DKS - Earnings call transcript Q4 2020 | DICK'S Sporting Goods, Inc.

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Operator

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

Nate Gilch

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

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

First, a note on our practices. same-store sales reporting

may across the comp XX:XX publish planning temporary XXXX result over release varies XXXX method market temporarily earnings as on call I’ll before a of first subsequent at scheduling other A.M. calculation XX, not purposes, retailers. result as as future quarter Eastern for Time. sales a And that, we our the now our With call that Ed. May retail of turn the closed Our method same are to Accordingly, opens earnings same-store the of tentatively at were second, includes to The of calculation be our closures consolidated calculating stores sales industry, of store COVID-XX. COVID-XX. treatment the including your

Ed Stack

The challenged Thanks, ways we quite never for an many everyone. were so portfolio, had numerous in survived, demand Nate. We home us not golf, as technology omni-channel favorable XXXX. category morning on helped shifts advanced as across a active execution capitalize our only we but consumer lifestyle. fitness, Good We've the outdoor strength thrived. capabilities, in organization, and year of diverse and like others, activities,

full sales and the earnings. delivered For we record year,

including X.X% $X.XX increase Our innovative sales consolidated a non-GAAP comp curbside sales drive our Most from importantly, same-store over over on year XX% record-setting of communities prior and step which earnings the the represented set that year. our a e-commerce helped we each retail of pace the other top and last increase an of We full billion, way. X.X%, of every pickup, share the increased for $X.X diluted and XXX%. was year our developed for cared of increase per technology, industry

health provide and As our safety shopping and a stores, was our athletes protocols safe experience. teammates and our we established we reopened priority, procedures of the highest to and

beyond in and and and program. across appreciation safety $XXX Our incremental pay our frontline to XXXX we million premium approximately compensation XXXX, above costs. center total, teammates showed distribution hourly we and invested went teammate associates our In

host we a clinic corporate Allegheny Additionally, last Network Health partnered Friday, our headquarters. to with at COVID-XX vaccination

vaccination vaccination X,XXX to-date. these of approximately host a We As vaccinated, clinic Pennsylvania members to the partnership, of in community the plan single this of a result state were future in the clinics largest also. number

donated our on serve to the severely communities. year field, pandemic. been kids by hampered impacted help that Foundation million sports the Sports have these help low-income this get of programs have communities $XX And most to impacted. recognize color these we been also We To Matter back

focus our to Bag ESG both our of also the a of sustainable this for which our increased lead in the and planet. caring past the retail on year, While the much convenient challenge, solutions is become committed retail other informed sports today's Beyond we the pandemic in to for activity actions, customers. Among aims innovative we identify to replace that plastic way sector single-use XXXX, bags,

We also committed I and strong Association's, Corps talk Outdoor joined goals I've been. climate-related business Climate to is and ever as in as Lee about our as Lauren another committed about Action XXXX. Today, excited the quarter, publishing and remain,

work over our difficult teammates to Before very unwavering concluding, during want turn to our the I'll thank I call Lauren. hard to dedication and for of this all their year. business now

Lauren Hobart

by and their And us am families future, we what their morning, everyone. and together people Ed, proud extremely other. DICK'S, make teammates came challenging At start communities, They our I to care our year. who I how our Thank it team. I to this thanking managed want good accomplish also together. each for for is all you, of for I am through know, excited and so great. will our

our delivered announced to this morning, a as Now perspective. and record on the we both from quarter results, fourth profitability earlier sales

which same year. sales was X.X% of of comp period Our our on increase last increased XX.X%, top consolidated QX same-store in the

prior to comps significant industry-leading a by hardlines, experience, in distribution sales consumer channel business. compared Within strongest growth positively categories as see in and enabled in-store of digits, forward stores, benefit one-third and nearly from our omnichannel representing the strong for mid-single supported each nearly we growth our serving as the the to second primary across our by fulfillment. quarter, increased total were our team. across continue of our brick-and-mortar from of three apparel digital athletes points our curbside, increasing which over same-day providing are a and of XXX in-store These of hub pickup XXX%, From our increased sales both for year. standpoint, fully and stores strong are e-commerce, to straight e-commerce which execution as services we demand XX%, favorable footwear, comped Our well our continue shifts

and our ship-from-store, QX, fact, In through our of online total sales XX% of over either sales curbside. pick-up our or during stores in-store XX% fulfilled enabled

supply in During marketplace continue remain the very, promotional to again strategy certain we as and in constrained. be categories QX, our disciplined cadence,

the margin As a and in merchandise basis, points. improvement our represented diluted last share we only XX% year. but increase of margin basis margin, over strategies total, points. significant clear fourth rate quarter helped not a over our result, increased expansion $X.XX by This XXX our setting which years XXX success. an earnings non-GAAP In expanded drove the gross us for on us are basis have several a up withstand that per thrive, past long-term pandemic It's non-GAAP working merchandise

so momentum and business pleased are has As year. we start to with the we our much enter our XXXX,

focus existing Our long-term accelerate our strategies center core around here will is enable enhancing and growth. our to

First, within merchandising.

brands elevate key stronger, to big our been will bets Our brands. have never we make strategic will and important vertical brand with continue time, continue same partnerships we the to partners. with At

previous on strength our have discussed we've source significant As calls, become of a brands vertical and growth.

billion average comps over During the vertical by points. basis in company sales, with brands XXXX, XXX our $X.X outperforming eclipsed

equipment together largest finished DSG Nike. brand, brand year and Our only in fitness, our second-largest outdoor the CALIA company's athletic vertical the our our brand as behind and was brands represented women's largest Furthermore, brand again golf, apparel sports. team vertical

product even through footwear important men's XXXX, into our Also augment vertical similar invest categories. brands XXXX specialty in space this from making we and brands and will including marketing while our store we'll stores. tremendous. the team In categories, Golf in in XXXX, improved athletic Later apparel increased During Galaxy we stronger and additional across in month, was fitness, premium apparel, well will expanding by growth launching gains athletic compete that XXXX, a significant DICK'S only our the selection in Burst, available apparel sports momentum in from position stronger Burst, drive put which pandemic. athletic modern golf, apparel serves to golf male. will saw our brand premium apparel and new both at be DICK'S, offerings will our business build us as on with and as which throughout much

well enhance our country's in and elevate club the trends. in and the invest participation we'll booking Galaxy golf in-store other Golf of experience to invest online increased fitting enable will in we in fittings, lessons retailer, service and TrackMan lesson are We'll on to As capitalize very also positioned to technology stores. talent favorable largest model. And XXXX, our we and

momentum XXXX, on build strong to Additionally, plan apparel the athletic and our and we in results in businesses. footwear

we're looks Our is and on athletic category excited the apparel assortment continue energy a presentation. with beyond trend head-to-toe in this to footwear complete and for assortment XXXX pandemic. We'll strong the

footwear continued full-service in that allocations business. these styles to premium part of As will enhancements, chain. We and our convert this and experience of positive trends the consumer the believe along apparel over additional over footwear, to athletic with drive XXX we'll strong taking improving in-demand results this, DICK'S stores most of XX%

Lastly, out tailwind team were following kids to XXXX we soccer we back year on business, the canceled. business re-conceptualize we seasons plan during expect many as provide our to initiative COVID. year last because our of a nice sports Furthermore, field get delayed an in which a

enhanced We service. used category to and XXXX, baseball attack in centered playbook will the premium experiences more follow same store the we around product, exceptional

athletes our want. we data business, XXXX, we'll stores our merchandising, experience, to continue business well lean experience, whenever, omnichannel science areas our omnichannel as enable and and customers, relationships. they the wherever Beyond our growth of profitable as we'll serve customer however in our on Within to e-commerce including our to focus whom call several on key

in omni-channel leverage As in March of our speed turn throughout partially to service expect with we and XXXX, costs, earlier, by improved the our continuously as meaningful pickup, profitability Curbside to our online athletes our that remain improvements launched promotions a along XXXX. driven the we and our mentioned Ed of service in channel piece drove convenience. year. significant XXX%, increased curbside and sales In in for e-commerce fewer fixed XXXX, offering of curbside the

online includes with more shortening In XXXX XX% This needs experience. and the of offering includes we sales. online path delivery for improve also time, a athletes' well represented This shopping integrated addition will more to destination our consistent which experience. as reducing our loyalty becoming a mobile, purchase over to for curbside, by to as continue leading our

game-changer online for streaming scorekeeping delivered sports through subscription youth enhance all service. Beyond live will technology, a our with through offering we shopping our premium and video-on-demand,

relationships our in existing and athletes building with continue and also new will both stores We online.

loyalty of the X.X continue ScoreCard athlete X.X athletes we XXXX, total that drove in we added drive key to personalized In more XX% million XXXX a to use to sales. XXXX, offering program, marketing athletes new leverage QX. than to will acquired our in including our more extensive fact, data among database during to over one-to-one million our science which increase new is In omni-channel

and community opening including rock store DICK’s an to York. events our will programming. This It center wellness Sports field first our us House will sports spaces stores. New innovate week Rochester, elevated very test a athletes, outdoor focus our excited on and service elements learning core DICK’s Lastly, successful we and and experiential of a most to climbing new in mall DICK’s host in-store roll to are serve allow as and be next experiences store prototype health called tryouts, to deliver and promote product the and into for will and

we really at I As our in are great look a business, position.

seamlessly platforms to Our an industry-leading working are brick-and-mortar stores and omni-channel experience. our technology deliver together

world-class brands stronger. knowledgeable partners athlete-centric, and friendly, been service. more with We've have our vendor have We key and focusing vertical available never on relationships become

and QX achieve and financial loved we're turn to create their and in confidence closing, our to building purpose the to more XXXX. our detail. excitement success aligned call results to have are pleased now forward by and Lee in to I'll XXXX over our a and this results common respected extremely behind on outlook In dreams. personally review all with we equipping and look Importantly, athletes brand

Lee Belitsky

morning, Thank and everyone. you, Lauren, good

higher a $XX Let's to during year XX.XX% increased costs and XX% margin basis as made to basis $XXX offset store million by e-commerce a expenses costs traffic Driven earnings share non-GAAP year. on driven on COVID-related sales begin year-over-year increased X.XX% of points percent basis fixed online expenses in by expansion XX was points costs. billion sales to support and incremental basis, approximately partially full from In to of $X.XX and the earnings offset donation from sales, sales diluted our of non-GAAP the of from a to items, growth. of profit a struggling Foundation driven net million or we increased back our even profit help well to the from increased same also expenses or a compared basis of e-commerce net year. meaningfully year X.X%, compared including year, by compensation to new $XXX.X increases increase Gross from occupancy and closed to SG&A shipping representing days was improved last sales, of merchandise was safety increase. the driven our last or share on and million review XXX% $XX merchandise as leverage DICK'S during basis a total, the non-GAAP year, sales $X.XX a expansion, by XXXX diluted though pandemic. of billion $XXX rate last Consolidated non-GAAP with XXX Consolidated sales increased COVID-related stores strong non-GAAP average closures. XXX year. total and improvement by the sales last XX% per basis last a billion store year's spring, million the XX% year. points, for encouraged same-store dollars or record-setting significant Apart net non-GAAP last resulting were million compensation, per safety were our results. a for $XXX.X of expense from XXX results, included as our sales of sales period basis programs $X.XX the points rate by a leveraged This reductions, EBT we Gross store delivered million X.X% were sports full XX% operating of business in increase XXX in $X.X these on were to points and brief SG&A on jump-start margin payroll primarily and closed sales XX.XX% incremental and $X.XX increase. compared within advertising this, foot temporary to non-GAAP come

our transactions. average $X.XX same-store Consolidated to billion. in sales ticket, moving a by net X% Consolidated partially offset a XX.X% increase results. to increased increased XX.X%, in driven Now QX XX.X% sales approximately by decrease

though comped on we mid-single up even Thanksgiving digits, stores brick-and-mortar Our were Day. closed

e-commerce profit This merchandise points. improvement fixed a our we improved was categories; points across percent hardlines, The and in rate rate expansion significant increased compared and and last billion to XX% on and each lower lastly, apparel three was of and of sales, online XX% footwear. And our basis basis Our non-GAAP sales of of sales, quarter total a costs the to driven $X.XX XXX by delivered a as merchandise points net basis on last occupancy activity. Gross XX% to compared net primarily increased of business or basis growth expansion margin margin XX.XX% primary year. year. driven XXX promotions XXX leverage was by fewer fourth clearance

from and volume of industry-wide saw In surcharges. costs higher holiday packages terms expense, we shipped shipping to increased due

neutralized of However, in-store a the combined higher higher ticket penetration pickup, from average curbside point and this basis perspective. with impact

basis markets XXX%. earnings costs Foundation, sales compared of per a other SG&A XXX $XXX to quarter. has In or earnings share in sales but donation net were last increase. safety This by comp additional non-GAAP is XX% increased $XX points Driven deleverage non-GAAP that The million X.X our rate increase expense $XX This basis, with expansion, points items share we in of GAAP net in due most expense, as significant period quarter, year. the of fourth diluted million as and and our last and well million included of on a on These last increase. diluted year, non-GAAP issued sales sales basis same to EBT equity as the from offset to non-GAAP was $XXX.X offset compensation our of to both increased settlement, we to convertible our margin the was merchandise $XXX.X deferred $X.XX, were incremental hedge XX.XX% QX. X.XX% income million the basis or by fourth the expenses non-GAAP nearly bond shares from $X.XX. made resulting or during in year. million the sales from million at $XXX.X total, fully the in offset and partially DICK'S of COVID-related the leverage earnings net first which share the be is for related as the balance expense impact On value associated primarily in-store or Specifically, delivered and basis, the strong earnings. of expenses share GAAP calculation other in required no interest non-cash curbside to attributable recognition was and and XXX pickup quarter. points per by were million our well the XX are change diluted the notes overall increased diluted a in basis year-over-year compared $X.X plans, million on will $X.XX and the of per

on additional of the press our this, details that issued release this non-GAAP For to we you refer morning. can reconciliation tables

cash Now our ending revolving financial moving no on a equivalents We're nearly position, QX $X.X in borrowings balance with and on $X.XX facility. cash billion to of sheet. credit strong and billion our

levels the inventory end XX% compared same quarter-end the to period of last decreased Our year.

in-demand Looking our we'll continue very is product in-stock to positions improve clean ahead, the chase to inventory our categories. in most and

Turning $XX million $XX allocation. in we paid quarterly expenditures dividends. fourth capital capital to Net our and million were quarter

that outcomes will athlete of be, the in guiding XXXX range will the we typically for XXXX, reason, be to baseline what we XXXX believe XXXX of me and sales Now nature a important compare to planned and both same when XXXX. move given new continued let will and to uneven on it we'll fiscal normal to for a Furthermore, against off our XXXX wider the possible earnings. normalize do. and outlook XXXX Due the uncertainty around of activities

EBT dollars and followed rate then EPS. start with onto by the Let's and sales guidance,

expected sales same-store be in the of represents to double-digit midpoint negative increase low XXXX. are versus consolidated range at to positive X% a X%, which XXXX, For the sales

XXXX footage is Our the same. about square versus

When of the fixed deleverage to both normalizing is XXXX, quarter. as increase advertising XXXX XXXX promotions increase expected due primarily Compared $XXX decline pleased SG&A majority versus trends have of expected to will XXXX, decline And is deleverage Compared of this, is our high for points primarily comps single-digits the our sales assumes growth, XXX fixed of Within driven more first we double-digits, gross the and SG&A down the compared to due and to the quarters quarter, expected versus XX% Beginning versus temporary than across margin sales percent this XXXX. to leverage XX% to deleverage anniversary anniversary expected and the approximately to and versus up XXXX. as XXXX, and merchandise midpoint primarily in in earnings deleverage is expenses to our expected from basis, expenses consolidated with rate SG&A modest to in gradually investments. non-GAAP over beginning low to million declined $XXX to been as due in to margins. comp and is year. a XXXX, guidance EBT Non-GAAP same-store range expense second expect at store year. expected XXXX QX, We margin is At EBT be is sales. on significant margin which expense those hourly is XXXX. so we to versus XXX higher net the to versus expected basis gross far basis a on gain in XXXX. wage a XX% closures million, points last to by on midpoint, we normalizing non-GAAP range and

$XX fall first majority COVID-related contemplates during vast SG&A. year, the of will also the million costs half of guidance within which of Our approximately safety the

outside annual and costs the the these these within and guidance, including impact been aforementioned COVID programs, transitioned and now hourly of pay for premium program changes of permanent. we are in-store merit increases accelerating, at included as XXXX, of lasting but higher fiscal - our of terms also minimums. wage more to hourly our has In falls The programs beginning DC teammates store compensation increasing

which share a basis, XX% XX% diluted of be non-GAAP Lastly, the non-GAAP earnings per versus we XXXX. range XXXX at on the to in and $X.XX, to mid-point down up is and anticipate $X.XX versus

an tax of shares is rate in Our payments is share-based earnings tax to on and of traditional due than outstanding XXXX. our XX tax rate and based expected average million approximately vest lower diluted effective is to the XX%. impact This guidance favorable

ongoing stores. plan concept includes relocate within six stores to investments million, XX six expenditures million stores as technology two we Field allocation specialty stores, convert into as DICK'S new DICK'S new $XXX capital stores, our improvements will also net capital be which $XXX stores, Stream in and Our & concentrated will and of Lands well in Public existing

share an terms returning shareholders, $X.XX $X.XXXX we to In dividend our an annualized today XX% of on announced or capital basis. of increase quarterly in per to

addition, plan guidance. $XXX minimum is includes the repurchases, included of share of In which EPS effect our of in million a our

However, to results. continuing with In million. extremely will pleased XXXX opportunistically the are consider we our $XXX we closing, repurchase shares beyond

our We remain enthusiastic business. are XXXX about looking and very continuing in forward to success this we

Before new this our Relations concluding, will want and later intent you interest in concludes line serve a to to comments. prospective you Goods. The Operator, This current to your for of is questions. provide highlight competitive website resource investor Sporting be company, today. I and to that an presentation for our presentation Investor as Thank may our a DICK’s of strategy open the prepared investors overview differentiation. posted now

Operator

Please first Our Instructions] question Morgan from Simeon is [Operator ahead. Gutman go Stanley. with

Simeon Gutman

outlook a gross XXXX can get the takes there expected levels. I outcomes very anything think help for you up XXXX. the versus of give of My you on a wide far through, as got balance part. range there. first puts the question as to can us obviously, is Is is let's there's margin that be some remaining in on that Obviously, that margins, do of back you we product say, and a the maybe so a leverage, occupancy some rent of of comp, the midpoint zero there? But

Ed Stack

thus It's second through hard it exactly lead happen were add to what fourth promotions we're into right approach adding become year we and levels charge promotional margin the are on a we seen we year say fewer but plentiful when of merchandise there, as return the we've the that the get to will attributable year. during QX the the or more really We industry there's The normal industry far, this, the promotion to that to to through inventories promotions. we margins, extent of merchandise will that have but largely potential back at not goes marketplace shape, we looking there. And It's quarter through across to QX. happen, now, light will but supply promotions, we've back the obtained merchandise across need had. good get planning react and business as gradually really to the to haven't, the our But than don't this will will far categories - there. intend believe that Right if the now. are more out in that rates kind

cautious we're kind the but we of the respect promotions. year year with don't imminent, So anything see to of being half this about back

Simeon Gutman

on you EBIT at Can like margin. a you're lot in I planning is maybe next a Okay. the investors know the like looks margin historically around of discuss It looks share business X% dependent peaked the don't and pre-eCommerce and that gross year the it - looks days, or the bigger second of that so. like question this are My margin long-term business? And to thought to you power if picture. with giving

earnings maybe the there's on to time time? if the rate ceilings margin could frame a that? is know to we should new business don't of to is the level which how street an I back update XXXX's providing power if about of And think get So share, over reasonable you where think in you the

Lauren Hobart

Simeon. Hi,

to will We guidance going what going forward. are not operating be share on margin our long-term our

over upside However, just now. we laying continue right few that to and next the commitment down years. We're is in operating view definitely the not we to there plan a deliver margin,

Ed Stack

We much higher the see demand on think past of in. a it add level we and I that, meaningfully of come that get to. just we'll but normal, is pandemic-driven and of we would hold how sales, once the to that business see to how want out settles lot settles where I at kind out of demand believe we to we'd a like that new this of

we build is what can going off of the understand So base forward. we that

probably we'll on year. in later year this So have this the information more

Simeon Gutman

just I back math, the And if a down, It's - can a if actually little Okay. not occupancy know color, hunt which basis gross margin there's XXXX we a should lot bit I for second. leverage of to positive is we versus on and my can know better a eComm any could and get should but XX be be margin pencil but XX I be XX, change, like don't points. possible you could of something barely. out comment if on

Ed Stack

we but opportunity that margin prepared Yes. to the - on side. do believe the there comment this now, continues I'm on to be not math gross really

Operator

is next from Adrienne ahead. The Please question Barclays. go Yih with

Adrienne Yih

flow on for net is? the give some targets of what port percent long-term finally how high relative is Also you for the merch of Thank can Lee, on Ed and your new Ed If how store Good a and about of that us the you basis, And very X-year on you think store gross a a strong annual that's Lauren. congestion product? just comp morning impacting historically all and business and and comments Can what talk large - talk and opportunity? maybe X net about the characterization quarter-to-date and of to on year-long note. sales about sports ending delays, is growth congratulations margin any you can that? year as how store a should that team This and much. Lauren, for be, and/or we and should

Lauren Hobart

thank Okay, Adrienne, you.

become this us ecosystem. that the is part year thing I of stores an are So our to starting that, to asset whole clear has long-term one as omni-channel with very, think our store very targets, enormous us

as our we growth store so are in we view symbiotic our e-commerce And and very growth - hand-in-hand.

to team not store huge on experiment That we continuing We year with at different mentioned, and sports. a expect want There And - the slow part country larger people frankly, we've looking year-to-date fitness next will I weather to concerns, port our prototype who and a buying and team while next. lot, a prototypes. Lee, COVID radical they to which of got in laid change Talking sort this now and said, up. kids a out in we'll their years. as outdoor sports football delays? little have plan got while would come as continue what cold some the team want not past continue was still playing large golf there's many of a that tailwind new will we And We've season be get see and of to parts growth is a we store we other fully the penetrate. due our this and us did few of big is still And obviously see believe the of so we would think Sports started and of we year. we play to baseball's about where to seize for lifestyle. in take tailwind to become opportunities are activities that also House types in you sports, new

Lee Belitsky

that So have some seen across with product some have. we supply we regard delays categories chain, to

being We being like not to delays, but lower with we some this inventories due our impediment But would at Not port to in of a point. anticipate liked. as were we that a categories little a quarter. don't have to do Our highly to significant we business the so manufactured merchandise much be. as bit than little bit them fourth would constrained are

I'd change. good of what couple last bit Asia Now we're looks supply getting little issues; position and at over a better the see catching for have could now. The inventory the in bit a better. the a right we that It seems point. a up little chain had little say, this like it like They pretty weeks, trending but got are in is U.S. ports bit been while, worse a

business the quarters. doing as an see don't we the to that do need we to over next So really couple impediment of

Adrienne Yih

Any Great. quarter-to-date? on comment

Ed Stack

that. with sales so at pleased leave really quarter-to-date we'll this our We're

Operator

The Goldman Kate next from with question is Sachs. go Please ahead. McShane

Kate McShane

you comment summer read-through to warmer the regions and seeing providing the spring might And my second around question you're golf how season was in business wondered what about if nationally? for the could be relocations. of I all then and weather store at a golf just it

year. I think this mentioned XX that you doing you're

is into. I in real is or little estate if opportunities there bit wondered what real real this new at favorable estate opportunities I or do. a were more you're rates? And new relocating you traditionally it more higher than which estate opportunities think

Lauren Hobart

Kate, I'll start with the business. Hi, golf

the the on It across bullish business. warm nationally the the golf strong incredibly are and still strong We in board. has remained weather markets through pandemic

of us There's rates and are participation up. in lot we there. see So, new athletes a growth golf sector ahead the of

pop when do In see a terms a strategy of a relocations, and store right have we profit and or do real multiple standpoint. sales either relocate. from definitely with has now into opportunities, been nice we new part we a big our And renegotiate relocate estate to of

Lee Belitsky

sales get the the big The we in driver than rent. in it is from lift savings Yes. the relocations on more

well. Sometimes, typically fresh the get but a is as profitability rent lift see and and we significant sales we reduced, in-store

Our new new selective and very picking well been to so good. very our stores economics targets well, have we've continue been as in stores for perform the

new discouraged do but any we're to in opening stores from selective. So we way, not be to continue want

Operator

The D.A. next question Davidson. go from ahead. with Please is Mike Baker

Mike Baker

today better One think that it I your Why think or was in it years. it to bigger before eCommerce? in Is one the XXXX, you it even thing above? pre-pandemic? comp of the you you're pandemic five important all were I best Is Is that note than four positioned vendor do question. picture technology? Is relationships? think

clearly, things better positioning? So are direction do the moving you right What in to that think leading is pre-pandemic.

Lauren Hobart

you thank agree with just question, year. a This pandemic I couldn't that this not Mike, and pump you. had more your for is past we

ecosystem, created on And the that really of digital stronger make strategy to top which our of our We now pandemic, that making only new most relationships, we've out I have been, make entire stores the many online our omnichannel of years ecosystem experience. a our through out that, pinnacled sales. strong would of to amazingly on part the most vendor our stores, with say to the curbside have now, working develop gotten

grow up Our helped that few also two in leveraged technology spin not a way if but in ago. fixed the us, pandemic a once few and expenses years curbside we investments technology just hit, days past the have years over couldn't our we invested hadn't in

best the operating right working feel - returning quarters before to little we look So, during and bit our the had and a we our like to pandemic, forward best normalcy and through we've pandemic, I of model. our then quarters do had

Lee Belitsky

to comments, about running it's some we're or lifestyle. perspective should to whether activities athletes our - And from Lauren's up new on, trends and more activities outdoor more and that that the picked addition to footwear, work-from-home, require time in have which consumer what's to habits some a add just golf during year, to of trend, add other so the be athletic or some people's apparel excited likely

going the ahead. So, as going at trends demand these got engaged think to as have - result that pre-pandemic that to all settle was is we a And that we athletes adding than level new with. higher our activities well And like of go it product a forward. in

Lauren Hobart

while experience, digital then the launched one Sorry, pleasing eCommerce wanted see is we of Mike, stores, and is add most of curbside stores that I as comping our positively, over e-Com. still improved opened and just more few we're things are thing, our past to to the up and our incredibly out quarters which our strong we getting growth one that

trend. feels a So long-lasting that like

Mike Baker

a New winter of - imagine or Under product for products. selling been to just was in these there you're similar called some I the in football layer of Yes. Armour going It's England. out lot I DSG add type

Lauren Hobart

is there or - some yes, guys. There there February some Yes, Under but a need and cold on. meaningful and March, Armour going was DSG fall Who season you gear, is some knew? in

Operator

from Please ahead. your our go end is open line Christopher JPMorgan. Horvers, on

Christopher Horvers

saw about stimulus a Can everybody. Can on those impacted footwear. the And how quarter? third that performance talk hardline, morning you Good trends? comment you Thanks. versus any strong sort changed apparel little in bit perhaps how talk performance, in of talked relative you the and what about about and - you

Lauren Hobart

apparel also us turn future. were of do over may - the that we categories incredibly in to Yes. much something is to measure stimulus what fitness, we're helped fourth in we much impact a quarter we hardlines actually Hi but but constraints was the quantify how - cannot they don't which just challenges in terms There's I'll we and us were so golf, really champion. footwear Despite equipment, Chris, have that a and strong. you - QX, to But and quite dominated footwear and the help the similar where lot yes. so this of it year. in outdoor year, supply all doing to really of Lee, - product; not stimulus, strong planning trying against. what - we're were the getting our It's we had that well in this is noise hardlines quarter, the that's not bikes, exact - that sports, checks and business

Christopher Horvers

the at XXXX ended Should the year of the from Understood. a Where - cash. balance as look the outlook, sheet? of level? what's inventory billion talk days you little $X.X And capital is perspective? then level working You bit we right can with right about

the share difference on EPS the line. was that outlook between count You're street the of sort a baking Most repurchase. of in minimum really share versus driven $XXX million

to is you're that significantly on capital $XXX something that big a So there for? Is why expecting? there wouldn't And than more that million? drain you cash buy working holding you're back

Lee Belitsky

with to planning end things. a questions. with of inventory working I'll couple a regard our even Well, 'XX capital, XXXX. to we of couple And address are to levels approximately

to up double expect low about sales be the digits. we So

math inventory to like comes think end we at about be expect the out and of 'XX. same XX% the the I to the

we've to So, greater probably there's this the than the measure business. changes year. to It's be set that and drain at we the said right now, a that, for buying our higher will buybacks, are back go it bit working we we of was happening And capital XXXX. at our share expected. but it regard turns also XXXX, there that's and also and expect resulting inventory on The But be possibility payable a with XXXX, accounts forward into more while for be pace than lower than what XXXX. measure any meaningfully the the from in demand pandemic. And With of if in open it we've in the what's leverage will as business to business, - leave that no unusual we'll than will as little million minimum we less is look $XXX of it appropriate shares. baked forecast be

Christopher Horvers

eCommerce Understood. how And then, extent in be your one Do And expect the you. might it to last question. margin? you up Thank impact down, gross expect that growth you to XXXX? that

Lee Belitsky

first quarter were XXXX. to in just of and the business, half back had the really the closed. our down a in stores planning when be unusual into eCommerce we're We the second business particularly lift versus quarter So the

eCommerce eComm business. last very coming we're our to than lot so QX higher about eCommerce going up the rate Certainly, optimistic numbers. the was is we're business it year, some really of run out big come So against in a

So that's We're as for good been have from there. us in-store pickup which pickup doesn't ship - curbside for delivery AURs us. good well, the The me, have and excuse we're cost. using the using

coming on be So overall shouldn't percent the the a the from our margins modestly. impact business, gross down eComm of as mix significant

Operator

The Crédit next question with Please go ahead. Sigman Seth is Suisse. from

Seth Sigman

I the costs was hoping more incremental in bit you little could XXXX. FY frame a

I $XX some the $XXX million assume incentive talked other donation. for comp And year. million maybe and think, higher included factors. there about also, don't the I I was that think Ed

make you for XXXX? because this then like confirm to Lee, So, you you're us that have think base wages we assume the like come to confirm and I costs for sure much the help sounds that and how maybe in to well? that as It And you're can want was saying; these right. back, more that. reallocate just about that don't things permanent Can going necessarily outlook,

Lee Belitsky

Yes.

of million me; got $XXX million. the of COVID do million of there, So foundation $XX We of additional not costs, $XXX contributions. a excuse couple million - include points $XXX

So incremental in those are - were XXXX.

piece COVID reallocated more into of kind going of wage large costs that the has However, permanent increases. forward, a been

of wage our - order continue wages in in both stores stores. to to kind get right We our people more continuing maintain talent invest kind the our centers. those in the distribution We're to pressures in hourly to of see to right our and have

So a reinvested, that of said, forward. going is as being part large you

Lauren Hobart

while and mention want were we was pandemic. is figure May to that, I to the between March were out through nonexistent past advertising liquidity pretty this other manage going much to we The expense how piece year trying

cost another next normalizing year. is be that so, will that And

Seth Sigman

to this just then, talked And Lauren, business. upside operating earlier of helpful. clarification. another follow-up you and margins the that's long-term about Okay,

X.X% Just or to XXXX confirm, in XXXX? is that what you saw versus the in versus just

Ed Stack

our for year. I this it's guidance say versus would

If you as establish of off midpoint base take can that we we the building then and of a think guidance, keep our new that.

it's So from there. can build over operating We X% margin.

Operator

ahead. go The next question is from with Lasser UBS. Please Michael

Mike Schwartz

question. for Mike taking Lasser. Thanks on Michael Schwartz for our

spend you increased how be existing the year, terms in to to by you customers customers of frequency? do existing new growth out sales the that customers? compare at And past of new ticket back able over customers driven versus would from Looking saw was how much parse

Lauren Hobart

Mike. Hi,

tend full year a the had in and customer, more new over the customers the million younger and makeup of year. very our customers. past skew new have slightly We the a in course average the of quarter. X.X than former customer this We're slightly current significant more little new to a X.X over fourth pleased We increase urban. million with customers bit or They little had female

very and - our of it's those database - a that’s for lot brand with to and people in the encourage our it's think from of we're time, we engaged the keep So But hard a or a exits first cities piece growth. do purchases. huge working people the second big the

Mike Schwartz

drive on we think when stance promotional ability and DICK'S limited to levels? more And is marketplace? as will the from Or XXXX intensity follow-up, depend about in pricing it a the promotional

Lauren Hobart

your is think the Is promotional your question? question, than able was that lead but XXXX? less that hear a asking of DICK'S you part couldn't I - I environment first were to

Mike Schwartz

Sure.

on dynamic? a or more limited not it's Just stance the whether more company of has market to a drive or its own if promotional levers

Lauren Hobart

moving We be promotional to plan do into. not very

promotional Of respond through. heavily manage environmental But any have have we course, here. pressure. any economic believe appropriately that we or pressure lead we And we do will to cycle or a we to the plan market levers not to

Operator

The ahead. next Grom question go Gordon is Chuck from with Haskett. Please

Chuck Grom

Hope Long time, you're Ed. well.

know I front, you have several leases a coming lease renewal the of years. on number Just up next the for over

the to think how should we impact cost that of years? occupancy about wondering Just couple from line the the over next

Ed Stack

Well, due five we've we of those coming years and about over next the on two-thirds leases have the got leases. an option

of reductions along the relocate we've when stores, those we forward majority leverage able in better go been new And as to the we stores. deals As negotiate negotiate drive also leases, we to us way. it gives

would forward we rent going have expect year-over-year as I along. all in the modest So declines line

Chuck Grom

any and the performance question up one Florida, fewer but in states I Texas quick apologize like particularly for restrictions, just being COVID wondering then regional been where here versus there's difference maybe, Northeast? in And seeing you're if say, in Georgia, I'm near-term-oriented,

Lauren Hobart

in and the of I activity team think looking we coming and We're at where levels that just obviously, to have back. that is coming strength the back, best restrictions COVID seeing those and businesses. are way are sports allowed different they that, business answer way

Operator

is go question Please next The ahead. from with Paul Citi. Lejuez

Paul Lejuez

mix And it gross do had margin think performance mix XXXX. F and you line impact just the this in if the margin on on have Curious you talk about could an XXXX. could the how F that year in merch impact

from of then what's competitive going you value label can also perspective managing if second, in a And a business. on landscape. in also curious talk just category private terms maybe that the You comment on perspective,

closings, Just that. from you. driven opportunities by you market F either small-sized will how you XXXX numbers much around share guidance think Any competitors? of store your be Thank chains, can share is competitor medium-sized

Lee Belitsky

categories, can higher footwear recovery was strongest XXXX businesses, continued margin in to see forward, in really fitness, in a in on. businesses. we because we favorable bit the XXXX And in to apparel, athletic the expect see and business XXXX are the the as to go team should strength expect a athletic in sports. hard-lines outdoor equipment, which We of part so be Mix little

And addition our business from coming positive also that, mix see private that grow, we to a be Hunt perspective. which brands favorable the brands expect In margin to a vertical which continue from down, should is to a our perspective.

much see landscape, a basis So, favorability, there competitive on that perspective. are would changing to from the brick-and-mortar mixed to With I expect points I XXXX. some regard of see don't

pandemic good stores, after think generally I regard is really to The I any in sales With across shape this closures in way stores department so other year. some of of stores, But kind some of more bit work goods the the spurred expect now. aggressively, sector on hand, a favorable. has the the space see our don't sector, right little to meaningful some the should way. sporting athletic them closing be going department apparel which which are will are other

it, see the So, a long this and competitive space. short in year really of landscape in meaningful I don't the change brick-and-mortar

Operator

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

John Kernan

couldn't mean, key were sale? you Can in to potentially are XXXX fulfill? if were talk left inventory I Were the you obviously - you on comps down where middle like you phenomenal. categories levels the curious any supply-constrained I'm some comps of you pretty felt just significantly. there in

Lauren Hobart

pandemic and demand the there categories through some we're chasing we've John, all that Hi managing due was to year been Yes. surging definitely it. in

basis hand-to-mouth over me on left it's turn a some table. categories. But let of these to So, on for the it sales We Lee. some

Lee Belitsky

Yes, that kayaks, equipment, chasing apparel. athletic year we golf were fitness, I categories and mean, and were all the

we course categories, in key certain higher. the certainly, had So, of more have would year been the if inventory sales over our

are We right shape in now. inventory in much better a

pretty feel of our few we last that the through inventory we're but We about levels don't short, latter mid year XX%. right we kind down good and pockets widespread where year. of a have part now. we're the outages So, still the There's inventory gave

John Kernan

XXXX, affect How the expect not mix comps back I know curious gross margin, just to how the of this to maybe And question. the big also will only my year? but this overall mix was follow-up question year? comps mix goes a you comps driver ticket in fiscal affect

Lee Belitsky

promotional. to think, remains to us, take it playout, retail reason how big-ticket of Part see average the I a well much, at less up is because for were that and the Well, so look the hold-up. we items

will average have good lot will there. business. did think as So golf new like And about, area, ticket. We and those the we strength time of about, we get a good fitness feel kind we that categories drove I in us, now. on. the feel happen the golf all the so items, to And when right in in tell sales of kayaks, activities the normalize, of later year big-ticket the But what really clubs,

Operator

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

Scot Ciccarelli

It's morning, Ciccarelli. Good Scot Ed.

can those conflicts So partners. the offering Burst create especially is like, that brand guys brand new right your the some your it on relationships? vendor for of are I'm improving that just of with introduce given to the aimed core in important and Thanks. any vendor potential how men's you your merchandise seems partners, athletic middle most curious planning comment apparel

Lauren Hobart

it - our is Yes. brand believe will our it's different stores have core it's the do athletic in Hi. see much Burst other apparel white with we we competing space. from so very now, vendor right now specialty, is space with mentioned but that very when premium men's what assortment we we Scot, a you it, it believe be white and our product a right partners a brand, new

of CALIA men's current space sort are of - on our just the think a it in. side, can as not that You white are partners of version filling have, terms the in that we not

Scot Ciccarelli

going a you say, provide can more to that's Under different Armour type offering, So Lauren? detail be on any why Nike, than,

Lee Belitsky

It's closer would that to to I the say, lululemon and it's - Yeah, a... closer they've got. assortments more it's

Lauren Hobart

Lifestyle…

Lee Belitsky

Lifestyle - you out if apparel that you it can in. work wear choose to There is you travel work, to. can could you in

a focused of athlete So kind little brand activities is our coming than is bit Nike, it broader than new out. which of range a more the covers

Operator

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

Steven Forbes

spoke So across you're mature of new remind I the the plus the guys on looking four-wall Curious margin. at, sort the can think are if store importance when target, the store margin you Lee what you operating that comments, to profile right, base? identifying, relocations what right us, or four-wall X% of margin is, And/or stores, given opportunities?

Lee Belitsky

when XX% is the And an investment. a to return in We IRR on on be our typically, in that to we remained so including, aiming hurdle new we've have the stores, the in lift if the that out for a order large stores IRR, we they least on And stores of investment. over new move. because really store, at an can get run sales spur existing we're do relocations the

Steven Forbes

And then terms the just comments we any a attached as ROI right, a think any footwear decks focus, about that return premium given of on should of Or IRR to on sort we to color initiative? these that follow-up, in lift? what

Lauren Hobart

share unlocked of a than of the lot and to experience. to We're much not deck, going that decks the a other assortment the say better IRR athlete have

a our changer, footwear for really game game so entire it's positive business. been very changer And a

Operator

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

Joe Feldman

to you've enhance mobile experience. Wanted month, things ask, the some mentioned doing last to

consumer? better little how guess, you I could be integrating, experience color more on that would and share the you for If a that

Lauren Hobart

the Yes. said, our to experience fully are both right with We're working app. experience of of the particular, That DICK'S we plans on mobile And online the eCommerce integrate into mobile a hub sales. now store relaunch the users, the app in already to come… have XX% experience. is ScoreCard entire of and our of the - shoppers members More mobile the and ScoreCard ScoreCard experience making the

Joe Feldman

Obviously, more efficient, wanted - for made things other year. in BOPIS, topic, that? headed the you go you to I this could you and of some find mile. how make it about And do sort ask you do last the Where that? that. are curbside then like share kind Like was on you to kind And do plans If ways strides back is great past of XXXX? of

Lauren Hobart

Yes.

focused mile, great improve that are we that's trying profitability, the the are the profitability also and on to last customer We but experience. in on BOPIS focused channel that

we're like athletes. So to speed on working things

a that We ready. under So is an XX very Curbside than right couple their but is quick. within just it's lot notified usually faster it's curbside now, minutes, promise or people weight are getting minutes a hour, order faster. that of BOPIS -

want love be looking we'll just become our small whether to And so on. did delivery, thing the see so athletes convenient just not make past and the same-day a tested goes we're other trying that it. we people delivery this Instacart same-day into and that to as And year the test experience is for year

Operator

question The end, our line your on next from is yours? Warren muted Cheng, Cheng Mr. is Evercore open with on is go Please ISI. ahead. it

Warren Cheng

and I of Simeon's just a the margin. on question gross had some other question follow-up on questions

sort we're So to levels? your a the underlying sales post-COVID to mix out rank structural maybe of environment, to structurally some normalized just back that even gross post-COVID to XXXX, margins be, XXXX may more XXXX promotional just noise in biggest filter what's where you relative whenever can order the changes your margins and gross if of I happening and out try a to scenario

Lee Belitsky

leverage To believe, shift to of occupancy continue should I'd be we in to to due say higher would particularly we rent largest promotions drive be be better expense. margin largest around we to the to one, the the able continue as management, going will extent expense. the our to to say I we've leverage along footage being able merchandise did the got and is second way, online. the that's due square same XXXX in mix largest. we're say and some I'd XXXX the occupancy reductions

the good delivery and think larger fourth AURs. we'll a to products to try customers. We BOPIS as mitigating in able it curbside of down. I is run to a did the some higher expenses the to there that, at to job from but But a effort expect part XXXX, a pickup eCommerce other really through of keep very from to our business. way, as to hold the on a expenses be be more sales would Going expenses some pressure so will management delivery that percent is detailed additional of on business, higher and quarter, get constant, there versus that We eCommerce

Operator

The Please next with question Securities. is Wedbush ahead. from Seth Basham go

Seth Basham

My Thanks a lot good morning. and question's SG&A. around

from on you underlying? should the X% looking in at growth could growth that X% you the contextualize business. SG&A basis annual Maybe we seeing to underlying about we're think two-year in if If basis a be it an on XXXX,

Lee Belitsky

So amount versus our XXXX, the as are well, board. driven That's the driven main really so the really on not up, higher but exact it's that deleverage comment store shape. to drivers of is wage are I'm expenses that payroll. shape it's is in growth store really are that rates. by are in experiencing payroll good expenses really by wage to going across that's and attributable the going we factor, advertising that rates Admin good hourly

Seth Basham

rate's what been? comment the growth no on But underlying

Lee Belitsky

I that point. don't any this comment at have on

Seth Basham

those as follow-up, just some XXXX? SG&A, in might your with capital increased a other that of investments. out the a that SG&A of thinking the elements headwind looking about D&A and And follow the Is smaller on CapEx step-up

Lee Belitsky

really. Not really, not

we coming not year the year for depreciation a As a year, throughout this investments It's partial headwind know, year. of in we of expense. really this have

Operator

ahead. question And be Wells the Tom will from Please final Fargo. Nikic go today with

Tom Nikic

Lauren, in I me end at ScoreCard squeezing program. the to want for quickly on just the Thanks loyalty ask here.

non-ScoreCard situation becoming members in XX of even that? like you in terms of And you sort pretty move differences can where ago, it buying seems I kind from here? Is frequency like average good there it could that and metrics sales? think do XX% also, like or XX%, you, uptake just penetration like like to sales. this there, of are it something I ask of of launched or XX% see think the I XX% the anything Thanks. basket want then seeing of months ScoreCard you've a just higher think members, you're meaningful gotten

Lauren Hobart

Tom. Thanks, Yes.

very, and clarify has thing, hope going been penetration very few to one it always years, we for XX% Just it's as for past the has our many, ScoreCard years, increase to around actually many at similar is. a high number program been

every highest probably on referring is ago customers of awful over an higher year account of which our our four you're is, for and think who do transaction, Gold a an are is we about total months to ScoreCard sales, best level sales, launched our higher. what I which is lot every now, is the XX criteria dollar $XXX the they Program, contribute

Tom Nikic

it. Got Understood.

Lauren Hobart

Thank you.

Tom Nikic

so for penetration program the XX% of, of So, the, loyalty steady you is yeah, kind sort alone? think state

Lauren Hobart

Reasonable assumptions.

Operator

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

Lauren Hobart

Thank everybody. thank for final you our their and Thanks everybody year. performance you in DICK's for a this teammates your interest to amazing

Operator

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

may disconnect. now You

DICK'S Sporting Goods (DKS) 9 Mar 212020 Q4 Earnings call transcript