DICK’S Sporting Goods Reports Second Quarter Results; Delivers 3.2% Increase in Same Store Sales and Raises Full Year Guidance
- Consolidated same store sales for the second quarter increased 3.2%, driven by increases in both average ticket and transactions, and represents the Company’s strongest quarterly comp sales gain since 2016
- Company delivered second quarter 2019 earnings per diluted share of $1.26 compared to $1.20 per diluted share in the prior year
- Company raises its full year 2019 earnings per diluted share guidance to $3.30 to 3.45, up from the previous range of $3.20 to 3.40
- Company repurchased $159 million of common stock during the second quarter
PITTSBURGH, August 22, 2019 – 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 second quarter ended August 3, 2019.
Second Quarter Results
The Company reported consolidated net income for the second quarter ended August 3, 2019 of $112.5 million, or $1.26 per diluted share. The Company reported consolidated net income for the second quarter ended August 4, 2018 of $119.4 million, or $1.20 per diluted share.
Net sales for the second quarter of 2019 increased 3.8% to approximately $2.26 billion. Consolidated same store sales increased 3.2%. Second quarter 2018 consolidated same store sales decreased 4.0%, adjusted for the calendar shift due to the 53rd week in fiscal 2017, which the Company believes is the best view of its business.
“We are very pleased with our second quarter results, as we delivered a 3.2% comp sales increase and earnings per diluted share above last year. Our strong comp sales performance was driven by increases in both average ticket and transactions and represented our strongest quarterly comp since 2016. We saw growth across each of our three primary categories of hardlines, apparel and footwear, our brick-and-mortar stores comped positively and our eCommerce channel remained strong, increasing 21%,” said Edward W. Stack, Chairman and Chief Executive Officer. “Our key strategies and investments are working, our major headwinds are behind us and we’ve bent the curve on sales. We are very enthusiastic about our business and are pleased to increase our full year sales and earnings outlook.”
“During the second quarter, we made great progress in executing against our strategic priorities and investments,” added Lauren R. Hobart, President. “Our stores have really championed our new service standards, and their efforts are moving the needle by supporting improved conversion rates and our return to positive brick-and-mortar store comps during the second quarter. Additionally, we remain focused on continuously improving our online experience, and the opening of our two new eCommerce fulfillment centers earlier this week will provide our athletes with faster and more reliable delivery.”
Omni-channel Development
eCommerce sales for the second quarter of 2019 increased 21%. eCommerce penetration for the second quarter of 2019 was approximately 12% of total net sales, compared to approximately 11% during the second quarter of 2018.
In the second quarter, the Company opened two new DICK’S Sporting Goods stores and closed two DICK’S Sporting Goods stores. As of August 3, 2019, the Company operated 727 DICK’S Sporting Goods stores in 47 states, with approximately 38.6 million square feet, 95 Golf Galaxy stores in 32 states, with approximately 2.0 million square feet, and 35 Field & Stream stores in 16 states, with approximately 1.7 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 second quarter of 2019 with approximately $116.7 million in cash and cash equivalents and approximately $441.5 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 $502 million to shareholders through share repurchases and quarterly dividends.
Total inventory increased 19.0% at the end of the second quarter of 2019 as compared to the end of the second quarter of 2018. This planned increase was due primarily to strategic investments to support key growth categories.
The Company also amended and extended its revolving credit facility as it increased its limit from $1.25 billion to $1.6 billion and extended the maturity to June 28, 2024 under substantially the same terms.
Year-to-Date Results
The Company reported consolidated net income for the 26 weeks ended August 3, 2019 of $170.1 million, or $1.85 per diluted share. For the 26 weeks ended August 4, 2018, the Company reported consolidated net income of $179.5 million, or $1.78 per diluted share.
On a non-GAAP basis, the Company reported consolidated net income for the 26 weeks ended August 3, 2019 of $171.0 million, or $1.86 per diluted share, excluding a non-cash asset impairment and the favorable settlement of a litigation contingency. The GAAP to non-GAAP reconciliation is included in a table later in the release under the heading “GAAP to Non-GAAP Reconciliation.”
Net sales for the 26 weeks ended August 3, 2019 increased 2.3% to approximately $4.18 billion. Consolidated same store sales increased 1.7%. Consolidated same store sales decreased 3.3% for the 26-weeks ended August 4, 2018, adjusted for the calendar shift due to the 53rd week in 2017, which we believe is the best view of the business.
Capital Allocation
On August 19, 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 September 27, 2019 to stockholders of record at the close of business on September 13, 2019.
During the second quarter of 2019, the Company repurchased approximately 4.5 million shares of its common stock at an average cost of $35.52 per share, for a total cost of $159.3 million. Under the five-year share repurchase program authorized by the Board of Directors in March 2016, the Company has repurchased $833 million of common stock and has approximately $167 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.
Subsequent Event
On August 22, 2019, the Company completed the sale of two of its technology subsidiaries, Blue Sombrero and Affinity Sports, to Stack Sports for $45 million. Stack Sports has no affiliation with Edward W. Stack, Chairman and Chief Executive Officer. The sale is expected to result in a one-time gain which will be determined later in the third quarter.
Full Year 2019 Outlook
- Based on an estimated 90 million average diluted shares outstanding, the Company currently projects earnings per diluted share to be approximately $3.30 to 3.45. 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 the new 10% tariff on substantially all remaining Chinese imports that is slated to go into effect on September 1, 2019 and December 15, 2019.
The Company’s earnings per diluted share guidance does not reflect the impact of the one-time gain from the sale of its Blue Sombrero and Affinity Sports subsidiaries. This gain will be determined later in the third quarter and reported separately within the Company’s third quarter results.
- The Company is continuing the strategic review of its hunt business, including Field & Stream.
- Consolidated same store sales are currently expected to increase low single-digits, compared to a 3.1% decrease in 2018.
- The Company expects to open eight new DICK’S Sporting Goods stores and relocate three DICK’S Sporting Goods stores in 2019. The Company also expects to open two new Golf Galaxy stores and relocate two Golf Galaxy stores in 2019. Seven of the new stores are expected to open during the third quarter.
- 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.
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 August 3, 2019, the Company operated 727 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.
