Dick's Sporting Goods reported earnings rose 27.0 percent in the fourth quarter on a 0.1 percent comp gain. Results came in largely in line with revised expectations given on Jan. 12. At the time, the retailer slightly narrowed its guidance for Q4 earnings and slightly lower its same-store outlook due to the impact of warmer than usual weather seen across the country this winter. For the current years outlook, Dick's Sporting Goods said it expects same store sales to increase approximately 2 to 3 percent compared to a 2.0 percent increase in fiscal 2011.
Fourth Quarter Results
The company reported consolidated net income for the fourth quarter ended January 28, 2012 of $111.1 million, or 88 cents per diluted share, at the high end of the company's revised expectations provided on Jan. 12, 2012 of 87 cents to 88 cents per diluted share. The company reported consolidated non-GAAP net income of $94.0 million, or 76 cents per diluted share, for the fourth quarter ended January 29, 2011, excluding an after-tax charge of $6.5 million, or $0.05 per diluted share, from litigation settlement costs. On a GAAP basis, the company reported consolidated net income for the fourth quarter ended January 29, 2011 of $87.5 million, or 71 cents per diluted share.
Net sales for the fourth quarter of 2011 increased by 6.1 percent to $1.6 billion as compared to the fourth quarter of 2010 due primarily to the growth of the company's store network and a 0.1 percent increase in consolidated same store sales. The consolidated same store sales increase was in line with the company's revised expectations provided on January 12, 2012 and consisted of a 2.5 percent decrease at Dick's Sporting Goods stores, a 9.0 percent increase at Golf Galaxy and a 52.0 percent increase in the company's eCommerce business.
“In the fourth quarter, we generated record earnings, maintained an exceptionally strong balance sheet with our cash balance growing $188 million, initiated our first ever dividend, and announced a 12-month share repurchase program,” said Edward W. Stack, Chairman and CEO. “In 2012, we will continue to build on our momentum as we profitably grow the business with earnings expected to increase approximately 18 to 19 percent, while simultaneously investing in key strategic areas including new stores, eCommerce, inventory management systems and private brands.”
New Stores
In the fourth quarter, the company opened six Dick's Sporting Goods stores. These stores are listed in a table later in the release under the heading “Store Count and Square Footage.”
As of January 28, 2012, the company operated 480 Dick's Sporting Goods stores in 43 states, with approximately 26.3 million square feet and 81 Golf Galaxy stores in 30 states, with approximately 1.3 million square feet.
Balance Sheet
The company ended fiscal 2011 with $734 million in cash and cash equivalents as compared to $546 million at the end of fiscal 2010, and did not have any outstanding borrowings under its revolving credit facility in either period. On December 5, 2011, the company entered into a new five-year credit agreement, which provides for a $500 million revolving credit facility and the ability to increase the aggregate revolving loan commitment by $250 million, subject to certain conditions.
Inventory per square foot was 6.2 percent higher at the end of fiscal 2011 as compared to the end of fiscal 2010. A little more than half of the increase was due to the lower than anticipated sales of cold-weather related product. The remaining increase was in preparation for anticipated spring business and eCommerce growth. Clearance inventory per square foot was down 2.1 percent at the end of fiscal 2011 as compared to the end of fiscal 2010.
Year-to-Date Results
The company reported consolidated non-GAAP net income for the 52 weeks ended January 28, 2012 of $253.9 million, or $2.02 per diluted share. Non-GAAP earnings exclude a gain on sale of investment and the favorable impact of lower litigation settlement costs. For the 52 weeks ended January 29, 2011, the company reported consolidated non-GAAP net income of $198.4 million, or $1.63 per diluted share, which excluded Golf Galaxy store closing costs and litigation settlement costs.
On a GAAP basis, the company reported consolidated net income for the 52 weeks ended January 28, 2012 of $263.9 million, or $2.10 per diluted share, compared to consolidated net income for the 52 weeks ended January 29, 2011 of $182.1 million, or $1.50 per diluted share.
Net sales for the full year 2011 increased 7.0 percent to $5.2 billion as compared to the full year 2010 primarily due to the growth of the company's store network and a 2.0 percent increase in consolidated same store sales.
Dividend
On February 13, 2012, the company's Board of Directors authorized and declared a quarterly dividend in the amount of $0.125 per share on the company's Common Stock and Class B Common Stock. The dividend is payable in cash on March 30, 2012 to stockholders of record at the close of business on March 2, 2012.
Share Repurchase Program
On January 11, 2012, the company's Board of Directors authorized a 12-month share repurchase program of up to $200 million of the company's common stock. The company initiated the program to offset the dilutive effect of the issuance of shares expected in connection with the expiration in 2013 of a substantial number of stock options issued following the company's 2002 initial public offering, which are anticipated to be exercised in 2012. The company will finance the repurchase from cash on hand.
Current 2012 Outlook
Full Year 2012 – (53-Week Year) Comparisons to Fiscal 2011 – (52-Week Year)
- Based on an estimated 126 million diluted shares outstanding, the company currently anticipates reporting consolidated earnings per diluted share of approximately $2.38 to 2.41, which includes approximately $0.03 per diluted share for the 53rd week. For the 52 weeks ended January 28, 2012, the company reported consolidated non-GAAP earnings per diluted share of $2.02, excluding a gain on sale of investment and the favorable impact of lower litigation settlement costs. On a GAAP basis, the company reported consolidated earnings per diluted share of $2.10 in 2011.
- Consolidated same store sales are currently expected to increase approximately 2 to 3 percent on a 52-week to 52-week comparative basis, compared to a 2.0 percent increase in fiscal 2011.
- The company currently expects to open approximately 40 new Dick's Sporting Goods stores and relocate four Dick's Sporting Goods stores in 2012.
First Quarter 2012
- Based on an estimated 126 million diluted shares outstanding, the company currently anticipates reporting consolidated earnings per diluted share of approximately $0.36 to 0.38 in the first quarter of 2012. In the first quarter of 2011, the company reported consolidated earnings per diluted share of $0.30.
- Consolidated same store sales are currently expected to increase approximately 3 to 4 percent in the first quarter of 2012 compared to a 2.1 percent increase in the first quarter of 2011.
- The company expects to open six Dick's Sporting Goods stores and relocate one Dick's Sporting Goods store in the first quarter of 2012.
Capital Expenditures
In 2012, the company anticipates capital expenditures to be approximately $241 million on a gross basis and approximately $190 million on a net basis.
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DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES |
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CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED |
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(In thousands, except per share data) |
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|
13 Weeks Ended |
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|
January 28, |
% of |
January 29, |
% of |
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|
2012 |
Sales |
2011 |
Sales (1) |
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|
Net sales |
$ 1,611,556 |
100.00% |
$ 1,518,914 |
100.00% |
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|
Cost of goods sold, including occupancy |
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and distribution costs |
1,098,785 |
68.18 |
1,039,320 |
68.43 |
||||
|
GROSS PROFIT |
512,771 |
31.82 |
479,594 |
31.57 |
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|
Selling, general and administrative expenses |
326,570 |
20.26 |
332,305 |
21.88 |
||||
|
Pre-opening expenses |
1,876 |
0.12 |
1,298 |
0.09 |
||||
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INCOME FROM OPERATIONS |
184,325 |
11.44 |
145,991 |
9.61 |
||||
|
Interest expense |
3,365 |
0.21 |
3,487 |
0.23 |
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Other income |
(951) |
(0.06) |
(1,058) |
(0.07) |
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INCOME BEFORE INCOME TAXES |
181,911 |
11.29 |
143,562 |
9.45 |
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Provision for income taxes |
70,835 |
4.40 |
56,073 |
3.69 |
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NET INCOME |
$ 111,076 |
6.89% |
$ 87,489 |
5.76% |
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EARNINGS PER COMMON SHARE: |
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|
Basic |
$ 0.92 |
$ 0.74 |
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Diluted |
$ 0.88 |
$ 0.71 |
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WEIGHTED AVERAGE COMMON SHARES |
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OUTSTANDING: |
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|
Basic |
120,928 |
117,952 |
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|
Diluted |
126,316 |
124,063 |
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Store Count and Square Footage
The stores that opened during the fourth quarter of 2011 are as follows:
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DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES |
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|
CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED |
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|
(In thousands, except per share data) |
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|
52 Weeks Ended |
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|
January 28, |
% of |
January 29, |
% of |
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|
2012 |
Sales |
2011 |
Sales |
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|
Net sales |
$ 5,211,802 |
100.00% |
$ 4,871,492 |
100.00% |
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|
Cost of goods sold, including occupancy |
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|
and distribution costs |
3,616,921 |
69.40 |
3,422,462 |
70.25 |
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|
GROSS PROFIT |
1,594,881 |
30.60 |
1,449,030 |
29.75 |
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