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Dick's Sporting Goods Reports First Quarter Results

PITTSBURGH, May 22 /PRNewswire-FirstCall/ -- Dick's Sporting Goods, Inc. (NYSE: DKS) today reported sales and earnings results for the first quarter ended May 3, 2008. The results include the operating results of Golf Galaxy and Chick's Sporting Goods from their respective acquisition dates of February 13, 2007 and November 30, 2007.

First Quarter Results

Net income decreased 4% to $20.8 million and earnings per diluted share decreased 5% to $0.18, compared to prior year net income of $21.7 million, or $0.19 per diluted share. First quarter 2008 results include a pretax gain on sale of a corporate aircraft totaling $2.4 million, or $0.01 per diluted share. Earnings guidance provided on March 11, 2008 was for earnings per diluted share of $0.16 - 0.19.

Net sales for the quarter increased 11% to $912.1 million primarily due to new store sales, partially offset by a comparable store sales decrease of 3.8% for Dick's Sporting Goods stores, compared to the first quarter of 2007. Comparable store sales for Golf Galaxy on a pro-forma basis decreased 7.4%.

"Throughout this difficult environment, we will continue to focus on the core athlete and outdoor enthusiast, while managing our business with our consistent focus on financial discipline and operational execution," said Edward W. Stack, Chairman, CEO and President.

New Stores

In the first quarter, the Company opened eight Dick's Sporting Goods stores and four Golf Galaxy stores. The stores that opened in the first quarter are listed in a table later in the release under the heading "Store Count and Square Footage."

2008 Outlook

The Company's current outlook for 2008 is based on current expectations and includes "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act as described later in this release. Although the Company believes that comments reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.

"In 2008 we are continuing to grow our business and build our brand. However, we are being cautious about our outlook for the remainder of the year, due to the overall uncertainty of the current economic environment," said Mr. Stack. "We will constantly monitor business trends and are positioned to take appropriate actions should the economic environment change."

-- Full Year 2008

  • Based on an estimated 118.3 million diluted shares outstanding, the Company currently anticipates reporting consolidated earnings per diluted share of approximately $1.22 - 1.36, as compared to earnings per diluted share for the full year 2007 of $1.33.
  • Comparable store sales, which include Dick's Sporting Goods stores only, are expected to decrease approximately 3 - 5%. The comparable store sales calculation excludes the Golf Galaxy and Chick's Sporting Goods stores.
  • The Company expects to open approximately 44 new Dick's Sporting Goods stores, ten new Golf Galaxy stores and relocate one Dick's store in 2008.

-- Second Quarter 2008

  • Based on an estimated 117.5 million diluted shares outstanding, the Company anticipates reporting consolidated earnings per diluted share of approximately $0.34 - 0.38, as compared to earnings per diluted share for the second quarter 2007 of $0.41.
  • Comparable store sales, which include Dick's and Golf Galaxy stores, are expected to decrease approximately 4 - 7%. The comparable store sales calculation excludes the Chick's Sporting Goods stores.
  • The Company expects to open approximately ten new Dick's stores and one new Golf Galaxy store in the second quarter.

Conference Call Info

The Company will be hosting a conference call today at 10:00 am 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 web site located at http://www.dickssportinggoods.com/investors. To listen to the live call, please go to the web site at least fifteen minutes early to register, download and install any necessary audio software.

For those who cannot listen to the live broadcast, the webcast will be archived on the Company's web site for approximately 30 days. In addition, a dial-in replay will be available shortly after the call. To listen, investors should dial (888) 286-8010 (domestic callers) or (617) 801-6888 (international callers) and enter confirmation code 17110385. The dial-in replay will be available for 30 days following the live call.

Forward-Looking Statements Involving Known and Unknown Risks and Uncertainties

Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify these statements by forward-looking words such as "may," "will," "expect," "anticipate," "believe," "guidance," "estimate," "intend," "predict," and "continue" or similar words. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to differ materially from forecasted results. Those risks and uncertainties include, without limitation, changes in economic and market conditions that affect consumer spending, changes in consumer demand, competitive pressures, currency exchange rate fluctuations, weather conditions, litigation and our ability to manage our operations and growth. Known and unknown risks and uncertainties are more fully described in the Company's Annual Report on Form 10-K for the year ended February 2, 2008 as filed with the Securities and Exchange Commission on March 27, 2008, and other reports filed with the Securities and Exchange Commission. The Company disclaims any obligation and does not intend to update any forward-looking statements except as may be required by the securities laws.

The prior period EPS numbers presented in this press release have been adjusted to give effect to the two-for-one stock split, in the form of a stock dividend, which became effective on October 19, 2007 to our stockholders of record on September 28, 2007.

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. As of May 3, 2008, the Company operated 348 Dick's Sporting Goods stores in 38 states primarily throughout the eastern half of the U.S. The Company also owns Golf Galaxy, Inc., a multi-channel golf specialty retailer, with 83 stores in 30 states, ecommerce websites and catalog operations and Chick's Sporting Goods, Inc., which operates 15 specialty sporting goods stores in Southern California.

Dick's Sporting Goods, Inc. news releases are available at http://www.dickssportinggoods.com/ (click on the Investor Relations link at the bottom of the home page).

Contact:
Timothy E. Kullman, EVP - Finance, Administration & Chief Financial Officer or

Anne-Marie Megela, Director, Investor Relations
724-273-3400
investors@dcsg.com



                 DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
                    (In thousands, except per share data)

                                                    13 Weeks Ended
                                         -------------------------------------
                                          May 3,    % of     May 5,   % of
                                           2008     Sales     2007   Sales (1)
                                         --------  -------  --------  --------
    Net sales                            $912,112  100.00%  $823,553  100.00%
                                         --------  -------  --------  --------
    Cost of goods sold, including
     occupancy and distribution costs     653,006    71.59   579,134    70.32
                                         --------  -------  --------  --------
        GROSS PROFIT                      259,106    28.41   244,419    29.68

    Selling, general and administrative
     expenses                             219,964    24.12   198,007    24.04
    Pre-opening expenses                    4,924     0.54     7,121     0.86
                                         --------  -------  --------  --------
        INCOME FROM OPERATIONS             34,218     3.75    39,291     4.77

    Gain on sale of asset                  (2,356)   (0.26)        -        -
    Interest expense, net                   1,658     0.18     3,207     0.39
                                         --------  -------  --------  --------
        INCOME BEFORE INCOME TAXES         34,916     3.83    36,084     4.38

    Provision for income taxes             14,141     1.55    14,383     1.75
                                         --------  -------  --------  --------
        NET INCOME                        $20,775    2.28%   $21,701    2.64%
                                         ========  =======  ========  ========

    EARNINGS PER COMMON SHARE:
      Basic                                 $0.19              $0.20
      Diluted                               $0.18              $0.19

    WEIGHTED AVERAGE COMMON SHARES
    OUTSTANDING:
      Basic                               111,216            107,098
      Diluted                             117,295            114,442

    (1) Column does not add due to rounding



                 DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                            (Dollars in thousands)

                                              May 3,      May 5,   February 2,
                                               2008        2007        2008
                                           ----------- ----------- -----------
                                           (unaudited) (unaudited)
    ASSETS
    CURRENT ASSETS:
      Cash and cash equivalents               $46,997     $41,424     $50,307
      Accounts receivable, net                 75,780      61,474      62,035
      Income taxes receivable                       -      11,674           -
      Inventories, net                        970,543     818,432     887,364
      Prepaid expenses and other current
       assets                                  53,227      40,771      50,274
      Deferred income taxes                    20,131       1,294      19,714
                                           ----------- ----------- -----------
        Total current assets                1,166,678     975,069   1,069,694

      Property and equipment, net             547,024     489,726     531,779
      Construction in progress - leased
       facilities                              31,149      14,930      23,744
      Intangible assets, net                   97,837       9,323      80,038
      Goodwill                                304,386     320,045     304,366
      Other assets                             43,487      53,943      26,014
                                           ----------- ----------- -----------
    TOTAL ASSETS                           $2,190,561  $1,863,036  $2,035,635
                                           =========== =========== ===========

    LIABILITIES AND STOCKHOLDERS' EQUITY
    CURRENT LIABILITIES:
      Accounts payable                       $401,962    $386,444    $365,750
      Accrued expenses                        231,510     180,736     228,816
      Deferred revenue and other
       liabilities                             86,797      74,420     104,549
      Income taxes payable                     13,442           -      62,583
      Current portion of other long-term
       debt and capital leases                    251         152         250
                                           ----------- ----------- -----------
        Total current liabilities             733,962     641,752     761,948
                                           ----------- ----------- -----------
    LONG-TERM LIABILITIES:
      Senior convertible notes                172,500     172,500     172,500
      Revolving credit borrowings             121,485     158,557         -
      Other long-term debt and capital
       leases                                   8,622       8,362       8,685
      Non-cash obligations for
       construction in progress -
       leased facilities                       31,149      14,930      23,744
      Deferred revenue and other
       liabilities                            204,553     181,404     180,238
                                           ----------- ----------- -----------
        Total long-term liabilities           538,309     535,753     385,167
                                           ----------- ----------- -----------
    COMMITMENTS AND CONTINGENCIES
    STOCKHOLDERS' EQUITY:
      Common stock                                851         814         848
      Class B common stock                        262         266         263
      Additional paid-in capital              425,957     346,266     416,423
      Retained earnings                       489,749     335,639     468,974
      Accumulated other comprehensive
       income                                   1,471       2,546       2,012
                                           ----------- ----------- -----------
        Total stockholders' equity            918,290     685,531     888,520
                                           ----------- ----------- -----------
    TOTAL LIABILITIES AND STOCKHOLDERS'
     EQUITY                                $2,190,561  $1,863,036  $2,035,635
                                           =========== =========== ===========



                 DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
         CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
                            (Dollars in thousands)

                                                        13 Weeks Ended
                                                  ----------------------------
                                                    May 3,             May 5,
                                                     2008               2007
                                                  ---------          ---------
    CASH FLOWS FROM OPERATING ACTIVITIES:
      Net income                                   $20,775            $21,701
      Adjustments to reconcile net income
       to net cash used in operating activities:
      Depreciation and amortization                 20,400             16,402
      Deferred income taxes                        (10,950)            (4,696)
      Stock-based compensation                       5,370              6,902
      Excess tax benefit from stock-based
       compensation                                   (848)            (8,957)
      Tax benefit from exercise of stock
       options                                         159              2,484
      Tax benefit from convertible bond hedge          744                680
      Gain on sale of asset                         (2,356)                 -
      Changes in assets and liabilities:
        Accounts receivable                          7,922             (2,496)
        Inventories                                (83,179)          (105,995)
        Prepaid expenses and other assets          (16,371)              (777)
        Accounts payable                            38,456             71,021
        Accrued expenses                           (20,147)           (17,039)
        Income taxes receivable / payable          (48,292)            12,426
        Deferred construction allowances             7,324              9,136
        Deferred revenue and other liabilities      (5,127)            (7,805)
                                                  ---------          ---------
    Net cash used in operating activities          (86,120)            (7,013)
                                                  ---------          ---------

    CASH FLOWS FROM INVESTING ACTIVITIES:
        Capital expenditures                       (49,393)           (45,410)
        Purchase of corporate aircraft             (25,107)                 -
        Proceeds from sale of corporate
         aircraft                                   27,463                  -
        Proceeds from sale-leaseback
         transactions                                    -                165
        Payment for purchase of Golf Galaxy,
         net of $4,859 cash acquired                     -           (221,449)
                                                  ---------          ---------
      Net cash used in investing activities        (47,037)          (266,694)
                                                  ---------          ---------

    CASH FLOWS FROM FINANCING ACTIVITIES:
        Revolving credit borrowings, net           121,485            158,557
        Payments on other long-term debt and
         capital leases                                (59)               (57)
        Construction allowance receipts              7,454                  -
        Proceeds from exercise of stock options      2,456             17,396
        Excess tax benefit from stock-based
         compensation                                  848              8,957
        Decrease in bank overdraft                  (2,244)            (5,701)
                                                  ---------          ---------
      Net cash provided by financing activities    129,940            179,152
                                                  ---------          ---------
    EFFECT OF EXCHANGE RATE CHANGES ON CASH
     AND CASH EQUIVALENTS                              (93)                37

    NET DECREASE IN CASH AND CASH
     EQUIVALENTS                                    (3,310)           (94,518)

    CASH AND CASH EQUIVALENTS, BEGINNING
     OF PERIOD                                      50,307            135,942
                                                  ---------          ---------
    CASH AND CASH EQUIVALENTS, END OF
     PERIOD                                        $46,997            $41,424
                                                  =========          =========

    Supplemental disclosure of cash flow
     information:
      Construction in progress - leased
       facilities                                   $7,405             $1,843
      Accrued property and equipment               $16,948            $(7,647)
      Cash paid for interest                        $2,841             $3,340
      Cash paid for income taxes                   $72,537             $3,318
      Stock options issued for acquisition
       (net of tax benefit upon exercise)           $7,266             $7,630



    Store Count and Square Footage

    The stores that opened during the first quarter of 2008 are as follows:

                  DICK'S                             GOLF GALAXY
    ------------------------------------    ----------------------------------
      Store                Market              Store               Market
    -----------------     --------------    --------------------  ------------
    Tempe, AZ             Phoenix           Towson, MD            Baltimore
    Huber Heights, OH     Dayton            Pembroke Pines, FL    Miami
    Portland, OR          Portland          Fairview Heights, IL  St. Louis
    Williamsburg, VA      Virginia Beach    Montgomeryville, PA   Philadelphia
    Ocala, FL             Ocala
    Montgomery, AL        Montgomery
    Tupelo, MS            Tupelo
    Noblesville, IN       Indianapolis

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


                             Fiscal 2008                    Fiscal 2007
                      -------------------------------  -----------------------
                       Dick's         Chick's           Dick's
                      Sporting  Golf  Sporting         Sporting   Golf
                       Goods   Galaxy  Goods    Total   Goods    Galaxy Total
                      -------- ------ --------  -----  --------  ------ ------
    Beginning stores      340     79     15      434       294      65   359
      Q1 New                8      4      -       12        15      10    25
                      -------- ------ --------  -----  --------  ------ ------
    Ending stores         348     83     15      446       309      75   384
                      ======== ====== ========  =====  ========  ====== ======
    Relocated stores        -      -      -        -         -       -     -
                      ======== ====== ========  =====  ========  ====== ======


    Square Footage:
    (in millions)
                       Dick's         Chick's
                      Sporting  Golf  Sporting
                       Goods   Galaxy  Goods    Total
                      -------- ------ --------  -----
    Q1 2007              17.4    1.1      -     18.5
    Q2 2007              17.8    1.1      -     18.9
    Q3 2007              19.0    1.2      -     20.2
    Q4 2007              19.0    1.3    0.8     21.1
                      -------- ------ --------  -----
    Q1 2008              19.5    1.3    0.8     21.6


Non-GAAP Financial Measures

In addition to reporting the Company's financial results in accordance with generally accepted accounting principles ("GAAP"), the Company provides information regarding net income and earnings per diluted share adjusted for the gain on sale of asset, pro-forma comparable store sales, earnings before interest, taxes and depreciation ("EBITDA") as well as a reconciliation from the Company's gross capital expenditures, net of tenant allowances. The following measures are considered non-GAAP and are not preferable to GAAP financial information; however, the Company believes this information provides additional measures of performance that the Company's management, analysts and investors can use to compare core, operating results between reporting periods. These non-GAAP measures are provided below and on the Company's website at http://www.dickssportinggoods.com/ (click on the Investor Relations link at the top of the home page). The Company's website is not part of this press release.



    Pro-forma Net Income and Proforma Earnings Per Share Reconciliation
    (in thousands, except per share data):

                                                          13 Weeks Ended
                                                            May 3, 2008
                                                      -----------------------
                                                                        Per
                                                      Amounts          Share
                                                      --------        -------
    Net income and earnings per diluted share (GAAP)  $20,775          $0.18
    Less: Gain on sale of asset, after tax             (1,402)         (0.01)
                                                      --------        -------
    Pro-forma net income and earnings per share       $19,373          $0.17
                                                      ========        =======
Pro-forma Comparable Store Sales

The following pro-forma comparable store sales present information as if Golf Galaxy had been acquired at the beginning of the periods presented. The sales have been adjusted to conform to the Company's reporting calendar and method of reporting comparable sales. Golf Galaxy will be included in the quarterly comparable store base beginning in Q2 2008, which will be the first full quarter following the anniversary of the date of acquisition.


                                             Dick's
                                            Sporting      Golf
                                              Goods      Galaxy   Consolidated
                                            ---------   --------  ------------
    13 weeks ended May 5, 2007                 2.0%        5.5%        2.3%
    13 weeks ended May 5, 2007 - shifted(1)    0.1%        0.8%        0.1%
    13 weeks ended May 3, 2008                -3.8%       -7.4%       -4.1%

    (1) Adjusted for the shifted retail calendar

EBITDA

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


                                                        13 Weeks Ended
                                                   -------------------------
                                                    May 3,            May 5,
                  EBITDA                             2008              2007
    ----------------------------------------      --------          --------
                                                    (dollars in thousands)
    Net income                                     $20,775           $21,701
    Provision for income taxes                      14,141            14,383
    Interest expense, net                            1,658             3,207
    Depreciation and amortization                   20,400            16,402
    Less:  Gain on sale of asset                     2,356                 -
                                                   -------           -------
    EBITDA                                         $54,618           $55,693
                                                   =======           =======
    % decrease in EBITDA                               -2%

Reconciliation of Gross Capital Expenditures to 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
                                                   -------------------------
                                                    May 3,            May 5,
                                                     2008              2007
                                                  ---------         ---------
                                                    (dollars in thousands)
    Gross capital expenditures                    $(49,393)         $(45,410)
    Proceeds from sale-leaseback
     transactions                                      -                 165
    Changes in deferred construction
     allowances                                      7,324             9,136
    Construction allowance receipts                  7,454                 -
                                                  ---------         ---------
    Net capital expenditures                      $(34,615)         $(36,109)
                                                  =========         =========

CONTACT:
Timothy E. Kullman
EVP - Finance, Administration & Chief Financial Officer

Anne-Marie Megela
Director, Investor Relations
Both of Dick's Sporting Goods, Inc.
+1-724-273-3400
investors@dcsg.com