DICK’S Sporting Goods (DKS) Q4 2019 earnings summary

Executive summary

• FY2018 diluted EPS was $3.24, up 7.6% YoY, while net income was $319.9M versus $323.4M in FY2017; FY2017 included 53 weeks.

• Net sales declined 1.8% to $8.44B, driven mainly by a 3.2% decrease in comparable sales and the extra week in FY2017; adjusted to a 52-week comparison, comparable sales fell 3.1%.

• eCommerce sales grew ~17% on a 52-week comparable basis and reached ~15% of net sales; private brands delivered double-digit growth and represented ~14% of net sales.

Financial highlights

• Gross profit was $2.44B, down 2.1% YoY; gross margin was 28.90%, down 7 bps. Operating income declined to $444.7M from $477.6M.

• Net income was $319.9M versus $323.4M; diluted EPS rose to $3.24 from $3.01, while the effective tax rate declined to 25.9% from 35.5%.

• SG&A increased 0.2% to $1.99B and rose to 23.55% of sales; pre-opening expense fell to $6.5M from $29.1M as new store openings decreased.

• Operating cash flow was $712.8M, down $33.6M; net cash used in investing was $198.2M and net cash used in financing was $502.1M.

Outlook and guidance

• FY2019 capital expenditures expected at ~$230M gross and ~$200M net, focused on eCommerce fulfillment, technology, stores, and the omni-channel experience.

• Planned FY2019 openings: ~7 Dick's Sporting Goods stores and 2 Golf Galaxy stores; plans also included 3 Dick's and 1 Golf Galaxy relocation, with no new Field & Stream stores.

• Two fulfillment centers planned for Q3 FY2019, supporting delivery of the majority of online orders within two business days by year-end.

• Plans called for removing hunting merchandise from ~125 additional stores and reallocating floor space to regionally relevant, higher-growth categories.