Third Quarter Results
The company reported consolidated net income for the third quarter ended November 2, 2013 of $50.0 million, or $0.40 per diluted share, compared to the company's expectations provided on August 20, 2013 of $0.37 to 0.39 per diluted share. For the third quarter ended October 27, 2012, the company reported consolidated net income of $50.1 million, or $0.40 per diluted share.
Net sales for the third quarter of 2013 increased 6.7 percent to $1.4 billion. Adjusted for the shifted calendar, due to the 53rd week in 2012, consolidated same store sales increased 3.3 percent, compared to the company's guidance of approximately flat to an increase of 1 percent. Third quarter 2012 consolidated same store sales increased 5.1 percent. Shifted same store sales in the third quarter of 2013 for Dick's Sporting Goods increased 3.4 percent while Golf Galaxy increased 2.2 percent.
Unshifted consolidated same store sales for the third quarter increased 0.3 percent, compared to the company's guidance of an approximate 2 to 3 percent decrease. Unshifted same store sales in the third quarter of 2013 for Dick's Sporting Goods increased 0.6 percent while Golf Galaxy decreased 4.7 percent. eCommerce penetration for the quarter was 6.5 percent of total sales.
"Despite the continued challenging consumer environment, we delivered better than expected results in the third quarter, exceeding both our sales and earnings expectations. The marketing efforts, improved customer experience and selective pricing initiatives we began in the third quarter were successful in driving traffic and sales, but at slightly lower than anticipated margins," said Edward W. Stack, Chairman and CEO. "We remain excited about the long-term opportunities in our business that we presented at our analyst day in September, and we will continue to drive towards those goals."
Store Development
In the third quarter, the company opened 25 new Dick's Sporting Goods stores, one new Golf Galaxy store and two new Field & Stream stores. The company also relocated one Dick's Sporting Goods store, repositioned one Golf Galaxy store and completed three full and 22 apparel remodels of Dick's Sporting Goods stores. As of November 2, 2013, the company operated 552 Dick's Sporting Goods stores in 45 states, with approximately 29.9 million square feet and 82 Golf Galaxy stores in 30 states, with approximately 1.4 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."
In the beginning of the fourth quarter, the company opened six new Dick's Sporting Goods stores and remodeled one Dick's Sporting Goods store. The company also opened one new True Runner store.
The company has now completed its 2013 store development program, opening a total of 40 new Dick's Sporting Goods stores, one new Golf Galaxy store, two new Field & Stream stores and one new True Runner store. The company also relocated one Dick's Sporting Goods store, repositioned one Golf Galaxy store and completed four full and 75 apparel remodels of Dick's Sporting Goods stores in 2013.
Balance Sheet
The company ended the third quarter of 2013 with approximately $66 million in cash and cash equivalents as compared to $294 million at the end of the third quarter of 2012. Due to seasonality and capital utilization over the last 12 months, which included investments in omni-channel growth, store remodels, share repurchases, and special and quarterly dividends, the company ended the quarter with approximately $116 million in outstanding borrowings under its $500 million line of credit. The company expects to end fiscal 2013 with no outstanding borrowings under the revolving credit facility.
Inventory per square foot was 5.6 percent higher at the end of the third quarter of 2013 as compared to the end of the third quarter of 2012.
Year-to-Date Results
The company reported consolidated non-GAAP net income for the 39 weeks ended November 2, 2013 of $199.3 million, or $1.59 per diluted share. For the 39 weeks ended October 27, 2012, the company reported consolidated non-GAAP net income of $188.6 million, or $1.50 per diluted share.
On a GAAP basis, the company reported consolidated net income for the 39 weeks ended November 2, 2013 of $199.0 million, or $1.58 per diluted share. For the 39 weeks ended October 27, 2012, on a GAAP basis, the company reported consolidated net income of $161.0 million, or $1.28 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 39 weeks ended November 2, 2013 increased 5.8 percent from last year's period to $4.3 billion primarily due to the opening of new stores. Unshifted consolidated same store sales were flat year-to-date.
Dividend
On November 14, 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 December 27, 2013 to stockholders of record at the close of business on December 6, 2013.
Share Repurchase Program
In the third quarter of 2013, the company repurchased approximately 0.5 million shares of its common stock at an average cost of $52.09 per share, for a total cost of $25.0 million.
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.
Fourth Quarter 2013
Based on an estimated 126 million diluted shares outstanding, the company currently anticipates reporting consolidated earnings per diluted share of approximately $1.04 to 1.07 in the fourth quarter of 2013, compared to fourth quarter 2012 consolidated earnings per diluted share of $1.03. The 14th week in fiscal 2012 contributed approximately $0.03 to earnings per diluted share.
Consolidated same store sales adjusted for the shifted calendar, due to the 53rd week in 2012, are currently expected to increase 3 to 4 percent in the fourth quarter of 2013, or increase 2 to 3 percent on an unshifted basis, as compared to a 1.2 percent increase in the fourth quarter of 2012.
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 non-GAAP earnings per diluted share of approximately $2.62 to 2.65, excluding an asset impairment charge and the partial recovery of a previously impaired asset. 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. The 53rd week in fiscal 2012 contributed approximately $0.03 to earnings per diluted share.
Consolidated same store sales are currently expected to be approximately flat to an increase of 1 percent on a 52-week to 52-week comparative basis, compared to a 4.3 percent increase in fiscal 2012.
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.
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
|
||||||||||||||
13 Weeks Ended
|
||||||||||||||
November 2,
2013 |
% of
Sales
|
October 27,
2012 |
% of
Sales (1)
|
|||||||||||
Net sales
|
$
|
1,400,623
|
100.00
|
%
|
$
|
1,312,072
|
100.00
|
%
|
||||||
Cost of goods sold, including occupancy and
distribution costs
|
975,724
|
69.66
|
905,948
|
69.05
|
||||||||||
GROSS PROFIT
|
424,899
|
30.34
|
406,124
|
30.95
|
||||||||||
Selling, general and administrative expenses
|
333,724
|
23.83
|
314,637
|
23.98
|
||||||||||
Pre-opening expenses
|
12,122
|
0.87
|
9,294
|
0.71
|
||||||||||
INCOME FROM OPERATIONS
|
79,053
|
5.64
|
82,193
|
6.26
|
||||||||||
Interest expense
|
696
|
0.05
|
860
|
0.07
|
||||||||||
Other income
|
(2,735)
|
(0.20)
|
(1,113)
|
(0.08)
|
||||||||||
INCOME BEFORE INCOME TAXES
|
81,092
|
5.79
|
82,446
|
6.28
|
||||||||||
Provision for income taxes
|
31,115
|
2.22
|
32,307
|
2.46
|
||||||||||
NET INCOME
|
$
|
49,977
|
3.57
|
%
|
$
|
50,139
|
3.82
|
%
|
||||||
EARNINGS PER COMMON SHARE:
|
||||||||||||||
Basic
|
$
|
0.41
|
$
|
0.41
|
||||||||||
Diluted
|
$
|
0.40
|
$
|
0.40
|
||||||||||
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
|
||||||||||||||
Basic
|
123,221
|
122,103
|
||||||||||||
Diluted
|
125,842
|
125,938
|
||||||||||||
Cash dividend declared per share
|
$
|
0.125
|
$
|
0.125
|
||||||||||
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