DICK'S Sporting Goods (DKS) 22 Aug 192019 Q2 Earnings call transcript

Company Profile

Participants

Nate Gilch	Director, Investor Relations
Ed Stack	Chairman and Chief Executive Officer
Lauren Hobart	President
Lee Belitsky	Chief Financial Officer
Michael Lasser	UBS
Robbie Ohmes	Bank of America/Merrill Lynch
Simeon Gutman	Morgan Stanley
Christopher Horvers	JPMorgan
Paul Lejuez	Citigroup
Seth Sigman	Credit Suisse
Tom Nikic	Wells Fargo
Steve Forbes	Guggenheim Securities
Joe Feldman	Telsey Advisory Group
Brian Nagel	Oppenheimer
Gustavo Gonzalez	RBC Capital Markets
William Gaertner	Susquehanna
Omar Saad	Evercore ISI
Jim Duffy	Stifel
Chris Svezia	Wedbush
Peter Benedict	Baird

Call transcript

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Operator

Good morning and welcome to the Dick’s Sporting Goods Second Quarter Earnings Call and Webcast. All participants will be in listen-only mode. [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

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

actual As XXXX to and our sales are subject to outlook various could we and results earnings, be that forward-looking making from will reminder, materially for a statements, our uncertainties risks these including differ which cause statements.

during for considered measures information. Any should market we subsequent Time. to non-GAAP discussions obligation no today’s at conjunction statements Please third the in November cautionary or annual call. our call find such publish any this statements update filings the to earnings Form to of reconciliation made our our release be SEC, these quarter finally, refer with XXXX XX, call. factor Eastern in risk Investor We on on forward-looking future earnings XX:XX with website last our Relations statements XXXX our the report and assume cautionary of including with earnings XX-K, in financial release in referenced tentatively a.m. the planning your before scheduling opens any to And our are statements purposes,

Ed. now to With over I’ll call that, the turn

Ed Stack

everyone. morning, Good Nate. Thanks,

And as same-store X.X% this indicated, to a sales. in earlier As second comp announced expected we quarter. we beginning previously consolidated to were positively morning, in increase deliver pleased the

of earnings diluted $X.XX $X.XX year. Our compares per second to share of share per quarter last diluted earnings

performance XXXX. and our average was strongest sales quarterly by supported strong both transactions since increases represented ticket comp and Our in comp

primary year. and of e-commerce apparel business increasing strong, growth our hard positively our last and remained categories saw lines, We XX% our brick-and-mortar stores comped each of across footwear over and three

and strategies Our investments key working. are

business about of raising and remain our and sales curve. to earnings range headwinds positive are year have $X.XX bent sales consolidated full the guidance share same-store enthusiastic we major $X.XX. diluted very to are full Our year our and our We guidance are single-digit per a to behind us low raising

As discussed and last design our at been we the growth investments in running in the by levels XX% call, were year. making on compared the to our of we the categories. period lean This prior therefore of strategic inventory increasing the have too inventory year inventory last same end second quarter key end average resulted

increased investment, basis, in at a on we feet X%. Through inventory showcase levels are key square and Looking this have this way. very X-year impactful improved per just to a in-stock items our total able

responded expect throughout positively comps these to year. the changes to deliver the athletes to Our second continue positive and of half have we

our align and growing continue adapt space reallocate categories with We floor to needs offerings to better of the each market. to product

these positive stores results. generate you growth. replaced As removed discuss and stores. to year, early compelling we the stores success a second Though of last performance, third that balance athletes generated am quarter will pleased and replaced with who off optimistic Like the outperformed hunt sales quarter assortment. communities third positive from to I quarter, it localized of underperformed the are Building second XXX that approximately initial better announce we will our we Dick more recall, products from removed can categories with in the the the and category these it too the changes category had and chain. during it’s we these additional serve stores, the quarter XX late during in comp consecutive their hunt the drive

hunt business, call, in As review Stream. I a broader strategic were of Field discussed last space steps initial taken these on our the & decisions allocation including

and provide review this available. we’ll updates continuing additional when are We

Our differentiated strategic product. renewed Face our and through brands we including access have to elevated Callaway allowing serve to remain together, Under strong. and These in-store focus premium Nike, all and athletes. our improved business enthusiast invest better Adidas, North Working continue relationships our on assortment with The us our and very the to in shops, partners, Armour, marketing programs athlete

Our private our a brands also provide source of differentiation and strength and assortment. remain within exclusivity

apparel and in business start. as fantastic average high company performance outperform a the The out quality, to CALIA, During value-oriented Alpine apparel. brands Walter Design. again the we and team second with across this athletic assortment out by Hagen has rounded our new great off we our DSG athletic it’s launching job kids done build DSG, brand men’s, Late quarter, great to women’s the as quarter, a and continued

During stores technology space the of efforts, to cage stores HitTrax to another part our we the a XXX across expanded as reallocation embedding experience enhanced XX this quarter, approximately bringing country. our experience

our GameChanger all apps for and destination new more comp softball Dick’s improved making and in expanded Our categories. assortment HitTrax driving baseball important experience, are of these compelling a athletes collectively integration are the meaningful product and sales

other partnered West innovative continue sports training organization youth training we E|LX, with more our with affiliated with baseball youth Coast. and softball to facilities Dodgers pursue on experientially Los operate athletes. an ideas engage addition, that the to In the We Angeles recently

we where will partnership, athletes new activations pursue locations retail play in and compete. this Through

to Sporting initiative I to and about results this enthusiastic excited gain all for and hard business. and am performance I serve of made better with which Dick’s thank learn our I’d this possible. work second In pleased to from am commitment insights quarter our future Goods, new to very athletes. to eager teammates our like our We’re closing, their are

over Lauren. I’d like to call the turn to now

Lauren Hobart

our I our on to program will matter. working. review and business. investments echoing also you, And on We loyalty some best start experience. progress in about by focused provide and building we’ve and made enthusiasm good our goods, sporting experience to an strategies our investments e-commerce I morning, the the great our morning, sports Ed’s I Thank Ed, update are everyone. This and and want due site remain in on will stores of key Scorecard omni-channel

asset. our that greatest important teammates it’s our First, to are note

across out our We training championed and moving stores to our store rolled second comps our and to are service mortar standards quarter. provide approximately new dialed and positive conversion up their this XX,XXX really efforts have we new needle the have teammates helping return brick the model teammates. and the during rates These and improved service drive

athletes online launch faster we experience. desktop. responsive meaningful and deliver to new improve [ph] and features in on provide Later to athletes. reliable XX% that pleased to Turning and result to our remain delivery strong growing we more will priority continuously the as quarter, online sales Providing to across performance with the quality e-commerce, second prior experience over with year. we our websites to tablet focused a We during the growth mobile, improving deliver This quickly. athletes will for improvements this year, [page] allow our remains more we e-commerce us continuously ways our look were

in toward are fulfillment supply making within innovative significant solutions developing and investments this We capabilities our working by our chain.

e-commerce opened recently California. Earlier we And this and partnership a dedicated FedEx. week, delivery formed two York centers in New we fulfillment with strategic our new

by to expect our going see many to and in create which results nearly athletes also cases We from reduce one we the forward. are collectively times delivery day positive delivery initiatives, these beginning to efficiencies

up availability. of growth to inventory and online in messaging, overall execution the the outpacing better POPUS, picked orders we was importantly, accomplished our quarter, the strong during improved addition, This saw in through e-commerce growth athletes purchased in-store and deliver number our significantly business. we in-store, continued In XX% site growth

XX As minutes reminder, orders responding a filled nearly for service. of positively our within and athletes are same ready day XX% ability to get and the pickup BOPIS just to are athlete this

redeem improvements Gold and our benefit to VIP a product at we enhanced users and XX awareness. account communications our more omni-channel will for will Next, sales. launches, over seamless asset to with most engaging Gold sales XX% provide more to October, time, program our will loyal launch Over active better and nationally, and been drive include the is tier continue athletes Scorecard opportunities and testing is to tremendous who early which benefits million that access engage members. tier loyalty to program deliver have This reward points, make a to we experience various our launch events more. Scorecard we with than more an of more program

sports Lastly, our which in today’s youth committed partnership the focused with fighting on very matter Dick’s Sporting to program, Foundation, we Goods crisis. funding remain is sports

matter a chance athletes provide Since in young by sports access we play. additional the X inception Foundation the of X million Dick’s Last athletes to to them DICK’S than giving more nationwide sports and the XXXX. month, impacted for young across by million pledged to XXXX, country have

created athletes our of Advisory will major match $X support this some the to today. to made our of new youth the a of part sports the by influential personally And facing to comprised donations we effort, As in million Sports up a the Matter that sports mission foundation addressing who most Dick’s are committed issues further in names to foundation. announced Board

against position. as remain investments our optimistic execute strengthen priorities, and about our strategic that drive we closing, business marketplace we to the continue differentiation and will In enthusiastic are leadership our our in

to turn to detail. over will more results our call Lee outlook I review in the financial now and

Lee Belitsky

Lauren morning and good you, Thank everyone.

X.X% increase increased increase review Let’s a X.X% results. X.X% $X.XX in billion, begin increased second of brief to approximately a ticket transactions. in Consolidated by sales and sales same-store average our X.X% a quarter with consolidated driven

As during Lauren XX%. quarter our and business Ed mortar increasing the and with positively mentioned, brick stores e-commerce and both e-commerce comped our

our XX% XX% As same a percent of total net the to in business compared year. increased online period last to sales,

growth across hard and lines, During three each primary categories the our of delivered we footwear. quarter, apparel of

as XX same second As XX.XX% strategic last or declines margins the was $XXX.X continuing. net in our profit hunt sales, of XX period expected, this, of year. a basis our Within Gross moderated. in basis is merchandise business about And sales merchandise million point the reset compared the to clearance Reebok mentioned, decreased hunt decline points. well from review with were comp in quarter with apparel more performance. was margin we And influenced DSG withstanding the decline merchandise decline, as hunt we locally this quarter. athletic stores our brand of we second clearance rate replaced pleased relevant in The our XXX by late with not that as of categories, Ed

of good margin improve merchandise in will expect in we Our our and year-over-year inventory shape half year. performance is the second the sequentially

a our factors These result increased and fulfillment partially occupancy on of shipping as strong addition, leverage were growth. e-commerce offset costs. costs by In

as e-commerce is of lower while our to SG&A of As a margin the profitability with gross business lower continue very overall channel. rate this stores, pleased expenses reminder, our the we are well. And than be

increasing period of made we hourly SG&A, wages. while a strategic and SG&A expenses from same also were million business sales, meaningful $XXX.X points investments basis expected. little growth or up from our Within than XX inflationary year last XX.XX% the incurring better headwinds in

to approximately In addition, of track $XX objective of total, productivity a we portion expenses. million our In second $X.XX to diluted These share we on earnings of remain per offset eliminating year. our achieve quarter delivered per of share investments. diluted of last helped XXXX $X.XX compared earnings savings

approximately sheet, with our cash revolving to outstanding compared Now $XXX revolving cash and we million looking the credit facility This our $XXX facility. at ended quarter last million on of year. on is second million our balance $XXX and credit equivalents outstanding

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

business we positioned. well additional support We recently we’ve our financial the $X.X June XXXX credit ahead, to and limit Looking million to clean maturity Also amended continued by to disclosed, $XXX and and our revolving growth as facility. extended extended and billion is the increased previously provide the our flexibility. of inventory

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

an for at we During million stock the $XX.XX. of repurchased also quarter, average price our shares of X.XX $XXX.X million

four share credit and the revolving trailing $XXX facility. over quarters, shareholders These quarterly were operations our have dividends. borrowings During repurchases through million cash under activities from through and we returned to funded

our $X.X approximately have programs. billion remaining repurchase under We share

sales for move me let fiscal to outlook our earnings. and XXXX Now,

of full consolidated guidance year strong positive slightly now sales, to our low-single our X% to as are from up raising a second previously. First, result we quarter digit same-stores positive

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

XX% estimated impact based as tariffs updated tariff expected the million as average Our new outstanding guidance September that remaining slated effect an is this imports and currently on substantially earnings effect, is all includes from Chinese in well Xst year. all shares to into and go XXth on December a on XX

Sports two of with to Sports, Stack Note $XX our million. Sombrero Stack. of that no pleased the and affiliation completed to am Ed we Sports Before I that concluding, today announce technology sale Stack has subsidiaries, Affinity for Blue

sale, we Stack the part official a the retailer long term As serve into of where of partnership as we will strategic entered Sports.

to We the reflect expect will to which our determined year concludes full one separately of third $X.XX onetime our time the please guidance And prepared result expected your the will Dick’s our quarter. not a gain, for earnings be does later This sale that gain, within comments. impact we $X.XX this results. of report quarter in note you to Thank Sporting Goods. which third interest in you in

operator, the line open you now may questions. And for

Operator

ahead. from question begin Our now Instructions] question-and-answer will Please We go Lasser today comes first the UBS. session. [Operator Michael with

Michael Lasser

taking lot Thanks a morning. for my question. Good

going how list assumed are of and have in On be topic, able is percentage the sales your tariff you final to this you of your to to that terms what exposure of the really what rest the this And for XXXX? this in a that and for or year? mitigate exposure year the fourth isn’t XXXX could event be this of then quarter

Lee Belitsky

thanks Michael the question. So, for

We our are China but the this whether now, products and covers XX%. they as there our most brands orders for the into the the to Thus purchase vendors, but hard to that based well, year, and written right year. are year. of or are in It balance not out own going for balance are come rest the our purchase for tariffs going with stand lines imports across our the XXXX those categories brands from private right direct have get of futures national businesses of of orders far most the we our of now apparel for discussions on

you there our X% majority has right that believe in So now between the order rates the exchange occurred. tariffs, regard they the will yuan. at beginning with be significant since around the XX% look been to free. we inventory ownership about have we February, the to Also, have and tariff And on also the that of devaluation

some So renegotiating going and brands we going back those down. pricing private costs of bring to are our on the forward

with strategies, So, we kind can more for currency favorability, will with are be out year. with negotiations, that pursue in of a can we X% vendors. negotiations pricing due changing we a that XX% if avenues further got X% nut terms take of our strategies, dealing to tariff, next we There sourcing

of we pull XXXX part not tariff to large think outlook the to are mitigate yet, year. giving we we So for potential of a but exposure have number next a levers for

Michael Lasser

what commentary, how we your helpful from so really of That’s percentage Lee. Could you give better understand the is? us COGS could China exposure come

Lee Belitsky

Hey, Michael.

that disclosed haven’t We at this point.

still kind range a vendors, of broad with our vendors now. working are right through that plus X,XXX many of information all We of

production those move of many opportunities So, between factories. to vendors have

So, right it’s a moving little a us target bit for now. of

Ed Stack

surprised were quarter the of at with that a Michael, tell of second and even been working we next number have next into meaningful price pleasantly you And into we increases. the can of I the vendors of spring going year. year lack

huge be we anything going are seeing don’t think I to is So – far. so a really this not significant really

Michael Lasser

on And conversion mentioned and you my Understood. that your question follow-up inventory inventory that of helped a in buildup. was the presumably is few because part position, times

quantify So do a your to this your the think how there quarter? way growth growth much sales you to inventory in that? contributed same-store Is

Ed Stack

inventories Those lean. had it I extremely exactly, was gotten quantify it don’t helpful. can think but we too

stack in a basis, foot per have it’s on X%. only the We inventory basis, a square on invested and X-year up

pleased inventory. we with So are very the

the line much side business. in in-stock are position hard footwear, We better apparel, the across a of

from have a category. strategies employed certain We different

average. extremely well our outpacing So the done baseball company far has business

inventory paying the that in made in investments our tactics those of So, have are we paying clearly one off, the are business that the and off. is investments strategy

Michael Lasser

good and lot a Thanks luck.

Ed Stack

Thanks.

Operator

question next Bank from comes Lynch. with Robbie The Ohmes America/Merrill go ahead. of Please

Robbie Ohmes

morning, guys. Nice quarter. Good

to and were strategic color a you the maybe couple follow-ups. more outlook were the ever. the Any of footwear back the partnerships be the about going going on to this you a quick a am is and the in? of Just I good how we brands comp and and apparel quarter probably of a feel mentioned be have great? would Could footwear Ed, some color could you half things back-to-school as color little for part comps as with this apparel that. strong on seen keep give bit assuming maybe get for you little then big momentum

Ed Stack

fourth business Yes. we We apparel our quarter. and going the in third were the extremely with footwear pleased about enthusiastic into and that business and very are quarter forward

with that take well initiatives in vendors, through and investing I in we look do our it’s differentiated a that as about products across at been of in Armour, it DSG like Reebok us also products As investing business together, brands strong in with the working in to Under the markets as be in that had marketing then quarter. in are we key brands it’s the we as to which us is the and Face. to we replaces strategic continue shops, drive investing the Callaway, vendors the key all-in-all, we marketplace. would North The us very providing vendors brand and have with both And key last well. providing that with said opportunities their say business to us move whether invest Adidas, and ever talked relationship working and Nike, I that launched their the we very can end differentiate past brand, the together the

we and apparel. across on so with what’s the women’s athletic very both are going DSG And with kids brand far pleased men’s,

Robbie Ohmes

great. That’s

weather just Did how the give build momentum issues, like you things talk played starting out others Can sort us the other lot color quarter? any one quarter some of on that you guys? you – the through have for of can that. just and talked of cadence Northeast, about in Ed, rain follow-up, about slow Just and the

Ed Stack

Yes, we through quarter. pleased by with are pretty month the it month

Robbie Ohmes

great. you. Thank That’s

Ed Stack

Thanks.

Operator

with Please The Morgan next question ahead. go Gutman comes from Simeon Stanley.

Simeon Gutman

morning, the curve intriguing Ed, said exits. on press the past some comment. from found pipeline, broad that? sales. What We in call, have you bit you expand the was and headwinds that bending behind product on based of else and I have Good that thanks. everyone. is you an little the you release How some seeing anything are on the Hey, bent think Can you I are it the comment? just a context curve? know category

Ed Stack

negative. we standpoint last year, a bent standpoint the what we philosophies gun on know actually weren’t to based that talk two We started of from were changes sales see can you improve. sequentially And as really with have bend last that some last over you that curve quarters, comps brands our that you pleased them. three and When from curve quarters, distribution about and see can happened a has in the kind that,

are we pleased pretty that. So about

We the apparel, we able for feel So, be enthusiastic we hunt even the able business, categories. do to are in expect in us the three deterioration business, to with hard been have makeup our the are And continued firearms we footwear those other and that the the these that main of balance of business now. headwinds to that and categories year. behind And about lines. through

Simeon Gutman

store the income but of you or staying line a to sight your have again, a should and and can pretty be in positive good you of function are the healthy And then making, I sales shared line investments it’s with inflecting? that it realize you And operating visibility the dollars start traffic or share into

Ed Stack

which It’s pretty store a mean, into able increase have a place average to do. the that’s the be. we as been ticket, to to positive we positive and agree. – continue I get traffic We can retailer

Simeon Gutman

lap you and it the to maybe, standards, forward Can do like now sneak and us the one Lauren in in you for want how momentum are it’s then seems the changing experience it? maintain service in just even and then more you tell I as where store. you effort that going

Lauren Hobart

and engaging that be up of and standards we of new help with if a service of life a results really to our organization lot the has you’ll watch service great see stores. the they and of the with it’s the are Yes. define momentum change how to throughout ground new going bring it’s recognition stores service fulfilling athletes. And think prophecy. great model, and the a our are with April, athlete the real I And on it recognizing April company-wide focus from athletes just And in built a posting proud champions rollout our for actually on and We of the their are self combined of how of standards – they focus we are and back customer what going to had worked on end so the you opinion other. performance expertise LinkedIn, in and our power just to the each how

the got and the moving shape, very virtuous good building stores that service we’ve circle. in the in momentum the and Now there inventory and a flywheel model just it’s

Simeon Gutman

very much. thanks Okay,

Operator

The go Horvers with from Christopher JPMorgan. next comes Please ahead. question

Christopher Horvers

that Thanks. light the most in about cried May. Good traffic weather impressive retail morning, of was everybody. The of especially very performance in

you you terms about within improvement of the And Was the if versus in level price curious traffic are can and can stores? sort full you that you what wasn’t UPTs talk selling of talk I sequential up? about what ticket of it see? seeing So did the was it then AURs building in basket? you of versus the with degree And traffic,

Ed Stack

that we in ticket. the have drive and into transactions inventory the have helped having granularity what it’s transactions, have can that That’s have service done which put standpoint, by that a are fact we lays that going increased level you have of we drive combination together, those we the although really standpoint that a what better conversion are tell a we helped not investments traffic from we’ve in-stock I made, a that and into, of some standards position, which done from to average get

Christopher Horvers

quarter. second understood. Okay, golf a And then in is category important the pretty

apparel very on So golf? well, working running footwear you doing have the you talk are And the where can and like could mentioned done well, categories better about felt have that you half. very you back in of you doing performance

broadly So, any category performance? in on of terms color just

Ed Stack

would not soft we are category, category continue had be anticipated. bad, kind was expect, the industry to we whole as had – we by was soft going hunt as less wasn’t you right as It the business now. Well, going of as good what to as a to but to is that’s get it

We are pleased with our business. golf

are We and business line our with pleased very other baseball categories. hard

overall, we’ve from standpoint, inventory, So we’re some categories. made with made out that investments standards, three see marketing for all investments the The us. the different happy service in we’ve around marketing made the there investments a we’ve you

and strategies in these investments to of happier. couldn’t pay we place and off put All we’ve tactics are starting be and

Christopher Horvers

talked one, And back you it. in less Got about down? focused to very the be improvement last half? the margin, hard the differentiate you’ve hunt, the the to that core in merchandise on assortment and couldn’t athlete back Is working on that why Lee, up margins given sequential half. And then merchandise downtrend

Lee Belitsky

little there. half, the get a again, back in Margins to margins tougher even. may to business the we are back e-commerce to believe continues to prove sequentially continue going merchandise But Well, grow. are the

an got we’ve So, opportunity there.

it’s year. we get half the of going So, better do believe the to back in

Christopher Horvers

of best Thank you. and luck. Understood

Ed Stack

Thank you.

Operator

comes Lejuez ahead. Paul Please with go question The Citigroup. from next

Paul Lejuez

curious quarter in you because in second of quarter? tariffs you second, margins mitigate gross and were EBIT tariff or Hi clearance to you the Did assumption product what much Reebok your just I’m reduce the how should was am just And inflect of it margin can stores, the actually curious comp the necessary hunt in as half? of the well saying fourth thanks questions. able guys. about the all? as XXX second the Couple I you how the then clearance hit last, to we quantify sales Thanks. are impacted think the third, in see about that if

Ed Stack

so within half not didn’t an impact there. is so we of offset the were margin transition that, of year. to the it, to sales impact had really hunt and the the We lift think it we but our on kind an we embedded departments, we’ve but while of sales. our a a within back little doing tariff sales really Yes, liquidations pretty Tariffs on for had have then merch it, Reebok growth now we’ve forecasts modest, exposure of bit

Paul Lejuez

point leverage for comp half? second then And the

Ed Stack

total on leverage expenses Comp on. or

Paul Lejuez

I’m Well, thinking EBIT top to or inflection would need even comp EBIT prospective to from what the achieve an on a margin that? just line you to out, margin see flatten see

Ed Stack

Well, going invest in we to are be continuing business. still to our

we’ve got hunt So, XXX stores the out taken that we’ve of.

to continue business. hunt the We evaluate

So, these to make and are longer to think going we continue pay that we dividends. investments

guess really where I going least would to we’re not not point now. guide what of we’re At get to right So, to a to going leverage. comps kind operating our that be increase

Paul Lejuez

inventory, sales? down. it something last call, happy second Got that on that being it. you year And quarter I Was just one your you I follow-up, on were saw think expressed think, inventories you’re pretty with last where really you like did could if missed that year? were managed missing you you’ve the were point inventories what you that they And that so, hindsight way down to feel with the categories in sales

Ed Stack

was we too footwear too in probably that we looked was lean. lean we category back we’ve lean. not strategic our and level baseball a made inventory definitely at hindsight, Yes. businesses, with that feel In little category The went now. categories bit optimizing comfortable but these too those and the looked investments The said, it was we’re

not should get two up year basis, people worried because it’s think X%. per about I said, our only on too I a level As square foot inventory

a right in can through that you year. this can year low and really that think you from you too standpoint. last sales it it’s And that see it’s coming was we see that So, zone down can see

Paul Lejuez

Good you. luck. Thank

Ed Stack

you. Thank

Operator

Please next Sigman comes ahead. from The go Credit question Seth with Suisse.

Seth Sigman

wanted I guidance morning. Hi, Good guys. comp for on the to follow-up year. the

the on in the you’re last quarter from forecast half tariffs. conservatism year what all think that third that of the impact is the you Thanks. up, then revision also for guess quarter. performance or changed higher the the seeing or based the sort for I early half had second built So, what has the to I related reflect you’re seeing? of the year-to-date here to view in And consumer and potential some the year second of update, at

Ed Stack

were into a numbers. be had the the been digits year. comp our sales we’ve sales up the right And got single at internally in we baked that’s the with second consistent So, quarter. expected comp the And now. that And little better that’s least guidance internally than along bit half to low we of in back largely were expecting, all

is, of baked half wouldn’t So, in regard which that tariffs, it’s gave back about margins margin a there. first the and half sales impact line, because that’s the outlook to into in in the the into of in. we tariffs impact considered say our minor relatively potential back we quarter were a the of of XX% change guidance little tariffs bit I out the year. that quarter tariffs with regard had to on we the coming going knew second we But year, With

we for So, to to that be But we going huge the around bit it’s conservative we’re have tariffs. were margin tariffs a are either. point. at line the again, the And not us a don’t going related guidance But zero conservative to be the think on continuing all to little impact.

regard going single it forward into and but good in to in With in forecasts. So, back the numbers. continuing the on, our we’ll still in consumer, we’re to it of into the anybody’s the happen count we’ve QX be shape, half call in comps digit what’ll bet, it’s baked number. year low the seems to the continue embedded We bake numbers to consumer

Seth Sigman

planned relative if to we you a Thank higher being peak Thanks. the sense follow-up SG&A, be think the Okay, investments? that. of this in for half we this SG&A about year, the some growth the of just the of the you this that you’re then time second us of quarter? about a How And issued got Do the I then on year had think of it. you to QX investments, could give some just quarter investments. would making helpful. do expected frame think due And of

Ed Stack

and we e-commerce work the quarter. up two margin move investments here gross some the of SG&A we centers out in in there The our into the little a line through costs third as start-up third the and line, open quarter, bit distribution

affect margin third this it’ll won’t bit overall margin, the for it that could quarter. our impact our merch little gross a So but quarter,

Seth Sigman

it. got Thank you. Okay,

Operator

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

Tom Nikic

Can this is touch good seeing was talked a still response when stands? brand the wanted Hi, as product of that Armour struggling, how just seeing question. update better kind in morning. really you of last give taking progress? for or you to on XXXX you for where year customer you were Under I Are about you it brand us year. Thanks work optimism to that my flows you thought about expressed for kind an and

Ed Stack

important second So, performance talking I’m Armour their through of the in of balance can year. an Under the that not going I with we continue we’ll ours we you is quarter look tell to get the brand and be about particular we’re brand. suspect specifically into any and pleased to pleased

Tom Nikic

Alright. Thanks very much.

Operator

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

Steve Forbes

Can and as sales you category. this interplay the model mix to then on what represents, think between then I as the wanted XXXX in And regarding to activity the or be benefit some gross category clearance margin color half out whether future point we I focus about the year remind provide back drag additional Good the of from a XXXX? what and would think percentage and of at hunt time? us it’s morning.

Ed Stack

a of soft, business continues for continue as whole. never we’ve us, sales just So, percent we’re of continues the that is not thought. to to the a hunt what but category and hunt be with given for businesses the be for going soft But competitive to specific reasons,

that our under another stores we the and the do on review, hunt you there wouldn’t third get have expect would the too think which XX yourself to XXX be did and we business, As because into into is and rate a less, improvement ahead category stores business margin in But of I would gun dependency we lower fourth far those rates. quarter. the margin that reduce

know. decide soon what as how it, And let as going to to going we this have we’ll we’re we’re and do exactly review. We you under do

Steve Forbes

Thank you Ed, just follow up you. if quick And a can.

the sort engagement you those via just of as experience just transcript ideas. customer levels, in-store look during you know the is you where and mentioned to discuss about don’t greatest at do I do right, as by so or can sort You the here, experience other right you drive category service sort see in or broader you of mean, opportunities? How forth. experiences? it in of opportunity I engagement the the think community like box if engagement

Ed Stack

the to Well, Sports but at not of Both, only two. experiences Matter Foundation. community we’re a do, I Dick’s, combination of combination think through and a it’s going it’s what

aspects at can the We’re store. other looking bring we experiential into that

and We store things a feel the we able in next store. important. to to and outdoor a bring be climbing in climb in is opening wall category up in Rochester to there of the One we’ve there really the they’ll in to be able people year climbing got be plan have

things do it technology that store the think be upgraded put that And we’ve far, HitTrax are like at. to technology, a we’ve we paying And that that there’s we’re number looking TrackMan have we the as investments our this, off. So, the we’re golf experiences so whether that finding stores those in now. of

Steve Forbes

you, Ed. Thank

Operator

comes question with go ahead. Joe next Group. Telsey Advisory The Feldman Please from

Joe Feldman

discuss building Yes. Hi, and to have selling for was really then thinking guys. of could my Blue and family over capturing the a because Affinity. ask guys Good been business, younger and you sell Sombrero Good quarter. you the in Can those businesses to growing was that lifetime. pretty why integral Wanted that two that part guess sports their it? tech chose you about I morning. consumers through it with time

Lauren Hobart

very for the sport family committed. is youth Yes, we support The do and athlete tech feel their and absolutely important. very still agree

governing bodies. and own those from And not operate value specifically HQ team are is frankly, and we BXC BXB more that GameChanger extract which for both We realized keeping sports the the of to over be and to Affinity the businesses leagues ecosystem, of for to able aspect did support were Sombrero them. we Blue few the last the have years a for business,

platform, pleased partnership going we’ve into platform. are And into Blue back as Sombrero and strategic about entered a And GameChanger to so, Affinity the with exclusive and where with as Stack integrate be going excited retailer. very we’re their well to into Sports, their we which we’re

as bigger just is So, gets long-term well. as doing of partnership a result this there on actually a the ecosystem data sharing and

So, and we ability to win-win same this indicated that strategy we a the as few view a deliver real that years ago.

Joe Feldman

Got it.

too, out you’re Okay. Thanks going you said and customer what’s does you in I to more score test little it? for maybe The color and get that. scorecard? you’re And you What a exactly for then new October. Lauren, know a doing Gold about roll give on can the actually Gold different

Lauren Hobart

purchaser by and/or Gold a first annually of card. over using So, all, customer, being our time $XXX this qualifies credit at anyway

learn in moves roll that a nice different they needle ways will continuously So, And will and it at the time, VIP a and They now times, so of our there get customers. rewarding be valuable events or a for and is multiple has customers customers. best the will product access as to we But gold certain results evolve they access really proven our really, by points. the to done ahead get we’ve are launches out. as for best program go, most store benefits year what going program more we our test going to having we’re to

Joe Feldman

and thanks Great, with good Thank guys. you. quarter, luck this

Operator

comes go Brian Oppenheimer. The ahead. with question from next Please Nagel

Brian Nagel

in already, I you quarters the In inventory mind, start inventories couple Thanks touch if I a again. questions. it’s that to we’ve good of increased the on but morning. it taking comments Hi know for seen clear we make and discussed strategic in my I to the you is want nature. last bit don’t off wanted

as just in we first more QX, is and the help, and nature, markdowns it or maybe should then this the bit next now footwear you question through the growth all risk those Will along mentioned category. higher so these and this of at year in seen potential strategic remain understand elevated composition think lines, into QX my inventory better So, it’s year? to it about how can your a balance But I does as inventories, we’ve we understand of year? or later but even hide

Ed Stack

apparel, these in issue. Brian, markdown I in golf. strategic the don’t Yes. investments is and key I we’ve Where baseball think big categories made key don’t a really in is issue think items, footwear,

So, the that we the not any inventory the And we is majority worried have to these And vast that in embedded made categories where investments. we’re we guidance markdowns. cleanup about is of very talk strategic we’ve have. about, do

guidance comfortable very that we’re So, with the just we’ve provided.

into the expect next bit same a of in the see would after they range wouldn’t balance inventory are year. the that of We year, the first But you quarter. off. off kind then next rising maybe pretty through the levels and now see into year, inventory as them in going to that they close right leveling level far As little going

Brian Nagel

had my to then up a e-commerce question, gears And another shifting you. with Thank very it. Got quarter regard bit. you nice follow Clearly, growth.

you to about particularly the on remains implications growth think see the e-commerce margins. I starting perspective to for the think response you, you overall business, a just there, has we my how of question margin but the of impact assuming P&L, picture indications driver successfully from of in are And another mentioned scale in Lee bigger grow gross to is question, e-commerce that business, upon primary should point continued leverage?

Lauren Hobart

Yes.

business the scale the benefit e-commerce pleased from a even a or so meaningful in-house before. ago, than actually took platform since with two more we are to enables which We very we in year much more way could us

we leverage strong profitability to we And and the channel, we’re G&A. are we drive think so, of where channel. do the to grow. go we the in and this plan margin continue overall, costs with But the out ships of and pleased continue as profitability very can hit profitability There forward to very between

Brian Nagel

Okay, thank you much. very

Ed Stack

Thanks.

Operator

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

Gustavo Gonzalez

good my Scott. This Hi, Thanks for Gonzalez taking questions. morning. is Gustavo on actually for

and question. profitability the sort right that mentioned, as prior on key a you of up that give store is you e-commerce follow pickup profitability, business penetration store online to sort that the Just regards to pickup within I in us enhance to business. now? of With buy online buy initiative guys Can have the in

Lauren Hobart

penetration. buy shared we’ve believe pick in-store up don’t I online the

XX% growth business. the more than we the saw in that our was is meaningfully was, it However, it e-commerce growth

And and penetration is well received. in it growing so, very

Gustavo Gonzalez

XQ, of unrelated, sort headwinds QX, hunt it. growth of been sort And up then you said, have what just to previously us reallocation? XXX this higher ex Got in can quarter follow you sort this basis was quarter guys points Thank have about of that category XXX in it you. on give

Ed Stack

that had significantly declines put comp been in was were other able categories and we less We we investments up with with off. these And and strategic those than tactics were to it It cover terribly able to not meaningful. place.

Gustavo Gonzalez

Got for it. That’s me. it you. Thank

Ed Stack

Thank you.

Operator

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

William Gaertner

Sam. everyone. morning, Good is on for Will This

are on there continuum of Lauren, want you the Where So, improving more service service is how are scale much stores? do improve? to think levels. mean, to of on I opportunity levels? to a levels guys you the focus the one XX, where in I On

Lauren Hobart

in on service early the We what could be innings are we of the stores. think max in reaching our

degree a lot our I on now stores. engaging us. going extraordinarily muscle our But We on pushing there’s of right keep our focus and focus who headroom is service. training And continuing think a to And be athletes athletes to into our keep this focused on come to here it. we for exciting are are and some to and new

William Gaertner

Great. And then here. this much Lee, gears for switching then and you.

quarter private or label. the private So of first year? penetration What the now this or label is of your half as

Ed Stack

It bit. last continues a to it’s haven’t year improve XX% disclosed and we was quarter-by-quarter, little but varies it by it

William Gaertner

source where on material going And most private business? of impact tariffs label to is a And the from? that are the have

Ed Stack

soft Yes. I of lines the of come come China. mean, don’t most places, lot hard from various out of of sourced China, out the it’s a lines

William Gaertner

last just one. Okay, one And great.

for in in EPS you in mentioned much List last baked into FY baking ‘XX tariffs. tariffs the impact ‘XX? X you How you think believe quarter List for X I your So, FY I EPS guidance, and $X.XX are

Ed Stack

the give we what maintaining cover to baked contingency flux. some baked we believe that guidance going quarter risk in number little But in the a were did into first up we we’ve and, on specific forward. not is still But we’re in we Explicitly to conservative a that. our because going guidance is taking amount the

William Gaertner

on. pass will I Thanks. great. it Okay,

Ed Stack

thank Okay, you.

Operator

next The Please ISI. question ahead. go Evercore is from with Saad Omar

Omar Saad

acceleration, more bit was around pick in I if that unlocked could maybe above thanks. in Hi, dive us going up component buy digital how new a wondering do pretty it? really online we impressive detail acceleration that of forward? trajectory big give How e-commerce Is a XX%. you going and that of DC, of that the DC about think store kind little much

Lauren Hobart

real e-com focus the our which growth a and attributed on can think growth basics. of brick driving mortar really be I to some what’s is also just the

So, to online. technology has the matter with improved. It’s in on at faster up been delivery. do in-store growth. do on these also It working The offering for that significantly that inventory going buy referencing products of to positions but enhanced been and estimated really anything up has group online The to were we running product. availability centers one our to trying well really us that call been I offer fulfillment speed we’ve well, Ed going sure and pickup we QX [indiscernible] working have not delivery would of moving and speed less helped our say has things are the the had conversion. And more, because ability The the for been terms get have all the been quite two week. then than site

Omar Saad

review especially business? of that? in expand know call, there potential stores, strategic a in Any light to Understood. the the has up ask it but in of Is there. I to And a hunt a then be XXX I follow-up? couple on could some there seems update come times the

Ed Stack

We’ve review don’t under information to get But and any new we category we for as soon will you. do, you. really got we have whole this as

Omar Saad

Thanks.

Ed Stack

Sure.

Operator

Jim is question Please next ahead. The from with Stifel. Duffy go

Jim Duffy

That’s To Sports a Thanks. the and with I great to say the just community Good wanted start, the to back program. morning. work Matter contribution meaningful marketplace.

youth merchandise adults between any the business? the helpful to are differences relates genders, between some you gave perspective, it trend in and As there trends,

Ed Stack

with both our No, men’s, sports we’re team I kids even and business the and minor pleased apparel, mean across footwear in but women’s piece.

Jim Duffy

to at to Okay, for more appropriate speak investment? wondering as there you developing if characterize around is great. you test larger it Ed, if about levels. your thoughts separate you’re then related positions, to I off-price additional room accurate And am your perhaps that that and a or concept? then inventory component of to with seem a can business as the Is the And off-price respect

Ed Stack

Yes.

I it from inventory. need to So, more don’t invest an put think need any inventory we this standpoint, let’s we in don’t way,

now. test cycle it’s of of to understand early of how as have and off comments in price, mitigate inventory inventory got that to We too and is right And the just it’s we some trying I to we’re these And in to the in and the we’re kind think we’re way as clear sales. on it. think couple markdowns we’ve showing pleased any stores with up a where really far have. stock

Jim Duffy

you. enough. Thank Fair

Ed Stack

Thanks.

Operator

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

Chris Svezia

my for Good morning, taking everyone. question. Thanks

outlook on I the So gold what’s from that into the the in-stock, the I of you sustain launch store guess or comp, the the comp what’s what position and first guess level and back half? would the or accelerate would slow that given into stores, not traffic cause the X.X% just hunt, level just program a half, any as headwind to from the better for of resets, XXX that second you inventory about reason in the think trends comp just

Ed Stack

got good a question. of. got a out stores There’s, it’s And really We’ve we’ve think I couple things. hunt XXX

wasn’t We’re going hunting season. into main the the hunt main QX season.

season. the the business main be hunt challenged. hunt into We’re across to continues The industry going

a that going we League are teams last to cold control can’t And had weather had go QX forward. we year things, things, have business last particular those get that playoffs. we Under a of weather also business. Baseball weather, playoff Major into all and can’t other gear in we year cold the control we’re And season Armour we the some and helped couple what So, to with as cold the drive the the great in going

could those cause that And to are decel the so of X.X%. things issues the some it could from cause the that

some are that QX and QX forward. we optimistic things enthusiastic going pretty in cannot we’re business our control. there about But Now and

Chris Svezia

you assumption or Okay. helpful. given add nature any and potentially consumers to might onto tariff things respond to making that to comp, just are sales not? That’s guess that, the I just on pricing any how very situation that And due of there’s headwind

Ed Stack

the concerned We about business. that to previous we We not. exactly what We’re were quarters going our see don’t these the, in in were understood tariffs until be.

we long-ways be there’s the year. see go scares said, into through a of meaningful don’t to the although balance to year. As we I’m us next anything relatively next optimistic, not we’re them year, that going into seeing

the impacting than So, going about into concerned we of think least consumer, consumer, less at year before. were back the we the we’re our half tariffs

Chris Svezia

Okay, that’s gross margins, for just on the And you about just Lee, unclear something. helpful. just one

think it distribution So, out anticipate merchandise you second you in will and I half e-commerce in quarter business the inflect new margin on else back seems flatten like the offsets half. second of occupancy on gross could missing? be second some Are leveraged the the half? in Is of the the there to there the opportunity the year, just margin in centers? I’m mix anything

Lee Belitsky

distribution Yes. Those part e-com Yes, pieces. are centers. starting the two and business of two up the major much a bigger becomes

Chris Svezia

the to process the squeak raising curious, one like movement the thing thought And between end most is those it the Okay. here, buyback, just on I looks just two $X.XX if the by numbers? final last could end just bottom and by top $X.XX, related

Lee Belitsky

higher we conservative. are think end I just on bit little a more the being

better buybacks high just a we’re the share a bit out going little baking in the We’re on end in little baking lower buying of more we’re the on baking performance we’re of coming in bit forward. QX conservatism and

Ed Stack

we on the question. On that about things first control, can’t your we talked

Chris Svezia

Got it.

Okay, everyone, the you all thank and best. much, very

Ed Stack

you. Thank

too. You

Operator

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

Peter Benedict

Thanks. XQ. Lee, versus Pretty mine looks answered. like a of kind on much it down Hi, stepped guys. D&A, XQ have all just been quick one of sequentially

if around you’re Just thinking run of Thanks. that the That’s balance the curious there’s think year, D&A? for it. we anything the rate if should that’s

Lee Belitsky

that there QX elevated it. QX, a impairments run rate. in some we is better Yes, had

Peter Benedict

Thanks great. much. very Okay,

Lee Belitsky

Thank you.

Operator

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

Ed Stack

for to everybody our talking November. thank again on to and joining forward like call, you. everyone us we to look Thank I’d in today

Operator

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

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