DKS - Earnings call transcript Q4 2018 | DICK'S Sporting Goods, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the Dick's Sporting Goods Fourth Quarter Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. At this time, I would like to turn the conference over to Nate Gilch, Director of Investor Relations. sir. ahead, go Please

Nate Gilch

Lauren and today's quarter for months. investors.dicks.com call XXXX our our Officer. website Executive Ed everyone, Belitsky, Relations and discuss Chief Investor will our will us approximately be our for Stack, Financial Officer; Chief and fourth results. playback Chairman at our thank morning, XX President; joining Lee of you A to be Hobart, call Good located On on today's archived

Investor forward-looking differ statements, in and such SEC, the making in are these report or finally, annual a assume subject cause our risks We these obligation be last statements As cautionary for Form our be Please non-GAAP call. conjunction including reminder, Any various which a and of uncertainties items. in financial discussions information. a statements this our our earnings referenced refer website forward-looking to we'll filings considered statements. on made cautionary should in statements actual any And materially release admin with could measures call. during with factor our that and results today's reconciliation to of from risk to Relations of statements to any update couple find no XX-K to

have help call. a Investor visually First, strategies our we discuss to added today's in short depict website the Relations to presentation we'll several of

the over AM time. May XX, future now will quarterly And before conjunction release call future With as to to releases. on that, we are purposes, XXXX, your tentatively opens at in relates quarterly be reminder dividends it XXXX scheduling planning I announcing publish a earnings our our earnings announcements, year-end quarter Ed. for call Second, market quarterly first dividend with with to Eastern our lastly, XX:XX the earnings turn and we will

Ed Stack

IR Nate, us joining thank like today. of to welcome back to I'd Thanks, you and team. the all for

per and and diluted year, $X.XX year share pleased high morning, increase our $X.XX last was X% we for near the an to of of we're end XXrd $X.XX this deliver This represents very included the of announced week. $X.XX. earnings which full over As range guided

For sales our in our a X.X%, on and line calendar same-store expectations. consolidated quarter the adjusted XX-to-XX-week shift, declined the with for fourth basis

remained increased over Our eCommerce business XX% year. and strong last

of increased As same a sales, the to XX% period in very during percent quarter. online last pleased business We're year. net performance total the our business XX% with our to core the of compared

responded of comp fitness merchandising, private initiatives apparel, positively athletes and athletic including Our many drove footwear, categories gains across our outdoor key to brands. across have and equipment, marketing eCommerce our and

actions As offset and these expected, our gains. prior electronics in hunt

impacted categories by Taken together, X%. our two these quarter negatively comps fourth

We're to As response sales ability beginning and in athletes' XXXX, business. the them we second about by the we're momentum our positive to enter excited encouraged early pursuing, this convert our enthusiastic we're our in confident into strategies about quarter. comp

us. With We to growth, from to needs will Late make our removed and floor with is on the While investment category mind, and total space critical improving enthusiast. athlete the tested categories more from generate we revenue. the the regionally and from our therefore have we're the -- XX% athletes their enhancing experience stores more implementing it last our approximately our with Enhancing said, as compelling need That achieved ensure technology athletes engagement categories generated several hunt meet the the pleased of athlete solutions continued to stores; in the and be of initiatives relevant comp XX stores to focused XX hunt this growing they so experiential. and athletes. teammates' the Dick's eCommerce quarter. need experience been results are XXXX: improve a experience reallocate that with capabilities; business replaced removed in all optimize fulfillment to our we demands stores our our and our positive pleased assortment. with athlete three meet the to we improvement that early our to year continue we assortment, reinvest know of our changing beginner quarter, our underperformed These in had strong in we far, our sales third the and in a and margin-rate in it increase fourth response stores where stores during for we to the long-term We of productivity.

Following in approximately category each underperforms. replaced Dick's this growth, that with drive based can particular on It be will the of from needs will categories remove success, XXX stores additional that the hunt market. we XXXX where merchandise

impactful beginning Key as late our how We benefit as private will categories brands. with a strategic of strike in strike merchandise expand dominant very much our also presentation more in been have presentations responded will And of several of year last our which both our with points key provide this our clear vendors, improved product in as stores. These point view we points. pleased from way. important we points our a from We've a the very merchandise along first across deliver tested with call test pipeline athletes presentation and items showcase strike a athletes we quarter, key well strong the what's chain.

integration their several more interactive which to angle, for and To with from softball exit velocity brands our continues stores our the improving us measuring across experience and the been fun more determine the baseball now HitTrax country. and product recreational improve. our in assortment the and baseball product and access the bat differentiated technology strong and to our make allows in have stores distance. them This GameChanger by relationships addition premium athletes testing our launch to cages of athletes to of and to best We from our HitTrax Our experience engagement and app is response we for the player. will tested never the make and led test, us our The enthusiast expand this experiential compelling stronger in destination stores. batting and expended athletes XXX believe

brands Lastly, to integral part our private in strategy exclusivity be of our this assortment. differentiation drive continue will an to and

growing private XXXX, double remained brands our During strong, digits.

a role we of brands allocation as percent an XX% private total to net As and to strengthen XX% sales, brand to private to assortment our our approximately XXXX, strategies. increased continue play space our year. will important in compared In sales last expect

our brand a are innovation. to to brands. for I'd focus which call in leadership help fuel in and further We sales will continue and $X their for the long-term reach critical billion invest turn our this past to In for their this and to To like Reebok quality strategy, offerings closing, on back-to-school will XXXX. footprint like time in we replace position. investments would to commitment us in hard that upcoming year important to like growth enhance solidify the existing thank – XXXX we approximately support now making in teammates work with XX over year products is product an goal development our Lauren. I of expand team Launch all CALIA's apparel athletic out of private a in new our stores. will and efforts

Lauren Hobart

Thank you, morning and good Ed everyone.

building goods. best we omni-channel the experience in As enter sporting focused remain on XXXX, we

our and eCommerce increasing This outlined, provide in these we experience on morning, technology. investments details some Ed are the fulfillment initiatives. As store I'll additional

efforts. In are update how guide the on addition, of we to productivity an power discuss expert provide I our athletes, will we'll leveraging opinion our and

to bringing critical are experience life. our teammates Our to improved store

deliver will One where of robust education. investments and therefore our is key we our more in training stores,

For This such focus summit example for differentiated our training elevate it focus also new - support and the experiences key we're on new partnership will footwear our multi-day enhance skills. partners, to product model and in HitTrax. teammate's launching selling expertise with as service athletes brand and a will training

pleased XXXX holiday deliver and an during to growth through experience enhanced business. We an season this functionality. our XX% Turning in eCommerce, eCommerce athletes with provided to better online shopping were our assortment improved we

marketing dial up drive traffic. our with digital and work also industry Google leaders closely in increased Facebook We partnership and to

Looking ahead, fulfillment capabilities. this, to significantly reliable in investing To our big faster we're and continue experiences more opportunity we improving our to believe a delivery. online achieve

optimize new building As California. eCommerce our us the York New York our online to the within the deliver will and two orders per I of last will open These quarter, cost will fulfillment dedicated and be near we new invest in during centers in as two majority days in New state-of-the-art shipment. facilities business to mentioned future. third automation enable drive facility efficient in we're robotics highly quarter The and

our convenient responsiveness Pro will a functionality our checkout, of faster and page new continue platform. content exciting through website. more improved the to performance We improve and This include Tips will also and

allow In sites. us to our addition, faster. mobile we own this our year, features and will quality to our re-platform control destiny mobile tablet later athletes will and deliver This

technology beyond Our our website. just investments extend improving

We when, us. of technology productivity how also shopping continue leverage and where, our the shop investments or our more athletes make of regardless easier in increase to We'll teammates. will the capabilities experience talent to for technology, convenient to to all they with and aim improve

recently alternative search, experience. real-time guide that provides detailed teammates delivered product shopping through can information product an we DICK'S inventory so their product availability, to stores which recommendations we've merch named and application, app nationwide. For descriptions, This example, including our all athletes

opinion expert entire guide Additionally, leverage inform to their to throughout journey. our power our and of sports we will athletes continue the

As for it strongly to products are react see that believe athletes point and Ed easy strike mentioned, we our the making presentations in. to

to HQ explore leverage continue drive our our Here targeted marketing ability Sports them messaging. enthusiast integrated expand Better vast datasets and will ScoreCard our And and athletes new Starts assortments. to campaign to newly DICK'S to to through Team and traffic inspire Our invite expanded our timely we level

our remain and we we focused increasing lower on spending as costs productivity of areas eliminate business. across our Finally, all unnecessary

reinvest savings approximately earnings greater Both we and XXXX, ever turn I time will to a results financial to XXXX tremendous closing, We detail. eliminated of to and these Lee We of XXXX. transform our company the our outlook. the been continue athletes strategic magnitude investments the and for opportunity guidance, in business we now exciting investments morning. into strategic we our the execute expense similar offset to over cover of a priorities. which will XXXX In for pipeline to we outlined plan identified as our incorporated to growth see this review additional our During help very $XX have that is we savings savings needs. changing call meet this against our as million

Lee Belitsky

X.X% the while decreased morning everyone. same-store sales the billion. calendar consolidated I'd and negatively decreased and and shift the by approximately results. last million $XX Consolidated basis our XX week million, quarter in a million. review start reflects which Lauren, was to adjusted XX% fourth XX-to-XX-week a a impact sales with calendar XX extra X.X% X.X%, like shift, which of to of $XXX previously from X.X%, On you, year sales eCommerce of shift On increase decreased business. by average ticket our impacted basis sales to Thank brief of negatively also the consolidated sales $X.XX good This or X.X%. with mentioned for decreased million. Transactions week the impacted $XX $XXX week calendar a increased

the equipment The the to During private key is footwear represented comp apparel, athletic outdoor brands footwear increases. and categories an low-single-digit athletic brands. best each fitness by athletic delivered in Apparel prior our and included and quarter, driven our improvement performing compared quarter. strength footwear,

with pleased comp and equipment of each vendors. the and outdoor improved strategic increases. across posting Additionally, strike were outdoor driven in-stocks we strength strong by in was The points performance fitness equipment

to penetration. with brands positively higher private continued comp Our also

electronics, together We continue see in sales hunt quarter. the by the comp X% and to which impacted for double-digit declines

consolidated revenue occupancy eCommerce strong recognition profit margin a higher by Gross reporting these by shipping, regulation points. recognition was was and The Excluding is begin as to basis gross X.X%. basis. for in by and for fourth and in and or bat our anniversary declined to bats non-GAAP points XX impacts, also deleverage. same-store The result last by net costs basis of on breakage. a changes Merchandise changes Team decline as quarter the fulfillment sports ScoreCard our gift a sales, last used baseball year decreased margin $XXX.X in increased million years versus growth sales attributable our driven we XXX driven of card XX.XX% decline change. freight decline program expense

the which for week. decrease $XXX.X quarter. margin Our the merchandise from million flat rate was year extra were otherwise million, $XX in expenses included a million expense last on non-GAAP SG&A $XX.X from savings a basis,

last million. week decreased year, extra SG&A the $XX.X Excluding expenses

that reductions referenced expense more and Lauren quarter, the incentive compensation. investments than higher During the offset strategic

to total, per SG&A by by $X.XX to As diluted week compared to year calendar. a last delivered per percent of of $X.XX XX.XX%. diluted earnings compared was share quarter shifted net which at of earnings approximately due share the year, which negatively This flat per non-GAAP last the fourth positively affected $X.XX, impacted we In last $X.XX $X.XX, sales, and of diluted GAAP for earnings year. the XXth were was share

year, DICK'S negatively in by and We same-store electronics sales our and For a consolidated with adjusted a XXXX $X.XX share opened six. diluted earnings business week. the the was during for XX X.X% shift, by to last and closed impacting of for basis comps categories XX-to-XX-week eCommerce and delivered headwinds decreased from This calendar we increase year the XX% hunt XXrd stores $X.XX per impacted full which the $X.XX. X.X%. positively On compares delivered we

ended looking million credit with on cash borrowings equivalent facility. quarter of sheet, $XXX fourth approximately Now and to and balance our we cash the no our revolving

our in the growth investments by Additionally, in increased categories. key strategic levels quarter inventory we of X.X% as support made

into is inventory our of Our as the season. inventory we are position the confident enter first clean spring going and we quarter

of allocation, Turning and capital approximately our expenses for shares $XX.X of for shares net remaining we million fourth stock quarter We million under million an XXXX, repurchased to total million $XXX million. price were In $XX.XX. capital $XXX for at our X.X repurchased average authorization. $XX.X have XXXXXX

quarter. in in quarterly weeks we per dividends dividend We XX% the And our paid ago, increase of approximately share. also $XX $XX.XX an few announced to a million during

approximately anticipate Now, we turning range per to up X% the diluted be earnings to flat $X.XX be in $X.XX to the outlook, for share consolidated and XXXX, our sales to for of same-store year. to

as We meaningfully by to deliver at as headwinds year second the announcement our comps electronics and we the expect anniversaried of end last the the to abating. execution well hunt positive beginning of firearms hunt, quarter we faced strategies February. our Specific in

now exception of grow electronics, to where most the our follow to respect business trends. anniversaried February we space the our exit end business With from stores hunt of at quarter. expect month this we will categories of With reallocate the generally the we to industry in fourth

will Lauren an and the guidance the believe our million lastly, that teammates' million fulfillment to within we included productivity. experience reallocation improve experience athlete fulfillment centers talent that we HitTrax business space Ed expenses and and around in XXXX, over benefit solutions strike $XX our in in our on EBT long-term. and As our position include product approximate will elevating XXXX our us our our improve These capabilities, investment concentrated fulfillment dedicated investments in our it presentations, the have our batting technology. our to strategic investments million of to discussed, includes eCommerce $XX in our our of our have New and Improvement store and million eCommerce $XX efforts, with experience expansion operating athlete our to And stores, in enhance York $XX rollout include the The and enhancements cages, investment California. point which associated technology will development teams. better capabilities two capabilities deliver new is technology in and

While eliminating making unnecessary productivity we remain spending. these and on investments, improving focused also our

fund has which about our identified eliminate half strategic opportunities investments. For also about and $XX million through of guidance which our have XXXX, additional we we within contemplated expenses expect to productivity of been will

rate to in All to to Gross to margin we as strategic considered, rate is slightly, growth basis improve capabilities. by year-over-year the our are result is and XX we sales investments. from down in strategic business. operating our make driven has approximately lower fulfillment deleverage margin double-digit flat our eCommerce to which of this expected decline expected be gross points to is SG&A investments expected making anticipated margin the as investments by of XX a

million, of and Additionally, and our from opportunity rate approximately higher wages merchandise headwinds guidance an hourly freight $XX costs. contemplates productivity the savings discussed previously modest for meaningful increasing inflationary expansion,

expectation be This net tax expected the guidance shares fully share based includes and and to new assumes in XXXX, stores capital XXXX. effective rate In diluted be includes repurchases XXXX, In earnings of and existing XX estimated also our Our within eCommerce is seven in net Golf outstanding. million of concentrated expenditures approximately stores $XXX stores. fulfillment were million are technology an two offset which improvements Galaxy capital an expenditures million. will and XX% DICK'S dilution on new to $XXX

provide an on lease just Before a the new take to moment accounting concluding, will standard. update I

prospective the $X.X a standard. Sporting the in We During lease may accounting not adoption will adopt concludes our of comments. and the for now additional standard result interest our the lease you We of liabilities net transition respectively. for affect questions. Thank assets a the prepared open recognition allows Goods. optional you believe of billion the first for new do will using This application quarter, materially which approximately your method standard estimate we P&L. will new line DICK'S lease Operator, in

Operator

we and will Thank your question-and-answer sir. first Michael be from you gentlemen, Ladies session. And now Please ahead. Instructions] go [Operator begin Lasser question of will the UBS.

Michael Lasser

degree step-function considerable gross coming in like facilities seems more from of my new you is it how And degree from in factors? in it for Good on a outlook year margin will lot this the fulfillment eCommerce the from Thanks Can the you're what what cost the morning. the change a expecting performed other online? for impact come quarter? to to give fourth light taking us upcoming especially question. details It

Lee Belitsky

we XX compared have gross of of to to highest I So, the sales a in calendar, the have our in and indicator with weeks, is the rest year-over-year eCommerce fourth quarter don't for year. the a the shifted good regard weeks at period think penetration against quarter we fourth have we margin XX because looking

fourth the drag margin would gross disproportionate rate. quarter have So, the a on

lower we year this over expect out would've been the for full margin gross year. So, would next we to be in significantly fourth look impact it the than of quarter as year

Michael Lasser

unfold to eCommerce big you push story? is how fulfilling versus are pull a -- does compared -- centers? of part the your that -- relate new the So Is fulfillment and from stores the

Lee Belitsky

favorable if their stores. And of cost quarter year. fulfilling over think the better of long-term, cost shipping back you we involved versus got the For plus orders there better facilities costs the from look is we've center, it. our are at startup that, of half the that fourth up predictability of We this in the fulfillment think and to distribution have us starting we intermediate our for out fulfilling with of cost of in two we're a the at once quality slightly do but year,

are XXXX. forecast Yes, some embedded that we the have XXXX. startup there costs within for So

Michael Lasser

ensure And is savings then impact follow-up the coming customer this that my so question is million $XX How potentially doesn't from? you jeopardize sales? Thank of the do experience you and where much.

Lee Belitsky

big A pieces. couple of

We savings part we of a have programs rework our from savings some some chain. well. as supply have -- significant in We've And bit. the kind of big of are of a benefits rent the out

those So chunks the impact really will which are on none experience. three customer

Michael Lasser

the Good luck year. with

Lee Belitsky

Thanks you.

Ed Stack

you. Thank

Operator

be go The Morgan from Simeon ahead. of Gutman Stanley. next Please question will

Simeon Gutman

is can we at question still the down? clarify drivers of operating can that's margin want Thanks. My that if you ex the the operating Good the morning If margin. excluding talk expected first about I midpoint that's if case? to be is to out we it the is them investments, take -- investments even everyone. on correct,

Lee Belitsky

think pretax would investments, the operating million the Operating slightly that be at $XX I on of margin margin would margin including -- up the midpoint.

And bit the decline. excluding driving your half top a million. that's of -- level question? second what's to relatively the the So $XX It's the including little really

Simeon Gutman

excluding given we've about the about were more I'll business underlying we end of I rate zero you about the the to can you capture a And in sales guess cetera? cycles if some -- of ask last out. hunt a picture -- talked follow-up the those electronics. a year But of of reporting the the the et the what seems the of where inventory we business then. talk to then past, of business from underlying does two health were efficient productivity perspective run I of should to, brands, we've that think impacts? the talked one so Because some consistent some improvements I should ex the reflect see product

Ed Stack

really Yes, about business. so the confident we're

for we about. to expect that talking X% the the to the year that'll we've the And beginning expect We and to come flat end the -- at get from that in you of second would been what are think year. quarter categories

every once apparel strike in category standpoint our what doing and Sports year, products. headed access the or past this footwear the different very point little year. last merchandising, don't from bad headed new last So a change to we've Team league by area The which done with virtually league year we're that bat new was for -- by have every what get significant they to a do we

very, are business. about very and we So really confident excited our

Simeon Gutman

the -- Okay. of I would at? say relative momentum that quarter can Is if about you've would the better? internal you getting looked describe follow-up it the Some underlying the the Is that to fourth And it metrics third? same? the how you like in just

Ed Stack

bit A better.

Simeon Gutman

Thanks. great. Okay,

Ed Stack

Sure.

Operator

go ahead. be The Horvers JPMorgan. Please from of next Christopher question will

Christopher Horvers

side bit. you particular think a of Would Can the period ticket And the it what's XXXX? in little been the to promotional you that what weren't drive a right? very your and to in quarters. has half more a morning. ability Is And back traffic the ticket recapture nicely is so and traffic in the ticket and for of up and talk that was outlook -- thinking sort Good up is hunt from AUR ticket how Ticket about continue XXXX? of up? in have bigger the for -- past if about are hunt headwind it very couple would been what's driving electronic

Ed Stack

of couple the things that I were think there a drove Well ticket.

had promotional year. a cold-weather good We from than standpoint. very a AURs were up. less It winter the was it last So was

kind was help -- our The piece a the of a lot very of piece -- apparel still sell hunt is ammunition. you good. So

ammunition but price. lower think we of a the the and sell think that excited we of we that continue to happening And that business underlying -- will see what You about. be is ticket health are we guns, pretty that lot positive. But the

Christopher Horvers

or you around the outlook year. and detail Eagles but And for understand in that particularly we commentary margin the quarter here bats other get as have we about the fourth talked these the Understood. for cadence any expense around comp some margin's and quarter, I frontload openings? have DC the first SG&A forth? that the gross into and Does to three Lee, and And that of quarters sort first the first past so the

Lee Belitsky

the as we extra for margin space two Yeah. of well, and stores there. as margin second And facilities a of reallocate to to related bit is up growing little Other the bit will some be little -- bring the that in hunt as huge not be remove some lot of from of in floor that fourth we're the extra expand bit headwinds extra little there's some really -- than the amount, floor quarter there. reconfigurations, quarter the second in of have us, will so expense the of but headwinds quarter that. third -- gross we new those cost our It a some a are departments to -- related a a looking

Christopher Horvers

SG&A floor reset an that's And item? the

Lee Belitsky

is an yes. SG&A That principally Yeah. item,

Christopher Horvers

a great it. Thanks. year. Got Have

Lee Belitsky

Thanks.

Ed Stack

Thank you.

Operator

Please be ahead. will Consumer Research. Schick David question Edge go of from next The

David Schick

bats Hi. can Thanks my question. for I first to year? kids new that Ed, quote you my this need taking they don't My question

Ed Stack

No. Please don't know. do They probably need that. don't to

David Schick

it just tonight No, be dinner bad know news. the at them would letting Yes.

first as talking first back there my level line as hopefully we fall a those discrete about new think a is longer-term -- that of My question of this past model, that we is count. impacts be XXXX? calendar sight so is about? the Or -- it get doesn't would Okay, investment they you're

Lee Belitsky

cost year. into majority going to forward the The carry following of these are

David Schick

eCommerce mixing one eCommerce on understanding or margin within drives substantially the moving margin or then margin if getting And rate way better compared and gross basis, eCommerce in the you. Thank Great. But your margin eCommerce eCommerce, within is to I so gross lower. just other? the worst Okay. gross

Lee Belitsky

I are operating margin? talking you mean about

David Schick

How yes. about you it. the gross talking is I'm margin about think --

Lee Belitsky

we want the into eCommerce to for that had I on trajectory in but nicely significant haven't don't profitable it. and think with get our of us, individually it's the P&L down we're level business improvements the granularity that individual like components. for pleased We've we of profitability broken

David Schick

that’s much. Thanks fair. Okay, very

Operator

question Bank. Baker next The Mike will of be go ahead. Deutsche Please from

Mike Baker

just Hi, question. I'll follow-up on thanks. Dave's

are is same those the do if guess in increase positively So such beyond to I ongoing, costs would this they rate Or costs? able but that were comp XXXX? run that you you year leverage

Lee Belitsky

to plans that Well, in following yet be our the detailed XXXX, the those we haven't this but year. worked for out expect investments we're making year, increasing wouldn't we

we we that yet, got things XXXX. new haven't other gotten some guiding but do haven't to for into may we Now

Ed Stack

increase But into we to meaningfully. next wouldn't those going year expect

Lee Belitsky

No.

Mike Baker

Understood.

-- one Okay. of this being electronics also about you. someone Thank hunt three hurting you've and talked that impacts your the also you. being business -- And the brands someone past the had then followed-up, mentioned you your in to year

much that -- of your the how remaining quarter. did comp mentioned haven't X.X% -- year? how points Under much XX that You was this that But so, of basis you how In drag to Armour? for or much quantified from XX other XX the the words

Lee Belitsky

and So points positive hunt electronics. we're XX excluding basis

business a row So our again apparel now a for the in continues we that quarter be is mentioned but difficult, positive. second Under Armour have to

forward get loss in Under we position well. better to better been able can the as that Armour replace Under brands for the it business And we've business going extent point. business Armour to the with apparel So other would into bode a this the stores at

Ed Stack

Yes.

assortment. we're As the I going forward. Armour going with that in made forward. Armour's enthusiastic changes we about Under different helpful more business very and from the the a indicated We've Under Armour to very see much last trajectory been some call, Under

Mike Baker

line issue? And Understood. of is down for how the off to been season of the through How Last first issue? not product much businesses. fully great much because The lot due How of to spring is much the a The could. seasonal quarter, presumably the bat is if had start yet then hasn't I impacting? one cooperative that comping cycling? weather that

Ed Stack

that business Yeah, but that gun each of the to let those issue, to percent slower of the said -- I'm we're going -- impacting a what impact haven't fully the those pretty forward. of We've -- have other -- is, are we positive that been bit as three going of things main we're start, but number a anniversaried there's so quarter. one me of not in qualify the got are we retailers the -- it's a that's

Mike Baker

understood. you. Really it. Okay, appreciate Thank

Operator

will The of Suisse. question Sigman from next Please Credit ahead. Seth be go

Seth Sigman

morning. My really Seems talk growth about growth. you is we've Thanks growth taking some little time. more we're good question. to guys, seen seeing? around that a in Hey, the Can inventory fastest bit And the be maybe question now coming the be for better seemed just up. with more risk view Just be sector any activity inventory, understand seems competitive across here. promotional to the landscape? picking pretty to Obviously situation of XXXX lean on trying into to the the

how thinking curious guys you just that? So about are

Ed Stack

had And inventory a our as we've we one growth have a the bit probably -- lean. at of inventory see quarter think we've look through this and we issues too running year. this, Yeah, taken the quarter, you’ll next is lean the

really these as Adidas' of Legend certain whether in -- Nike it doing in we investing non-toxic Nike inventory. in it Inventory product in a we're what we're So investing the stores and What with a the T, inventory. and made doesn't key be we're though change go-forward we've can't toxic, training that strike products shoes successful. our also not fourth characterize positive. And that running shoes, quarter is points back that's basic shorts, enough is inventory life. been what the running product extremely we that the they've stress have done I shelf that they in comped short XX is

a that that that product don't be we that XXX-some to non-toxic -- at these the with do we is growing It's So making around. stores Again that quarter. we'll promotional we these going completed stores. the not changes expect this to inventory. need third be reset it's to inventory. it'd go-forward XX this We're And inventory. of it's And we're beginning year expect

Seth Sigman

about of you be positive And removal categories specifically stores should included assume from productive Is that that right, talking with the replace and in on the so the XXX more hunting I net that guidance? the Okay. then you're categories? as hunting in here, actually those is impact

Ed Stack

understand what third but until have won't we completed That's the expect beginning quarter. this the to we of be, project

Seth Sigman

could about final grow long-term the and Got EBIT point into to it, like on potentially And to growth you you about start point we again? How think just you continuing margins EBIT do follow-up what you dollar or get do then a At actually okay. my were year. outlook? next the talked investments can EBIT feel is dollars

Lee Belitsky

beyond haven't year. point at really this this -- We guided we

what getting We level continue our to work through about to comp we're but confident sales. the need to in of forward, we business increasingly make investment going drive ability

point. this this guiding beyond So we're at going to got year not be

Seth Sigman

and Thanks it. got good Okay, luck.

Lee Belitsky

you. Thank

Ed Stack

Thank you.

Operator

ahead. Forbes The next go of Guggenheim Securities. Steve from Please question be will

Steve Forbes

Good any the those morning. of that stores, stores. to be? just can customer pace learnings helpful mention focus for XX be to us in, the the comps, engagement expand impactful you the I Really understand on wanted transpired but how this change right? right color within on would sort around could positive of, You

Ed Stack

excited that the positive. were mix. the And were yourself. better Well, about don't were comps the we thing get and We're really this the were comps rates the because so -- ahead positive, margin even of of

margin comps we positive those thing traffic increase get and good is know very up. about we an that's in in a excited as were you the and stores actually was very if So thing all

Steve Forbes

well. And then as just follow-up that on quick a

receive call as you capture the this does refresh stores view to it, initiative? poised underperforming the Or multi-year will you stores As about you it that think hunt? base a relates all as the do to this XXX in as

Ed Stack

that multi-year space. boxes that with. very next stores floor goes. enthusiastic to another initiative. pretty that around about allocating our look more is of stores expanding And very XX business make as see And how as good. if it space we're And we're -- we some other this at the we're hunt some stores pleased batch having it's to We This XXX goes there. good, take places probably productive response We just have XX the is productive. there as well would year. stores the places And expected, the not and is We're we a very we'll it

Steve Forbes

for last the I just and apologize one And here. the quick one

Just attraction? receivable did have six stores cage the didn't the the batting for a difference of or any batting of that there the the you within -- four outlook those a cage versus XXX, had What's both was experiences? an sort about the XX stores, that they the think

Ed Stack

them of not Well, all do.

some differences had batting that don't. the stores. those in do, early too kind cages six the what it's in really say we batting to the the that of hunt some had and cages -- did So And between that

So of batting cages, the of don't. have some some XXX them the

Steve Forbes

Ed. Thank you,

Ed Stack

Thank Sure. you.

Operator

of question Genuity. next ahead. The Please Lyon from will Canaccord go be Camilo

Camilo Lyon

the -- opportunities. give Thank Hi. hopefully, bit Good a us detail you I little morning. comp can incremental you. hopeful on was more

about how experiential and stores, to you key you that the the rank can about the you're what's a talked but opportunities you to comp? You I'm order drivers doing, the zero gets get to from a initiatives reformatting are what flat know up the talked from that X%? So that you're curious X% comp components

Ed Stack

of a there the think bats subside I pretty we're bat number the quarter. will about into things. that big enthusiastic going where is of with baseball Well, It's -- second there headwind kind business, how a got a the the we've how

And would will another year being one we the at think is we we had like year past that As past look we be weather a helpful. full -- be in-stock. if of the things year, take important this that very have this time

nearly that are going robust back go-forward part be we inventory them a scaled So these be like as big in-stocks these as our products is to having it. non-toxic in-stocks of too were would key to And we not as a far. bit

Camilo Lyon

apparel going My next Okay. That's question helpful. the is category. very you. athletic back to Thank

some shed to your think that? maybe What shed And talked Can private brand. around light athletic Second some pricing. you Skin had relative of learnings some of You apparel I label was? that re-launch what probably you the about color look on like? the will components

the to curious context it's in know How product? this the going does are -- the a of we seeing be And be you're fit I'm just the see the of away you setup to more how should last be reallocation that square a be made that this stores? the to And brand go new how you year? allocated improving had Armour? to So footage within back-to-school? square launching to will to Under Under on been taken comment then going price brand footage Armour all Or expect back before there do

Ed Stack

different Well, brand Skin. the very than is new Second

price opening well for quality, has excited Very Skin, an terrific received, pretty going floor So Second is going we the through value, the Second point working been to opening very it. have do a that brand still have meaningful more Skin, -- have to product point we're this we're space. us. we've done what It we're we're research price -- on of and but good about with of will

of this it had with will licensing It business agreement take in business we and the walk and you there we that did And mens', that will we a will product. across think with brand primarily womens', boys', when be and more you will do it the we're Reebok. So Reebok place Reebok. with know will in it than girls'

been the that. like very initial really I So And about we're has say very positive. excited research

about floor goes, the As has going it Armour that today. remain forward. we're business will far as space Under in enthusiastic it our UA But

won't between and be the enthusiastic they're we've of really to allocated the were there that big footwear brands Nike, made space And market And additional bet we're any particular, product couple about that there. they're and to our the a there. bringing floor -- about product product market. really excited bringing So a in we’re apparel

Lauren Hobart

would add are be And and getting we that that point new the we brand into an currently that feel be store. to -- meant is it mean, if are traffic opening I -- can store. the the actually we creating price occasion that drive the I and in just it's area in I could will wide-space not occasions

Camilo Lyon

a of is great This That's could. my question if I more question. color. philosophical And last

partnership lot more more experiential Planet a with Fitness. making talked store intent the and it store, about You've expand very that already has, question reported to activewear its more also I announcing that appreciate changes make My week is, last much you're competitor it producing to was even there while that. its and department to productive trying section a

for entertain those drive footage would out of of your idea I'm your you external some So, about partnerships, traffic? curious partnerships thoughts that if for about incremental the and moves, giving square

Ed Stack

the enthusiastic is brands to have enthusiastic like think good -- at business. going might about a that somebody I And else the number and strongly what we we key on our be do can't forward. our business for look are we opportunities depends going all do is how what for and our it business right Well, what about we we'll partnerships of continue express enough seems and their the to time with

in we're right position the like much very we So now.

Camilo Lyon

Thanks Fantastic. so much. Good luck.

Ed Stack

Okay. Thank you.

Operator

of question go Sam Please next ahead. Poser Susquehanna. The be will from

Sam Poser

three. see a change, -- that the the you given charges. wasn't ex But didn't was taking for margin the in why One, we merch mix the those margin morning. -- the why questions. I've flat quarter was got Thank in Good improvement there? my merchandise better other

Lee Belitsky

month business promotional some up there did the we capture Well, try December little Christmas. in -- of as get weather there to warms that of to have a the more to bit up leading to

had Black December. Friday in floor did we weather we got January, in a more a and So pretty bit strong favorable but the promotional

that and everything scorecard our year-over-year. margin merch was the changes noted also some absent the of We about even --

I'd the reduction more some -- was some is but the a So offset. we to get from promotional leading Christmas tailwind of did say there little bit hunt,

Sam Poser

the was the up? change Or to all tariffs Thank you stuff potential early, in you. in about building stuff this when And strategic then that decision or any bring those move was to the secondly, made talked inventory decisions on inventory the of up key items? levels based depth as were of

Ed Stack

the across not season southern It to ready be our of It was to really and to get spring for was this -- was country. related tariffs. stores earlier trying set it much related

that it past. think set did all missed for we the our strike of better deck was products the we the in relocating, part So points also getting with enthusiast footwear we've

forward. really was philosophy merchandising So it to going was be about what very strategic our going

Sam Poser

right. All

last and thing. follow-up to then So one

You of doesn't guess, inventory in-stock and it having need to slower good there your better-selling bit mentioned I still levels, but... that time a imply reduce making of mean that given that of amount price items amount? you I a of is might little take that items. sure these more promotional selling full

Ed Stack

the up that quarter cleaned basically in we've fourth No, Sam.

Sam Poser

are to the with Okay. the And What then, lastly, ensure, your improve make training when you're staffing to because you're visiting? when store there there how you that ask regard they're store store at levels always to in can doing sure you're experience. in talked also people -- staff you about the the that people to

Ed Stack

Yes, we're levels. yes. reducing levels, Thanks. protecting staffing staffing We're not those

Sam Poser

Thank right. All so much. you

Operator

The will from be Benedict W. of next Peter Please question ahead. Robert Baird. go

Peter Benedict

guys. All right,

on deck First slide guys sent the just out. you question, that

points highlighted was you YETI. strike that the One of

continue you that maybe kind That's where build question. first with out? are stand going you or Just today to trying be those that from wanted, all where months, versus maybe you to of you months my will X now? Is XX understand where X sets to months,

Ed Stack

out pretty think for we there, sure at YETI. could put with got presentation. that that's has a It's I a anybody YETI. don't presentation pretty are else that And been not pleased a of where what we us. brand we with do, else if of that you great take impressive We're look I'm kind slide

Peter Benedict

going stores Is in? that it's that my – that already many that’s that question, is -- store is already in that every of Is fully how face into?

Ed Stack

all holiday. looked in have for in -- all the it the the of be it for stores. will Ex T-shirts T-shirts was vast of majority the Well, The holiday. stores didn't that's in the we stores like what

of find stores table, a going we you'll have table. will but single there, show XX% which ex Some forward a have our versus what double a double have a that's much table single, in will some pretty some

Peter Benedict

Got it, sense. okay. That make

try about? of Secondly, when think help What should about to us XXXX we in the versus of most the message, I Starts of we invite incremental some XXXX changes? Here, you be store what's the guys kind terms more into the marketing understand on you to marketing see think as thinking can Better folks

Lauren Hobart

media and terms pushing channel. In are direct of the significantly our to digital we toward types,

finding like channels Here mail, Better as vast radio effective But in majority enthusiast to things digital and of become well launched trying as have e-mail campaign Starts direct marketing that things the reach leverage can where also our the spend. in athlete the also we're datasets. the marketing TV our So mix. is parent And we digital the but

Peter Benedict

thinking it Okay. if the And trajectory it think as of know think we forward. moderate coming about move comp going my clients that you up, year last are it about leads assume X%. we comps I mean are certainly the the around the more question to as you where the Would the and guys assumes is, holistically, but I kind seems flattish store that that plans for just in-store the about comp? guidance a higher end

sense to can So achieve a moderation you you maybe much everything just for goes if how guys get as trying think planned?

Lee Belitsky

in down still it of the stores. slightly be Yes, would kind

Ed Stack

moderating… But

Lee Belitsky

Yes, much year. better than this

Ed Stack

Moderating significantly.

Peter Benedict

Understood. Thank All Make right. sense. you.

Ed Stack

Thanks.

Operator

ahead. go will Please question Feldman Joe Telsey next be The Advisory. from of

Joe Feldman

flattish? Is taking morning, talking I with industry, down you're guys wanted in I to guys. regards that Thanks the about how with XXXX? growing still question. Good industry, that to the Yes. you Hi. know but for for ask about growth? industry hunting thinking are line is it

Ed Stack

We down. continue would expect to be that

Lauren Hobart

Yes, down.

Lee Belitsky

we to and to down be expect down. be to it continue continue Yes,

Joe Feldman

of Stream those a industry? higher presumably level to as just been thoughts to how little more maybe are your well with stores to what those that do then And Got regard the And of performing, have that, what talk to it. about themselves, you Field with related stores? sort at a can &

Ed Stack

as & We're on not not positive though. flow do We're a to Well, anniversary stores company. we're going longer about not a drain then going what four-wall exactly our to And it make Stream what little we sure right basis, for it. & they're a Field Field a on new We're and we're cash play out talked as decision we this. announcement Stream. any do let the going with now, to opening with and while they're

Joe Feldman

And to that know should That's just or a space of the there, you does days? week? I the one trying it together. then a all it. would then Got And in to just be expect real have relative Like I few more guys quarter comp second take know to it impact said a how the mostly you you on second the Does that take said allocation, like good. disruptive does is an quarter, the it positive, it? when -- so it you others, more do blend question on quick store

Ed Stack

And been team disruptive really at weeks I and they somewhat mean -- there. team few work we've done We've it's take we're in of plan. and will then get construction one a our and it together have store but good each a inventory got to pretty this. well them back

take in we of as a go through it bit So the will think that comps to expect have to time difference year, this a it's going little but transition. don't the overall have we meaningful we

Joe Feldman

That’s great. Thanks, guys. Good this quarter. luck

Ed Stack

Thanks.

Operator

Omar from The be go Evercore Please Saad question next will ISI. ahead. of

Omar Saad

I'm new store there is rents picture openings amplifying temporary opportunities of tone? the -- bigger digital Is it the question you're Most that coupled year. hold stores planning really open only or square Hey, investments, picture the of direction technology network, of ask But you're maximizing to to existing so than think is more as less from taking fair my of experience, real-estate have for trying up? Thanks. making frame you a talk come I you guys footage this of of change with of to store been XX the productivity less that bigger it than investments the is answered. the to in the kind on Hearing crop its past, just just company say that and I level. kind path question. the with kind about of in fact focused store wait here, other on down my eCommerce the in for to to them wanted most thanks a really the

Ed Stack

opportunity We from a the is to that productivity. standpoint, forward we margin have maximize sales biggest think going boxes both that our

with also We've that's that --depending where but down. to think there we comes still Sears a continue now, from. stores, pretty happens other are come We probably to biggest stores, on open a need. a take going fair amount what we are position got So to of Penneys, with the to of number the retailers that in think good piece rents going opportunity close continue landlords with is we're that to that to think space to continue

and Somebody would selective very process. being so of take very real-estate a and we're fair in amount patient our just space

Omar Saad

something is crystallizing discussion in there a fair this change to that the in around there is say, there has experience, call and add on team's has mind? Is store that past? in even emphasis And the greater Understood. been really that technology than of kind investment investing it management the Thanks. today there

Lauren Hobart

we the greatest is asset that if say optimize stores, as them of omnichannel the mind. of we of think and not would trying I Yes. our that, experience greatest assets, in have stores top-top one the the to

to we when the hub experience making athletes have a it provide the service So store store, on to they when and come teammates the extremely omnichannel just are to athletes the of will focused that big that our come wheel. they the

are noticing experience. very focused you the are we on store very, So

Omar Saad

you. That’s helpful. Thank Good luck

Ed Stack

Thanks.

Operator

RBC of from go ahead. Ciccarelli Markets. Please next be Scot The Capital question will

Scot Ciccarelli

morning guys. Good

these primary assumption assumption Or expect of year-over-year So may flat or positive changes? call question for your traffic similar but turn -- XXXX, it Peter I be to this, think will can the get comp improvement? the you is to that guidance asked for the that the is know the driver back still merchandise as you do

Ed Stack

to ticket. to the the we increase in we're not traffic be we can a going can think to think we We're We which I and ticket and to better. the better increase don't now. UPTs stores that provide traffic confident comps moderate right our will will do -- traffic. -- that will we're imply We make think guidance continue that that hope

flat All over comps we'll that feel will -- the be plus combined, to we X%. year of

Scot Ciccarelli

hunt it. on about is of then from a a removal guns peripheral site? you you're just three-points had including those would, if when And may that Or the electronics, effect drag outdoor the clarification got call let's only hunt and you other the a and ammo from of guys that products talk have comp products? Okay, it

Ed Stack

outdoor has hunt, hunt. which Well, and other to that it would doesn't It include specifically fishing do would it's with be anything hunting. categories, include

anything So associated obviously included in firearms, with with accessories outdoor that other activities ammunition, kayaks be hunting and apparel, like It associated guns, not would include would hunting. that.

Scot Ciccarelli

Roger that.

guys. thanks Okay,

Operator

will from ahead. of Stifel. be go Duffy question The next Jim Please

Peter McGoldrick

Hi, Peter my this Jim. on questions. McGoldrick is Thanks for for taking

like just of needs I'd talent First, about ask your for you organizational can to about are improvement investments. the key from What business? the technology And changes? talk these expectations

Lauren Hobart

transformed across our that are technology aspect is into We on do experience business. that product of teams a enhancing every how have focused organization very actually group we almost agile the

well athlete even and stores. experience the that's as center our support of everybody as our productivity website So the everything to in from in

us internal an of for how approach external we actually change So weapon are on aspect to experience. every technology, in strategic focused implement becoming and it's absolutely and our a enormous they

Peter McGoldrick

lost on the to there it Or XXXX? was in-store measure in in-stocks to business and Was improvement recapture stock. attributable able -- a to of out you then on focus And efforts as stocks? in amount sales any I that there Thanks. partial of to wanted in were eCommerce remains

Ed Stack

that try to going in different question take I'm two Well to chunks.

sales investing got that. pretty be in items Yes, a do in-stock idea standpoint? So we good did lost measure able we've that what from to at up to is. key yes, of an We're

was forward of make those least some of product was -- was, it item challenges, mean under invested the very some that things taking our that few last going a just -- key shipping holiday comfortable in-stock One We're some the which the enough. key holiday. didn't we of season, going days -- I going it with. happen. feel to in at sure from we it be into buy we're shipping doesn't challenges holiday look that in is going of very were going a in to we We're items into of

Nike be of we in will CALIA a we tights, items missed bit set apparel sales. where those earlier golf stores Nike of felt our fleece, product, we'll Southern quite Some

change good standpoint big So assortment And had that's from been fourth quarter. in confident our we in similar a the we've those put I in from -- forward. that very we've that able very products Yeti piece out And because mean very made a and release. buying our what strike and stores we were of do. in-stock presentation standpoint put to the the merchandising we with going really The an point, Yeti in-stock we we're to this in presentation

Lauren Hobart

that part our second something if eCommerce outer and the do was that On getting stock issue that's business your what outer our of driving you're stocks of at. an the at will We question, a to improvement board. affected the we both key actually look not channels be think across the

Peter McGoldrick

questions. Okay. Thank my you taking for

Ed Stack

Thanks.

Operator

be will Wells Please Tom Nikic question from ahead. next go of Fargo. The

Tom Nikic

answered on the a my of been my Most taking everyone. morning, Thanks just already, question. clarification have but quick questions Hey, good for investments.

partially I'm So am million cost of year, net million I correctly, the by a $XX yields of thinking which offset about right? it's that investments, -- $XX $XX headwind savings million for

Lee Belitsky

correct. That's

Tom Nikic

of year. All Best right. this That’s luck all I had.

Lee Belitsky

you. Thank

Lauren Hobart

you. Thank

Operator

The next John Cowen. from question ahead. be will Kernan of go Please

John Kernan

All a question. -- lot right. and there a you're fulfillment for cost new you fulfillment change making I taking Can talk centers. Good direction morning, the investments my in? Thanks lot heading everybody. know in made you of the about it's

And the and we year move is about be into think throughout profitability next? you Can this your going that's fulfillment one direction cost? how going in New automated. York eComm as just affect talk of the to to I fully

Lee Belitsky

be keeping the the able improved of we job the as out fulfillment those We'll in do past stores. well. items and little to as bit on we of startup together will us believe a the will of the also be And get an overall quality centralized combination customers will be Yeah, once stage to lower going do profitably centers the be favorable shipments coming will saves the well. with out of be fulfillment delivery order, it of the we a cost if our a than facilities better which they

So, there multiple do to reasons are it.

John Kernan

category priced is there you you overall higher AUR get much Got follow-up the more business? within athletic an one holiday that recovery it. seasons. felt like this that just back from where core talk It Can in level on apparel prior just are AUR Is full And category? apparel. a perspective selling then as season you about versus additional to price of full athletic

Ed Stack

AUR We expect to our higher. be

John Kernan

how seasons you And just detail any more lapping pretty high given several much promotions? recovery is there on that of are

Ed Stack

do in we AURs product but expect we our higher -- don't I promotion, be that guide differentiated which hopefully to get missed the by for of see think that but also athlete driven we to enthusiast we Yeah, continues, want to will if we're last bringing to that year. more to less

John Kernan

it. Got Thank you.

Operator

question the from will of final ahead. this Chris be And morning Svezia Wedbush. Please go

Chris Svezia

to you first morning And on me to all the this, viewpoint? SG&A this the investments but been this. on what think guess just digit about of or that just single I on magnitude talk point investments. and year, Good get the still -- unclear possible leverage unlikely? given the forward, in thanks that's the SG&A? love leverage that just as just I here. that is is low I getting Where guess comp. Is we SG&A move for it's everyone

Lee Belitsky

not for think got just suggests will I we've volume it's leverage to the right now that -- we that guidance and that this got of The it's due we've SG&A investments the year.

Chris Svezia

what take to you a And would is comp a if business -- -- think guess what out SG&A? to do okay, allow to leverage you I you a those go-forward were that on what is degree

Lee Belitsky

guide to this to at don't I I'd that point. think Yeah, want

Chris Svezia

or are or embedding -- you're -- to benefit these incremental the up, faster, just automation once DC on gears, Switching product any just Okay. the any and two opening are facilities and those lines on that people in the assuming comp anything the you facilities benefit along comp getting no?

Lee Belitsky

There is adding no comp benefit from implicit these buildings. resulting

Chris Svezia

lot footwear of the comes situation. just availability, lot XXXX private then, curious grown of in different brands a for about you've And think terms a I'm out it, apparel kind about talk forward? I in lastly, going you of know spoken that significantly -- about stores, I'm just on and how lot label. curious a a brand -- Okay. you've product in of just I know but Adi, Reebok that's XXXX

Ed Stack

We about brand. continue be to enthusiastic that

very our is Under that Under We we about Armour are in brand enthusiastic Nike stores. think will the -- the and turnaround Armour

about. whole athletic very category enthusiastic the So, we are

Chris Svezia

Thank and you best. Okay. all the

Lee Belitsky

Thank you.

Ed Stack

Thank you.

Operator

our ladies Ed remarks. closing to the like his session. hand gentlemen, conclude for to over will And conference Stack this back would and question-and-answer I

Ed Stack

on thank everyone forward as we results. first quarter you and for I'd report Thank to to our talking look fourth joining call us like our you. quarter to

Operator

sir. you, Ladies for conference and gentlemen, Thank today's concluded. Thank has you presentation. the attending

may now disconnect your You lines.

DICK'S Sporting Goods (DKS) 12 Mar 192018 Q4 Earnings call transcript