DICK’S Sporting Goods (DKS) Q4 2017 earnings summary

Executive summary

• FY2016 net sales rose 9% to $7.922B and consolidated same-store sales increased 3.5%; GAAP diluted EPS was $2.56 versus $2.83 in FY2015.

• Adjusted diluted EPS was $3.12, excluding $0.56 per share of asset write-downs, impairments, and merger and integration costs; adjusted earnings exceeded full-year guidance.

• Retail-industry disruption and competitor closures supported displaced-share gains; investment priorities included the omni-channel experience, digital capabilities, and store productivity.

Financial highlights

• Net income was $287.4M versus $330.4M; operating income was $449.9M versus $535.2M, while gross profit increased 8% to $2.366B.

• Operating cash flow increased to $759.0M from $643.5M; net cash used in investing activities was $550.3M, including acquisitions and capital expenditures.

• FY2016 eCommerce sales grew approximately 26% to $939M, reaching 11.9% of net sales versus 10.3% in FY2015.

Outlook and guidance

• FY2017 capital expenditures were expected at ~$350M net of tenant allowances and ~$465M gross; plans included ~49 new stores and completion of the Conklin distribution center.

• Private-brand sales were expected to exceed $1B in FY2017; vendor-base reduction of up to 20% was targeted by year-end 2017.

• Operating cash flow and credit-facility availability were expected to fund planned FY2017 capital spending, repurchases, and dividends; the quarterly dividend was raised 12% to $0.17 per share in early 2017.