Press Release:
Dick’s Sporting Goods Reports Second Quarter Results; Exceeds Expectations
– Consolidated non-GAAP earnings per diluted share increased 25% to $0.65 per diluted share in the second quarter of 2012 from $0.52 per diluted share in the second quarter of 2011
– Consolidated same store sales increased 3.8% in the second quarter of 2012
– Company raises full year estimated consolidated non-GAAP earnings range from $2.45 to 2.48 per diluted share to $2.47 to 2.51 per diluted share
– Board authorizes quarterly dividend of $0.125 per share
PITTSBURGH, Aug. 14, 2012 /PRNewswire/ — Dick’s Sporting Goods, Inc. (DKS), the largest U.S.-based full-line sporting goods retailer, today reported sales and earnings results for the second quarter ended July 28, 2012.
Second Quarter Results
The Company reported consolidated non-GAAP net income for the second quarter ended July 28, 2012 of $81.3 million, or $0.65 per diluted share, excluding a $0.22 per diluted share impact of an impairment charge related to the Company’s investment in JJB Sports. The second quarter non-GAAP earnings per diluted share exceeded the Company’s earnings expectations provided on May 15, 2012 of $0.62 to 0.63 per diluted share. For the second quarter ended July 30, 2011, the Company reported consolidated non-GAAP net income of $65.1 million, or $0.52 per diluted share, excluding a $0.07 per diluted share impact from a gain on sale of investment.
On a GAAP basis, the Company reported consolidated net income for the second quarter ended July 28, 2012 of $53.7 million, or $0.43 per diluted share. For the second quarter ended July 30, 2011, the Company reported consolidated net income of $73.8 million, or $0.59 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 second quarter of 2012 increased by 10.0% to $1.4 billion due primarily to a 3.8% increase in consolidated same store sales and the opening of new stores. The 3.8% consolidated same store sales increase consisted of a 2.9% increase at Dick’s Sporting Goods stores, a 4.4% increase at Golf Galaxy and a 34.6% increase in the eCommerce business.
“We have delivered another exceptional quarter, and are on track to post strong full-year performance for 2012,” said Edward W. Stack, Chairman and CEO. “We plan to drive continued long-term profitable growth by investing in new stores, developing our omni-channel capabilities and increasing our margins through inventory management, an emphasis on private brands, and the continued shift of our product mix to higher margin merchandise categories.”
New Stores
In the second quarter, the Company opened four Dick’s Sporting Goods stores. These stores are listed in a table later in the release under the heading “Store Count and Square Footage.”
As of July 28, 2012, the Company operated 490 Dick’s Sporting Goods stores in 44 states, with approximately 26.7 million square feet and 81 Golf Galaxy stores in 30 states, with approximately 1.3 million square feet.
Balance Sheet
The Company ended the second quarter of 2012 with $350 million in cash and cash equivalents and did not have any outstanding borrowings under its $500 million revolving credit facility. At the end of the second quarter of 2011, the Company had $626 million in cash and cash equivalents and did not have any outstanding borrowings under its credit facility. Over the course of the past twelve months, the Company has utilized capital to fund its share repurchase program, initiate a dividend program, purchase its store support center, invest in JJB Sports, acquire intellectual property rights to the Top-Flite brand, and build a distribution center.
The inventory per square foot was 4.2% higher at the end of the second quarter of 2012 as compared to the end of the second quarter of 2011.
Year-to-Date Results
The Company reported consolidated non-GAAP net income for the 26 weeks ended July 28, 2012 of $138.5 million, or $1.10 per diluted share. For the 26 weeks ended July 30, 2011, the Company reported consolidated non-GAAP net income of $102.6 million, or $0.82 per diluted share.
On a GAAP basis, the Company reported consolidated net income for the 26 weeks ended July 28, 2012 of $110.8 million, or $0.88 per diluted share. For the 26 weeks ended July 30, 2011, the Company reported consolidated net income of $111.3 million, or $0.89 per diluted share.
Net sales for the first half of 2012 increased 12.3% from the first half of 2011 to $2.7 billion primarily due to a consolidated same store sales increase of 5.9% and the opening of new stores.
See Page 2 for more details
Dividend
On August 13, 2012, 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 September 28, 2012 to stockholders of record at the close of business on August 31, 2012.
Investment in JJB
In the second quarter, the Company recorded a pre-tax impairment charge of $32.4 million related to its investment in JJB Sports, which impacted earnings per diluted share by $0.22.
“Since making our investment in JJB, and as publicly announced, JJB’s performance has materially deteriorated from its expectations, partly due to a worsening macro environment in Europe, adverse weather conditions in the first quarter and lackluster sales associated with the recent Euro Championships,” said Mr. Stack. “While we continue to believe in the underlying opportunity within the UK sporting goods market, in light of these developments and our own assessments, we have determined to fully impair the value of our investment. As we indicated at the outset, this is a high risk investment that was structured to provide us with meaningful upside and capped downside. We have no further funding obligations to JJB at this time and will continue to monitor the situation.”
Field & Stream
On August 1, 2012 the Company entered into an agreement to purchase the intellectual property rights to the Field & Stream mark in the hunting, fishing, camping and paddle categories for approximately $25 million. The Company had been licensing these rights since 2007. Upon completion, this acquisition is expected to provide the Company with the control and flexibility necessary to maximize and leverage the value of this popular brand.
Current 2012 Outlook
The Company’s current outlook for 2012 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 2012 – (53 Week Year) Comparisons to Fiscal 2011 – (52 Week Year)
Based on an estimated 126 million diluted shares outstanding, the Company currently anticipates reporting consolidated non-GAAP earnings per diluted share of approximately $2.47 to 2.51, 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 earnings per diluted share of $2.02, excluding a gain on sale of investment and the favorable impact of lower litigation settlement costs. On a GAAP basis, the Company reported consolidated earnings per diluted share of $2.10 in 2011.
Consolidated same store sales are currently expected to increase approximately 4 to 5% on a 52-week to 52-week comparative basis, compared to a 2.0% increase in fiscal 2011.
The Company currently expects to open approximately 38 new Dick’s Sporting Goods stores and relocate five Dick’s Sporting Goods stores in 2012. The Company also expects to reposition one Golf Galaxy store in 2012.
Third Quarter 2012
Based on an estimated 126 million diluted shares outstanding,the Company currently anticipates reporting consolidated earnings per diluted share of approximately $0.36 in the third quarter of 2012. In the third quarter of 2011, the Company reported consolidated non-GAAP earnings per diluted share of $0.32, excluding the favorable impact of lower litigation settlement costs.
Consolidated same store sales are currently expected to increase approximately 4% compared to a 4.1% increase in the third quarter last year.
The Company expects to open approximately 21 new Dick’s Sporting Goods stores and relocate three Dick’s Sporting Goods stores in the third quarter of 2012.
Capital Expenditures
In 2012, the Company anticipates capital expenditures to be approximately $241 million on a gross basis and approximately $190 million on a net basis.
About Dick’s Sporting Goods, Inc.
Dick’s Sporting Goods, Inc. is an authentic full-line sporting goods retailer offering a broad assortment of 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 July 28, 2012, the Company operated 490 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.
