DKS - Earnings call transcript Q1 2020 | DICK'S Sporting Goods, Inc.

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Operator

Good day and welcome to the DICK’S Sporting Goods First Quarter 2020 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Nate Gilch, Senior Director of Investor Relations. sir. ahead, go Please

Nate Gilch

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

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

growth First, sales announced and Recall same eCommerce our in a note metrics from store we eCommerce on penetration practices. last intent away quarter, our sales reporting providing to QX. move beginning

earnings With at XXXX market now to to And the continuing the that, for publish with call store planning XX:XX we're release a.m. this our temporary our surrounding to second XXXX these purposes, QX. earnings the Given Time. opens will our scheduling we’re your quarter second, on closures, revisit quarter metrics August provide Ed. circumstances over turn decision for I’ll Eastern future XX, tentatively call this subsequent and before

Ed Stack

Nate. everyone. Thanks, morning, Good

are behalf each of We safe us you so and saying, by here this agree country. families far hope for that been we all year your of DICK’S our would has Sporting all difficult Let Goods, me of and start on a at healthy.

out go and across country. have injustice America. by those issues impacted on deep in and rooted and around unrest hearts events Our of inequality shined racial the to a going the civil longstanding all spotlight on These COVID-XX the

is fitness Goods our and the forcing centers across All new while values everyone this at fitness premise our business of country, corporate is ultimate coronavirus right success. pandemic. the the the result all industry we to this the change grappling evolving and path thing build has is anchored come happening to a closed were gyms as Organized still affected. continuous segment, to with world been sports retail the on DICK’S levels including of and Sporting doing to every and Virtually habits standstill, the routines. that dramatic Throughout a have landscape,

the a outflows. spread Our current tradition Company we and through To of compensation of temporarily to eliminate the and $XXX safety this liquidity cash our our To invested strong care in came to reduce, the a and from Beginning our virus to we quickly ensure increase in and on fortify billion. quarter, credit million standpoint, inflows stores measures. we capacity business across number we issued through senior first And closed the over public. in that acted $XX our eCommerce quarter the balance the to through take mid-March position. and of exception. facility crisis first financial efforts cash and teammates, position. to accordion the we has promoting of exercised the on our MarchXXth, crisis decisively defer of to the is on of focused why revolving our we health minimize This flexibility, notes communities, supported And maximized cash we of convertible net athletes, managing no to added nearly business. financial for maximum provide borrowing was welfare exclusively to and proceeds teammates, a our the response a sheet and safety feature balance $X.XXX nationwide We million long the our

billion, As through athletes pleased good of first feel mobile closures, store of continued to apps. these our a to cash we of quarter report end approximately very actions, had Throughout at result the liquidity. our about serve online our I'm the and the equivalents and cash we we $X.X and

contributing first more Our eCommerce since our XXX% increasing stores end and strong we notably to liquidity sales were position. our quarter, the than tremendous, the of closed through

eCommerce of launched of during our stores, Lauren teams came and most country together success in a strong matter days. new this the continued leadership, part cover within service. these pickup stores where remarks. this curbside new key across our of Lauren's technology and the have reopened. online this online in Under those detail into is initiative Importantly, her greater even results second will have our markets A quarter,

As in for mid-April, local in to state where accordance started guidelines. our reopen and permitted federal, we with beginning stores,

of and with our results. early the As been to stores we've May, approximately reopened XX% pleased of of end have the the public,

out business the environment and fitness customer. the even of of become more this We position Sporting Although Goods to strength. XXXX in believe of is DICK’S will crisis, uncertain, remains a important coming health

relationships great retail As and the stronger, have with sporting support sector, our to been leader place demand. brands key this never in our goods are we in a

due market strong and actions business a team of successfully our management enhanced have sheet this crisis Our hit, stronger pandemic a navigating to when to position. Perhaps we've our competitive managing a the first to we even in long-term with experienced fully liquidity the importantly, cycles from has committed emerge view. most taken difficult is remains and history balance

liquidity reopening, to gain our Now, with for XXXX. the and business in profitable XXXX of in market can and remainder the our confidence our turn attention share we stores growth for our positioning

one and especially I'm these times, another, I would through the proud the to whole. Finally, our now like and over a call difficult of Company I as support they teammates. thank how came to Lauren. to turn to would together like Through came

Lauren Hobart

by to thanking several communities. and for dedication committed We've how morning, start to continue with Thank you athletes hard I serve to you, months. past teammates Ed, impressed and also and the our serve been work over incredibly good want our everyone. their

You’ve closed stores abruptly a and done were spread thereafter, to sales public. for tremendous Shortly job our a responding sales of the strategies our landscape. indication changing XXth, the as the X.X%, store constantly was virus same that strong our on XXth, we a working. consolidated our trends changed March March which accelerated Through increased clear

pickup. increased significantly our end after grew in including eCommerce the then we quarter. For the stores through This strength as online sales quarter, closed XXX%, the our contactless sales online increased since of curbside XXX%

from our to network also orders continue vendors. pickup, leverage via We store well store fulfilling and as our eCommerce fulfillment directly to as while centers, our curbside distribution from centers ship and

and sales This supported you shipping sales fulfillment and pick Importantly, as the huge business initiative helped continue The expenses. BOPIS end to move significant athletes. a eCommerce a vast big of volume goes and to times We positive. fulfillment to our we total We eCommerce and leverage those curbside seamlessly it to operating stores, network compare way with great believe shipping XX% in athlete up over us year, and period. teams helped been nimble to as prior orders, their forward. our to were accounted our reflection when overwhelmingly us this were provide Curbside response opportunity is us will our this reducing executed to and culture the to in experience pivot a during credit that to ensure a packaging launched for ability the safe time of while out quarter days, for and sales model, within since our athletes eCommerce able convenient our technology continue of the our X,XXX% quickly our many our it curbside has our and teams. reduce increase methods these we new up be through

of first of stores. reopened Now, By end our the of to let the our reopened. as XX% And end May, turn stores. me have of we approximately the approximately quarter, XX% stores the of

our QX. opening into continue remaining throughout stores and rest QX to of expect We the

is health safety authorities. the As and state from highest and for we the Disease guidelines as Centers and reopen, local and priority, our following Control we're of and athletes teammates our federal, Prevention, the as well

As all these by our and efforts, protocols part teammates. We're of gloves. teammates sanitize worn enhanced our are we've sanitizing regularly requiring wear be or coverings requiring their hands also face

athlete and habits, distancing. social to These to are as to continuing including where reinforcing the decals enabling And contact, of ensure are minimize lastly, floor store, by and applicable and using at to supporting, the only offer communicating, as protocols This well tools to screen store steps being includes ordinance. in in we're actions people supported checkout, number we're teammate healthy. plexiglass throughout pickup. local when limiting curbside working by Next, healthy aimed addition wellness teammates taking communication the

Ed we've been our As reopened, and the results early sales that we've seen with recovery a pleased progressive very where stores to-date, in have traffic. mentioned, in

where reopening, comped only stores. four have first even remained those brick-and-mortar store including of consolidated average, our remaining with Where very weeks are curbside our we've closed stores of have XX% the a have stores decreased Furthermore, strong, on pickup since our markets basis. through and we same gaining momentum QX sales X%. fact, many In on in our sales, positive online reopened

call this, in trust future and Ed, actions expectations off athletes As pay increased create new that very over the part I new to and XXX%. DICK’S Goods. in more turn our sales to closing, detail. the have the In Sporting of and competence to and eCommerce have their now over shopping the enthusiastic related build our experiences, to results will of believe financial these are and certain Along remain Lee long-term. we're momentum I experiences will taking teammates we're with we review for to working about

Lee Belitsky

good Thank morning, you, and everyone. Lauren,

sales a saw ticket. in XX.X% by and in our We each with XX.X% Consolidated offset decreased our of same-store Consolidated apparel by approximately brief driven XX.X%, of in results. footwear. first was hardlines, decreased billion. to and $X.XX begin declines increase X.X% review primary partially three decrease sales transactions a categories Let's quarter average

the contactless the virus, of in significant partially delivered of our closures, sales As through XXth, with our a our Lauren we negative of We all same-store eCommerce very stores. increased through sales reduction we demand and of acceleration continuation significant offset business, customer in spread closed curbside saw strong including half we from the COVID-XX, mentioned, to our pickup. were thereafter, X.X%, a comp prior to able the March due store trends traffic of XXXX. in our performance. impact to and we continued the impact a second comp And Shortly were sales the consolidated pleased

total to It's of last occupancy percent life For don't decline. deleverage we that sales, points, abatements businesses deferrals profit basis-point the a due costs compared and quarter on net payment important quarter, basis over the net rent our of successfully in of are And sales in to cash grew XXX%. sales gross didn't to deferrals a XX%, total year. to negotiated XX.XX% affect the lease. term profit, note the XX% X,XXX fixed of million decline, materially and as to abatement, change our the the the compared XXX remaining was payments eCommerce $XXX.X have P&L spread this period Gross QX while sales, year. same last Within saw first online as increased or we the

by basis early points driven our We quarter inventory, promotions, also saw XXX write-down and closures. were and margins, $XX of lower million by the mix, a particularly temporary primarily merchandise from resulting decreased store in sales which higher

as as Finally, fulfillment well costs sales fulfillment basis we shipping in and third result associated sales, expenses eCommerce two growth, the a eCommerce our were with results. XX.XX% dedicated $XXX.X higher year. eCommerce higher from our as was meaningfully fixed non-GAAP year's opened to or of SG&A new net XXX last last costs of centers points quarter Again, the that decline. that sales expenses million the up due saw

offset closures teammate store safety to compared incremental includes million compensation This However, approximately was dollars million partially $XX last expenses and $XX million of by in following our decreased reduction and $XX costs. temporary SG&A year.

billion share plan Within other share In of for million compared of and last cases $XX the at and to non-GAAP approximately reduction million earnings Since the credit. of we in was recorded $X.XX included our cash year. borrowing have COVID-XX and of diluted diluted with preserve the per of cash values, recognized to the on first a income changes investment in line in $X.X sheet. for equivalents capacity rapid Collectively, loss had associated our the additional in million a decisively $X.XX which cash mid-March, a our acted loss we rise bolstered quarter the and to total, deferred end comp expense. expenses these quickly actions balance $XXX investment corresponding $XX per Company's we fortify of of

the through walk Let's details.

meaningfully First, business, and reductions including travel, number salary centers cash stores, through reduced across reopening a expenses Concurrent stores, of salaries furlough. we teammates last the back week, significant payroll the marketing, certain of our of started contractors we have teammates and previously across restored furloughs our within and customer our with and teammates the of support our center. for except from majority for executives bringing distribution reduced

rent receipts to similarly also our we've productive with have had and about with and payments. payment landlords debating We had reduce discussions vendors our inventory extend Likewise, very terms. productive discussions deferring

notes XXXX, a notes provide overallotment conversion solution stock reaches typically $XXX when option thus issuance the this threshold. for initial $XX.XX our our once senior the due an completed per exercise These we full million $XX of in stock exceeds convertible million of includes would X.XX% and price which share, option. Additionally, price of occur

expense, hedge protection proceeds the notes. have a of current discounted rules, the The at stock notes, $XX.XX. the annualized value However, of balance notes quarter. dilution issuable total with our net entered in transactions as of conjunction will dilution Due sheet to and notes discount to rate of note accounting the will million to interest non-cash or hedge. from the be the discounted upon transactions issuance, approximately amortized notes. the of of of we between on the the the shares hedge from interest first conversion provide and notes reduce net $XXX into issuance value the approximately resulting the $XXX if million $XX.XX on trading sale is we end or were stock The of million aggregate of the in upon This XX.X% the as $XXX maturity economic

accordion exercised and billion to $X.XXX on $X.X the also to ended first We credit the approximately facility billion revolving borrowing from our capacity our with $X.X feature increase quarter outstanding. billion

includes meaningful capital plan. capital Finally, modifications allocation XXXX our to expenditures. our reductions planned made to significant we This

repurchase quarterly dividend, program. our well suspended temporarily also We share as as our

As our continues stabilize, repurchases authorizations. resume to business may under opportunistic our share we current

which any paid We did declared $XX quarter, first million prior and capital million the expenditures the in For quarterly net dividends, to were $XX suspension. we repurchase shares. was not

to inventory Our brands, to receipts of end quarter planned same defer and X% the levels last and forecast. the decreased our year, compared alongside to align period end working new our reduce, we sales acted with cancel decisively

rest are receipts. planning the conservatively For our of inventory XXXX, we

to and and of business. several the on consumer employment as including and external stay-at-home economic pandemic, have chase duration confidence uncertainty liquidity we scale relationships respect high of our the well as impact potential the we key strong if of factors, With to degree as our our well with plenty orders there's surrounding outlook, COVID-XX However, need opportunistically as vendors, a and product. stimulus,

a at uncertainty, outlook Given believe and for forward we this Notwithstanding move not this time. it confidence. provide do sales earnings with to XXXX uncertainty, appropriate is this we

as have as We market and sales open in liquidity line prepared your you This now QX DICK’S for are our may ample Thank and position Sporting you our concludes Goods, questions. with operator, pleased the our for trends. comments. well interest

Operator

you. Thank

comes question with from Securities. begin the Today’s go BofA ahead. Please question-and-answer Robby We session. Instructions] first now [Operator will Ohmes

Robby Ohmes

my Thanks everyone. taking for Good morning, question.

the the are give how those, does reopened how follow-up color great. just they terms some more Any sort And think more wants gave comps. on But, I of pickup first if getting weeks be those there down could eCommerce and stores, performing? think, four on how depending -- curbside you on you have get Then can contactless how stores? reopen isolate change is, should the to great a we that also you color question about of on in maybe weeks? four It's X everybody would we a ask color the question. little us you I when

Ed Stack

doing Robby, stores that a I have things. of The opened very couple think well. are

comping of said, of most Lauren As are them them positively. -- many

curbside pleased still really with that. that. And you really doing well. that's about we're Lauren, I But, can talk think So, the pickup,

Lauren Hobart

And on the penetration We we think, of the close down curbside of during that I XX% were about on. way No, our Robby, average it to Yes. is, X%. pickup had think continues stores period.

And you so, if very do you math, the that pleased performing the can reopen. we're with how say are they when stores

Robby Ohmes

comping or…? stores closed still Should the first of are that assume kind closed -- similar what are to the quarter we are you up quarter put stores for

Lee Belitsky

do sales pickup, we to any Curbside They’re pickup. continuing sales. brick-and-mortar closed. our recording We're we're within in curbside it, not are but including eCommerce

Ed Stack

The the them wouldn't that the that doing open pickup with up. the reopened. And case. of But And positively they’re be pleased They're eCommerce curbside markets want comping business comping. that Robby. not well, are well. get very well. yourself to closed. to I very business are then, we've they're the stores eCommerce to more where for We is the strong, of in stores very stores or even majority extremely and how doing those doing That's continues positively, up that of making are stores we're we’ve the couldn't be ahead closed, with from the still opened comping think XX%

Robby Ohmes

think question, the different just the second think categories of be may terms And that a sports? just -- pressure like how not that potential the we into may further how in here, from could going you, about quarter follow-up -- quarter We're different about the we how should And maybe or seasons? forward. write-downs should moving first Ed, team

Ed Stack

it or going they're -- concerned to play they're if most going about the from to going play are this We we're is if soccer fall if Yes. the to sales that a play standpoint, know this fall. kids football Team don't sports depends. one go-forward

Some where least markets, of up going where the are amount have sports, of the municipal But football leagues. is baseball opened some those more concerned, visibility the what's Baseball doing we're has and school up, most open going team sports side. the -- very travel which well. forward. kind of happen is And are a of to it's to to on primarily especially in starting leagues

Robby Ohmes

getting That’s guys. a going. congrats Best That’s on it. execution. really pickup curbside And luck, really Got helpful. of that amazing

Ed Stack

Thanks Robby. Yes.

Operator

Please from our go And Sachs. comes today Goldman with Kate ahead. next question McShane

Kate McShane

was just in I categories. first was sold the any the assume lot changed equipment had weeks, The the terms that's strength other being time. fitness in during I there over a demand, last question how just in product change in of shelter-in-place, of you're four wondering seeing if but, type

of baseball, was the trends then, that second comes mentioned if is when could to other and wondered year what we're about You how thinking any emerging. it there entering expect question promotions what of because Thank you. half just And were you back into? level possibly my of you're

Ed Stack

So, bit. Kate, changed little trend a has the

The You're hit. closed struggling stock in the right. business to of the that were and really part in big first still was fitness And pandemic keep stores good. We the pretty a business that's very when product.

footwear Although good going the business was we've opened kind golf has very The since got of golf businesses bike pick the But the apparel very some is courses fine. the to been be very we're got business started product we the good, that business good, have up. very think is road, up, on business good. to

baseball, a been been been we've good. baseball it's growing pretty games it's to pretty we're a baseball into app. starting scored rapid places. They're it's the all-in-all, look not business basis weekly to that's And from lot game-changer to a started very, playing a a our different We're The baseball, very played baseball still they've at got good see good. rate. and play -- in see being on more So, of where lot starting

and But, still to yet. footwear So, there's be the business, forward. continues lot outdoor we're good. where pretty very a of places golf not overall, the confident business playing business, baseball going business, still apparel they're But

Lauren Hobart

in promotions back level question Second the about of half. the

Ed Stack

more of, Oh, of promotional it'll yes. but X% to very good us inventory of actually do. mean, inventory none our quarter. We inventory of a the surprised to think be in lot because I a people know see I get have at our end is position. rid the tad people down yet, I probably don't were think

pretty good So, we're position. a in

to to I think, but be promotional, it too will it's I more bit I bad. going -- don't be little think a don't think be going it's

Kate McShane

Thank you.

Operator

Michael next Lasser question UBS. Our comes from Please ahead. with today go

Michael Lasser

morning. Thanks question. for a Good taking my lot

Sporting that, half DICK’S as second Ed, that So, puts As structure? has business? into we comment the we're to and you are changed factor can part what takes be should this on Goods going the situation permanently margin modeling the of

Lee Belitsky

So, Michael, it's Lee.

business I sales If we're has to up the and I they're which on the margin eCommerce curbside eCommerce the back of and should well, back of shipping the eCommerce operating about margins. increased running able to we're profitability that, up continued well. trends strong think, business the pickup, respect high as our to a got grow. we've you It structure continue and that packaging with talk improve and getting contactless hasn't where these been our expense. and profitability the running, channel of if channel -- And and eliminates brick-and-mortar penetration we and maintain is terribly promotional, frankly, getting the

mix depends out. going to how all it it's So,

forward. aggregate, in going profitability picture think, good for it’s I a

comps, For really profit out, should it total eCom between on we to it's our and stores. forward. line, what stores those picture going margin rolling profits, along the But it depend be with how solid does brick-and-mortar keep going pretty respectable can to if brick-and-mortar mixes profit

Ed Stack

actually merchandising right from are And ahead margin now. rates the running an eCom

Michael Lasser

the can drag going of from in of impact if a of kind like you frame How to also And about Also, as the temporary? if brick you more thinking are much will is increased resume So, part from that, in promotion? of margin the shipping the was looks resurgence expect you and basis-point of running mix what XXX is that that pretty just This some rates see about temporary, going few out business the points. then, much merch costs is in at frame you can quarter. very part, point? a how don't to -- was eCommerce there period. be? do different lack You're Are unique to this mortar lower ahead comp shift clarify [Technical cost occupancy because And you of real promotion be of help those able to be radically the perspective, leverage that from and estate shouldn’t to occupancy? at landscape you a benefiting to Difficulty]? from a leverage It

Lee Belitsky

it's So, due we for of XXX coming opportunities, to to go margin XX% curbside our have regard expense. reduce a renegotiating We from gross each year I as with regard XX% QX. aggressively I so some of it impact the opportunities drag expect perspective. get had If expenses, will to the we But, down margin as of occupancy the stays back we be have we couldn't significant continue savings that expense, our expect there. occupancy I to don't that on think, to we pickup, have and our the brick-and-mortar was do opportunities all forward. gross With that that XX%, leases to at though think sales eCommerce, high. the I And we to offset to will be additional But, be remain to shipping going do it those stay costs. we're north rent even from drive up penetration full to penetration continue leases in don't a eCom expect and happy. renewal at business, there eCom going And to

Lauren Hobart

the world, stores would the always weeks, our add stores through but I in and the and of online this merged eCommerce that and just the profitability Lauren. the part bigger way a and part could is way at lived place driving, are XX delivered such where huge think a for very we the what need this a this of what they clearly was which the only the order very, integral our part point. even weeks we fulfillment, Mike, omni-channel last the were, sale became what all is XX last of really I in of demand through an over fulfillment rethink P&L the flow -- it's to is consumer because

Lee Belitsky

the curbside have stores, don't the we Yes. Without pickup.

So, estate in much need. real we that's consideration how a becoming growing

Operator

our Chris And go next today JPMorgan. Horvers question Please ahead. comes with from

Chris Horvers

a on question, the follow-up gross margin. First

I You promotions quarter. think the in mentioned some, earlier

was that had when think I you comp. strong

So, little color there what drove I a you can then, that just of have follow-up. give And a pressure.

Lee Belitsky

stores, knew the Well, closed nobody It happen, scenario I going long be going was going knew. what where was were in stores a think, the months, to we shortly how to were after to weeks, we closed. be nobody

aggressive out are also So, we little couple we of after with didn't online we still And of those have in we cold first were pretty closed. weeks because the winter a clearing in promotions early quarter bit much the weather. merchandise

merchandise, were some remaining winter in clearing before closed. that stores through, we we So, even of

Chris Horvers

Makes sense.

savings in the of extent up? the quarter you color the other are open well? you as in or bringing stores, a So, we you second SG&A as you -- you How business expense color what To any sort look are think -- as bring do some terms of the And forward? those share about back all how going forward on the thinking the line, can of you appreciated. just store, are you cascading be third are furloughed employees as them and marketing builds in about back would you

Lee Belitsky

The we've opened strong been them. in the stores sales have as

furloughed we're in the share stores So, lion's as associates the they the of back bringing open.

extra in and basis QX on they're some store. have into -- taking we do because had store QX But, store expenses are all not the we by in equally. performing We

That's We by to Pay while. XX%. are with temporarily going we continue increasing in our Hero increasing and for have distribution Program continued -- where centers the stores little a hourly pay

to We going so into carts going -- yet cleaning, stores, things wiping determined down, we're and up haven't when do We have payroll going end. the shopping extra sanitizing lightening that's on. to

in extra COVID. through the payroll right there stores actually get we as So, some is now

will would that incur I that we open, we in stores to additional experience for restored as be XX% what the we except we as stores And until the as the QX we almost the We'll stores With -- at we experienced would we to right admin positions that the the expect those few well for as noted And past. open the in to the hiring to we really the expenses, as we've fourth May, started with end as a So, of of expense stores regard associates have all the have back what's payroll cautious while we restored positions open we where now. see had QX. versus into of senior in point to their the and of got we open the open, executives pay. the we reductions XX%, pay happening to of restored week business. Company, a

have have we still do expenses travel some and We So, in we're incurring contractors. extra as coming well. meaningful savings

Chris Horvers

And just you clean. planning down at exited just second this marketing point quarter? similarly you in And perspective the then, are lastly, on from promotional then, a

are sort point, is just the in waiting the is of a -- this so you given promotional happens inventory the clean sales see the positive how -- to at So, the clean but in probably environment, what far? strength and

Lauren Hobart

demand. back have terms when upped and -- I’ll and it very Lauren, significantly We we spend COVID the cut the the definitely, bullish we're the -- half consumer -- closed. back actually Yes. start marketing. the in of generating stores on the were feeling with It's And we the we when were year of we

And in phased Ed, inventory? to then, on doing marketing and the approach. So, a mention reason do turning we within you about obviously are want it

Ed Stack

from chasing We We're some inventory of our for reason some buying have inventory inventory. actually We're they about position. that whatever the brands great feel available. off-price

margin visibility inventory kind going and a we our rates our with forward what to on happy rates position. have happy go with really of margin basis. we're So, forward We're

optimistic. cautiously We’re

Operator

Barclays. from And our next Yih question with go Adrienne ahead. Please comes

Adrienne Yih

store? my one that thinking of of pre-COVID, sort kind of investments, investments retailers IT are Ed, of current guess, wondering is very I’m [ph] was about Thank that, a present of you. to What stores, sort And this albeit I next one the things as at impacts evolutionary that. slower a feature you're first since looking the question of that's you follow-on pace. are to whether checkout how open contactless kind of your with still DICK’S crisis digital the or few sort XXXX. was

Ed Stack

we've open what's the the marketplace stores, So, year real into stores we'll year. we'll that a from bit. on a going new down go We the growth of standpoint on going and estate to And little we're basis. a some assess this slowed assess pushed next forward

IT far as As investments, continue to in technology. we invest

going continue about. we're footwear from do to pickup, We apps invest that a talking in to we're what curbside

So, from other a couple things. And got to invest standpoint. got continue Lauren, we we've of technology -- a you've

Lauren Hobart

Yes.

few consumer accelerated. past came right And I -- you're the a to investments to new us definitely past that think, several the environment productively really which positive Adrienne, the all scale over has and the were fruition to enable weeks. years, absolutely very over

customer customer Some ton a at looking will of whether self that's for our our -- we’re of piece the store the themselves, shoe runner journey, we help opportunities going forward. be big pushes be now different can sort when people for of mobile that to experience where contactless providing entire us app a innovation, right there, tried we've even shopping, are the provide more will entire people how experiences, in

So, this has efforts our if incredibly teams our anything, energized landscape. technology and changing the innovation behind

Lee Belitsky

also our year. performance quarter We the last during delivery versus improved

big sales time average same took the increase day about of notwithstanding So, last half that year. off had, a we we of from delivery our period

to continue So, make there. improvements we

Adrienne Yih

sales. one just are the May that ask about we How then, I kind you. quick for a I a sustainability trend. of And People summer think It more the should of performance, Lee, is talking are And this or demand. big question of about know reason the -- is some get It vacations like things onetime seems like [ph] stronger feels as summer. or something into we driving unlike of May those investing more could they drivers may that some pent-up outdoors. [ph] are go vacation, the XQ the

how wondering some we of just think So, the early drivers May. of about should

Lee Belitsky

kids say they Yes. are pulled going as people because working the school of was home. how could It's hard but forward it's and stronger play to get are out, out from to some well could that be

early. So, of summer into the they may have got purchases some

a going how to summer little on hard those it's trends say play So, to it's out.

Operator

question ahead. Gutman And Stanley. go from today our Morgan Simeon with Please comes

Simeon Gutman

share a about to press My you, question, comment Ed, release. in was there first market the want ask I

quarters comments from how next to approaching are perspective? financial business I were the that you few that you wasn't it think, you -- closing, then be looked clear first, you you a in should Sports made a in then, couple you the read after this when share. is managed the in release, in didn't was message XXXX, similar made so way, clear it I back guess Authority QX? years a at it XXXX, a across gain going And and about

Ed Stack

we're year see up merchandising picking that now. QX great off cut to we our and to pick through able the market be in buy don't continue put to in brand shape. We eyes that pretty opening, So, right in going terrific up great to we price of a market aggressively financial in we're standpoint, basically mortar put go share. that out with on from a stores from position trends back whether a closed that vendors. brick and it's we business. the even where And into our our the that an traditional product with on inventory pick we in whether confident share. have think QX We drive were and our relationships is the last pickup, we this from got standpoint is effort. online when that position that curbside it's self the we're our We our standpoint from the up and a to go on think that marketing more or stores, trajectory in before a can believe we were stores consumer marketing consumers our changes of continuing it's The We to the we've self are of to I from store, year made

stores And We market trend, the last store big service in year made reopen. marketing carry. changes and made others. I were we we we're are think comp changes that picked into sales some changes if We've some the that in start how our we've you made We've how we take things versus So, up big are merchandise as we a share from standpoint. continuing our some a to feel at the what to especially big approaching to that look business.

Lauren Hobart

a about customers had not about want and that our competitors TSA online from never that gathering going moment business just I it's and share before. now, different comparing and it's feels little tried and to XXXX who add it our is how XXXX a to that the -- customers we're on us market under, for to thinking about try which gaining new gaining brick-and-mortar it

So, it's compare, I very different point a and out. different just that actually to exciting. It's wanted it's

Simeon Gutman

profitable follow-up. if I then, business closer in that to or relates My if at closer now, to And between look -- to getting the profitability in that growth, don't harder it. the know I to It's on, are separate. -- two commented equilibrium two to sustainable are separately. profitability But, harder on a we we channels? prerequisite to Lee channels, at Lauren This I it's be again, not. think question much something Thanks. merging an appreciate the And what's them my to is the from know of and I year is look going and you a at look Okay.

Ed Stack

especially the does our it and stores closer, we're positively. seeing to as think down I be pickup slow comp get to not continue curbside

and because said, and it be So, packaging gets of to both a up more picks curbside have profitable Lauren as eCommerce from standpoint, changes. as shipping the Lee

Simeon Gutman

Thanks, Ed. Okay.

Ed Stack

Sure.

Operator

Please question next from Poser our comes Susquehanna. go ahead. Sam with And

Unidentified Analyst

is morning. on Hi. Sam. This for Good Will

question So, this $X think a do eCommerce you here. be billion I could be this year? guys mean, how and my is are not could eCommerce, I business year? big do mean, But, realize business on the first I you think guiding it you plus

Lee Belitsky

with we're guiding can we're you But, pleased that. Will, got as said, we really and momentum we’ve up. the hope it Well, keep not

Ed Stack

going think we go suspect we of fourth the We'll what out right know at can, We on a but to now. tell are limb let not quarter. numbers end the you and we're the you

Unidentified Analyst

think much cannibalizing stores you enough. Fair much how think -- do that eCommerce you how stores? you the are positive I -- comping business and Fair do is said enough. And know

Lee Belitsky

customers. new we've very little. pickup A from now, got are Right of the lot eCommerce

Unidentified Analyst

how acquired, and That's many a I XQ were good guess, do program? you put loyalty in segue. that you customers for guys in think

Ed Stack

We're new we of or the was that standpoint, a traditional get meaningful not customers that an it there's now, be but more meaningful amount pickup customers going we from eCommerce customers. level granularity whether right picked eCom of to serve of a that There number up. to curbside

Operator

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

Seth Sigman

performance. initial results Thanks on morning. of seeing. positive consistency impact the ahead, of Is some Thanks. of the but are sports some guys that from be that the stores an have for even reopened? those The up wanted for the or surge way or a team in that like and Good period Any this the is through half the of question. to level had then could guys. size back what uncertainty. and year? to the quarter-to-date follow the Hey, taking you have And risk stores unrelated, then, have exposure sort you on you trend there's obviously steps some sort an I in down, up seen it point the limitations back acceleration reopened

Ed Stack

consistent. continue? I start And think, really we from fitness standpoint, been would pretty some a we that��s boat some good, been and fourth good, a And, the and quarter, but been -- to half store it’s additional consistent. year, get very there today, accelerate, back bike in products could not is products, get From issues products facing in country com it's say second that. to products, mean, happens. as wait that guidance. difficult the I the what wave We'll really a as the of of to not into going and get to We're far. providing it's see do we’re out talking So, they any some have to about

Seth Sigman

enough. Fair Okay.

and of different And the maybe the Thanks. percent the model's on how regarding the then, a the ago? here. Clearly, mix? being on year any are it's of that types just if than more typical that ship online the color whether picked compares evolving actually follow-up categories pickup, business. guys store that up, us or you and from that's to sales up, online to give pick touched Just today, Can store

Ed Stack

of from of coming whether are sales ship curbside, meaningful our of mix. the store the majority be again, it So, kind out stores, or

that's Fortunately, earnings the a some are kind more of towards that of expensive items stores. do an favorable ship. little perspective more bulkier skewed from to bit that the it's from And bigger, to

Lauren Hobart

some than the It's way, curbside increase. eCommerce business, half our to in stores been continues It that that increased. surge for a in time some obviously with more touch and

Operator

go Nomura. Please question next Our Baker with ahead. Mike comes today from

Mike Baker

that would Could last pace would think helped? what business on We And out. about, through half the comped part weather that other be into lot But, My across some or period. consistent the sure But, through of end March weeks you any case the sort of of you the saw into seven be, sort the I'm guess if they a a and whatever helped of weren't can talk guess color April? question if back of I stimulus of more and is, helpful. the may color or you a that like be. provide by you April, that stimulus things could retailers, on progress

Lee Belitsky

eCommerce been building. store have The opened as And has obviously, we building. our stores, sales have been business

But, assuming with stimulus it. It's on with arrived. business continues But, checks when ago, we're the the month where good now. these arrived, going business now. checks that to measure a probably But, and those is checks hard of is Some stimulus still be connection timed encouraged to in help.

Mike Baker

helpful. Okay. A couple follow-ups. That's of the

that of now. you're that does this season in buying you get some can get -- product you away? off-price Is think that stores said that product packed You right the or

Ed Stack

might of stores stores We but pack season. will the vast this for buys to year, majority majority be may The in this we it in of have it some year. be that away next will use the

Mike Baker

said, if I a lot now, about and of be then, not of know relates more back those types inventory. think sort in one license as you're to fashion about of going still to as in you're And you normal world some there, this. inventory there now? uncertainty might as it college But, you of apparel. schools in I or a don't or to we also And things. follow-up We interesting. and risk there? prepared putting is answer how ask out and have September, And do as Is risk mean, Okay, series right school building inventory into don't I football back could get particularly there the

Ed Stack

got think can we very we've best the cautious making we -- aggressive. on. decisions are be information are being than aggressive that categories probably and being that more There to we with We're going we are certain we're and the are good we're

category. continue So, example, fitness very aggressive we be to in as an the

very around aggressive be in aggressive to continue bike We the We'll running. footwear especially category, athletic category. in be very the

of do to that help who's lane ways pandemic be I As in service be to to that the this one a great of great stronger. in healthy to they're are people to out coming be realize looking -- think is to really consumer And think shape that. and starting we we're

around license how to going a as football From be pro very play on of aggressive. standpoint, aggressive out, some nearly depending we're not in we're the things sports, areas. and college some So,

we're So, we're to on aggressive places have. right And decisions pulling I the and information some make like the trying we're being said, places we back. based other

Mike Baker

particularly the of Thanks. opinion. Thanks. sense. some perfect to sports, football, in crossed my Fingers college for a Makes return

Operator

And today Ciccarelli question ahead. comes Capital go Scot from RBC our next with Markets. Please

Scot Ciccarelli

push the you Another are without store role in can’t footprint and potentially you have that to In your eCom they et of each specific same we cetera stores? same all curbside configuration pickup do be But, question, other think your stores. all they sized, I and today? have reevaluate understand words, the of growth curbside does to

Ed Stack

what a to store looking And right most player at will if in although not now. be and standpoint. on trying we to continue player, fall about team soccer that to see next spring, player, this that sport be constrained focus we're athlete, it's baseball in allocation, or going talked they football athlete, recently trying reduce team back. They'll may are the perpetuity. how sport back. from be to be not how any That's change we're don't We We space

business. So, our an we important of that's part think

the we're doing And third women's we now, our that and our broaden As or brand. largest footwear athletic footwear are athletic continue brands DSG the women's -- in in we right business. second largest what to in or and our make department and apparel new changes carry to products CALIA our in apparel

to And have to think they And need available with to a the product don't stores. we So, make to things these in one people big have up of there's to the the pick that have curbside, order change. inventory curbside, need we it day. them, -- to we that want want

very that not understand don't store now. be So, comfortable it right with truly may people our but we're our configuration popular with business, very

Scot Ciccarelli

funds? And Have away was just I think Is continued just of accelerate to follow then that something to from stimulus the I moved it. what Lee the as inference clarify distribution to further up, actually wanted we’ve the like? Got sales said.

Lee Belitsky

QX. we XXX% eCommerce talked eCommerce, -- north about in XXX% business the of in up the half of The being May back

Operator

Peter Our today next question from Benedict comes go ahead. with Baird. Please

Peter Benedict

Two questions.

you the update outdoor you're theme play first areas that's that my that of And that related marketplace, seeing First, on just margin number material and that question. on kind on that hunt in any in -- the any did exit, an can to clearance product just of the impact other store give us the XQ? status where out out? of That's have there

Ed Stack

budget the down allocation, on CapEx back based right significantly. We cut So, we space capital. that on slowed now the on our pretty

bit. little down a that's slowed So, been

to the pretty those good. as continued categories, have far outdoor categories As outdoor be

We in continue those to comp positively areas.

Peter Benedict

over pivoting to just SG&A. And Okay.

come COVID back And SG&A through first the million a expense of million to continue to quarter, just the it that kind the One, that questions. quarter there on off? should sounds Does we about we start think that half marketing, second back $XX $XX are that you million store in I how as parts XQ or like was then, start some employees, of you're rate. in adding here that it expect a in today? in back Thanks. to sit think of run monthly mean, be call Would you're the Just the XX% follow-up those, still down hit year-over-year, SG&A year as first year-over-year? to two down SG&A about of bringing you $XX and quarter

Lee Belitsky

paying come that parts I that working not of because that mean, are people there weeks off three of paying who weren't had working. we're And we anymore. aren't people just

furlough. all returning as because to there. regular people that pretty in So, been have cleaning earlier, back we're we most least the to expenses at have with our I said stores well. increased store the if we’d associates off, of as comes pretty extra to do not running XX% solid have because from sales associated piece And stores of much we stores. And trends the extra have are But, the largely for we've going workers bring hours the expenses and got hourly in

expenses continue point. So, are May still some lower from are at furloughed people some to from will aggressively now. have that hiring back -- savings we're we savings positions have right this folks not We'll that in open and

associated savings But, to going we're extra some have have we’ll cost that. So, too. with some

Operator

ahead. Wells of go Please Nikic Fargo. from comes Our Tom question today

Tom Nikic

experiences sort ask, to batting the to of years, cetera. made wanted some Does last cages, couple of lot et I social that in-store elevated you've worked investments that around of with any of requirements levels, experience, create in-store those over to in the distancing, store? a service to add new you've the impediments the safety,

Lauren Hobart

Yes.

elements experiences for and a So, a our in to we the hard fittings, do believe in very with working golf when able much golf out to that been last which batting and several baseball that, manner. We've to those is Be simulators. the we the teammates store. in have over right or we down the cages figure the those ways stores same safe we to it prior But, way continue all weeks simulator. shut turned are and safe of experiential both, we pretty now closed the back athletes, our very on it first

to there adapted actually seems those keep we going. consumer have demand So, to experiences and be fairly well,

Tom Nikic

revolver. the And you think of Is we down balance question debt the there down certain should debt did of reach shore but also perspective, to help you. way or debt? quite and the would revolving Obviously Lee, pace to a borrowed sort that that up you any sheet like there's the appreciated? of on a start paying a leverage you want be comparable you some a a bit raise that, about just from for before like maybe paying anything If milestone liquidity,

Lee Belitsky

the in paying We're resolver debt. process of Yes. that down

possibly concern think through I through, could have be or us. seem our go we liquidity to the worst mid-March that many the from concerns As of around occurred crisis behind mid-April

with Our our coming banks are our good. is relationships business back; really

down. So, we're of that in process the bringing

Tom Nikic

rest Got right. All much very Well, thanks for of year. best and luck the it. of

Operator

next question comes from Duffy Our ahead. Stifel. Jim Please with today go

Jim Duffy

pickup, Thanks in for lit much for patience store, store? On curbside a respect taking few in delivered higher with you my versus do immediately questions. to a Is week? consumers, available to what show to inventory conversion or trends is as the if inventory up the available days be

Lauren Hobart

that Yes. we're the presenting Right in now, is is available that store. availability availability

Ed Stack

Immediately.

Lauren Hobart

immediately. pick to yes, Immediately, available that's sorry. I'm up

XX we we call, But, would what So, the is in we what fulfill. delayed buy We thing experience. that's the been has just usually pickup a can has whole online patience not right profit, are a on on And upside have store XX to something average, to that we're -- the think entire actually the less taking been factor. closer minutes actually for than quarter as patience working now. or minutes and

is patience over-delivering. we're important, So, I think but

Jim Duffy

cold you what We inventory second year, second you been part is inventory planned that enthusiasm half. but Is get have relates Are of in juncture? the for it that mean, to respect process most back-to-school and this concerned will conservative holidays? to vendors, That's for categories will great. the Christmas. there of to reopening don't have speaking as going half the may And seasonal question, lot the around right with not now, at thought a with receipts a enough know then, of be the

Ed Stack

and of concerned, of I some the go now, choices and if categories additional right like we'd confident we'll feel right then market shape. good. But, There's move goes. some in inventory. good enough pretty moving we to We'll from pretty pretty vendors feel to that a some inventory now, have think, to right some some second we'll see we're we're market we how share. But we're to that have have kind and share

Jim Duffy

luck. Best Thank you. of

Ed Stack

you. Thank

Operator

comes have Telsey Feldman Please time final ahead. we gentlemen, one Group. and from today's And Advisory question. Ladies And final from for question Joe go

Joe Feldman

what from it obviously mean, certain checks. the the Thanks for taking consumer? consumer? you I but are COVID-XX, ask or before is categories, asked things are there it into I to insight stimulus you about the for guys. we're people like question. seeing feeling? bit Hey, about wanted know, the to is and was would parts But, upwards there's like, of a seems an I down Sporting within any the more Goods, anything it are start past a up just differences, will give free any get that really you trade seeing consumers how once Is better? shifting that the appetite

Ed Stack

trading down. think we I don't see anything from or meaningfully different up trading

with there's we mix really the do but fair a Some as unit amount actually average that such the got footwear, And going mix have. up, is that's to categories, differences. retail

anything do the continue -- As forward. business, with going really the we continues we fitness we the think that business, do extremely will to is well. think has And the to business, said, boat that outdoors bike

Joe Feldman

I And of then, a versus front. how's you've is style? more or a what's that on versus made guys that investment category good right have regard basketball times, footwear little Ed. was know or that it there, couple itself, actually running now, segue With the to a really mentioned you driving

be Just any would helpful. that color on

Ed Stack

well. business Yes. the continues do to I lifestyle mean, extremely

walking, are up running and before about were getting get social to because were people people a bit don't continue out and people out they as good fresh anytime that we and started get were running, really in -- be is and out to walking going air, think that be we that. enthusiastic when out But, get a think open And or better and about And to that's change trying the continue category distance, for little so, little enthusiastic soon. they running. even running, of be shape going in that either the we to continue we get silhouette out to could bit out people and out, walking as to it to very they

Joe Feldman

guys. you, Thank great. That's

Ed Stack

of position great a take advantage in to that. We’re

Joe Feldman

sense. Yes. you. Thank the Makes with guys. and great. I a looks better know quarter, that footwear luck it’s lot deck Good

Ed Stack

Thank you.

Operator

concludes the to gentlemen, and I'd Ladies remarks. turn final session. the Ed this like over question-and-answer to conference back Stack any for

Ed Stack

Thank I'd thank on DICK’S Sporting we'll like their everyone conference our in next to to look for Be call. safe. Goods, everybody seeing interest forward and you.

Operator

Thank you, concluded. has conference now sir. Today’s

You may day. a And now your disconnect have wonderful lines.

DICK'S Sporting Goods (DKS) 2 Jun 202020 Q1 Earnings call transcript