Dick's Sporting Goods, Inc. reported that fourth quarter net income increased 8.1% to $73.2 million, or 62 cents per diluted share, from $67.7 million, or 60 cents per diluted share, for the year-ago 14-week quarter. The company reported the extra week in the 2006 quarter provided an extra week of operations and included the favorable impact of sales of licensed merchandise relating to the Super Bowl, which combined contributed approximately 5 cents to earnings. The company's most recent guidance provided on January 15, 2008 was for earnings per diluted share of at least 60 cents to 61 cents. The operating results of Golf Galaxy are included in the current period results and the results for Chick's are included from its November 30, 2007 acquisition date.
Net sales for the quarter increased 18.2% to $1.21 billion due to the opening of new stores, the inclusion of Golf Galaxy in this year's quarterly results (which will be included in Dick's Sporting Goods comparable store sales calculation beginning in Q1 2008), and a comparable store sales increase of 2.7% on a 13-week to 13-week comparable basis (or an increase of 3.4%, adjusting for the shifted retail calendar). Comparable store sales for Golf Galaxy on a 13-week to 13-week proforma basis decreased 8.8%, or 9.8% after adjusting for the shifted retail calendar.
“We are pleased to have delivered 4th quarter sales and earnings in excess of our guidance, culminating a year in which our business generated a 30% EPS increase. We also made two acquisitions, continued to capture market share in new and existing markets, expanded our merchandise margin, and improved our operating efficiency,” said Edward W. Stack, chairman and CEO.
In the fourth quarter, the company opened four Golf Galaxy stores, one each in Baltimore, MD; Fairfax, VA; Phoenix, AZ and Washington DC. In addition, Golf Galaxy closed two stores, one each in Memphis, TN and Pittsburgh, PA.
As of February 2, 2008, the company operated 340 Dick's Sporting Goods stores in 36 states, with approximately 19.0 million square feet, 79 Golf Galaxy stores in 29 states, with approximately 1.3 million square feet, and 15 Chick's Sporting Goods stores in California, with approximately 0.8 million square feet.
Full Year Results (52 weeks compared to 53 weeks last year)
Net income for the 52 weeks ended February 2, 2008 increased 38% to $155.0 million and earnings per diluted share increased 30% to $1.33, as compared to prior year 53 week net income of $112.6 million, or $1.02 per diluted share. The operating results of Golf Galaxy and Chick's have been included in the results from their respective acquisition dates.
Net sales for the 52 weeks increased 25% to $3,888.4 million as compared to the 53 weeks ended February 3, 2007, while comparable store sales at Dick's stores on a 52-week to 52-week basis increased 2.4%, compared to a 6.0% increase last year. The increase in sales this year was also attributable to the opening of new stores and the inclusion of Golf Galaxy and Chick's in this year's results. Comparable store sales for Golf Galaxy on a proforma basis were flat for the year.
Current 2008 Outlook
“We are cautiously optimistic about our business prospects in 2008,” said Edward W. Stack, Chairman & CEO. “This year we will add approximately 46 Dick's stores, 10 Golf Galaxy stores, and will open a new distribution center in Atlanta to support our continued growth. We will continue to build our private brand strategy with partnerships with Nike ACG, adidas baseball, Reebok apparel and our newest brand Maxfli. Even with all of these key initiatives we can't ignore the uncertain macro economic environment we are all currently facing.”
— Full Year 2008— Based on an estimated 121 million diluted shares outstanding, the
Company anticipates reporting consolidated earnings per diluted
share of approximately $1.49 – 1.54. This represents an approximate
12 – 16% increase over earnings per diluted share for the full year
2007 of $1.33.
— Comparable store sales, which include Dick's Sporting Goods and Golf
Galaxy stores, are expected to be approximately flat to an increase
of 1%. The Golf Galaxy stores are included in the comparable store
sales calculation beginning in the first quarter of 2008. The
comparable store sales calculation excludes the Chick's Sporting
Goods stores.
— The Company expects to open approximately 46 new Dick's Sporting
Goods stores, ten new Golf Galaxy stores and relocate one Dick's
store in 2008.— First Quarter 2008
— Based on an estimated 119 million diluted shares outstanding, the
Company anticipates reporting consolidated earnings per diluted
share of approximately $0.16 – 0.19, as compared to first quarter
2007 earnings per diluted share of $0.19.
— Comparable store sales, which include Dick's and Golf Galaxy stores,
are expected to decrease approximately 1 – 4%. The comparable store
sales calculation excludes the Chick's Sporting Goods stores.
— The Company expects to open approximately eight new Dick's stores
and four new Golf Galaxy stores in the first quarter.
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED
(In thousands, except per share data)13 Weeks Ended 14 Weeks Ended
—————————————–
February 2, % of February 3, % of
2008 Sales(1) 2007 Sales
———— ——- ———- ——-
Net sales $1,212,615 100.00% $1,026,275 100.00%
Cost of goods sold, including
occupancy and distribution
costs 836,295 68.97 705,973 68.79
———— ——- ———- ——-
GROSS PROFIT 376,320 31.03 320,302 31.21Selling, general and
administrative expenses 250,356 20.65 203,759 19.85
Pre-opening expenses 1,314 0.11 1,427 0.14
———— ——- ———- ——-
INCOME FROM OPERATIONS 124,650 10.28 115,116 11.22Interest expense, net 2,730 0.23 2,253 0.22
———— ——- ———- ——-
INCOME BEFORE INCOME TAXES 121,920 10.05 112,863 11.00Provision for income taxes 48,749 4.02 45,145 4.40
———— ——- ———- ——-
NET INCOME $73,171 6.03% $67,718 6.60%
============ ======= ========== =======EARNINGS PER COMMON SHARE:
Basic $0.66 $0.65
Diluted $0.62 $0.60WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic 111,033 104,982
Diluted 117,721 113,130(1) Column does not add due to rounding
