Dick’s Sporting Goods, Inc. reported net sales for the second quarter of 2017 increased 9.6 percent to approximately $2.2 billion. Consolidated same-store sales increased 0.1 percent, compared to the retailer’s guidance of an approximate 2 percent to 3 percent increase. Second quarter 2016 consolidated same-store sales increased 2.8 percent.

Consolidated net income for the second quarter ended July 29, 2017 was $112.4 million, or $1.03 per diluted share, compared to the company’s expectations provided on May 16, 2017 of 98 cents to $1.03 per diluted share. For the second quarter ended July 30, 2016, the retailer reported consolidated net income of $91.4 million, or 82 cents per diluted share.

On a non-GAAP basis, DKS reported consolidated net income of $104.8 million for, or 96 cents per diluted share, in the second quarter, compared to the previous outlook of $1.02 to $1.07 per diluted share. Second quarter 2017 non-GAAP results exclude a previously announced corporate restructuring charge and income related to a contract termination payment.

“In this very competitive and dynamic marketplace, we were able to deliver a significant increase in our bottom line from last year. We continued to capture market share and generated strong results in eCommerce, footwear and golf, although sales were pressured by weakness in hunting, licensed and athletic apparel,” said DKS Chairman and Chief Executive Officer Ed Stack,. “By design, we will be more promotional and increase our marketing efforts for the remainder of the year, as we will aggressively protect our market share. We have updated our outlook to reflect these investments. We continue to believe retail disruption creates opportunities for us as we look long-term.”

Omni-Channel Development

E-Commerce sales for the second quarter of 2017 increased approximately 19 percent. eCommerce penetration for the second quarter of 2017 was 9.2 percent of total net sales, compared to 8.5 percent during the second quarter of 2016.

In the second quarter, the DKS opened 13 new Dick’s Sporting Goods stores. The retailer also closed one specialty concept store. As of July 29, 2017, the retailer operated 704 Dick’s Sporting Goods stores in 47 states, with approximately 37.4 million square feet, 98 Golf Galaxy stores in 32 states, with approximately 2.1 million square feet, and 29 Field & Stream stores in 14 states, with approximately 1.4 million square feet.

Balance Sheet

Dick’s Sporting Goods, Inc. ended the second quarter of 2017 with approximately $132 million in cash and cash equivalents and approximately $187 million in outstanding borrowings under its revolving credit facility. Over the course of the last 12 months, the DKS continued to invest in omni-channel growth, while returning over $275 million to shareholders through share repurchases and quarterly dividends.

Total inventory increased 11.8 percent at the end of the second quarter of 2017 as compared to the end of the second quarter of 2016.

DKS also amended and extended its revolving credit facility as it increased its limit from $1 billion to $1.25 billion and extended the maturity to August 2022 under substantially the same terms.

Year-to-Date Results

Dick’s Sporting Goods, Inc. reported consolidated net income for the 26 weeks ended July 29, 2017 of $170.6 million, or $1.55 per diluted share. For the 26 weeks ended July 30, 2016, the company reported consolidated net income of $148.3 million, or $1.32 per diluted share.

On a non-GAAP basis, DKS reported consolidated net income for the 26 weeks ended July 29, 2017 of $165.1 million, or $1.50 per diluted share, excluding a corporate restructuring charge, conversion costs for former Sports Authority stores and income related to a contract termination payment. 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 26 weeks ended July 29, 2017 increased 9.8 percent from last year’s period to approximately $4.0 billion, reflecting the growth of the store network and a 1.1 percent increase in consolidated same-store sales.

Capital Allocation

On August 10, 2017, the company’s Board of Directors authorized and declared a quarterly dividend in the amount of 17 cents per share on the company’s Common Stock and Class B Common Stock. The dividend is payable in cash on September 29, 2017 to stockholders of record at the close of business on September 8, 2017.

During the second quarter of 2017, DKS repurchased approximately 3.4 million shares of its common stock at an average cost of $41.56 per share, for a total cost of $143 million. Since the beginning of fiscal 2013, the company has repurchased approximately $1.1 billion of its common stock, and has approximately $0.9 billion remaining under its authorization that extends through 2021.

Current 2017 Outlook

The company’s current outlook for 2017 is based on current expectations and includes “forward-looking statements” within the meaning of Private Securities Litigation Reform Act of 1995.

Full Year 2017   

Based on an estimated 109 to 110 million diluted shares outstanding, the DKS currently anticipates reporting earnings per diluted share in the range of $2.85 to $3.05, which includes approximately 5 cents per diluted share for the 53rd week. The company’s earnings per diluted share guidance is not dependent upon share repurchases beyond the $166 million executed through the second quarter of fiscal 2017. The company reported earnings per diluted share of $2.56 for the 52 weeks ended January 28, 2017.

DKS currently anticipates reporting non-GAAP earnings per diluted share in the range of $2.80 to $3.00. This excludes a corporate restructuring charge, TSA conversion costs and income related to a contract termination payment. The company reported non-GAAP earnings per diluted share of $3.12 for the 52 weeks ended January 28, 2017.

Consolidated same-store sales are currently expected to be in the range of approximately flat to a low-single-digit decline on a 52-week to 52-week comparative basis, compared to an increase of 3.5 percent in 2016.

The company expects to open approximately 43 new Dick’s Sporting Goods stores and relocate approximately seven Dick’s Sporting Goods stores in 2017. The company also expects to open approximately eight new Golf Galaxy stores, relocate one Golf Galaxy store and open eight new Field & Stream stores adjacent to Dick’s Sporting Goods stores. These openings include former TSA and Golfsmith stores that the company converted to Dick’s Sporting Goods and Golf Galaxy stores, respectively.

Third Quarter 2017

Based on an estimated 108 million diluted shares outstanding, the company currently anticipates reporting earnings per diluted share in the range of 22 cents to 30 cents in the third quarter of 2017. This is compared to earnings per diluted share of 44 cents in the third quarter of 2016. On a non-GAAP basis, the company reported earnings per diluted share of 48 cents for the 13 weeks ended October 29, 2016.

Consolidated same-store sales are currently expected to decline in the low single digits in the third quarter of 2017, as compared to a 5.2 percent increase in the third quarter of 2016.

The company expects to open 15 new Dick’s Sporting Goods stores and relocate four Dick’s Sporting Goods stores in the third quarter of 2017. The company also expects to relocate one Golf Galaxy store and open six new Field & Stream stores adjacent to Dick’s Sporting Goods stores. These openings include one former TSA store that the company plans to convert to a Dick’s Sporting Goods store.

Capital Expenditures

In 2017, the company anticipates capital expenditures to be approximately $400 million on a net basis and approximately $515 million on a gross basis. In 2016, capital expenditures were $242 million on a net basis and $422 million on a gross basis.

Photo courtesy Dicks Sporting Goods