DKS 8-K
Dick's Sporting Goods, Inc. (DKS)
8-K
2020-11-24
For: 2020-11-20
View Original
Added on
April 12, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): November 20, 2020
(Exact Name of Registrant as Specified in Charter)
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||
(Address of Principal Executive Offices)
(724 ) 273-3400
(Registrant's Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
TABLE OF CONTENTS
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On November 24, 2020, the Company issued a press release announcing its results for the third fiscal quarter ended October 31, 2020 and certain other information that is furnished as Exhibit 99.1 to this Form 8-K. A copy of an infographic relating to the third fiscal quarter results that will be posted on the Company’s investor relations website is also being furnished hereto as Exhibit 99.2 to this Form 8-K. Going forward, the Company will post new infographics relating to its results on its website at https://investors.dicks.com/investor-relations in conjunction with the release of quarterly results.
ITEM 5.02. DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS
On November 24, 2020, the Company announced that Edward W. Stack, the Company’s current Chairman and Chief Executive Officer, will transition to the role of the Company’s Executive Chairman effective February 1, 2021. Mr. Stack will continue to serve as the Company’s Chief Merchant and oversee key strategic growth initiatives for the Company. The Company also announced that the Board has appointed Lauren R. Hobart, the Company’s current President, to the role of President and Chief Executive Officer effective February 1, 2020.
Information required pursuant to Items 401(b), (d), (e) and Item 404(a) of Regulation SK regarding Mr. Stack and Ms. Hobart, can be found In “Directors Standing for Election” and “Certain Relationships and Transactions with Related Persons” sections of the Company’s Definitive Proxy Statement, filed with the Securities and Exchange Commission on April 29, 2020, which information is incorporated herein by reference. In addition to such information, on October 9, 2020, Ms. Hobart, age 52, was appointed as a member of the Board of Directors of Yum! Brands, Inc. (NYSE: YUM).
A copy of the press release announcing the appointments is attached hereto as Exhibit 99.3 and is incorporated herein by reference.
ITEM 8.01. OTHER EVENTS
On November 20, 2020, the Board of Directors of Dick's Sporting Goods, Inc. authorized and declared a quarterly dividend in the amount of $0.3125 per share on the Company's Common Stock and Class B Common Stock. The dividend is payable in cash on December 29, 2020 to stockholders of record at the close of business on December 11, 2020.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits.
The following exhibit is being furnished pursuant to Item 601 of Regulation S-K and General Instruction B.2 to this Form 8-K:
| Exhibit No. | Description | |||||||
| Press Release regarding third fiscal quarter results dated November 24, 2020 by Dick's Sporting Goods, Inc. furnished herewith | ||||||||
| Infographic regarding third fiscal quarter results dated November 24, 2020 furnished herewith | ||||||||
| Press Release regarding officer appointments dated November 24, 2020 by Dick's Sporting Goods, Inc. filed herewith | ||||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| DICK'S SPORTING GOODS, INC. | ||||||||
| Date: November 24, 2020 | By: | /s/ LEE J. BELITSKY | ||||||
| Name: | Lee J. Belitsky | |||||||
| Title: | Executive Vice President – Chief Financial Officer | |||||||
Exhibit Index
| Exhibit No. | Description | |||||||
| Press Release regarding third fiscal quarter results dated November 24, 2020 by Dick's Sporting Goods, Inc. furnished herewith | ||||||||
| Infographic regarding third fiscal quarter results dated November 24, 2020 furnished herewith | ||||||||
| Press Release regarding officer appointments dated November 24, 2020 by Dick's Sporting Goods, Inc. filed herewith | ||||||||
Exhibit 99.1
| FOR IMMEDIATE RELEASE |  | ||||
DICK'S Sporting Goods Reports Third Quarter Results; Delivers Record-Setting 23.2% Increase in Same Store Sales
•Third quarter 2020 earnings per diluted share of $1.84 increased 179% versus $0.66 per diluted share in the prior year; on a non-GAAP basis, earnings per diluted share of $2.01 increased 287% versus $0.52 per diluted share in the prior year
•eCommerce sales increased 95% during the third quarter of 2020 as compared to the third quarter of 2019
•Brick-and-mortar same store sales increased double-digits during the third quarter of 2020, the Company's best performance since going public nearly two decades ago
•Company is in a strong financial position, ending the quarter with nearly $1.1 billion of cash and cash equivalents and no outstanding borrowings on its $1.855 billion revolving credit facility
PITTSBURGH, November 24, 2020 - 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 October 31, 2020.
Third Quarter Results
The Company reported consolidated net income for the third quarter ended October 31, 2020 of $177.2 million, or $1.84 per diluted share. As a result of actions taken to prioritize the health and well-being of its teammates and athletes, the Company incurred approximately $48 million of pre-tax incremental teammate compensation and safety costs in response to COVID-19, or $0.37 per diluted share, net of tax, during the current quarter. The Company reported consolidated net income for the third quarter ended November 2, 2019 of $57.6 million, or $0.66 per diluted share.
On a non-GAAP basis, the Company reported consolidated net income for the quarter ended October 31, 2020 of $182.2 million, or $2.01 per diluted share, which excluded non-cash amortization of the debt discount associated with the Company's convertible senior notes and included the share impact of the convertible note hedge purchased by the Company, which is antidilutive for GAAP purposes. For the third quarter ended November 2, 2019, the Company reported consolidated net income on a non-GAAP basis of $44.8 million, or $0.52 per diluted share. Third quarter 2019 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 2020 were $2.41 billion, an increase of 22.9% compared to the third quarter of 2019. This increase was driven by a 23.2% increase in consolidated same store sales and included an increase in eCommerce sales of 95%. eCommerce penetration for the third quarter of 2020 was approximately 21% of total net sales, compared to approximately 13% during the third quarter of 2019. Third quarter 2019 consolidated same store sales increased 6.0%.
“We had another exceptionally strong quarter from both a sales and a profitability perspective. The strength of our diverse category portfolio once again helped us capitalize on the favorable shifts in consumer demand, as the positive trends across golf, outdoor activities, home fitness and active lifestyle continued throughout Q3,” said Edward W. Stack, Chairman and Chief Executive Officer. “Our performance in the quarter was driven by our 45,000 dedicated teammates who continued to work hard every day to safely serve our athletes and communities."
Lauren R. Hobart, President, added, “Our stores continue to be the hub of our industry-leading omni-channel platform and were the key to our unprecedented third quarter growth. Brick-and-mortar store comps grew double-digits, and our stores fulfilled approximately 70% of our online sales, which increased nearly 100% for the quarter. In fact, our stores drove 90% of our total Q3 sales growth, whether an athlete purchased at the register, picked up curbside or had their order delivered through ship-from-store. Data science and technology will continue to play an important role in creating a personalized, one-to-one relationship with our athletes, enabling us to serve them in the most convenient way possible.”
Mr. Stack concluded, "Overall, the favorable trends in our business have continued into Q4. These strong sales results have been partially offset by warmer weather that has negatively impacted sales in important cold-weather categories. Taken together, through the first three weeks of Q4, our consolidated comp sales have increased in the high-teens."
Balance Sheet
The Company ended the third quarter of 2020 with nearly $1.1 billion in cash and cash equivalents and no outstanding borrowings under its $1.855 billion revolving credit facility. In April, the Company issued $575 million aggregate principal amount of 3.25% Convertible Senior Notes, which added over $500 million of net proceeds to its cash position.
Total inventory decreased 9.8% at the end of the third quarter of 2020 as compared to the end of the third quarter of 2019.
Year-to-Date Results
The Company reported consolidated net income for the 39 weeks ended October 31, 2020 of $310.6 million, or $3.44 per diluted share. As a result of actions taken to prioritize the health and well-being of its teammates and athletes in response to COVID-19, the Company incurred approximately $124 million of pre-tax incremental teammate compensation and safety costs, or $1.01 per diluted share, net of tax, during the 39 weeks ended October 31, 2020. For the 39 weeks ended November 2, 2019, the Company reported consolidated net income of $227.6 million, or $2.53 per diluted share.
On a non-GAAP basis, the Company reported consolidated net income for the 39 weeks ended October 31, 2020 of $321.3 million, or $3.65 per diluted share, which excluded non-cash amortization of the debt discount associated with the Company's convertible senior notes and included the share impact of the convertible note hedge purchased by the Company, which is antidilutive for GAAP purposes. For the 39 weeks ended November 2, 2019, the Company reported consolidated net income on a non-GAAP basis 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 & 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 October 31, 2020 increased 5.2% to approximately $6.46 billion. Despite temporary store closures during March, April and May to help prevent the spread of COVID-19, consolidated same store sales increased 5.8%. eCommerce sales increased 135%. eCommerce penetration for the 39 weeks ended October 31, 2020 was approximately 28% of total net sales, compared to approximately 13% during the 39 weeks ended November 2, 2019. Consolidated same store sales increased 3.1% for the 39 weeks ended November 2, 2019.
Capital Allocation
On November 20, 2020, the Company's Board of Directors authorized and declared a quarterly dividend in the amount of $0.3125 per share on the Company's Common Stock and Class B Common Stock. The dividend is payable in cash on December 29, 2020 to stockholders of record at the close of business on December 11, 2020.
For the 39 weeks ended October 31, 2020, capital expenditures totaled $156.4 million on a gross basis, or $114.1 million net of deferred construction allowances provided by landlords. For the 39 weeks ended November 2, 2019, capital expenditures totaled $165.7 million on a gross basis, or $140.1 million net of deferred construction allowances provided by landlords.
Full Year 2020 Outlook
As previously announced on March 19, 2020, the Company withdrew its fiscal 2020 outlook. The Company is not providing an updated outlook at this time.
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 believes that excluding non-cash debt discount amortization from its convertible senior notes and including the share impact from the convertible note hedge is useful to investors because it provides a more complete view of the economics of the transaction. 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.
Fiscal 2020 Consolidated Same Store Sales
Consolidated same store sales include stores that were temporarily closed as a result of COVID-19. The method of calculating consolidated same store sales varies across the retail industry, including the treatment of temporary store closures as a result of COVID-19. Accordingly, our method of calculating this metric may not be the same as other retailers’ methods. For additional information on consolidated same store sales, please see our most recent Annual Report on Form 10-K, and any subsequent Quarterly Reports on Form 10-Q, filed with the Securities and Exchange Commission.
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, liquidity, 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: the impact on our business, operations and financial results due to the duration and scope of the COVID-19 pandemic, including whether there is a second wave or periods of increases in the number of COVID-19 cases in areas in which we operate, and the restrictions imposed by federal, state, and local governments in response to the pandemic; changes in consumer discretionary spending, including those caused by COVID-19; the extent to which changes in consumer demand due to the COVID-19 pandemic will continue and whether new trends will emerge after the impact of the COVID-19 pandemic subsides; store closures and other impacts to our business resulting from civil disturbances; 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 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, including changes caused by COVID-19; 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, including disruptions and cancellations due to COVID-19; 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 20, 2020 and our Quarterly Report filed with the SEC on August 26, 2020. 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 October 31, 2020, the Company operated 732 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 dynamic 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, Senior Director of Investor Relations
DICK'S Sporting Goods, Inc.
(724) 273-3400
Media Relations:
(724) 273-5552 or [email protected]
Category: Financial
###
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
| 13 Weeks Ended | ||||||||||||||||||||||||||
| October 31, 2020 | % of Sales(2) | November 2, 2019 | % of Sales(2) | |||||||||||||||||||||||
Net sales | $ | 2,412,112 | 100.00 | % | $ | 1,962,204 | 100.00 | % | ||||||||||||||||||
Cost of goods sold, including occupancy and distribution costs (1) | 1,569,938 | 65.09 | 1,381,562 | 70.41 | ||||||||||||||||||||||
GROSS PROFIT | 842,174 | 34.91 | 580,642 | 29.59 | ||||||||||||||||||||||
Selling, general and administrative expenses | 591,117 | 24.51 | 531,704 | 27.10 | ||||||||||||||||||||||
Pre-opening expenses | 4,964 | 0.21 | 3,313 | 0.17 | ||||||||||||||||||||||
INCOME FROM OPERATIONS | 246,093 | 10.20 | 45,625 | 2.33 | ||||||||||||||||||||||
| (Gain) Loss on sale of subsidiaries | — | — | (33,779) | (1.72) | ||||||||||||||||||||||
Interest expense | 12,769 | 0.53 | 4,278 | 0.22 | ||||||||||||||||||||||
| Other (income) expense | (3,746) | (0.16) | (2,020) | (0.10) | ||||||||||||||||||||||
INCOME BEFORE INCOME TAXES | 237,070 | 9.83 | 77,146 | 3.93 | ||||||||||||||||||||||
Provision for income taxes | 59,854 | 2.48 | 19,562 | 1.00 | ||||||||||||||||||||||
NET INCOME | $ | 177,216 | 7.35 | % | $ | 57,584 | 2.93 | % | ||||||||||||||||||
EARNINGS PER COMMON SHARE: | ||||||||||||||||||||||||||
Basic | $ | 2.10 | $ | 0.68 | ||||||||||||||||||||||
Diluted | $ | 1.84 | $ | 0.66 | ||||||||||||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||||||||||||||||
Basic | 84,422 | 85,048 | ||||||||||||||||||||||||
Diluted | 96,571 | 86,601 | ||||||||||||||||||||||||
(1) Cost of goods sold includes: the cost of merchandise (inclusive of vendor allowances, inventory shrinkage and inventory write-downs for the lower of cost and net realizable value); freight; distribution; shipping; and store occupancy costs. The Company defines merchandise margin as net sales less the cost of merchandise sold. | ||||||||||||||||||||||||||
(2) Column does not add due to rounding | ||||||||||||||||||||||||||
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
| 39 Weeks Ended | ||||||||||||||||||||||||||
| October 31, 2020 | % of Sales | November 2, 2019 | % of Sales (2) | |||||||||||||||||||||||
Net sales | $ | 6,458,712 | 100.00 | % | $ | 6,142,093 | 100.00 | % | ||||||||||||||||||
Cost of goods sold, including occupancy and distribution costs (1) | 4,460,336 | 69.06 | 4,320,571 | 70.34 | ||||||||||||||||||||||
GROSS PROFIT | 1,998,376 | 30.94 | 1,821,522 | 29.66 | ||||||||||||||||||||||
Selling, general and administrative expenses | 1,537,371 | 23.80 | 1,539,934 | 25.07 | ||||||||||||||||||||||
Pre-opening expenses | 9,728 | 0.15 | 4,887 | 0.08 | ||||||||||||||||||||||
INCOME FROM OPERATIONS | 451,277 | 6.99 | 276,701 | 4.50 | ||||||||||||||||||||||
| (Gain) loss on sale of subsidiaries | — | — | (33,779) | (0.55) | ||||||||||||||||||||||
Interest expense | 35,496 | 0.55 | 12,909 | 0.21 | ||||||||||||||||||||||
| Other (income) expense | (4,731) | (0.07) | (10,340) | (0.17) | ||||||||||||||||||||||
INCOME BEFORE INCOME TAXES | 420,512 | 6.51 | 307,911 | 5.01 | ||||||||||||||||||||||
Provision for income taxes | 109,875 | 1.70 | 80,268 | 1.31 | ||||||||||||||||||||||
NET INCOME | $ | 310,637 | 4.81 | % | $ | 227,643 | 3.71 | % | ||||||||||||||||||
EARNINGS PER COMMON SHARE: | ||||||||||||||||||||||||||
Basic | $ | 3.69 | $ | 2.57 | ||||||||||||||||||||||
Diluted | $ | 3.44 | $ | 2.53 | ||||||||||||||||||||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||||||||||||||||
Basic | 84,095 | 88,671 | ||||||||||||||||||||||||
Diluted | 90,430 | 90,130 | ||||||||||||||||||||||||
(1) Cost of goods sold includes: the cost of merchandise (inclusive of vendor allowances, inventory shrinkage and inventory write-downs for the lower of cost and net realizable value); freight; distribution; shipping; and store occupancy costs. The Company defines merchandise margin as net sales less the cost of merchandise sold. | ||||||||||||||||||||||||||
(2) Column does not add due to rounding | ||||||||||||||||||||||||||
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(In thousands)
| October 31, 2020 | November 2, 2019 | February 1, 2020 | ||||||||||||||||||
ASSETS | ||||||||||||||||||||
CURRENT ASSETS: | ||||||||||||||||||||
Cash and cash equivalents | $ | 1,059,994 | $ | 87,622 | $ | 69,334 | ||||||||||||||
Accounts receivable, net | 77,212 | 70,463 | 53,173 | |||||||||||||||||
Income taxes receivable | 5,453 | 17,122 | 5,762 | |||||||||||||||||
Inventories, net | 2,319,992 | 2,573,250 | 2,202,275 | |||||||||||||||||
Prepaid expenses and other current assets | 82,648 | 128,458 | 79,472 | |||||||||||||||||
Total current assets | 3,545,299 | 2,876,915 | 2,410,016 | |||||||||||||||||
Property and equipment, net | 1,336,676 | 1,436,975 | 1,415,728 | |||||||||||||||||
Operating lease assets | 2,177,006 | 2,378,399 | 2,313,846 | |||||||||||||||||
Intangible assets, net | 91,585 | 123,855 | 94,768 | |||||||||||||||||
Goodwill | 245,857 | 245,857 | 245,857 | |||||||||||||||||
Deferred income taxes | 27,717 | 16,033 | 14,412 | |||||||||||||||||
| Other assets | 141,350 | 128,965 | 133,933 | |||||||||||||||||
TOTAL ASSETS | $ | 7,565,490 | $ | 7,206,999 | $ | 6,628,560 | ||||||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||||||
CURRENT LIABILITIES: | ||||||||||||||||||||
Accounts payable | $ | 1,394,904 | $ | 1,097,564 | $ | 1,001,589 | ||||||||||||||
Accrued expenses | 449,304 | 379,774 | 415,501 | |||||||||||||||||
Operating lease liabilities | 474,803 | 417,912 | 422,970 | |||||||||||||||||
Income taxes payable | 24,805 | 2,519 | 10,455 | |||||||||||||||||
Deferred revenue and other liabilities | 193,956 | 183,876 | 225,959 | |||||||||||||||||
Total current liabilities | 2,537,772 | 2,081,645 | 2,076,474 | |||||||||||||||||
LONG-TERM LIABILITIES: | ||||||||||||||||||||
Revolving credit borrowings | — | 719,300 | 224,100 | |||||||||||||||||
| Convertible senior notes due 2025 | 411,256 | — | — | |||||||||||||||||
Long-term operating lease liabilities | 2,310,318 | 2,509,866 | 2,453,346 | |||||||||||||||||
Deferred income taxes | — | 8,530 | 9,187 | |||||||||||||||||
Other long-term liabilities | 184,505 | 178,756 | 133,855 | |||||||||||||||||
Total long-term liabilities | 2,906,079 | 3,416,452 | 2,820,488 | |||||||||||||||||
COMMITMENTS AND CONTINGENCIES | ||||||||||||||||||||
STOCKHOLDERS' EQUITY: | ||||||||||||||||||||
Common stock | 608 | 597 | 593 | |||||||||||||||||
Class B common stock | 239 | 243 | 243 | |||||||||||||||||
Additional paid-in capital | 1,415,909 | 1,240,864 | 1,253,867 | |||||||||||||||||
Retained earnings | 2,873,263 | 2,599,495 | 2,645,281 | |||||||||||||||||
| Accumulated other comprehensive loss | (114) | (116) | (120) | |||||||||||||||||
Treasury stock, at cost | (2,168,266) | (2,132,181) | (2,168,266) | |||||||||||||||||
Total stockholders' equity | 2,121,639 | 1,708,902 | 1,731,598 | |||||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 7,565,490 | $ | 7,206,999 | $ | 6,628,560 | ||||||||||||||
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(In thousands)
| 39 Weeks Ended | ||||||||||||||
| October 31, 2020 | November 2, 2019 | |||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||
| Net income | $ | 310,637 | $ | 227,643 | ||||||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||||||||
Depreciation, amortization, and other | 239,666 | 244,163 | ||||||||||||
Amortization of convertible notes discount and issuance costs | 14,345 | — | ||||||||||||
| Non-cash lease costs | (1,199) | (43,011) | ||||||||||||
Deferred income taxes | (22,492) | (3,438) | ||||||||||||
Stock-based compensation | 35,631 | 31,742 | ||||||||||||
| Gain on sale of subsidiaries | — | (33,779) | ||||||||||||
Changes in assets and liabilities: | ||||||||||||||
Accounts receivable | (12,099) | (22,636) | ||||||||||||
Inventories | (121,435) | (758,016) | ||||||||||||
Prepaid expenses and other assets | (384) | 3,822 | ||||||||||||
Accounts payable | 381,383 | 168,259 | ||||||||||||
Accrued expenses | 30,035 | 11,424 | ||||||||||||
Income taxes payable / receivable | 14,659 | (28,610) | ||||||||||||
Deferred construction allowances | 42,314 | 25,598 | ||||||||||||
Deferred revenue and other liabilities | 6,454 | (35,936) | ||||||||||||
| Net cash provided by (used in) operating activities | 917,515 | (212,775) | ||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||
Capital expenditures | (156,444) | (165,703) | ||||||||||||
| Proceeds from sale of subsidiaries, net of cash sold | — | 40,387 | ||||||||||||
| Proceeds from sale of other assets | — | 4,103 | ||||||||||||
| Deposits and purchases of other assets | (96) | (1,000) | ||||||||||||
| Net cash used in investing activities | (156,540) | (122,213) | ||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||
| Revolving credit borrowings | 1,291,700 | 1,778,750 | ||||||||||||
| Revolving credit repayments | (1,515,800) | (1,059,450) | ||||||||||||
| Proceeds from issuance of convertible notes | 575,000 | — | ||||||||||||
| Payments for purchase of bond hedges | (161,057) | — | ||||||||||||
| Proceeds from issuance of warrants | 105,225 | — | ||||||||||||
| Transaction costs paid in connection with convertible notes issuance | (17,396) | — | ||||||||||||
| Payments on other long-term debt and finance lease obligations | (612) | (3,965) | ||||||||||||
| Proceeds from exercise of stock options | 25,472 | 1,160 | ||||||||||||
| Minimum tax withholding requirements | (3,911) | (6,320) | ||||||||||||
| Cash paid for treasury stock | — | (366,148) | ||||||||||||
| Cash dividends paid to stockholders | (80,874) | (74,540) | ||||||||||||
| Increase in bank overdraft | 11,932 | 39,466 | ||||||||||||
| Net cash provided by financing activities | 229,679 | 308,953 | ||||||||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | 6 | 4 | ||||||||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 990,660 | (26,031) | ||||||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 69,334 | 113,653 | ||||||||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 1,059,994 | $ | 87,622 | ||||||||||
Store Count and Square Footage
The stores that opened during the third quarter of 2020 are as follows:
| Store | Market | Concept | |||||||||||||||
| Cape Cod, MA | Cape Cod | DICK'S Sporting Goods | |||||||||||||||
| Cumberland, GA | Atlanta | DICK'S Sporting Goods | |||||||||||||||
| Midland, TX | Midland | DICK'S Sporting Goods | |||||||||||||||
| San Antonio, TX | San Antonio | DICK'S Sporting Goods | |||||||||||||||
| Annapolis, MD | Baltimore | DICK'S Sporting Goods | |||||||||||||||
| Copperfield, TX | Houston | DICK'S Sporting Goods | |||||||||||||||
| Myrtle Beach, SC | Myrtle Beach | Golf Galaxy | |||||||||||||||
| Cumberland, GA | Atlanta | Golf Galaxy | |||||||||||||||
| Canton, OH | Canton / Akron | Golf Galaxy | |||||||||||||||
| Monroeville, PA | Pittsburgh | Outlet Store | |||||||||||||||
| Tempe, AZ | Phoenix | Outlet Store | |||||||||||||||
The following represents a reconciliation of beginning and ending stores and square footage for the periods indicated:
Store Count:
| Fiscal 2020 | Fiscal 2019 | |||||||||||||||||||||||||||||||||||||
| DICK'S Sporting Goods | Specialty Concept Stores (1) | Total | DICK'S Sporting Goods | Specialty Concept Stores (1) | Total | |||||||||||||||||||||||||||||||||
Beginning stores | 726 | 124 | 850 | 729 | 130 | 859 | ||||||||||||||||||||||||||||||||
Q1 New stores | 1 | 2 | 3 | — | 1 | 1 | ||||||||||||||||||||||||||||||||
Q2 New stores | — | 3 | 3 | 2 | 2 | 4 | ||||||||||||||||||||||||||||||||
Q3 New stores | 6 | 5 | 11 | 6 | 1 | 7 | ||||||||||||||||||||||||||||||||
Closed stores | 1 | 5 | 6 | 4 | 9 | 13 | ||||||||||||||||||||||||||||||||
Ending stores | 732 | 129 | 861 | 733 | 125 | 858 | ||||||||||||||||||||||||||||||||
Relocated stores | 12 | 3 | 15 | 3 | 2 | 5 | ||||||||||||||||||||||||||||||||
Square Footage:
(in millions)
| DICK'S Sporting Goods | Specialty Concept Stores (1) | Total (2) | ||||||||||||||||||
| Q1 2019 | 38.6 | 3.7 | 42.2 | |||||||||||||||||
| Q2 2019 | 38.6 | 3.7 | 42.3 | |||||||||||||||||
| Q3 2019 | 38.8 | 3.4 | 42.2 | |||||||||||||||||
| Q4 2019 | 38.5 | 3.4 | 41.8 | |||||||||||||||||
| Q1 2020 | 38.4 | 3.4 | 41.8 | |||||||||||||||||
| Q2 2020 | 38.4 | 3.5 | 41.9 | |||||||||||||||||
| Q3 2020 | 38.7 | 3.6 | 42.3 | |||||||||||||||||
(1) Includes the Company's Golf Galaxy and Field & Stream stores, as well as the Company's outlet stores. In some markets the Company operates DICK'S Sporting Goods stores adjacent to its specialty concept stores on the same property with a pass-through for customers. The Company refers to this format as a "combo store" and includes combo store openings within both the DICK'S Sporting Goods and specialty concept store reconciliations, as applicable. As of October 31, 2020, the Company operated 30 combo stores.
(2) Column may not add due to rounding.
DICK'S SPORTING GOODS, INC.
GAAP to NON-GAAP RECONCILIATIONS - UNAUDITED
(in thousands, except per share amounts)
Non-GAAP Net Income and Earnings Per Share Reconciliations
| 13 Weeks Ended October 31, 2020 | ||||||||||||||||||||
| Income from operations | Interest expense | Income before income taxes | Net income (2) | Diluted shares outstanding during period | Earnings per diluted share | |||||||||||||||
GAAP Basis | $ | 246,093 | $ | 12,769 | $ | 237,070 | $ | 177,216 | 96,571 | $ | 1.84 | |||||||||
% of Net Sales | 10.20 | % | 0.53 | % | 9.83 | % | 7.35 | % | ||||||||||||
Convertible senior notes (1) | — | (6,683) | 6,683 | 4,945 | (5,976) | |||||||||||||||
| Non-GAAP Basis | $ | 246,093 | $ | 6,086 | $ | 243,753 | $ | 182,161 | 90,595 | $ | 2.01 | |||||||||
% of Net Sales | 10.20 | % | 0.25 | % | 10.11 | % | 7.55 | % | ||||||||||||
(1)Amortization of the non-cash debt discount on the Company's convertible senior notes and diluted shares that will be offset at settlement by shares delivered from the convertible note hedge purchased by the Company.
(2)The provision for income taxes for Non-GAAP adjustments was calculated at 26%, which approximates the Company's blended tax rate.
| 39 Weeks Ended October 31, 2020 | ||||||||||||||||||||
| Income from operations | Interest expense | Income before income taxes | Net income (2) | Diluted shares outstanding during period | Earnings per diluted share | |||||||||||||||
GAAP Basis | $ | 451,277 | $ | 35,496 | $ | 420,512 | $ | 310,637 | 90,430 | $ | 3.44 | |||||||||
% of Net Sales | 6.99 | % | 0.55 | % | 6.51 | % | 4.81 | % | ||||||||||||
Convertible senior notes (1) | — | (14,345) | 14,345 | 10,615 | (2,365) | |||||||||||||||
| Non-GAAP Basis | $ | 451,277 | $ | 21,151 | $ | 434,857 | $ | 321,252 | 88,065 | $ | 3.65 | |||||||||
% of Net Sales | 6.99 | % | 0.33 | % | 6.73 | % | 4.97 | % | ||||||||||||
(1)Amortization of the non-cash debt discount on the Company's convertible senior notes and diluted shares that will be offset at settlement by shares delivered from the convertible note hedge purchased by the Company. This amount includes $1.1 million of amortization recognized in the fiscal quarter ended May 2, 2020.
(2)The provision for income taxes for Non-GAAP adjustments was calculated at 26%, which approximates the Company's blended tax rate.
| 13 Weeks Ended November 2, 2019 | ||||||||||||||||||||
| Selling, general and administrative expenses | Income from operations | Gain on sale of subsidiaries | Income before income taxes | Net income (4) | Earnings per diluted share | |||||||||||||||
| GAAP Basis | $ | 531,704 | $ | 45,625 | $ | (33,779) | $ | 77,146 | $ | 57,584 | $ | 0.66 | ||||||||
| % of Net Sales | 27.10 | % | 2.33 | % | (1.72) | % | 3.93 | % | 2.93 | % | ||||||||||
Gain on sale of subsidiaries (1) | — | — | 33,779 | (33,779) | (24,996) | |||||||||||||||
Field & Stream store closing costs (2) | (8,938) | 8,938 | — | 8,938 | 6,614 | |||||||||||||||
Non-cash asset impairment (3) | (7,630) | 7,630 | — | 7,630 | 5,646 | |||||||||||||||
| Non-GAAP Basis | $ | 515,136 | $ | 62,193 | $ | — | $ | 59,935 | $ | 44,848 | $ | 0.52 | ||||||||
| % of Net Sales | 26.25 | % | 3.17 | % | — | % | 3.05 | % | 2.29 | % | ||||||||||
(1)Gain on sale of Blue Sombrero and Affinity Sports subsidiaries.
(2)Charge related to the Company's exit from eight Field & Stream stores, which were subleased to Sportsman’s Warehouse.
(3)Non-cash impairment charge to reduce the carrying value of a corporate aircraft held for sale to its fair market value.
(4)The provision for income taxes for Non-GAAP adjustments was calculated at 26%, which approximated the Company's blended tax rate.
| 39 Weeks Ended November 2, 2019 | ||||||||||||||||||||
| Selling, general and administrative expenses | Income from operations | Gain on sale of subsidiaries | Income before income taxes | Net income (5) | Earnings per diluted share | |||||||||||||||
| GAAP Basis | $ | 1,539,934 | $ | 276,701 | $ | (33,779) | $ | 307,911 | $ | 227,643 | $ | 2.53 | ||||||||
| % of Net Sales | 25.07 | % | 4.50 | % | (0.55) | % | 5.01 | % | 3.71 | % | ||||||||||
Gain on sale of subsidiaries (1) | — | — | 33,779 | (33,779) | (24,996) | |||||||||||||||
Field & Stream store closing costs (2) | (8,938) | 8,938 | — | 8,938 | 6,614 | |||||||||||||||
Non-cash asset impairment (3) | (15,253) | 15,253 | — | 15,253 | 11,287 | |||||||||||||||
Litigation contingency settlement (4) | 6,411 | (6,411) | — | (6,411) | (4,744) | |||||||||||||||
| Non-GAAP Basis | $ | 1,522,154 | $ | 294,481 | $ | — | $ | 291,912 | $ | 215,804 | $ | 2.39 | ||||||||
| % of Net Sales | 24.78 | % | 4.79 | % | — | % | 4.75 | % | 3.51 | % | ||||||||||
(1)Gain on sale of Blue Sombrero and Affinity Sports subsidiaries.
(2)Charge related to the Company's exit from eight Field & Stream stores, which were subleased to Sportsman's Warehouse.
(3)Non-cash impairment charge to reduce the carrying value of a corporate aircraft held for sale to its fair market value.
(4)Favorable settlement of a previously accrued litigation contingency.
(5)The provision for income taxes for Non-GAAP adjustments was calculated at 26%, which approximated the Company's blended tax rate.
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.
| 39 Weeks Ended | ||||||||||||||
| October 31, 2020 | November 2, 2019 | |||||||||||||
| (dollars in thousands) | ||||||||||||||
Gross capital expenditures | $ | (156,444) | $ | (165,703) | ||||||||||
Proceeds from sale-leaseback transactions | — | — | ||||||||||||
Deferred construction allowances | 42,314 | 25,598 | ||||||||||||
Construction allowance receipts | — | — | ||||||||||||
Net capital expenditures | $ | (114,130) | $ | (140,105) | ||||||||||
Exhibit 99.2
Exhibit 99.3
FOR IMMEDIATE RELEASE
DICK’S SPORTING GOODS ANNOUNCES PLANNED LEADERSHIP SUCCESSION
Edward W. Stack will transition to Executive Chairman and continue as Chief Merchant on February 1, 2021.
Lauren R. Hobart to become President and Chief Executive Officer.
PITTSBURGH, Nov. 24, 2020 – DICK’S Sporting Goods, Inc. (NYSE: DKS), the largest U.S.-based, omni-channel sporting goods retailer, today announced that Edward W. Stack, Chairman and Chief Executive Officer, will assume the role of Executive Chairman and continue as Chief Merchant on February 1, 2021. He also will oversee key strategic growth initiatives for the company.
Mr. Stack has served as Chairman and CEO of DICK’S since he and his siblings bought his father’s two small sporting goods stores in upstate New York in 1984. Under Mr. Stack’s leadership and predominantly through organic growth, DICK’S has become the industry leader, with more than 850 stores and nearly $9 billion in annual revenue. Stack has driven DICK’S omni-channel strategy and investments in logistics and technology, which in 2020 have helped the company’s eCommerce business approach $2 billion in revenue.
The company also announced today that its board of directors unanimously elected Lauren R. Hobart, the current President of DICK’S, as President and CEO, also effective February 1, 2021. Ms. Hobart’s appointment is an important step in the company’s long-term succession plan undertaken by the board and Mr. Stack.
Mr. Stack said, “This is the perfect time for this transition. We have the best management team in the company’s history, and the investments we have made in our people, our stores, and our communities are paying off. I look forward to continuing to lead merchandising, product development and several strategic growth initiatives while supporting Lauren as a trusted advisor. She has proven herself to be a capable, innovative and respected leader who has helped drive our business and our culture.”
“Leading the company that Ed built is truly a privilege and an honor,” Ms. Hobart said. “For nearly 10 years, I have witnessed first-hand his commitment to DICK’S values, to our teammates, customers and the communities we serve. I am fortunate to have Ed as a mentor and look forward to leading the company into this next phase of growth with Ed and our senior management team.”
Ms. Hobart continued, “I also want to thank the board and our 45,000 passionate and dedicated teammates who are so pivotal to our success. I am excited to work closely with them and with other members of the DICK’S family to continue to advance the business and make a meaningful impact on our communities as we look to the future.”
Lawrence Schorr, Lead Independent Director of DICK’S, said, “Ed’s vision, values and leadership have built a company of which we are all proud, and DICK’S is well-positioned for growth. This transition process has been in the works for several years with two primary objectives: Ed’s continued involvement in key areas of the business; and a smooth transition of leadership to a capable and prepared new CEO. Lauren is a valued and forward-thinking leader who has played a vital role in DICK’S success. She embodies all that DICK’S stands for, and the board is confident that Ed and Lauren will continue on this successful journey and drive long-term shareholder value.”
Ms. Hobart brings more than 25 years of finance, consumer and retail experience and spent 14 years at PepsiCo in various leadership roles before she joined DICK’S as Chief Marketing Officer in 2011. She was appointed President in 2017 and joined the board of directors the following year. Since joining DICK’S, Ms. Hobart has revamped the company’s marketing efforts and helped drive its robust eCommerce strategy, among other substantive growth initiatives. She has enhanced the company’s exceptional customer service offering and improved the omni-channel customer experience.
In addition to leading the company through the health and economic crises this year, Mr. Stack and Ms. Hobart have together championed the company’s support of youth sports through its groundbreaking Sports Matter initiative. DICK’S and the DICK’S Sporting Goods Foundation have provided more than $100 million in grants and sponsorships since 2014 to enable more than one million kids the opportunity to play and to raise awareness and address the issue of underfunded youth sports programs nationwide.
DICK’S also reported its third quarter 2020 earnings today. The company looks forward to addressing the leadership transition on its earnings call today at 10 a.m. ET.
###
About Lauren Hobart
Lauren Hobart currently serves as President of DICK’S Sporting Goods – overseeing the Stores, Marketing, eCommerce, Technology, HR, Legal, and Strategy and Analytics organizations. Additionally, she has served on the DICK’S Board of Directors since January 2018 and is President of the DICK’S Sporting Goods Foundation.
Ms. Hobart joined DICK’S in February 2011 as Senior Vice President and Chief Marketing Officer. In 2015, Ms. Hobart was promoted to Executive Vice President and Chief Marketing Officer and later to Executive Vice President, Chief Customer and Digital Officer. She became President in 2017.
Prior to joining DICK’S, Ms. Hobart had several senior executive roles at PepsiCo, including Chief Marketing Officer of carbonated soft drinks in North America. Prior to PepsiCo, she was at Wells Fargo Bank and at JP Morgan Chase. From 2014 to 2018, Ms. Hobart served as a member of the board of directors of Sonic Corp. She currently serves on the Yum! Brands Board of Directors.
About DICK’S Sporting Goods
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 October 31, 2020, the Company operated 732 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, 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 dynamic 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.
Contact
DICK'S Sporting Goods, 724-273-5552, [email protected]
Forward-Looking Statements Involving Known and Unknown Risks and Uncertainties
This press release includes forward-looking statements concerning the Company’s expectations, anticipations, intentions, beliefs or strategies regarding the future. Investors should not place undue reliance on forward-looking statements as a prediction of actual results or events. These statements can be identified as those that may predict, forecast, indicate or imply future results, performance or advancements and by forward-looking words such as “believe”, “anticipate”, “expect”, “estimate”, “predict”, “intend”, “plan”, “project”, “goal”, “will”, “will be”, “will continue”, “will result”, “could”, “may”, “might” or any variations of such words or other words with similar meanings. Forward-looking statements represent the Company’s current expectations regarding future events and are subject to known and unknown risks and uncertainties, including the risks set forth in the Company’s filings with the Securities and Exchange Commission, that could cause actual events to differ materially from those implied by the forward-looking statements. 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.
Category: Company