Dick's Sporting Goods, Inc. reported net income for the third quarter ended November 1, 2003 increased 68% to
$4.7 million and earnings per share increased 29% to $0.18 per diluted share as compared to net income of $2.8 million and earnings per share of $0.14 per diluted share for the quarter ended November 2, 2002. Total sales for the quarter increased 16% to $338.2 million. Comparable store sales increased 2.5% compared to a 5.1% comparable store sales increase in the prior year.
Net income increased 62% and earnings per share increased 38% compared to
pro-forma net income of $2.9 million or $0.13 per diluted share in the third
quarter of last year. Prior period pro-forma results include a reduction of
interest expense and an increase in diluted shares as if the Company had
consummated its initial public offering at the beginning of the third quarter
last year rather than on the October 15, 2002 effective date. No pro-forma
adjustments have been made to the current quarter earnings.
The Company noted that the following were included in this year's third
quarter results:
- Net income included $1.3 million of non-cash, after-tax expense related to the closing of two women's apparel concept test stores.
- Net income also included an after-tax gain of $1.4 million resulting from the sale of a portion of the Company's non-cash investment in GSI Commerce.
Excluding these items, net income for the third quarter would have been
$4.6 million, while earnings per share would have remained unchanged at the
reported $0.18 per diluted share.
“The associates at Dick's continued to execute in the third quarter as
evidenced by delivering a 2.5% comp sales gain despite a difficult comparison
while opening 11 new stores during the quarter,” said Edward W. Stack,
Chairman and CEO. “Additionally we're building for the future by adding to an
already strong management team. Joining us are Bill Newlin, EVP & Chief
Administrative Officer, Jerel Hollens, SVP – Supply Chain and Denny Feldman,
VP – GMM Lodge & Bikes.”
During the third quarter, the Company opened 11 new stores. Five of these
stores were in new markets: Watertown, NY; Plattsburgh, NY; Waterford, CT;
Roanoke, VA; and Charlottesville, VA. Six of the stores opened were in
existing markets: Garner, NC (the fifth store in the Raleigh/Durham market);
Short Pump, VA (the third store in the Richmond market); Manassas, VA and
Waldorf, MD (the second and third stores in the Washington, D.C. market);
Millbury, MA (the second store in the Worcester market); and Smithfield, RI
(the third store in the Providence market). As of November 1, 2003, the
Company operated 162 stores in 27 states.
Year-to-date Results
Net income for the 39 weeks ended November 1, 2003 increased 40% to $26.8
million and earnings per share increased 10% to $1.08 per diluted share as
compared to net income of $19.2 million and earnings per share of $0.98 per
diluted share for the 39 weeks ended November 2, 2002. Total sales for the 39
weeks ended November 1, 2003 increased 14% to $996.4 million. Comparable
store sales increased 1.0%.
Net income increased 37% and earnings per share increased 23% compared to
pro-forma net income of $19.6 million or $0.88 per diluted share for the 39
weeks ended November 2, 2002. Prior period pro-forma results include a
reduction of interest expense and an increase in diluted shares as if the
Company had consummated its initial public offering at the beginning of the
first quarter last year rather than on the October 15, 2002 effective date.
Fourth Quarter and Full Year Outlook
Based on an estimated 25.8 million fully-diluted shares outstanding, EPS for the fourth quarter is expected to be $0.91 – 0.92 per diluted share, an 11 – 12% increase over the prior year's fourth quarter EPS of $0.82. The prior year's fourth quarter included a non-cash after-tax charge of $1.4 million, or $0.06 per diluted share. Excluding last year's charge, EPS is expected to increase 3 – 5%.
Net income is expected to be $23.5 – 23.7 million, compared to last year's net income of $19.1 million in the fourth quarter, an increase of 23 – 24%. Excluding the charge in the prior year's fourth quarter, net income is expected to increase 15 – 16%.
The Company opened its last store for the year in November (Allentown, PA), bringing the total for the year to 22 stores.
Fourth quarter comparable store sales are expected to increase 1-2%.
Full Year 2003
The Company increased guidance for the full year.
Based on an estimated 25.2 million fully-diluted shares outstanding, the Company is raising its earlier guidance from $1.95 and now expects to report EPS for the full year of $1.99 – 2.00 per diluted share, compared to pro-forma EPS of $1.72 in the prior year (or $1.87 on a GAAP basis) and $1.78 excluding the non-cash charge taken in last year's fourth quarter.
Net income is expected to be $50.2 – $50.4 million, compared to last year's pro-forma net income of $38.6 million (or $38.3 million on a GAAP basis) and $40.0 million excluding the non-cash charge taken in the fourth quarter.
Comparable store sales are expected to increase approximately 1-2%.
DICK'S SPORTING GOODS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(in thousands, except per share data)
GAAP Pro-Forma
13 Weeks Ended 13 Weeks Ended
------------------------ --------------
November 1, November 2, November 2,
2003 2002 2002
----------- ----------- -----------
Net sales $338,164 $290,616 $290,616
Cost of goods sold, including
occupancy and distribution costs 249,325 218,487 218,487
----------- ----------- -----------
GROSS PROFIT 88,839 72,129 72,129
Selling, general and
administrative expenses 80,210 64,984 64,984
Pre-opening expenses 2,594 1,649 1,649
----------- ----------- -----------
INCOME FROM OPERATIONS 6,035 5,496 5,496
Gain on sale of investment 2,324 - -
Interest expense, net 504 907 724
----------- ----------- -----------
INCOME BEFORE INCOME 7,855 4,589 4,772
TAXES
Provision for income taxes 3,142 1,835 1,909
----------- ----------- -----------
NET INCOME $4,713 $2,754 $2,863
=========== =========== ===========
EARNINGS PER COMMON SHARE:
Basic $0.20 $0.16 $0.15
Diluted $0.18 $0.14 $0.13
