Cover Page
Cover Page - shares | 3 Months Ended | |
Apr. 30, 2022 | May 20, 2022 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Apr. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-31463 | |
Entity Registrant Name | DICK’S SPORTING GOODS, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 16-1241537 | |
Entity Address, Address Line One | 345 Court Street | |
Entity Address, City or Town | Coraopolis | |
Entity Address, State or Province | PA | |
Entity Address, Postal Zip Code | 15108 | |
City Area Code | 724 | |
Local Phone Number | 273-3400 | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | DKS | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001089063 | |
Current Fiscal Year End Date | --01-28 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 56,906,652 | |
Class B Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 23,620,633 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 30, 2022 | May 01, 2021 | |
Income Statement [Abstract] | ||
Net sales | $ 2,700,205 | $ 2,918,719 |
Cost of goods sold, including occupancy and distribution costs | 1,715,491 | 1,830,092 |
GROSS PROFIT | 984,714 | 1,088,627 |
Selling, general and administrative expenses | 615,293 | 608,294 |
Pre-opening expenses | 2,900 | 4,524 |
INCOME FROM OPERATIONS | 366,521 | 475,809 |
Interest expense | 25,642 | 13,381 |
Other expense (income) | 9,022 | (7,350) |
INCOME BEFORE INCOME TAXES | 331,857 | 469,778 |
Provision for income taxes | 71,298 | 108,022 |
NET INCOME | $ 260,559 | $ 361,756 |
EARNINGS PER COMMON SHARE: | ||
Basic (in dollars per share) | $ 3.42 | $ 4.27 |
Diluted (in dollars per share) | $ 2.47 | $ 3.41 |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||
Basic (in shares) | 76,181 | 84,750 |
Diluted (in shares) | 108,629 | 106,010 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - UNAUDITED - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2022 | May 01, 2021 | |
Statement of Comprehensive Income [Abstract] | ||
NET INCOME | $ 260,559 | $ 361,756 |
OTHER COMPREHENSIVE (LOSS) INCOME | ||
Foreign currency translation adjustment, net of tax | (7) | 64 |
TOTAL OTHER COMPREHENSIVE (LOSS) INCOME | (7) | 64 |
COMPREHENSIVE INCOME | $ 260,552 | $ 361,820 |
CONSOLIDATED BALANCE SHEETS - U
CONSOLIDATED BALANCE SHEETS - UNAUDITED - USD ($) $ in Thousands | Apr. 30, 2022 | Jan. 29, 2022 | May 01, 2021 |
CURRENT ASSETS: | |||
Cash and cash equivalents | $ 2,251,338 | $ 2,643,205 | $ 1,858,737 |
Accounts receivable, net | 76,253 | 68,263 | 67,145 |
Income taxes receivable | 1,639 | 1,978 | 2,803 |
Inventories, net | 2,824,832 | 2,297,609 | 2,012,054 |
Prepaid expenses and other current assets | 102,603 | 95,601 | 100,586 |
Total current assets | 5,256,665 | 5,106,656 | 4,041,325 |
Property and equipment, net | 1,305,137 | 1,319,681 | 1,319,774 |
Operating lease assets | 2,048,151 | 2,044,819 | 2,150,664 |
Intangible assets, net | 86,160 | 86,767 | 89,119 |
Goodwill | 245,857 | 245,857 | 245,857 |
Deferred income taxes | 66,080 | 35,024 | 47,491 |
Other assets | 211,750 | 202,872 | 172,350 |
TOTAL ASSETS | 9,219,800 | 9,041,676 | 8,066,580 |
CURRENT LIABILITIES: | |||
Accounts payable | 1,491,931 | 1,281,322 | 1,239,503 |
Accrued expenses | 462,085 | 620,143 | 499,071 |
Operating lease liabilities | 476,343 | 480,318 | 468,318 |
Income taxes payable | 80,023 | 13,464 | 141,868 |
Deferred revenue and other liabilities | 292,457 | 317,433 | 238,751 |
Total current liabilities | 2,802,839 | 2,712,680 | 2,587,511 |
LONG-TERM LIABILITIES: | |||
Revolving credit borrowings | 0 | 0 | 0 |
Senior notes due 2032 and 2052 | 1,481,664 | 1,481,443 | 0 |
Convertible senior notes due 2025 | 466,026 | 449,287 | 425,799 |
Long-term operating lease liabilities | 2,095,314 | 2,099,146 | 2,253,883 |
Other long-term liabilities | 179,351 | 197,534 | 200,663 |
Total long-term liabilities | 4,222,355 | 4,227,410 | 2,880,345 |
Commitments and contingencies | |||
STOCKHOLDERS' EQUITY: | |||
Additional paid-in capital | 1,368,211 | 1,488,834 | 1,448,892 |
Retained earnings | 4,212,451 | 3,956,602 | 3,394,067 |
Accumulated other comprehensive (loss) income | (89) | (82) | 15 |
Treasury stock, at cost | (3,386,747) | (3,344,524) | (2,245,097) |
Total stockholders' equity | 2,194,606 | 2,101,586 | 2,598,724 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 9,219,800 | 9,041,676 | 8,066,580 |
Common Stock | |||
STOCKHOLDERS' EQUITY: | |||
Common stock | 544 | 520 | 610 |
Class B Common Stock | |||
STOCKHOLDERS' EQUITY: | |||
Common stock | $ 236 | $ 236 | $ 237 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Common StockCommon Stock | Common StockClass B Common Stock | Additional Paid-In Capital | Additional Paid-In CapitalCumulative Effect, Period of Adoption, Adjustment | Retained Earnings | Retained EarningsCumulative Effect, Period of Adoption, Adjustment | Accumulated Other Comprehensive (Loss) Income | Treasury Stock |
BALANCE (in shares) at Jan. 30, 2021 | 61,195,000 | 23,736,000 | ||||||||
BALANCE at Jan. 30, 2021 | $ 2,339,534 | $ 612 | $ 237 | $ 1,442,298 | $ 3,064,702 | $ (49) | $ (2,168,266) | |||
Increase (Decrease) in Stockholders' Equity | ||||||||||
Exercise of stock options (in shares) | 297,000 | |||||||||
Exercise of stock options | 12,333 | $ 3 | 12,330 | |||||||
Restricted stock vested (in shares) | 791,000 | |||||||||
Restricted stock vested | 0 | $ 8 | (8) | |||||||
Minimum tax withholding requirements (in shares) | (237,000) | |||||||||
Minimum tax withholding requirements | (18,601) | $ (3) | (18,598) | |||||||
Net income | 361,756 | 361,756 | ||||||||
Stock-based compensation | 12,870 | 12,870 | ||||||||
Foreign currency translation adjustment, net of taxes | 64 | 64 | ||||||||
Purchase of shares for treasury (in shares) | (1,030,000) | |||||||||
Purchase of shares for treasury | (76,841) | $ (10) | (76,831) | |||||||
Cash dividend declared | (32,391) | (32,391) | ||||||||
BALANCE at May. 01, 2021 | 2,598,724 | $ 610 | $ 237 | 1,448,892 | 3,394,067 | 15 | (2,245,097) | |||
BALANCE (in shares) at May. 01, 2021 | 61,016,000 | 23,736,000 | ||||||||
BALANCE (in shares) at Jan. 29, 2022 | 51,989,000 | 23,621,000 | ||||||||
BALANCE at Jan. 29, 2022 | 2,101,586 | $ (84,729) | $ 520 | $ 236 | 1,488,834 | $ (118,961) | 3,956,602 | $ 34,232 | (82) | (3,344,524) |
Increase (Decrease) in Stockholders' Equity | ||||||||||
Net Shares Issued for April 2022 Exchange | 1,833,000 | |||||||||
Exchange of convertible senior notes due 2025 and partial unwind of convertible bond hedge and warrants | 3,811 | $ 18 | 3,793 | |||||||
Exercise of stock options (in shares) | 389,000 | |||||||||
Exercise of stock options | 12,665 | $ 4 | 12,661 | |||||||
Restricted stock vested (in shares) | 933,000 | |||||||||
Restricted stock vested | 0 | $ 9 | (9) | |||||||
Minimum tax withholding requirements (in shares) | (332,000) | |||||||||
Minimum tax withholding requirements | (33,287) | $ (3) | (33,284) | |||||||
Net income | 260,559 | 260,559 | ||||||||
Stock-based compensation | 15,177 | 15,177 | ||||||||
Foreign currency translation adjustment, net of taxes | (7) | (7) | ||||||||
Purchase of shares for treasury (in shares) | (417,000) | |||||||||
Purchase of shares for treasury | (42,227) | $ (4) | (42,223) | |||||||
Cash dividend declared | (38,942) | (38,942) | ||||||||
BALANCE at Apr. 30, 2022 | $ 2,194,606 | $ 544 | $ 236 | $ 1,368,211 | $ 4,212,451 | $ (89) | $ (3,386,747) | |||
BALANCE (in shares) at Apr. 30, 2022 | 54,395,000 | 23,621,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2022 | May 01, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 260,559 | $ 361,756 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 79,673 | 78,366 |
Amortization of deferred financing fees and debt discount | 1,371 | 7,306 |
Deferred income taxes | (1,791) | 3,984 |
Stock-based compensation | 15,177 | 12,870 |
Other, net | 264 | 0 |
Changes in assets and liabilities: | ||
Accounts receivable | (17,435) | (12,439) |
Inventories | (527,223) | (58,486) |
Prepaid expenses and other assets | (6,138) | (9,603) |
Accounts payable | 237,076 | 38,057 |
Accrued expenses | (132,185) | (44,310) |
Income taxes payable / receivable | 66,898 | 104,464 |
Construction allowances provided by landlords | 19,891 | 13,902 |
Deferred revenue and other liabilities | (35,047) | (21,240) |
Operating lease assets and liabilities | (21,391) | (27,276) |
Net cash (used in) provided by operating activities | (60,301) | 447,351 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Capital expenditures | (73,783) | (71,097) |
Proceeds from sale of other assets | 14,261 | 0 |
Deposits and other investing activities | (10,780) | (2,338) |
Net cash used in investing activities | (70,302) | (73,435) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Principal paid in connection with exchange of convertible senior notes due 2025 | (100,000) | 0 |
Payments on other long-term debt and finance lease obligations | (178) | (220) |
Proceeds from exercise of stock options | 12,665 | 12,333 |
Minimum tax withholding requirements | (33,287) | (18,601) |
Cash paid for treasury stock | (67,909) | (76,841) |
Cash dividends paid to stockholders | (46,081) | (33,334) |
Decrease in bank overdraft | (26,467) | (56,647) |
Net cash used in financing activities | (261,257) | (173,310) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (7) | 64 |
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (391,867) | 200,670 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 2,643,205 | 1,658,067 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 2,251,338 | 1,858,737 |
Supplemental disclosure of cash flow information: | ||
Accrued property and equipment | 33,959 | 52,228 |
Cash paid for interest | 9,792 | 10,375 |
Cash paid for income taxes | 6,236 | 3,249 |
Accrued treasury stock | $ 6,051 | $ 0 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED - Parentheticals - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 30, 2022 | May 01, 2021 | |
Statement of Stockholders' Equity [Abstract] | ||
Foreign currency translation adjustment, taxes | $ 2 | $ (20) |
Cash dividend declared per share (in dollars per share) | $ 0.4875 | $ 0.3625 |
Description of Business and Bas
Description of Business and Basis of Presentation | 3 Months Ended |
Apr. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Basis of Presentation | Description of Business and Basis of Presentation DICK’S Sporting Goods, Inc. (together with its subsidiaries, referred to as “the Company”, “we”, “us” and “our” unless specified otherwise) is a leading omni-channel sporting goods retailer offering an extensive assortment of authentic, high-quality sports equipment, apparel, footwear and accessories through a blend of dedicated teammates, in-store services and unique specialty shop-in-shops. In addition to DICK’S Sporting Goods stores, the Company also owns and operates Golf Galaxy, Field & Stream, Public Lands and Going Going Gone! stores, and offers its products both online and through mobile apps. The Company also owns and operates DICK’S House of Sport and Golf Galaxy Performance Center, as well as GameChanger, a youth sports mobile app for video streaming, scorekeeping, scheduling and communications. When used in this Quarterly Report on Form 10-Q, unless the context otherwise requires or otherwise specifies, any reference to a “year” is to the Company’s fiscal year. Basis of Presentation and Use of Estimates The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the requirements for Quarterly Reports on Form 10-Q and do not include all the disclosures normally required in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The interim consolidated financial statements are unaudited and have been prepared on the same basis as the annual audited consolidated financial statements. In the opinion of management, such unaudited consolidated financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the interim financial information. The unaudited interim financial information should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended January 29, 2022 as filed with the Securities and Exchange Commission on March 23, 2022. Operating results for the 13 weeks ended April 30, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending January 28, 2023 or any other period. Recently Adopted Accounting Pronouncements Convertible Instruments In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, “ Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) ,” which removes the separation models for convertible debt with cash conversion or beneficial conversion features. ASU 2020-06 also requires the application of the if-converted method for calculating earnings per diluted share, under which the Company must assume that any conversion of the Convertible Senior Notes will be satisfied entirely in common stock . The Company adopted ASU 2020-06 on the first day of fiscal 2022 using the modified retrospective approach, which resulted in the following adjustments to the Consolidated Balance Sheet (in millions) : Last Day of Fiscal 2021 Adoption of ASU 2020-06 First Day of Fiscal 2022 Balance sheet line item Convertible senior notes due 2025 $ 449.3 $ 114.0 $ 563.3 Net deferred tax assets $ 35.0 $ 29.3 $ 64.3 Additional paid-in capital $ 1,488.8 $ (119.0) $ 1,369.8 Retained earnings $ 3,956.6 $ 34.2 $ 3,990.8 Following the adoption of ASU 2020-06, the embedded conversion feature of the Convertible Senior Notes is no longer separately presented within stockholders’ equity, eliminating the non-cash debt discount. Accordingly, the Company’s effective interest rate on the Convertible Senior Notes decreased from 11.6% to 3.9% upon adoption, resulting in a $6.5 million reduction in non-cash interest expense for the 13 weeks ended April 30, 2022 as compared to the prior year quarter. The Company anticipates that fiscal 2022 earnings will not include $27.4 million of pre-tax non-cash interest expense that was incurred in fiscal 2021. Despite the Company’s intention to settle the principal amount of the Convertible Senior Notes in cash, the application of the if-converted method requires earnings per diluted share to reflect the assumed share conversion of the Convertible Senior Notes, which was 14.6 million dilutive shares as of April 30, 2022. The Company used the treasury stock method prior to adoption of ASU 2020-06. The impact of adoption was not material to earnings per diluted share. Recently Issued Accounting Pronouncements Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, “ Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. |
Earnings Per Common Share
Earnings Per Common Share | 3 Months Ended |
Apr. 30, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Common Share | Earnings Per Common Share Basic earnings per common share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed based on the weighted average number of shares of common stock outstanding, plus the effect of dilutive potential common shares, which include shares the Company could be obligated to issue from its Convertible Senior Notes and warrants, and stock-based awards, such as stock options and restricted stock. Dilutive potential common shares are excluded from the computation of earnings per share if their effect is anti-dilutive. For both periods presented, dilutive potential common shares for the Company’s stock-based awards and warrants were determined using the treasury stock method. For the period ended May 1, 2021, the dilutive effect of the Convertible Senior Notes was calculated using the treasury stock method; however, upon the adoption of ASU 2020-06, the Company was required to calculate diluted earnings per diluted share using the if-converted method, which was applied to the period ended April 30, 2022. See Note 1–Description of Business and Basis of Presentation for further discussion. The computations for basic and diluted earnings per common share were as follows for the periods presented ( in thousands, except per share data): 13 Weeks Ended April 30, May 1, Numerator: Numerator for basic earnings per common share - Net income $ 260,559 $ 361,756 Effect of dilutive securities Interest expense associated with Convertible Senior Notes, net of tax 8,209 — Numerator for diluted earnings per common share - Net income after the effect of dilutive securities $ 268,768 $ 361,756 Denominator: Weighted average common shares outstanding - basic 76,181 84,750 Dilutive effect of stock-based awards 6,030 6,407 Dilutive effect of Convertible Senior Notes 17,080 9,214 Dilutive effect of warrants 9,338 5,639 Weighted average common shares outstanding - diluted 108,629 106,010 Earnings per common share: Basic $ 3.42 $ 4.27 Diluted $ 2.47 $ 3.41 Stock-based awards excluded from diluted shares 13 162 For the 13 weeks ended April 30, 2022 and May 1, 2021, the dilutive effect of the Convertible Senior Notes included approximately 11.9 million and 9.2 million shares, respectively, that are designed to be offset at settlement by shares delivered from the bond hedge purchased by the Company. The shares provided by the bond hedge are anti-dilutive; accordingly, they are not treated as a reduction to diluted weighted average shares outstanding for any periods presented. In addition, the dilutive effect of the Convertible Senior Notes for the 13 weeks ended April 30, 2022 included approximately 5.2 million shares related to the principal amount of the Convertible Senior Notes, which the Company intends to settle in cash. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Apr. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Accounting Standard Codification (“ASC”) 820, “Fair Value Measurement and Disclosures,” outlines a valuation framework and creates a fair value hierarchy for assets and liabilities as follows: Level 1: Observable inputs such as quoted prices in active markets; Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. Recurring The Company measures its deferred compensation plan assets held in trust at fair value on a recurring basis using Level 1 inputs. Such assets consist of investments in various mutual funds made by eligible individuals as part of the Company’s deferred compensation plans. As of April 30, 2022, January 29, 2022 and May 1, 2021 the fair value of the Company’s deferred compensation plans was $150.2 million, $150.8 million, and $142.1 million, respectively, as determined by quoted prices in active markets. The Company discloses the fair value of its senior notes due 2032 and 2052 and Convertible Senior Notes using Level 2 inputs, which are based on quoted prices for similar or identical instruments in inactive markets, as follows (in millions) : April 30, 2022 January 29, 2022 May 1, 2021 Carrying Value Fair Value Carrying Value Fair Value Carrying Value Fair Value Convertible Senior Notes $ 466.0 $ 1,425.5 $ 449.3 $ 2,016.3 $ 425.8 $ 1,411.2 Senior notes due 2032 $ 741.9 $ 630.1 $ 741.7 $ 733.1 $ — $ — Senior notes due 2052 $ 739.8 $ 545.6 $ 739.7 $ 711.3 $ — $ — Prior to the adoption of ASU 2020-06, the carrying value of the Convertible Senior Notes excluded amounts classified within additional paid-in capital and any unamortized discounts as of January 29, 2022 and May 1, 2021. See Note 1–Description of Business and Basis of Presentation for further information. Due to their short-term nature, the fair value of cash and cash equivalents, accounts receivable, accounts payable and certain other liabilities approximated their carrying values at April 30, 2022, January 29, 2022, and May 1, 2021. Nonrecurring Assets and liabilities recognized or disclosed at fair value on a nonrecurring basis may include property and equipment, goodwill and other intangible assets, equity and other assets. These assets are required to be assessed for impairment when events or circumstances indicate that the carrying value may not be recoverable, and at least annually, for goodwill and indefinite-lived intangible assets. In the event that an impairment is required, the asset is adjusted to fair value, using Level 3 inputs. |
Leases
Leases | 3 Months Ended |
Apr. 30, 2022 | |
Leases [Abstract] | |
Leases | Leases The Company leases all of its stores, three of its distribution centers and certain equipment under non-cancellable operating leases that expire at various dates through 2033. The Company’s stores generally have initial lease terms of 10 to 15 years and contain multiple five-year renewal options and rent escalation provisions. The lease agreements are primarily for the payment of minimum annual rentals, costs of utilities, property taxes, maintenance, common areas and insurance. Supplemental cash flow information related to operating leases for the 13 weeks ended April 30, 2022 and May 1, 2021 were as follows ( in millions ): 13 Weeks Ended April 30, May 1, Cash paid for amounts included in the measurement of operating lease liabilities $ 165.8 $ 171.6 Non-cash operating lease assets and liabilities obtained in exchange for new or modified leases $ 121.6 $ 118.1 |
Convertible Senior Notes
Convertible Senior Notes | 3 Months Ended |
Apr. 30, 2022 | |
Debt Disclosure [Abstract] | |
Convertible Senior Notes | Convertible Senior Notes Overview In April 2020, the Company issued an aggregate $575.0 million of 3.25% convertible senior notes due 2025, which included the exercise of the full $75.0 million over-allotment option, receiving proceeds of $557.6 million, net of $17.4 million of transaction fees and other third-party offering expenses. The Convertible Senior Notes are scheduled to mature on April 15, 2025 and accrue interest at a rate of 3.25% per annum, payable semi-annually in arrears on April 15 and October 15. As of April 30, 2022, the conversion rate for the Convertible Senior Notes was 30.6413, which represents a conversion price of $32.64 per share. The difference between the initial conversion rate and the conversion rate as of April 30, 2022 is due to dividends that have been declared and paid on shares of the Company’s common stock following the issuance of the Convertible Senior Notes. Upon conversion, the Company may settle the Convertible Senior Notes for cash, shares of the Company’s stock, or a combination thereof, at the Company’s option. The Company also has the ability to irrevocably elect to settle the Convertible Senior Notes in cash without amending the indentures or the Convertible Senior Notes themselves. The Company currently intends to settle the principal amount of the Convertible Senior Notes in cash and any conversion premium in shares of its common stock. April 2022 Exchange In April 2022, the Company entered into agreements (the “Exchange Agreements”) with certain holders of the Convertible Senior Notes (the “Noteholders”), to exchange $100.0 million in aggregate principal amount of the Convertible Senior Notes for a combination of cash and shares of the Company’s common stock, plus payment for accrued and unpaid interest (the “Note Exchange”). Concurrently with the Exchange Agreements, the Company entered into agreements with certain counterparties (“the counterparties”) to terminate a proportionate amount of the convertible bond hedge and warrant agreements that were entered into by the Company in April 2020 in connection with the issuance of the Convertible Senior Notes. In connection with these transactions (collectively, the “April 2022 Exchange”), the Company recognized a pre-tax inducement charge of approximately $5.8 million in the first quarter of 2022, which was recorded within interest expense on the consolidated statement of income, paid cash to Noteholders of $100.0 million to redeem the principal amount of the Convertible Senior Notes with a carrying value of $98.1 million, and issued approximately 1.8 million shares of the Company's common stock. Following the April 2022 Exchange, approximately $475.0 million aggregate principal amount of the Convertible Senior Notes remain outstanding at April 30, 2022. In addition, approximately 14.6 million shares underlie the Convertible Senior Notes, the convertible bond hedge and the warrants at April 30, 2022. Financial Statement Impacts As discussed in Note 1, following the adoption of ASU 2020-06, the Convertible Senior Notes are recorded entirely as a liability. A summary of the composition of the net carrying value of the Convertible Senior Notes is as follows: (in millions) April 30, 2022 January 29, 2022 May 1, 2021 Principal $ 475.0 $ 575.0 $ 575.0 Debt discount $ (9.0) $ (125.7) $ (149.2) Carrying amount $ 466.0 $ 449.3 $ 425.8 Equity component (*) N/A $ 160.7 $ 160.7 (*) Included in additional paid-in capital on the Consolidated Balance Sheets as of January 29, 2022 and May 1, 2021. During the 13 weeks ended April 30, 2022, the Company recognized $11.1 million of interest expense related to the Convertible Senior Notes, or $8.2 million, net of tax, which included the aforementioned inducement charge and $0.8 million of non-cash amortization of the debt discount. During the 13 weeks ended May 1, 2021, the Company recognized $12.0 million of interest expense related to the Convertible Senior Notes, of which $7.3 million was attributed to non-cash amortization of the debt discount. At April 30, 2022, the stock price conditions under which the Convertible Senior Notes could be convertible at the holders’ option were met. The Company has not received any material conversion requests through the filing date of this Form 10-Q. Because the closing price of the Company’s common stock of $96.42 at the end of the current quarter exceeded the conversion price of $32.64, the if-converted value exceeded the principal amount outstanding of the Convertible Senior Notes by approximately $928.4 million at April 30, 2022. |
Subsequent Event
Subsequent Event | 3 Months Ended |
Apr. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Event | Subsequent EventOn May 24, 2022, the Company's Board of Directors authorized and declared a quarterly cash dividend in the amount of $0.4875 per share on the Company's common stock and Class B common stock. The dividend is payable on June 24, 2022 to stockholders of record as of the close of business on June 10, 2022. |
Description of Business and B_2
Description of Business and Basis of Presentation (Policies) | 3 Months Ended |
Apr. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Recently Adopted Accounting Pronouncements / Recently Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements Convertible Instruments In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, “ Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) ,” which removes the separation models for convertible debt with cash conversion or beneficial conversion features. ASU 2020-06 also requires the application of the if-converted method for calculating earnings per diluted share, under which the Company must assume that any conversion of the Convertible Senior Notes will be satisfied entirely in common stock . The Company adopted ASU 2020-06 on the first day of fiscal 2022 using the modified retrospective approach, which resulted in the following adjustments to the Consolidated Balance Sheet (in millions) : Last Day of Fiscal 2021 Adoption of ASU 2020-06 First Day of Fiscal 2022 Balance sheet line item Convertible senior notes due 2025 $ 449.3 $ 114.0 $ 563.3 Net deferred tax assets $ 35.0 $ 29.3 $ 64.3 Additional paid-in capital $ 1,488.8 $ (119.0) $ 1,369.8 Retained earnings $ 3,956.6 $ 34.2 $ 3,990.8 Following the adoption of ASU 2020-06, the embedded conversion feature of the Convertible Senior Notes is no longer separately presented within stockholders’ equity, eliminating the non-cash debt discount. Accordingly, the Company’s effective interest rate on the Convertible Senior Notes decreased from 11.6% to 3.9% upon adoption, resulting in a $6.5 million reduction in non-cash interest expense for the 13 weeks ended April 30, 2022 as compared to the prior year quarter. The Company anticipates that fiscal 2022 earnings will not include $27.4 million of pre-tax non-cash interest expense that was incurred in fiscal 2021. Despite the Company’s intention to settle the principal amount of the Convertible Senior Notes in cash, the application of the if-converted method requires earnings per diluted share to reflect the assumed share conversion of the Convertible Senior Notes, which was 14.6 million dilutive shares as of April 30, 2022. The Company used the treasury stock method prior to adoption of ASU 2020-06. The impact of adoption was not material to earnings per diluted share. Recently Issued Accounting Pronouncements Reference Rate Reform In March 2020, the FASB issued ASU 2020-04, “ Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. |
Description of Business and B_3
Description of Business and Basis of Presentation (Tables) | 3 Months Ended |
Apr. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Accounting Standards Update and Change in Accounting Principle | The Company adopted ASU 2020-06 on the first day of fiscal 2022 using the modified retrospective approach, which resulted in the following adjustments to the Consolidated Balance Sheet (in millions) : Last Day of Fiscal 2021 Adoption of ASU 2020-06 First Day of Fiscal 2022 Balance sheet line item Convertible senior notes due 2025 $ 449.3 $ 114.0 $ 563.3 Net deferred tax assets $ 35.0 $ 29.3 $ 64.3 Additional paid-in capital $ 1,488.8 $ (119.0) $ 1,369.8 Retained earnings $ 3,956.6 $ 34.2 $ 3,990.8 |
Earnings Per Common Share (Tabl
Earnings Per Common Share (Table) | 3 Months Ended |
Apr. 30, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of the computations for basic and diluted earnings per common share | The computations for basic and diluted earnings per common share were as follows for the periods presented ( in thousands, except per share data): 13 Weeks Ended April 30, May 1, Numerator: Numerator for basic earnings per common share - Net income $ 260,559 $ 361,756 Effect of dilutive securities Interest expense associated with Convertible Senior Notes, net of tax 8,209 — Numerator for diluted earnings per common share - Net income after the effect of dilutive securities $ 268,768 $ 361,756 Denominator: Weighted average common shares outstanding - basic 76,181 84,750 Dilutive effect of stock-based awards 6,030 6,407 Dilutive effect of Convertible Senior Notes 17,080 9,214 Dilutive effect of warrants 9,338 5,639 Weighted average common shares outstanding - diluted 108,629 106,010 Earnings per common share: Basic $ 3.42 $ 4.27 Diluted $ 2.47 $ 3.41 Stock-based awards excluded from diluted shares 13 162 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Apr. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of carrying values and estimated fair values of debt instruments | The Company discloses the fair value of its senior notes due 2032 and 2052 and Convertible Senior Notes using Level 2 inputs, which are based on quoted prices for similar or identical instruments in inactive markets, as follows (in millions) : April 30, 2022 January 29, 2022 May 1, 2021 Carrying Value Fair Value Carrying Value Fair Value Carrying Value Fair Value Convertible Senior Notes $ 466.0 $ 1,425.5 $ 449.3 $ 2,016.3 $ 425.8 $ 1,411.2 Senior notes due 2032 $ 741.9 $ 630.1 $ 741.7 $ 733.1 $ — $ — Senior notes due 2052 $ 739.8 $ 545.6 $ 739.7 $ 711.3 $ — $ — |
Leases (Table)
Leases (Table) | 3 Months Ended |
Apr. 30, 2022 | |
Leases [Abstract] | |
Other information related to operating leases | Supplemental cash flow information related to operating leases for the 13 weeks ended April 30, 2022 and May 1, 2021 were as follows ( in millions ): 13 Weeks Ended April 30, May 1, Cash paid for amounts included in the measurement of operating lease liabilities $ 165.8 $ 171.6 Non-cash operating lease assets and liabilities obtained in exchange for new or modified leases $ 121.6 $ 118.1 |
Convertible Senior Notes (Table
Convertible Senior Notes (Table) | 3 Months Ended |
Apr. 30, 2022 | |
Debt Disclosure [Abstract] | |
Summary of the principal, unamortized debt discount including debt issuance costs, and net carrying value of the liability component of the Convertible Senior Notes | As discussed in Note 1, following the adoption of ASU 2020-06, the Convertible Senior Notes are recorded entirely as a liability. A summary of the composition of the net carrying value of the Convertible Senior Notes is as follows: (in millions) April 30, 2022 January 29, 2022 May 1, 2021 Principal $ 475.0 $ 575.0 $ 575.0 Debt discount $ (9.0) $ (125.7) $ (149.2) Carrying amount $ 466.0 $ 449.3 $ 425.8 Equity component (*) N/A $ 160.7 $ 160.7 (*) Included in additional paid-in capital on the Consolidated Balance Sheets as of January 29, 2022 and May 1, 2021. |
Description of Business and B_4
Description of Business and Basis of Presentation (Details) - USD ($) $ in Thousands, shares in Millions | 3 Months Ended | |||
Apr. 30, 2022 | Jan. 30, 2022 | Jan. 29, 2022 | May 01, 2021 | |
New Accounting Pronouncements or Change in Accounting Principle | ||||
Convertible senior notes due 2025 | $ 466,026 | $ 449,287 | $ 425,799 | |
Net deferred tax assets | 66,080 | 35,024 | 47,491 | |
Additional paid-in capital | 1,368,211 | 1,488,834 | 1,448,892 | |
Retained earnings | $ 4,212,451 | $ 3,956,602 | $ 3,394,067 | |
Convertible Senior Notes | ||||
New Accounting Pronouncements or Change in Accounting Principle | ||||
Interest rate, effective percentage | 11.60% | |||
Convertible Bond Hedge and Warrant Transactions | ||||
New Accounting Pronouncements or Change in Accounting Principle | ||||
Number of securities called by warrants or rights (in shares) | 14.6 | |||
Accounting Standards Update 2020-06 | ||||
New Accounting Pronouncements or Change in Accounting Principle | ||||
Pre-Tax non-cash interest expense excluded from earnings | $ 27,400 | |||
Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2020-06 | ||||
New Accounting Pronouncements or Change in Accounting Principle | ||||
Convertible senior notes due 2025 | $ 114,000 | |||
Net deferred tax assets | 29,300 | |||
Additional paid-in capital | (119,000) | |||
Retained earnings | 34,200 | |||
Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2020-06 | Convertible Senior Notes | ||||
New Accounting Pronouncements or Change in Accounting Principle | ||||
Reduction in non-cash interest expense for period presented | $ 6,500 | |||
Cumulative Effect, Period of Adoption, Adjusted Balance | ||||
New Accounting Pronouncements or Change in Accounting Principle | ||||
Convertible senior notes due 2025 | 563,300 | |||
Net deferred tax assets | 64,300 | |||
Additional paid-in capital | 1,369,800 | |||
Retained earnings | $ 3,990,800 | |||
Cumulative Effect, Period of Adoption, Adjusted Balance | Accounting Standards Update 2020-06 | Convertible Senior Notes | ||||
New Accounting Pronouncements or Change in Accounting Principle | ||||
Interest rate, effective percentage | 3.90% |
Earnings Per Common Share (Deta
Earnings Per Common Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 30, 2022 | May 01, 2021 | |
Earnings Per Share [Abstract] | ||
Net income | $ 260,559 | $ 361,756 |
Interest expense associated with Convertible Senior Notes, net of tax | 8,209 | 0 |
Numerator for diluted earnings per common share - Net income after the effect of dilutive securities | $ 268,768 | $ 361,756 |
Weighted average common shares outstanding - basic (in shares) | 76,181 | 84,750 |
Dilutive effect of stock-based awards (in shares) | 6,030 | 6,407 |
Dilutive effect of Convertible Senior Notes (in shares) | 17,080 | 9,214 |
Dilutive effect of warrants (in shares) | 9,338 | 5,639 |
Weighted average common shares outstanding - diluted (in shares) | 108,629 | 106,010 |
Earnings per common share (in dollars per share) - basic | $ 3.42 | $ 4.27 |
Earnings per common share (in dollars per share) - diluted | $ 2.47 | $ 3.41 |
Stock-based awards excluded from diluted shares | ||
Dilutive effect of Convertible Senior Notes (in shares) | 17,080 | 9,214 |
Number of shares necessary to settle the principle amount of the Company’s Convertible Senior Notes | 5,200 | |
Incremental common shares attributable to convertible debt, excluding principal | 11,900 | |
Share-based Payment Arrangement | ||
Stock-based awards excluded from diluted shares | ||
Stock-based awards excluded from diluted shares (in shares) | 13 | 162 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions | Apr. 30, 2022 | Jan. 29, 2022 | May 01, 2021 |
Level 1 | |||
Fair Value Measurements | |||
Deferred compensation plan assets held in trust | $ 150.2 | $ 150.8 | $ 142.1 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Carrying and Estimated Fair Value (Details) - USD ($) $ in Thousands | Apr. 30, 2022 | Jan. 29, 2022 | May 01, 2021 |
Carrying Value | |||
Convertible Senior Notes | $ 466,026 | $ 449,287 | $ 425,799 |
Senior notes | 1,481,664 | 1,481,443 | 0 |
Fair Value, Recurring | Convertible Senior Notes | |||
Carrying Value | |||
Convertible Senior Notes | 466,000 | 449,300 | 425,800 |
Fair Value, Recurring | Convertible Senior Notes | Level 2 | |||
Fair Value | |||
Convertible Senior Notes | 1,425,500 | 2,016,300 | 1,411,200 |
Fair Value, Recurring | Senior notes due 2032 | |||
Carrying Value | |||
Senior notes | 741,900 | 741,700 | 0 |
Fair Value, Recurring | Senior notes due 2032 | Level 2 | |||
Fair Value | |||
Senior notes | 630,100 | 733,100 | 0 |
Fair Value, Recurring | Senior notes due 2052 | |||
Carrying Value | |||
Senior notes | 739,800 | 739,700 | 0 |
Fair Value, Recurring | Senior notes due 2052 | Level 2 | |||
Fair Value | |||
Senior notes | $ 545,600 | $ 711,300 | $ 0 |
Leases (Details)
Leases (Details) $ in Thousands | 3 Months Ended | |
Apr. 30, 2022USD ($)DistributionCenter | May 01, 2021USD ($) | |
Leases | ||
Number of distribution centers leased | DistributionCenter | 3 | |
Additional renewal period | 5 years | |
Cash paid for amounts included in the measurement of operating lease liabilities | $ 165,800 | $ 171,600 |
Non-cash operating lease assets and liabilities obtained in exchange for new or modified leases | $ 121,600 | $ 118,100 |
Minimum | ||
Leases | ||
Initial tenure of operating leases | 10 years | |
Maximum | ||
Leases | ||
Initial tenure of operating leases | 15 years |
Convertible Senior Notes - Narr
Convertible Senior Notes - Narrative (Details) - USD ($) $ / shares in Units, shares in Millions | Apr. 17, 2020 | Apr. 30, 2022 | May 01, 2021 | Jan. 29, 2022 |
Convertible Senior Notes | ||||
Amortization of deferred financing fees and debt discount | $ 1,371,000 | $ 7,306,000 | ||
Closing price of the Company's common stock at the end of the first fiscal quarter in 2022 (in dollars per share) | $ 96.42 | |||
Interest expense associated with Convertible Senior Notes, net of tax | $ 8,209,000 | 0 | ||
Convertible Senior Notes | ||||
Convertible Senior Notes | ||||
Principal | $ 575,000,000 | |||
Interest rate, stated percentage | 3.25% | |||
Over allotment option | $ 75,000,000 | |||
Proceeds from debt, net of issuance costs | 557,600,000 | |||
Debt issuance costs | $ 17,400,000 | |||
Conversion ratio | 3064.13% | |||
Conversion price (in dollars per share) | $ 32.64 | |||
April 2022, Exchanges Agreement | ||||
Convertible Senior Notes | ||||
Principal | $ 100,000,000 | |||
Inducement charge | 5,800,000 | |||
Carrying value of Convertible Senior Notes exchanged | $ 98,100,000 | |||
Net Shares Issued for April 2022 Exchange | 1.8 | |||
Conversion options for Convertible Senior Notes | ||||
Convertible Senior Notes | ||||
Principal | $ 475,000,000 | 575,000,000 | $ 575,000,000 | |
Conversion price (in dollars per share) | $ 32.64 | |||
Interest expenses related to Convertible Senior Notes | $ 11,100,000 | 12,000,000 | ||
Amortization of deferred financing fees and debt discount | 800,000 | $ 7,300,000 | ||
Amount in which the if-converted value exceeds the principal amount | $ 928,400,000 | |||
Convertible Bond Hedge and Warrant Transactions | ||||
Convertible Senior Notes | ||||
Number of securities called by warrants or rights (in shares) | 14.6 |
Convertible Senior Notes - Summ
Convertible Senior Notes - Summary of the Composition of net carrying values of the liability and equity components of the Convertible Senior Notes (Details) - USD ($) | Apr. 30, 2022 | Jan. 29, 2022 | May 01, 2021 |
Convertible Senior Notes | |||
Carrying amount | $ 466,026,000 | $ 449,287,000 | $ 425,799,000 |
Convertible Senior Notes Due 2025 | |||
Convertible Senior Notes | |||
Principal | 475,000,000 | 575,000,000 | 575,000,000 |
Debt discount | (9,000,000) | (125,700,000) | (149,200,000) |
Carrying amount | $ 466,000,000 | 449,300,000 | 425,800,000 |
Convertible Senior Notes Due 2025 | Additional Paid-In Capital | |||
Convertible Senior Notes | |||
Equity component | $ 160,700,000 | $ 160,700,000 |
Subsequent Event (Details)
Subsequent Event (Details) - Subsequent Event | May 24, 2022$ / shares |
Common Stock | |
Subsequent Event | |
Dividend amount (in dollars per share) | $ 0.4875 |
Class B Common Stock | |
Subsequent Event | |
Dividend amount (in dollars per share) | $ 0.4875 |