





$

0.53













WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:









Basic


112,105





117,044




Diluted


113,276





118,906













Cash dividend declared per share


$

0.15125





$

0.13750













(1) Column does not add due to rounding










 

 


DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS - UNAUDITED

(Dollars in thousands)




April 30,
 2016


May 2,
 2015


January 30,
 2016

ASSETS







CURRENT ASSETS:







Cash and cash equivalents


$

92,493



$

81,409



$

118,936


Accounts receivable, net


111,973



63,871



61,395


Income taxes receivable


2,787



5,748



5,432


Inventories, net


1,742,948



1,623,753



1,527,187


Prepaid expenses and other current assets


120,477



108,773



99,740


Total current assets


2,070,678



1,883,554



1,812,690









Property and equipment, net


1,406,471



1,220,471



1,347,885


Intangible assets, net


109,053



110,179



109,440


Goodwill


200,594



200,594



200,594


Other assets:







Deferred income taxes


4,456



5,448



6,165


Other


87,115



73,863



82,562


Total other assets


91,571



79,311



88,727


TOTAL ASSETS


$

3,878,367



$

3,494,109



$

3,559,336









LIABILITIES AND STOCKHOLDERS' EQUITY







CURRENT LIABILITIES:







Accounts payable


$

778,977



$

777,800



$

677,864


Accrued expenses


328,177



275,561



289,001


Deferred revenue and other liabilities


162,365



149,974



184,386


Income taxes payable


13,201



25,176



39,835


Current portion of other long-term debt and leasing obligations


590



539



589


Total current liabilities


1,283,310



1,229,050



1,191,675


LONG-TERM LIABILITIES:







Revolving credit borrowings


157,600



51,200




Other long-term debt and leasing obligations


5,180



5,781



5,324


Deferred income taxes


15,390



1,983



6,454


Deferred revenue and other liabilities


612,754



462,974



566,696


Total long-term liabilities


790,924



521,938



578,474


COMMITMENTS AND CONTINGENCIES







STOCKHOLDERS' EQUITY:







Common stock


870



912



869


Class B common stock


249



249



249


Additional paid-in capital


1,088,980



1,029,208



1,063,705


Retained earnings


1,776,782



1,518,237



1,737,214


Accumulated other comprehensive loss


(87)



(42)



(179)


Treasury stock, at cost


(1,062,661)



(805,443)



(1,012,671)


Total stockholders' equity


1,804,133



1,743,121



1,789,187


TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY


$

3,878,367



$

3,494,109



$

3,559,336









 

 


DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

(Dollars in thousands)




13 Weeks Ended



April 30,
 2016


May 2,
 2015

CASH FLOWS FROM OPERATING ACTIVITIES:





Net income


$

56,877



$

63,345


Adjustments to reconcile net income to net cash (used in) provided by operating activities





Depreciation and amortization


47,990



42,576


Deferred income taxes


10,645



5,489


Stock-based compensation


8,247



7,008


Excess tax benefit from exercise of stock options


(7,674)



(5,114)


Other non-cash items


181



133


Changes in assets and liabilities:





Accounts receivable


(19,514)



2,550


Inventories


(215,761)



(232,986)


Prepaid expenses and other assets


(20,012)



(16,878)


Accounts payable


145,651



163,478


Accrued expenses


10,838



(9,365)


Income taxes payable / receivable


(16,412)



(8,914)


Deferred construction allowances


16,202



40,579


Deferred revenue and other liabilities


(17,393)



(16,393)


Net cash (used in) provided by operating activities


(135)



35,508


CASH FLOWS FROM INVESTING ACTIVITIES:





Capital expenditures


(88,834)



(65,724)


Deposits and purchases of other assets


(8)



(406)


Net cash used in investing activities


(88,842)



(66,130)


CASH FLOWS FROM FINANCING ACTIVITIES:





Revolving credit borrowings


609,100



124,300


Revolving credit repayments


(451,500)



(73,100)


Payments on other long-term debt and leasing obligations


(143)



(130)


Construction allowance receipts





Proceeds from exercise of stock options


15,743



9,245


Excess tax benefit from exercise of stock options


7,674



5,115


Minimum tax withholding requirements


(6,281)



(7,507)


Cash paid for treasury stock


(50,000)



(150,000)


Cash dividend paid to stockholders


(17,613)



(17,413)


Decrease in bank overdraft


(44,538)



(189)


Net cash provided by (used in) financing activities


62,442



(109,679)


EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS


92



31


NET DECREASE IN CASH AND CASH EQUIVALENTS


(26,443)



(140,270)


CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


118,936



221,679


CASH AND CASH EQUIVALENTS, END OF PERIOD


$

92,493



$

81,409


 

 

Store Count and Square Footage

The stores that opened during the first quarter of 2016 are as follows:

Store


Market


Concept

Lafayette, LA


Lafayette


DICK'S Sporting Goods (1)

American Fork, UT


Provo-Orem


DICK'S Sporting Goods

Folsom, CA


Sacramento


DICK'S Sporting Goods

Lafayette, LA


Lafayette


Field & Stream (1)

Kalamazoo, MI


Kalamazoo


Field & Stream

 

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

 

Store Count:



Fiscal 2016


Fiscal 2015



DICK'S
Sporting
Goods
(1)


Specialty Store
Concepts
(1) (2)


Total


DICK'S
Sporting
Goods


Specialty Store
Concepts
(2)


Total

Beginning stores


644



97



741



603



91



694


Q1 New stores


3



2



5



9



1



10


Ending stores


647



99



746



612



92



704















Relocated stores


3





3



1



1



2















 

Square Footage:
(in millions)



DICK'S
Sporting
Goods
(1)


Specialty Store
Concepts
(1) (2)


Total (3)

Q1 2015


32.7



2.0



34.7


Q2 2015


33.1



2.0



35.1


Q3 2015


34.4



2.4



36.8


Q4 2015


34.4



2.3



36.7


Q1 2016


34.5



2.4



37.0


 

(1)

In some markets we operate adjacent stores on the same property with a pass-through for customers. We refer to this format as a "combo store". Combo stores are reflected in both the DICK'S Sporting Goods and Specialty Store Concepts reconciliations.  As of April 30, 2016, the Company operated five combo stores.



(2)

Includes the Company's Golf Galaxy, Field & Stream, and other specialty concept stores.



(3)

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 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 investors.DICKS.com.

 

Non-GAAP Net Income and Earnings Per Share Reconciliations:

(in thousands, except per share data):




Fiscal 2015



52 Weeks Ended January 30, 2016










As Reported


Litigation Settlement Charge


Non-GAAP Total

Net sales


$

7,270,965



$



$

7,270,965


Cost of goods sold, including occupancy and distribution costs


5,088,078





5,088,078









GROSS PROFIT


2,182,887





2,182,887









Selling, general and administrative expenses


1,613,075



(7,884)



1,605,191


Pre-opening expenses


34,620





34,620









INCOME FROM OPERATIONS


535,192



7,884



543,076









Interest expense


4,012





4,012


Other expense


305





305









INCOME BEFORE INCOME TAXES


530,875



7,884



538,759









Provision for income taxes


200,484



3,154



203,638









NET INCOME


$

330,391



$

4,730



$

335,121









EARNINGS PER COMMON SHARE:







Basic


$

2.87





$

2.91


Diluted


$

2.83





$

2.87









WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:







Basic


115,230





115,230


Diluted


116,794





116,794


 

During the third quarter of 2015, the Company recorded a pre-tax litigation settlement charge of $7.9 million. The provision for income taxes was calculated at 40%, which approximates the Company's blended tax rate.

EBITDA

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

 



13 Weeks Ended



April 30,
 2016


May 2,
 2015



(dollars in thousands)

Net income


$

56,877



$

63,345


Provision for income taxes


34,770



40,083


Interest expense


1,131



634


Depreciation and amortization


47,990



42,576


EBITDA


$

140,768



$

146,638







% decrease in EBITDA


(4)%




 

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.

 



13 Weeks Ended



April 30,
 2016


May 2,
 2015



(dollars in thousands)

Gross capital expenditures


$

(88,834)



$

(65,724)


Proceeds from sale-leaseback transactions





Deferred construction allowances


16,202



40,579


Construction allowance receipts





Net capital expenditures


$

(72,632)



$

(25,145)


 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/dicks-sporting-goods-reports-first-quarter-results-300271372.html

SOURCE DICK'S Sporting Goods, Inc.