Dick's Sporting Goods, Inc. second quarter net sales increased 38% to $1.013 billion due to a comparable store sales increase of 7.2%. Net income increased 87% to $47.9 million and earnings per diluted share increased 77% to 83 cents, compared to prior year net income of $25.7 million, or 47 cents per diluted share. Earnings guidance provided on May 23, 2007 was for earnings per diluted share of 74 cents – 77 cents. The results include the operating results of Golf Galaxy for 2007 from the acquisition date, but not for 2006 as Golf Galaxy was acquired on February 13, 2007.
Second Quarter Results
Net income increased 87% to $47.9 million and earnings per diluted share increased 77% to $0.83, compared to prior year net income of $25.7 million, or $0.47 per diluted share. Earnings guidance provided on May 23, 2007 was for earnings per diluted share of $0.74 – 0.77. The operating results of Golf Galaxy are included in the current period results.
Net sales for the quarter increased 38% to $1.013 billion due to a comparable store sales increase of 7.2% (or 5.8% adjusting for the shifted retail calendar, compared to a 6.5% increase in Q2 last year), the opening of new stores, and the inclusion of Golf Galaxy in this years' quarterly results (which will be included in Dick's Sporting Goods comparable store sales calculation beginning in Q2 2008). Comparable store sales for Golf Galaxy on a proforma basis increased 4.7%, or 5.5% after adjusting for the shifted retail calendar.
“The Dick's Sporting Goods portfolio of businesses produced an outstanding second quarter. We achieved increased sales not only in golf but across most of our businesses, delivered gross margin improvements, provided operating expense leverage and solid inventory management. In addition, Golf Galaxy delivered strong sales and earnings in their seasonally largest quarter. I would like to commend all of our team members for their efforts in driving the results for our second quarter,” said Edward W. Stack, Chairman and CEO.
New Stores
In the second quarter, the Company opened six Dick's Sporting Goods stores and two Golf Galaxy stores. The stores that opened in the second quarter are listed in a table later in the release under the heading “Store Count and Square Footage”.
Year-to-Date Results
Net income for the 26 weeks ended August 4, 2007 increased 88% to $69.6 million and earnings per diluted share increased 78% to $1.21, as compared to prior year net income of $37.1 million, or $0.68 per diluted share. The operating results of Golf Galaxy have been included in the results beginning with the February 13, 2007 date of acquisition.
Net sales increased 33% to $1,837.0 million due to a comparable store sales increase of 4.7% (or 3.1% adjusting for the shifted retail calendar, compared to a 6.9% increase year-to-date last year), the opening of new stores, and the inclusion of Golf Galaxy in this year's results. Comparable store sales for Golf Galaxy on a proforma basis increased 4.7%, or 3.0% after adjusting for the shifted retail calendar.
Current 2007 Outlook
The Company's current outlook for 2007 is based on current expectations and includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act as described later in this release. Although the Company believes that comments reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.
-- Full Year 2007 - (52-Week Year) Comparisons to Fiscal 2006 - (53-Week
Year)
-- We are currently increasing earnings guidance for the full year.
Based on an estimated 58 million shares outstanding, the Company is
increasing its consolidated earnings per diluted share guidance from
the previous estimate of $2.37 - 2.40 to the new estimate of
approximately $2.47 - 2.50. This new range represents an
approximate 23% increase over earnings per diluted share for the
full year 2006 of $2.03 and includes the expected results of Golf
Galaxy, which we continue to expect to be approximately $0.02 per
diluted share accretive for the year.
-- Comparable store sales for Dick's Sporting Goods stores are expected
to increase approximately 2% compared to a 6.0% increase last year.
-- The Company expects to open 45 new Dick's Sporting Goods stores, 16
new Golf Galaxy stores and relocate one Dick's Sporting Goods store
in 2007.
-- Third Quarter 2007
-- Based on an estimated 59 million diluted shares outstanding, the
Company anticipates consolidated earnings per diluted share of
approximately $0.09 - 0.12, as compared to $0.14 in 2006. The year-
over-year comparison is impacted by several factors, including the
shift in the 2007 retail calendar, which positively impacted Q1 and
Q2 this year and is offset in Q3 and Q4. Further, the inclusion of
Golf Galaxy is approximately $0.02 per share dilutive in the third
quarter.
-- Comparable store sales for Dick's Sporting Goods stores are expected
to decrease approximately 1 - 3%, or be approximately flat to down
2%, adjusting for the shifted retail calendar which compares to a
8.9% increase in Q3 last year. Golf Galaxy will be included in the
quarterly comparable store base beginning in Q2 2008, which will be
the first full quarter following the anniversary of the date of
acquisition.
-- The Company expects to open 24 new Dick's Sporting Goods stores and
one new Golf Galaxy store.DICK'S SPORTING GOODS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED(In thousands, except per share data)
13 Weeks Ended-----------------------------------------August 4, % of July 29, % of2007 Sales 2006 Sales----------- ------- --------- -------Net sales $1,013,421 100.00% $734,047 100.00%Cost of goods sold, includingoccupancy and distribution costs 714,761 70.53 526,650 71.75----------- ------- --------- -------GROSS PROFIT 298,660 29.47 207,397 28.25
Selling, general andadministrative expenses 212,747 20.99 159,239 21.69Pre-opening expenses 2,719 0.27 2,451 0.33----------- ------- --------- -------INCOME FROM OPERATIONS 83,194 8.21 45,707 6.23
Interest expense, net 3,629 0.36 2,906 0.40----------- ------- --------- -------INCOME BEFORE INCOME TAXES 79,565 7.85 42,801 5.83
Provision for income taxes 31,635 3.12 17,120 2.33----------- ------- --------- -------NET INCOME $47,930 4.73% $25,681 3.50%=========== ======= ========= =======EARNINGS PER COMMON SHARE:Basic $0.88 $0.51Diluted $0.83 $0.47
WEIGHTED AVERAGE COMMON SHARESOUTSTANDING:Basic 54,290 50,746Diluted 57,764 54,887