DKS - Earnings call transcript Q1 2019 | DICK'S Sporting Goods, Inc.

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Operator

Good morning and welcome to the Dick's Sporting Goods First Quarter Earnings Call and Webcast. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Nate Gilch, Director of Investor Relations. Please go ahead.

Nate Gilch

Good morning everyone and thank you for joining us to discuss our first quarter 2019 results. be Hobart, our Belitsky, our Financial will Executive and our call Officer. Lauren Officer; President; today's Ed Chairman Stack, Chief Chief On and Lee Relations be of months. XX on call, playback at will A our for today's Investor website approximately located investors.dicks.com archived

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

Ed Stack

diluted reported Good business and diluted are quarter morning, Nate. earnings guidance very about to $X.XX $X.XX. our morning of a We're share enthusiastic from per we to $X.XX everyone. to of $X.XX This raising earnings share Thanks, full-year per $X.XX diluted non-GAAP first range share per $X.XX to compared last of earnings year. our

our sales were the was $X.XX sequential another this, increased approximately consolidated billion. high expectations same-store consolidated quarter represented near sales of quarter First This and improvement. Within X.X% end of to flat. our

remained over and strong last Our year. XX% business e-commerce increased

design, positive as same This By end key and levels key sales, the the last last remained we growth categories increasing percent our too a in investments. investments online April in quarter the the of lean. to XX% see of Same-store to the compared inventory compared XX% resulted business inventory our as strategies total benefits inventory into period to the March year started same running year. sales prior XX% of end and in in positive we year. our net increased made turned first strategic period the As were at of

inventory is Our sales well the we're positive ability momentum same-store continue and clean sales and delivered and remainder the in confident positioned throughout the to year. of our

reflecting margin in healthy merchandise Additionally, rate first quarter business. points the our basis increased a XX

As our of expected, our February. end after comp decline announcement anniversaried in hunt at we the lessened

meaningfully However, the of continuing throughout hunt were faces remainder comps still negative the the hunt as headwinds. quarter industry

in trends, previously announced, light these our category we strategy all banners. are for of difficult industry this As evaluating across

As we from the compelling localized step Dick's underperformed where an category late replaced it and in in stores year, hunt last assortment. initial removed quarter the this with third review, it XX a more

quarter fourth these we strong pleased results to last stores. to Following year, strength in have report, see continued I'm

floor the categories merchandise saw be on that each We generated space on track that needs can during the will market. in particular replaced including Like margin second merchandise first they initial positive sales drive reallocate quarter, XXX rate stores, hunt comp stores improvement. and of to based positive During growth, with Dick's remain approximately the additional again quarter. transactions the

business a will we including Stream Field complete Looking review hunt holistic strategic stores. ahead, & of our our

which expanded chain. merchandise our we call presentations, the we points bold quarter, first across the During strike

in and key been categories. Our with driving athletes pleased results have positive responded positively, comps we've the

experience add stores and technology early this experience HitTrax our another to We've stores. approximately expanded fun, XX quarter. the plan batting also cage in interactive second and results been the pleased during XXX to We with

quarter. delivering of are source positive our continues average to Company this Our business outpace the strength and brands a comps first private in

existing growing launching private part on new brands focus time. reaching brands, in billion brands, to of sales over continue as while goal $X also We

giving more XX quarter, across CALIA's this important footprint brand During premium expanded floor we the stores space.

to new Additionally upcoming women's, for stores. assortment I'm athletic like back-to-school, and our DSG and we department to goods and will enthusiastic the brand I other with our a Lauren. for we've launch us very other high-quality, first focus DSG, available in compete stronger future. We've when Dick's will position kids pleased like to Dick's stores offerings men's, Sporting of pleased much across will the the performance been and our call all value-oriented teammates feedback in our also to excited their out round turn initial apparel. over I'd at athletic only very against we be received and closing, put in to sporting I'm with and are quarter now the would from groups about launch. work commitment results thank for In business Goods. our hard similar

Lauren Hobart

Thank and morning you, Ed, good everyone.

to announced leadership about we few talk that I important this getting to moment a month. earlier Before a changes want started, take

First, our Ed Chief Officer. Plummer Marketing appointed was

of CMO, As marketing driving XXXX most our and all served in as Vice President Management our continued transformation building, Team points. including Customer brand digital the HQ. and lead recently athlete traffic Relationship strategy of Company will across our touch DICK's and Ed overall as implementation Ed Sports SVP joined

team for to as us help this of Vice Miller Steve and where learn and our will be that and track served Company In addition, from Both Steve strong and approach continue Vice E-commerce. across President Dicks's Stores joined of and role, channels. will In success. centralized will innovation tremendous initiatives record strategic and Ed and Marketing he of our Steve leadership announced Joann Senior be Analytics. as President test assets joined across Senior all responsible driving adopting Steve our the a Strategy we

and our we've key due progress start Ed sporting Now efforts also strategies and an turning in I best marketing as to the starting our the and some on omni-channel experience investments enthusiasm. our are our Sports focused provide building of our in We Ed's to great update to on e-commerce want business. dividends. I made goods by investments pay discussed, morning, Matter program. and This in and will echoing review to remain teammates

our teammates store are I training in we improved First, Therefore, outlined particularly stores. important to call, dial-up experience critical and during to education, as investments life. our our bringing making our to our last are

As teammates this last new we part an event with in-person month, one of introduced over training our store nationwide time. simultaneous service XX,XXX standards to at

more ensure our confidence service new each while standards our excitement will empowering and create Our a teammates manner, in to help experience. athletes personalize for consistent we

seeing teammates the the positive already the exceptional pouring across in, initiative. from are Stories provided are country We service. ways highlighting of impact which our have this in

and standards service create athletes, increasing help greatest relationships are asset we to believe teammates their loyalty lasting Our new our our Dick's. will our with

XX% to pleased Turning to first the during growth we channel. the quarter, in e-commerce, were deliver

this those in-store part our As strategic we categories. completely experience of landing These redesigned Baseball our elevated and success, for Softball pages reinforced redesigned pages.

improve the and continue our website. to we Additionally, functionality of performance

first both new load and During we page results desktop search mobile. times dramatically search a the quarter, has across launched for engine that improved

and enhance improved We up significant get growth in products our quickly inventory of the of in-store. a via traffic, strategic into to increase help the in-store our delivered availability and priority purchase and is was also number hands accomplished execution. very e-commerce profitability, BOPIS store pick growth athletes athletes. messaging, orders This site our online

pickup BOPIS are just within of all filled In athlete fact, ready for today, orders and XX minutes. XX% nearly

our dedicated to York two fulfillment California third remain quarter. Lastly, open we track new centers on e-commerce during and New the in

We've including Goods. our quarter, Next the stores, pleased we've responded in been we Sporting Starts exciting marketing, Better and during in our assortments. communicate as first platform to new campaign how to changes strike check the our presentations impactful athletes invited Here our them the launched point as out elevated with a our Dick's have new

will back-to-school. marketing quarter, will assortment at compelling Dick's our be second Day amplify the our Father's more go-to the and destination even Looking as for and

partners up digital We like our and marketing and enable effective efforts to communications. Google also strengthen to Facebook continue meaningful ramp our with more and personalized alliances

sports committed with in raises teams foundation, the Dick's youth remain Matter which Goods of funding our to need. Program, in and Lastly, youth Sports about sports awareness the importance to provides partnership we Sporting

drive them play our important throughout place opportunities physical the we event other As with on and investments and detail. marketplace business powerful will the and month, Lee we new a about - I for call support joining enthusiastic Sporting are the be for Gymnasium will I continue LeBron skills strategic to learn now new I $X in can students where named the to lives. carry priorities, commitment, Foundation grounds a leadership Matter to to a our differentiation our and they to Gym execute of in a with James School Sports recreational of Promise safe the more construction to against announcement to optimistic very earlier our closing, in part classes Goods In with outlook LeBron financial the the review the can this to was This with in report This and they Promise our results Promise gym education Ohio. district I School part remain turn million will grant provide us and be will Akron, position. activities, as Family grant more will This of over their students. school creating strengthen take this our that the Dick's announced kids Foundation.

Lee Belitsky

and good Lauren Thank you, morning, everyone.

$X.XX first quarter Consolidated results. brief X%. sales Let's sales billion. as X.X% ticket were review begin approximately same-store average while a increased our Consolidated with flat, to of decreased transactions X% increased

increasing business Our remain strong e-commerce XX%.

comp saw We to the The athletic digit start positively April. in which penetration. positive drove delivered mid-single increase. improvement March a quarter business, strong comp sales higher February, brands particularly pleased a continue with slow we also private we in both with sales our During and comp following apparel were sequential comp

see continue hunt. in As expected, we to sales meaningful declines

hunt with impacted impact February. comps sales the the negatively coming quarter, largest our by X% in For

to overall be a throughout in continue negative as XXXX as is decline. to industry category We affect the

steps our to we exposure. are actively decrease However, taking

from we growing Ed XXX the discussed, hunt second approximately faster Dick's on with it categories. are during replacing to stores additional remove merchandise quarter, As track

the during were regulation both win quarter. the well Super the comp baseball Additionally, Philadelphia headwinds - year's Bowl Eagles last as sales anniversary our bat to as change

points, However, year. we second approximately the of our These headwinds shipping neither increased or well flat leverage. Gross profit higher compared was last as as quarter. net headwinds strong of costs which to which as were XX driving a the occupancy $XXX.X result first basis e-commerce forward margins, costs. million and saw higher these sales, XX.X% period benefits into carry the this, by fulfillment as Within as largely same will freight quarter was inflationary merchandise offset growth the well of in

points sales. is overall profitability the very with channel. This rate were stores, deleveraged continue we our year. same SG&A the compensation pleased the period no XX expense gross while and equity XX be points our than overall net $XXX.X basis associated basis of in of lower are plans XX.X% expense or is our in expenses quarter. increase from change to last business in from has expense XX Importantly, margin significant million recognition resulting e-commerce deferred or this attributable the of with This of other offset to Non-GAAP during the earnings. first the income impact fully markets of to value

also Additionally, These were our per our this, compared earnings while reconciliation release last of non-GAAP basis, offset objectives share can earnings on portion non-GAAP diluted million to delivered business, earnings per for we we made diluted $X.XX total, this additional that $X.XX, of of investments. morning. expenses. share details share quarter $XX XXXX on refer first you GAAP we savings the tables issued to strategic of press On productivity our to eliminating our year. of growth track per of diluted achieve investments $X.XX, a In our approximately in helped a remaining

approximately sheet, facility. and revolving Now our cash we our $XXX looking with equivalents of quarter and outstanding the to million cash $XX first on million balance ended credit

by increased in design, levels growth the in of year our XX% to investments were and prior by made key levels discussed quarter Ed we year the same and compared running period inventory Our lean categories. support strategic inventory therefore, last as too

inventory ahead, and is our clean positioned. Looking well

we did XXXX, and assets accounting standard fiscal liabilities affect respectively, resulted of net beginning lease the P&L on balance standards our and $X.X new billion or the lease new of $X.X in recording our flow. cash at billion adopted mention should materially not I of statement sheet. Additionally, which The

in net million were quarter first $XX allocation, and our expenditures to million we capital approximately Turning $XX paid quarterly dividends. capital

an under we for During we quarter remaining average million quarter, of million of Taking additional $XX.X our into end shares XXth, repurchased approximately million stock $XX.XX. through authorization. our million also of at the had purchases X.XX account $XXX.X $XXX subsequent share to May price

outlook. to fiscal our turning Now XXXX

delivered we quarter, first the end flat for consolidated of discussed same-store expectations. near As was high the our sales, which

the up for sales approximately consolidated slightly previously. end of X% to Given to our the to flat this range same-store low positive raising of from a guidance performance, up are we year X%

share full-year Additionally, range from to are our a $X.XX raising we $X.XX $X.XX earnings $X.XX. of to outlook per diluted to

Our guidance outstanding in earnings contemplated shares based diluted XX.X million million earnings estimated guidance. updated as is on from an our XX prior

Before concluding, a tariff tariffs. like billion goods. September take provide imposed XX% just to In Chinese I'd an moment U.S. on the on update of a XXXX, $XXX

pricing For increase us, XXXX and how partners of this these guidance. concentrated strategy. our categories to still are may into XX%. factored this and our this and lines mostly tariff the increased impact our hard influence was overall working in original brand XX, We're Effective manufacturing through tariffs May with our were

others, contemplated situation This concludes can Thank now interest closely Dick's the for you may not have our comments. Sporting your questions. we for a we Like prepared are Goods. result, reached. a and are trade hopeful guidance. this agreement into open the today's you monitoring Operator, be As in specifically line

Operator

[Operator Lasser of Please Instructions] first ahead. Michael from The go UBS. is question

Michael Lasser

Can Was quarter about the [indiscernible] vendors the in the of really with challenges improvement more that or the how more some and the of the was other improvement a easier a the saw hunt quarter your category about you parts the saw of last in some business? comparisons of year significant you give course certain flavor the little over it went? you on lapping

Lee Belitsky

the from hunt was Philadelphia was concentrated a and a perspective both month, February as February tough the in pressure weather well as Eagles. So,

we Team and Sports pickup in businesses apparel are key those really as but of lapped, some footwear February, improved through also by So particularly were encouraged the our well. going in and March,

way in Sports, as of some areas well, So and the which Team really as our - inventory our quarter. did we got the through we're apparel making we investments worked

as little go-forward businesses core So of for headwinds well. improved and it's a lessening us both, the in business

Michael Lasser

And next as remain the quarters, of easy. over your comparisons we couple look out particularly

stable? X-year assume end that midpoint so, in line next over if X.X% - guidance it couple guidance The of more keeping you'll lines, the that bit, quarters. of take we it is profitability is updated that? relatively it Along a full stack it looks shouldn't initiatives than like your to X-year the have better comp And of your that with little for all address can do on? X% guidance Why the down those with the you be stack, year the the implies high you going coming

Lee Belitsky

Yes.

of got think a that the bit I that and particularly forward have the uncertainty So in front consumer. might of impact on that we've overall going little what light on the tariff

side for the through the be count, our going buyback. that cautious buyback, the and it to here, do and to math per to interest share back share cautious But rest the to and I be kind the to gross being think have share of that. earnings. expense bit about a earnings that everybody We're it little the bit are impact because $X.XX I'll for about going reduced a related everybody, would it's half being sales our on on the of is you the we got on feel little we about outlook share of We've good for still but $X.XX. confident questions, With sales respect extra year, on the are with the just positive year. of the we flow

from is a We've the far, the per $X.XX, the net around on. that's guidance by share So think about year, so I done as around of $X.XX. process earnings on really taken impact the buybacks and we’ve it. little the consumer thought impact just share and up the our back we how tariffs of may of the reflective half get That's into react so

Operator

Robbie Ohmes The America Bank go next is Merrill from ahead. Lynch. question of of Please

Robbie Ohmes

where quarter a lot world retail. Nice quarters been in hasn't of there whole in a nice

apparel, out athletic can if you more A follow-up, on questions. two quick color footwear. wanted Just to see called get I we

but I April talk don't for - know weather in it underperforming and you weather beyond it it February? And sort as the improved hoped was footwear as I what just and athletic weather, also good Thanks. just it other and in did as in of - February this well the the you. question, about you you seeing apparel the significantly challenging quarter side was - sorry, moved to in was a it it sounds also are of mentioned on through the April but not was working like lot your business? may as you against most would have like you regions think, Lee you of March be quarter, then

Ed Stack

I footwear our real we're to - stores business and in presentation some think athletic we've content. very Robbie, pleased made the footwear got with our we've changes

going from that, very to in April, March pleased continue number and but impact a weather and bit a start weather was really us February February, was weather a athletic in was and both we April did comparison look footwear March retailers in as that comped the a we positively tough from So, other off to about with were of you and standpoint, an and on a significant. be And what's do standpoint. at pleased that. a we We issue, the not saw didn't - weather slow weather

Robbie Ohmes

some other quarter And one this just you've so relative probably - players follow-up, out to Ed, other seen having expectations. there challenges some their

Any in and may some a channel environment over a competitive a athletic you on thoughts carry of at inventory the summer lot athletic them and look play of carry family think areas, space. the positions, of footwear out apparel their lot them some As back-to-school? department - of lot the into the you of store do how in

Ed Stack

made moved shoe we you investments where may more at category. in the gotten very if having. aggressive are look not We've up. family take product. SKUs allocated We've same Well, ours I We've that they got channel in the our a be running the think

think standpoint. don't inventory is much our investment there from I versus same an and overlap apparel inventory where their is So as investment in the

Operator

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

Simeon Gutman

to I savings. first spending investments My versus about question. want the ask the

the think where I And correct investments, going those this me are spending question. you release you rated this morning. the taken in I talk Can I they into second think been the run about, have and think spend? you my and - to Are as expect or planned? I'm if reiterated already you savings wrong, ties the then

mentioned you the spending? the sounds Lee in, not that the you've reflects So, like around through, some reflecting, flow you've to cushion enough conservatism for in or tariff that we're getting not built savings offset of it the uncertainty built over

Lee Belitsky

Well, our e-commerce and investments well. as are on target and savings fulfillment, target are on our in

we're and more ramp-up I of the So on a at we're the be it's But would negotiations I and the pricing some to little the pleased a through would where vendors hardlines around bit direction the with as tariffs through respect going back there. flow through say forward. the for respect our more little general with half to on, with us, working opposed inventories. the still say we're consumer to particularly would with specific year, will on strategies because I be so of - tariffs. bit concern general that items of

Simeon Gutman

electronic words range were point, the think business if sales. been comp some is at rate the within in hunt away business inching or already question the has these headwinds, your on somewhere not the strip My our - but is that. towards I and and run sure of second I'm yours we

quarters? that's turn end given assessment - chances back quarter I comps at what to or earlier and two in in north the about comps comps, next happens? question, the that a you're there shouldn't maybe into good so positive why of to are up Michael's if of fair And couple think likelihood that here least so and a Is

Ed Stack

on going to It's out that. the laid that bit consumer. said, kind comment trying we uncertain we with on or not tariffs effect what's don't they're be we we're as going here we're and happen. We've enough knows of of what comfortable to what with We're to we what's said, happen of Nobody and because going to information are that. to a our guide as conservative - to have and - guidance going have

Operator

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

Christopher Horvers

the March a questions bad first it you the headwind what literally and and opening that in of of a Presumably to U.S.? Can that for April, the also for April was? actually you, was talk do about stick weather how to timing day League question. a more the I'll March-April positive think given considering related line previous the top bad was laps And ago? Little then question, for just you was overall year across was

Ed Stack

it piece bad first. holiday Well, year The so at what last about New bit from entire it country, York. we'll right of very a different than throughout in talk was piece beginning the was year. into Actually the the a and down bad of starts different the is upstate challenge a times League in Florida is it challenge Little

bad in So quarter. entire the the was difficult challenge

far it the I a it was We As same. was or think April think it weather as neutral. goes, don't negative, was positive relatively

Christopher Horvers

down about question is, here? of sort past and you feeling obvious sort coming are of the in Any - the the March how down in leads May of April, us quarter-to-date

Ed Stack

going. don't to indicated how quarter is Well, we that year. sales But for is flat comment X% particular plus we we've think our guidance on a the

- we're So that. comfortable that's with where

Christopher Horvers

question. then And last

much this big on lower other How this How this levels mix help would mix any margin the with promotional year-over-year, merchandise ago on drove this? up of lot was being driven? out? and that much factors you I year. a to tough you've been a you know working the merchandise So a Can drive side of margin. call inventory was about lean and talk compare really investments the year of what

Ed Stack

in what did the content we a in the We've papers. of you the circular, was still eliminated is thing some Well, the main promotional I to going and the combination still But do direct is Sunday think less. a we've determine it's of no ran - which for a We to will pieces, think if levels sustainable really fourth most things, forward. part, mix, going trying couple as we're lower it quarter. promotional drove bit but circulars that we mail we're that

Operator

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

Seth Sigman

questions couple hunt follow-up the A of on category.

I think headwind year said but If comps. somebody negative over impact this that the meaningfully the point quarter. lessened, recall I are the last in XXX was there periods to basis where still was

wondering if Just you been historically. than has could size it the it category up now? how is Obviously, impactful lot smaller is

So actually thinking then comp? how you second category across is is, meaningful about that the mentioned channels, of an Stream Field for all part that we are the specifically? options overall from and & the to And question the concept exit evaluating see Thanks. how you could the

Lee Belitsky

be anniversary respect that well to and leading we to our & determining of continues the all was for our the on businesses, path are largest at that of impact would comps the last that how announcement the piece both year. use looking say in up better of to negatively Stream. hunt the throughout February. - policies was as I but negatively comp - bigger store With the I that strategic Field basis by did comp the respect as comps, But hunt to points. quarter, within will to script in business - headwind mention space the the it to big impact utilize review, With XXX the continue did changing February, future what our The of

well So we're that we and looking were at both looking pieces. at as

Seth Sigman

own? historically said whether you Stream is on not or & Have Field its profitable

Ed Stack

great standpoint, said breakeven relatively it's - cash cash from flow it's flow positive. a We have. relatively We that

the hurting necessarily not it's So business.

Seth Sigman

the is for outlook And rest of the margin then question year. follow-up my the about

guidance just the the think decline to Can SG&A, through that margin as progression the year? have the in about Thanks. move EBIT terms worst us would remind this QX implies think we I the gross how you year. been margin, of

Lee Belitsky

we guidance full with still the kind sticking our the that It's giving not the on it. progression. expect guidance SG&A We're where the had range of for We're right quarterly we year. in

the from to So prior no changes regard SG&A. with guidance

Operator

Ciccarelli The from go Scot Please RBC Markets. next question ahead. is of

Gustavo Gonzalez

the for Gustavo actually is morning. Thanks this This taking question. on Scott for

it hunt you of relates progress you the fully sort as XXX it, remodels XXX much beyond that And year? how is initial that for currently this the So expanding is the category, see of the plan to remove year-to-date? also a stores to potential the there as

Ed Stack

to some, expand but this might to small. very we're So wouldn't do lot be say more. There that year, I a going

quarter. be far at right merchandise, later now made where set we as of in will As that clearing through just yet be stores. back-to-school most change any but that we're haven't meaningful we're this the It'll all for in

Gustavo Gonzalez

a And then just follow-up.

get of plan, level sort things store assuming sort of percentage comp? optimal sort total your to you need So store base you go of is according positive what of that think you to to get

Ed Stack

Can it? question. the I repeat not I'm you sure understand

Gustavo Gonzalez

optimal is term, percentage store you're of what the in terms sort of base aiming guess I in that of your long sort of refreshes? the total So, the

Ed Stack

out of mean -- you take to hunt Do

Gustavo Gonzalez

Correct.

Ed Stack

Yes.

between now. will our the X% guided We the and comp haven't anything do we So more XXX somewhere right be for store year year. sales X% for feel than that

Operator

The Baird. Benedict question from for go Please is next Peter ahead.

Peter Benedict

A quick hunt another here. on one

us are we Field Dick's the hunt Just, the I meaningful exclude mean of that give do & mean, stores. a Stream Can you you a I would business banner. under if for I a sense, there guys. stores imagine number core

the Field Stream to is about one just you might Certainly might we here? think size how decision & first within do trying as you what maybe Dick's outcomes or your So that that potential meaningful then another. my be stores banner maybe you I'm of what and number would business? understand, hunt Could That's in Dick's maybe hunt what is consider comment on maybe percentage a question.

Ed Stack

to complete that said and give a answer and right be. call or We'll of of the going suspect we now, as because near going going business I'm you we're we're next exactly the strategic ready disappoint not review a future to hunt in I'm what not do Sure, two. doing sense would it. to that's the to But I in

Peter Benedict

investments, or a maybe maybe be cadence of just give it track. after maybe or even said Lee, you're net gross the of the SG&A landed comment Can a Whether the you on some the how much sense - on hit you XQ? productivity savings? in

Lee Belitsky

think year. I relatively course SG&A ratable the of investments over the are this

Peter Benedict

had efforts last segment, prior to question, by and their calls maybe Armour I of mentioned some you product. my better in think And Under just

a planning Armour you're Thank what of an I you give over Under on to come. think you. year? that seeing of and XQ was you kind maybe was that where balance how with of the us the thought maybe going Can kind timing you update

Ed Stack

Well, to very progress it, we businesses the I Under is really ,especially men's pleased specific planning good. won't but in Armour we're get how that our with is made quite are

in all with on what's Armour Under very we're and direction forward. pleased So with in going all,

Operator

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

Steve Forbes

the So stores. on wanted planned removal to I follow up of - the XXX

some maybe tied sort poised right and a you us sort can ramping of if this of behind get categories productivity of more What return maturation envision So to for you or color do profile initiative? of the on are provide some space? reallocation of space how sort

Ed Stack

based that as - Each what's on be will we happening in could of local the stores different, said, be market. will be it

peanut blanket to a you give take can't is going what space. butter that I So spread,

quarter mature As indicated XX again comped we in those fourth we the them that what first XX the we with and stores both these and mature, to how positively. would we those in expect go quarter forward, to similar did stores

Steve Forbes

already, run that all wanted P&L there this there of still to stores quarter. sort the of a going the mentioned then into this Father's And of - reset but right, Day, ahead just concentrated sort that well. believe be sort just maybe we're of is investments is then is the plan? And as confirm baked you I topic follow-up within of that, second to initiative is the given expense rate the a on

Ed Stack

quarter. been be done where Lee sure our of are comment indicated investments Father's that can we're be are Well, has but and never track this might we not in second already We comfortable that Day. we on kind it indicated I'm would it expenses done And by commented the making. have will - confused, and that the with

at of this - that back-to-school. vast done the would look these So by majority be

Operator

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

Tom Nikic

a question. the line, is something my SG&A will some taking have into QX? other and basis you like that a modeling for Was throughout one-time now point Lee, mentioned expenses this perspective, that that out in expense something on XX the shifted you happen year? impact just that Thanks thing from of

Lee Belitsky

out We've upon for got lot our there. based movement assets, comp they quarter to plan market kind get there assets of of have team revalued retirement every management and deferred

side around, go there up, could be and offset that to number will expense. then the down could go on So other an going it in SG&A is move it

net it has So on earnings. impact no

Tom Nikic

and anything like there seen And like response of just level higher that a clarification for the question that. attachment things cages the batting from those or you've what the about things batting sort to in or color enhance done Is cages doing that? about rates the the stores experience, that's some on in-store you're or traffic of customers any to or

Lauren Hobart

batting pleased the to with reaction earlier. baseball the a with pleased Ed as our business very cages been very we've we've result, been mentioned and as Yes,

we're that see the already you - expanding experience areas other that looking for us noted where we and add as to So will can store. we've

Operator

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

Camilo Lyon

attract. about your can just I'm some to was apparel you're about type a DSG know curious I - around line. specific is if the targeting line. the to that new is specifically, that comments customer value that this you customer you with of curious This customer provide More you And hope details

mentioned store seems within you you it category, for stronger that you line you options more like similar profit will branded directly a think is result the customers, of hope it that how this with you a has profile kind department Or is? to offer clear for would that compete I years? that the over in the it performed

Ed Stack

us, with we're is Adidas now. think We we new the of right very attract and that into it's space value-oriented. a with business, brands, very not business really this we is that Nike pleased pleased compete space We a look those store. which brand think a good is is our that Adidas, our to it's can at we we're And white outline expect white this customer for quality. This more very Nike, with

done this. with Our a team job wonderful has

shopped who new that past. shop a they're in pleased and traditionally very us groups think reason this to Goods, have Our creates really not focus with have this and come indicated the Sporting Dick's I at

Camilo Lyon

those customer going the more I'm efforts to new that assuming that around marketing Store? into there's be targeted to attract

Lee Belitsky

yes. are, there If

Camilo Lyon

And so it? before we should bit plan period half around for back those investments to materialize in that or little March a

Ed Stack

that's to you. Second quarter, surprise our going they're baked There's quarter into and all but third into nothing guidance.

Lee Belitsky

is these bit their lot for equipment they have apparel. are a been save Camilo athletic buying we little going but thing be a our sports might of add that athletic it's other a apparel purchases, to to and already to that new in customers some customer they families The us, to in might on I'd of apparel have one money players buy their our stores stores, looking

who apparel. So already some addition It's we some attracting and them want customers. in sell customers those in to to are more stores capitalize on new

Camilo Lyon

the Is few CALIA roadmap stronger this And taking you're you piece, with there is on a way has much you're back positioning a you then into two and was are and the or positioning launched a evolved point brand? it a the - that guess similar I difference years starting this that from how just introduction? that this back CALIA was between the same like distinct a

Ed Stack

with to We're off We're and agreements. do store augments being used bigger Reebok what licensing aggressive more count, and this this. we starting with a investment with replaces broader our

we category or without brand, much baseline CALIA scratch the So already this CALIA. brand other where than already be bigger there significant when think started any business no was a that can we it transitioning launched we right a but is from that baseline. is from really there category have in into now, We we

much box going with CALIA. aggressive the we're So with be of we out to more this than were

Camilo Lyon

on you think said to offering. expand just you then looking elaborate expansion? And that on you're piece, the Could CALIA that I

Ed Stack

expand quality up better points we be to will to taking we're price the what with broadening are points doing price CALIA, Yes, continuing product in category. this

be things some apparel. travel doing We will around

on CALIA also we've from standpoint, and expand some sure it focusing not some to that the and the back gym, from points, we're travel only and going to gym we've starting So seen taking gym price getting there. the what's making but to on good really and response a

we've got better CALIA think the price. opportunities with product AUR we and some higher with So

Operator

from The of Brian Please Oppenheimer. Nagel next question is go ahead.

Brian Nagel

growth So inventories the first really makeup more is more prepared - within just been just of the comments, quarter and color topic I about a but Ed this now, is I on about some for with further growth inventory a now happy bit then you - you. be will XXXX? we - outsize makeup we progress there, Thank now I it inventories, in to building in QX your talked but continued Are you a position also you've know follow-up? elevated earnings saw position the should address think should you or there still as maybe got bit QX, this - we how will are wanted we QX, growth in into expect

Ed Stack

table basic Nike not Dry We've and little Legend key some which think but the Tee, significant, done I key meaningfully bent And comp bit of would we of what kind what's sales, done double look a a big - the gloves. where some is us had around really with be or higher. bets to we in our the Hyper nothing higher at done merchandise. categories, we've has take Nike store inventory think depending, this are is too some a well. baseball low. might exclusive These extremely the which bit taken with is curve this Tee you We've baseline

as it's So AXXXX has going be inventory next an couple AXXXX will it for around be is the been and year. most baseball the that part, glove glove of years toxic, baseball that last for to the same

Nike - very similar, going on similar key is it but apparel, a to Adidas Nike it's item key item the be of changes, basic go-forward basis. Some pretty color apparel, some apparel

So toxic. we in really invested easily that inventory gone haven't out become and could

to basic We're really it's it's that sure stock in want quite it. So product really stay we in starting make and we pleased dividends. with to pay

Brian Nagel

size I basically of to lifting understand to that what the of been fluid, so is of suppliers the tariffs what's of that I'm prices regard far some course so combination date, The follow-up back Has in action? pushing quite working two? tariffs. with but us the with and impacted understanding been remains dynamic had have Help that, Dick's. or the a stores, or function your it the

Lee Belitsky

combination tariffs within and we've major equipment concentrated brands of space, Team point this our broad swath swath broad furniture a - little in deals in and bit at like on hard categories Sports, a hasn't the in those. in this which so bit on far of category impact well. This hunt reducing stores the are that point. already across Really, negotiating better of chairs those furniture are and We've through hunt the it assortment like There us. the thus few been on. are private our handled had some is folding like stores increasing in at in not a our of things and it lines, little a It's categories,

increases. with some with far been deals dealing XX% able so better we've we've only So to and vendors been negotiate

So our and it private brand continue through or some a work suppliers, to national this sharing of significant be a had with we'll hasn't they our But brand suppliers impact. whether get not and at on based the at there address cost the point but Company. this impact selectively a have price, tariffs to items the major the are having it's we'll upon on

Operator

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

Sam Poser

I on and just wanted impact. up tariff follow to the the

you --just concerned go reaction part prices saying the if is consumer - all about You're that flowing the you're the to effect - you're not is guidance that and up, of that of in clarify through correct? the because

Ed Stack

Correct.

Lee Belitsky

Correct.

Sam Poser

mix current your of in percentage sourced China? is what then, And

Lee Belitsky

but that, concentrated hard and go we they line our from vendors it and get it's back to to we're right where we've as difficult bring lines, is our hard I - so got Sourcing it's in get now that to more would all soft because vendors to the through in. product X,XXX buying China over and Yes, X,XXX say

of brand private the and apparel amount us very good side, amount the On our small on private lines a of for hard brands. pretty

Sam Poser

other and the to apparel product exactly hit the because things same mean that's And yet. existing with haven't that's going then been if - from XX%, I the XX%

quarter lines had so about have think it on you done So XX% I goods, a mix what gone this would those from perspective, to when it's if the your mean hard past and earnings? to that that

Ed Stack

would what are on the with depends and to much the eat, to going how do us take. to much It get how they and vendors how - they haven't vendors you're to try going We negotiate would

So, now. be right knows what's nobody Sam with really and tariffs going it's going happen to these negotiation to

because we nobody not early conservative what's trying happen. upfront very going we do knows we're as only So said to happen, here be going on, to what's transparent, and know to not

Sam Poser

part guidance is the better Okay, mean lack a your discretion, the in better is term? of for about so this I

Ed Stack

the of… most For

Sam Poser

assessment? fair a that Is

Ed Stack

happen say conservative. we're of is going it from might we be to to take And the think what standpoint? Can for a It stuff that? consumer We're and someone are to try of we of tariff just kind our and much into going which not the eat. take sticker happen very of a pass consumer? that have And transparent minute. cost standpoint, to to on trying going going pause this go on to The goods, a would a to much this some we depends from is shock how what's price of to have to what's is be, to

So wish we we don't know. We did.

you to happy If talk you know, about to we'd it. be

Sam Poser

I Well, appreciate that.

do it that ask just try margin mean conceptually. try goes to your the tariffs at dollars XX%, this you me gross you you to maintain or margin - do maintain have point? I if Conceptually, to Let gross

Ed Stack

look conversations we depends goes on a our with vendors. will Well, depends what to on of take it have our that. where It and at each are it

a the answer. what guidance to what's still in same I different - number more our the it's ways, approach and and but conservative you're going understand happen to can you know can going question of to We be ask forward. get take we've going really a trying you don't to So tried to

know act. don't the know price consumer will So the will know will be, we we don't we the what how be and cost what don't sensitivity

Operator

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

Krista Zuber

and you update how said questions. Krista for Thank just for I an this follow-up? little John. a for you. ticket that prior us Could you us was trending one our be higher Could taking you for give have is sort guidance QX. of of AUR's AURs to - and 'XX X% Thank how you just - give your sense Zuber are on still supported This up on believe fiscal in I is

Lee Belitsky

higher AURs ticket. are up that's Yes, really the running supporting fairly well what's and

Krista Zuber

Is early growth you some with positive areas there as of experience investing potential to a the potentially been do the second half? all strategic think store behind and for turn these possibility - on key you've initiatives that as doing there traffic that is

Ed Stack

from now plus I flattened and think to a of somewhere guidance we traffic think between providing of in be the will year, and habit the don't in want ticket, comps to standpoint. between between X%. traffic get We our balance the

Krista Zuber

the correctly? the of QX, of are the of in going embedded the prior is sort thinking slip same we pretty just that be believe that thinking was the costs. that largely to in on startup guidance - about just is much could I fulfillment I and more, sort that one If e-commerce

Ed Stack

into because be QX That's event, really QX opening QX. in we'll

So yes, primarily QX.

Operator

is ahead. question of Svezia Please next from The go Chris Wedbush.

Chris Svezia

that is kind moment, just case? or one out prior for call, that you on mentioned on go guidance more the sorry so elevated able to then store QX I'm quick, I you the be to as come of - remodels, just roll XXX secondarily the Lee, And real guess, again think you I we'll in SG&A, the still

Lee Belitsky

slightly in a QX. still be elevated case. It'll is That

Chris Svezia

And rollout out half for still I that's with the having year second just as gross think flattened kind some impact on probably well? of center, fulfillment new you guided the then the negative for it similarly, margin, case as was

Lee Belitsky

Still case. the

Chris Svezia

because and about And product plan products how the about change. have they exposure think purchases? of no as that you where just some you situation, label regard of hard in in somewhat do you then with you so your private onshore tariff enough kind not your to China are how think I but - if guess already is of - power you are in some mitigated that brought do suggest, product levels that the be ability, to early or about - guys on Easy, to XXXX the bring product, take reduce is most impact and forward line to inventory

Lee Belitsky

that year. now the cushion inventory incurred significant of right Well, a inventory hand the for this more against having certainly on tariffs levels have hasn't have tariffs. we we bit Because elevated the little provides that

is. happen and our tariff what look next going and happen forward just deal year, This be negotiations terms it's - matter in a with year we trade the As tariff. of of will time is between long ultimately a to what now to next final

So look forward to to year. hard next it's

Chris Svezia

quick. final just real then And question

whether from get how online? online Just will - go XXXX? buy purchases a you from centers fulfill running that In or or wait agnostic an on purchase at margin we in and EBIT perspective, particularly fourth facility, store from buy into store quarter, they getting from consumer will other perspective, be above, are the once the need a words, new fulfillment the direct purchase to as until which up we or you

Ed Stack

can. that The best athlete be still to We profitable. more want sure to we from the have just share. them buys we make market agnostic But us. We where store to as service want will the we are

want in up online shop online, to it stores. us, the be it However, whether be in whether they with store, pick be it whether the it

through to are work have what online we'll truly are truly agnostic. and we a we experience want profitability business. continue agnostic. But to So we with the we move consumer great do our We as

Lee Belitsky

our to adding as It's sale on than make Ed said, sales. our we money But is a of profitable really for channel all business. e-commerce our and sale our profitable with us still the incremental in e-commerce e-commerce that, we're incremental more profitability in Just pleased business. an of stores

the Company to really can it's it's the and get it earnings So, for business take we however, and additive business, good we'll for us.

Operator

This question-and-answer to the Ed for I remarks. session. like conference would closing to back Stack concludes over turn our

Ed Stack

call our Thank joining to you of to us like I'd quarterly on next and to months. in thank everyone talking we'll for the forward couple all you. look

Operator

you presentation. Thank attending The conference has today's concluded. now for

disconnect. You now may

DICK'S Sporting Goods (DKS) 29 May 192019 Q1 Earnings call transcript