Dick's Sporting Goods reported sales increased 9.0% from the third quarter to $1.08 billion due primarily to a 5.1% increase in consolidated same store sales and the opening of new stores. The comp gain reflects a 3.8% increase in Dick's Sporting Goods stores, a 2.4% increase in Golf Galaxy and an 82.4% jump in e-commerce. Excluding excluding an 8 cents a share charge from Golf Galaxy store closure costs, non-GAAP earnings increased by 38% to $26.7 million, or 22 cents, in the quarter.
Net earnings after the change slid 10.6% to $16.9 million, or 14 cents a share, from $18.9 million, or 16 cents, a year ago. The retailer said the third quarter consolidated non-GAAP earnings per diluted share exceeded estimated earnings expectations provided on August 19, 2010 of $0.15 – 0.16 per diluted share.
The sporting goods chain also raised full-year estimates raised to $1.56 – 1.58 to reflect anticipated consolidated non-GAAP earnings per diluted share growth of 30 to 32% from 2009 consolidated non-GAAP earnings per diluted share of $1.20.
“We are encouraged by our third quarter performance and our continued progress in driving profitable growth.As a result, we have raised our earnings expectations for the fourth quarter and full year 2010,” said Edward W. Stack, Chairman and CEO. “We are also increasingly optimistic about our future growth opportunities, including the potential to more than double our network of Dick's Sporting Goods stores and to fuel the growth of our Golf Galaxy and e-commerce businesses, while continuing to drive margin expansion and deliver long-term shareholder value.”
Stores
In the third quarter, the company opened 12 new Dick's Sporting Goods stores, remodeled eight Dick's Sporting Goods stores, relocated one Dick's Sporting Goods store and closed 12 underperforming Golf Galaxy stores. The new stores are listed in a table later in the release under the heading “Store Count and Square Footage.”
In the first three quarters of 2010, the company opened 18 new Dick's Sporting Goods stores, remodeled 11 Dick's Sporting Goods stores, relocated one Dick's Sporting Goods store and closed 12 underperforming Golf Galaxy stores. As of October 30, 2010, the company operated 437 Dick's Sporting Goods stores in 42 states, with approximately 24.3 million square feet, and 79 Golf Galaxy stores in 29 states, with approximately 1.3 million square feet.
Balance Sheet
The company ended the third quarter of 2010 with $159 million in cash and cash equivalents and did not have any outstanding borrowings under its $440 million revolving credit facility. At the end of the third quarter of 2009, the company had $40 million in cash and cash equivalents and $63 million of outstanding borrowings under its credit facility.
The inventory per square foot was 2.5% higher at the end of the third quarter 2010 as compared to the end of the third quarter 2009.
Year-to-Date Results
The company reported consolidated non-GAAP net income for the 39 weeks ended October 30, 2010 of $104.4 million, or $0.86 per diluted share, which excludes an $0.08 per diluted share impact from Golf Galaxy store closure costs. For the 39 weeks ended October 31, 2009, the company reported consolidated non-GAAP net income of $74.1 million, or $0.63 per diluted share, which excluded merger and integration costs. On a GAAP basis, the company reported consolidated net income for the 39 weeks ended October 30, 2010 of $94.6 million or $0.78 per diluted share compared to net income for the 39 weeks ended October 31, 2009 of $68.0 million, or $0.58 per diluted share.
Net sales through the third quarter of 2010 increased 9.0% from the same period in 2009 to $3,352.6 million primarily due to a consolidated same store sales increase of 6.2 % and the opening of new stores.
2010 Outlook
Based on year-to-date results and expectations for the fourth quarter, the company is raising its annual consolidated non-GAAP earnings estimate and increasing the expected consolidated same store sales for 2010.
Full Year 2010
Based on an estimated 121 million diluted shares outstanding, the company currently anticipates reporting consolidated non-GAAP earnings per diluted share of approximately $1.56 – 1.58, excluding an $0.08 per diluted share impact from Golf Galaxy store closures. For the full year 2009, the company reported consolidated non-GAAP earnings per diluted share of $1.20, excluding merger and integration costs. On a GAAP basis, the company reported consolidated earnings per diluted share of $1.15 in 2009.
Consolidated same store sales are currently expected to increase approximately 4.5 to 5.5% compared to a 1.4% decrease in 2009. The consolidated same store sales calculation for the full year 2010 includes Dick's Sporting Goods stores, Golf Galaxy stores and the company's e-commerce business. The consolidated same store sales calculation for the full year 2009 included Dick's Sporting Goods stores and Golf Galaxy stores only.
The company expects to open 26 new Dick's Sporting Goods stores, remodel 12 Dick's Sporting Goods stores, relocate two Dick's Sporting Goods stores, open two new Golf Galaxy stores and close 12 underperforming Golf Galaxy stores.
Fourth Quarter 2010
Based on an estimated 122 million diluted shares outstanding, the company currently expects reporting fourth quarter consolidated earnings per diluted share of approximately 69 cents – 71 cents. In the fourth quarter of 2009, the company reported consolidated earnings per diluted share of 56 cents.
Consolidated same store sales are currently expected to increase approximately 3 to 4% compared to a 2.5% increase in the fourth quarter last year. The consolidated same store sales calculation for the fourth quarter of 2010 includes Dick's Sporting Goods stores, Golf Galaxy stores, the converted Chick's Sporting Goods stores and the company's e-commerce business. The consolidated same store sales calculation for the fourth quarter of 2009 included Dick's Sporting Goods stores and Golf Galaxy stores only.
The company expects to open eight new Dick's Sporting Goods stores, remodel one Dick's Sporting Goods store, relocate one Dick's Sporting Goods store and open two Golf Galaxy stores in the fourth quarter.
Capital Expenditures
For the full year 2010, the company currently anticipates capital expenditures to be approximately $175 million on a gross basis and approximately $145 million on a net basis.
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In thousands, except per share data)
13 Weeks Ended
--------------------------------------------
October 30, % of October 31, % of
--------- -------
2010 Sales (1) 2009 Sales
----------- --------- ----------- -------
Net sales $ 1,078,984 100.00% $ 989,816 100.00%
Cost of goods sold, including occupancy
and distribution costs 771,913 71.54 722,985 73.04
----------- --------- ----------- -------
GROSS PROFIT 307,071 28.46 266,831 26.96
Selling, general and administrative expenses 272,467 25.25 230,430 23.28
Pre-opening expenses 6,396 0.59 4,645 0.47
----------- --------- ----------- -------
INCOME FROM OPERATIONS 28,208 2.61 31,756 3.21
Interest expense 3,518 0.33 878 0.09
Other income (1,177) (0.11) (705) (0.07)
----------- --------- ----------- -------
INCOME BEFORE INCOME TAXES 25,867 2.40 31,583 3.19
Provision for income taxes 9,004 0.83 12,729 1.29
----------- --------- ----------- -------
NET INCOME $ 16,863 1.56% $ 18,854 1.90%
EARNINGS PER COMMON SHARE:
Basic $ 0.15 $ 0.17
Diluted $ 0.14 $ 0.16
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic 116,024 113,266
Diluted 121,408 118,704
(1) Column does not add due to rounding
