Dick's Sporting Goods reported net earnings rose 29.9% to $87.5 million, or 71 cents a share, from $67.4 million, or 56 cents, a year ago, topping previous guidance. Sales increased 13.6% to $1.53 billion due primarily to a 9.4% increase in consolidated same store sales and the opening of new stores. The 9.4% comp gain consisted of an 8.6% increase at Dick's Sporting Goods stores, a 2.2% increase at Golf Galaxy and a 36.3% increase in its e-commerce business.
On a non-GAAP basis, Dick's SG said net income for the fourth quarter ended Jan. 29 reached $94.0 million, or 76 cents per share, excluding an after-tax charge of $6.5 million, or 5 cents per diluted share from litigation settlement costs. These costs are from the previously disclosed fourth quarter settlement of wage and hour class action lawsuits and are included in selling, general and administrative expenses. The fourth quarter consolidated non-GAAP earnings per diluted share exceeded estimated earnings expectations provided on November 16, 2010 of 69 cents to 71 cents per diluted share. It also represents a gain of 34% versus year-ago earnings.
Gross margins in the period improved to 31.6% from 29.2% in the same time last year SG&A as a percent of sales rose to 21.9% of sales from 20.7%. The quarter also included pre-opening expenses of $1.3 million versus zero expense in that area last year.
Full Year Results
The company reported consolidated non-GAAP net income for the full year of $198.4 million, or $1.63 per diluted share. Non-GAAP earnings exclude Golf Galaxy store closing costs and litigation settlement costs. In the prior year, the company reported consolidated non-GAAP net income of $141.4 million, or $1.20 per diluted share, which excluded merger and integration costs.
On a GAAP basis, consolidated net income grew to $182.1 million, or $1.50 per diluted share, compared to $135.4 million, or $1.15, a year earlier.
Net sales for the full year 2010 increased 10.4% to $4.87 billion due primarily to a 7.4% increase in consolidated same store sales and the opening of new stores.
“In 2010, we generated significant earnings growth while maintaining our focus on strengthening our balance sheet,” said Edward W. Stack, chairman and CEO. “We have successfully navigated the storms of the recession and have executed our business plan by posting six consecutive quarters of same store sales gains, opening 26 new stores in 2010, expanding our margin rates and reducing inventory per square foot. As a result, we are solidly positioned to generate further growth and increased operating margins in the coming years.”
Stores
In the fourth quarter, the company opened eight new Dick's Sporting Goods stores, remodeled one Dick's Sporting Goods store, relocated one Dick's Sporting Goods store, closed one Dick's Sporting Goods Store and opened two new Golf Galaxy stores.
As of Jan. 29, 2011, the company operated 444 Dick's Sporting Goods stores in 42 states, with approximately 24.6 million square feet and 81 Golf Galaxy stores in 30 states, with approximately 1.3 million square feet.
Balance Sheet
The company ended the fourth quarter of 2010 with $546 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 fourth quarter of 2009, the company had $226 million in cash and cash equivalents and did not have any outstanding borrowings under its credit facility.
The inventory per square foot was 4.1% lower at the end of the fourth quarter 2010 as compared to the end of the fourth quarter 2009.
Current 2011 Outlook
o Based on an estimated 125 million diluted shares outstanding, the company currently anticipates reporting consolidated earnings per diluted share of approximately $1.89 to $1.91 for the full year. That would compared to consolidated earnings per diluted share of $1.63 in 2010, excluding Golf Galaxy store closing costs and litigation settlement costs. On a GAAP basis, the company reported consolidated earnings per diluted share of $1.50 in 2010.
o Consolidated same store sales are currently expected to increase approximately 3%. The same store sales calculation for the full year 2011 includes Dick's Sporting Goods stores, Golf Galaxy stores and the company's e-commerce business.
o The company currently expects to open approximately 34 new Dick's Sporting Goods stores, remodel 13 Dick's Sporting Goods stores and open approximately three new Golf Galaxy stores in 2011.
First Quarter 2011
o Based on an estimated 124 million diluted shares outstanding, the company anticipates reporting consolidated earnings per diluted share of approximately 26 to 28 cents in the first quarter of 2011. In the first quarter of 2010, the company reported earnings per diluted share of $0.22.
o Consolidated same store sales are expected to increase approximately 4 to 5%. The same store sales calculation for the first quarter 2011 includes Dick's Sporting Goods stores, Golf Galaxy stores and the company's e-commerce business.
o The company expects to open approximately three new Dick's Sporting Goods stores in the first quarter of 2011.
DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES | |||||||||||
CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED | |||||||||||
(In thousands, except per share data) | |||||||||||
13 Weeks Ended | |||||||||||
January 29, | % of Sales (1) | January 30, | % of Sales | ||||||||
2011 | 2010 | ||||||||||
Net sales | $ 1,518,914 | 100.00% | $ 1,336,590 | 100.00% | |||||||
Cost of goods sold, including occupancy | |||||||||||
and distribution costs | 1,039,320 | 68.43 | 946,809 | 70.84 | |||||||
GROSS PROFIT | 479,594 | 31.57 | 389,781 | 29.16 | |||||||
Selling, general and administrative expenses | 332,305 | 21.88 | 276,727 | 20.70 | |||||||
Pre-opening expenses | 1,298 | 0.09 | (15) | (0.00) | |||||||
INCOME FROM OPERATIONS | 145,991 | 9.61 | 113,069 | 8.46 | |||||||
Interest expense | 3,487 | 0.23 | 908 | 0.07 | |||||||
Other income | (1,058) | (0.07) | (367) | (0.03) | |||||||
INCOME BEFORE INCOME TAXES | 143,562 | 9.45 | 112,528 | 8.42 | |||||||
Provision for income taxes | 56,073 | 3.69 | 45,168 | 3.38 | |||||||
NET INCOME | $ 87,489 | 5.76% | $ 67,360 | 5.04% | |||||||
EARNINGS PER COMMON SHARE: | |||||||||||
Basic | $ 0.74 | $ 0.59 | |||||||||
