DKS - Earnings call transcript Q2 2021 | DICK'S Sporting Goods, Inc.

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Operator

Good morning, and welcome to the DICK'S Sporting Goods Second Quarter Earnings Conference Call. All participants will be in a listen only mode [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. Please go ahead.

Nate Gilch

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

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

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

calculation result temporarily comp closures Our because closed method The treatment calculation not store temporary the COVID-XX. the the that might of varies includes be other as retailers. retail a of consolidated our across same-store calculating stores of sales last sales same we of method COVID-XX. year of as industry, Accordingly, including

compare subsequent the now to publish with call XXXX are I'll earnings that, And XXXX our market and at results turn and lastly, our purposes, with of a third future baseline. before over Ed. the quarter XXXX tentatively on for a.m. of we XXXX a reminder, XXXX sales XXXX. XXXX, uneven XX Time. due earnings will we we November planning Eastern your as XX, to opens planned both And scheduling nature Next, results earnings the against Accordingly, off to XXXX call

Ed Stack

as been. Thanks, a of us announce extremely dedication diverse and now, demand. portfolio, everyone. lane results infrastructure, years experience in category the on in going new continue the made year pleased strength transformational was great continue the so are I in reimagine helped Nate. be record XXXX plus athlete and more offerings concepts. capitalize and business said couldn't history, in of in and most has our paying We of proud unwavering to morning, past our to consumer to strong to future experience elevated omnichannel team space We're four The Good our business. now invest right off. over We're the our and team another we've and technology, our be quarter our their far, core it our and We'll athlete company's allocation investments certainly our with our to

As strong successfully part a of redefining of launched sports that’s growth at DICK'S and completely new this, we've destination driven House retail. experiential Sport, DICK'S

extremely well. outdoor Lands and performing the of our first business Galaxy tomorrow, Our Golf category reengineering the active will focused Public store on is open

in we the I'll over elevate focused to business. the athlete our of remain trajectory core we we now XXXX, drivers of and on Lauren. look the call optimistic As and continue experience. the turn strategic into and confident balance We're year to strategies earnings to our sales as growth and will the

Lauren Hobart

morning, everyone. Ed, you, and good Thank

significantly. our QX, quarter delivered company's announced morning, we earnings, both the quarterly in earlier exceeding achieving in expectations record we sales this and our history, As strongest

a non-GAAP and over of XXXX and increase share non-GAAP our to also per last achieved EBT In earnings QX allocation enhancements XXX% increased QX capital top same-store year. Today, increase an XXXX. of the gross we our over by Our increase over $X.XX Driven the last total, in XX.X% unprecedented consolidated XX.X% margin represented XX% same of quarter sales on sales period a same strong margin, plan. diluted announced year second we period several XX%.

dividend a very of per $X.XX are to special share. we First, pleased announce

by And We our per our the to confidence minimum balance on $X.XX our sheet have of share commitment our dividend shareholders our of the also $X.XXXX cash a cash. This a an share business, doubled additional annualized we to and XX% $XXX to efficiently strength deploy to million. or return quarterly demonstrates increased we repurchases planned our in basis.

our results. Now to back

both we transactions. as of QX added in across of last the strong double by seeing new and primary acquired X million supported athletes apparel year ticket as quarter. were our athletes comps each during this well footwear, also new digit and million X.X We're growth Our sales hardlines, and retention average increases three categories: we strong

standards. significant to previously, in drive stores, we our and we discussed dedicated efficiencies. technology engagement ability solutions to with to across omnichannel and our In deploying teammates' our we're processes and enhancing are To As we're to this, serving ecosystem. enable training, service experience our increase serve athletes, investing new entire our athletes new the elevated leveraging with heighten to

to make teammate a know is continue fantastic great a as We to experience experience. DICK'S a work great critical to athlete place we delivering

We making stores are our more experiential. also

stores us elevated to DICK'S QX, are marketplace. working new set the During within approximately added shops. apart converted premium we strategies we soccer XX full-service to XX and These continue and additional footwear

year our to quarter, brick-and-mortar stores compared when delivered sales the comped XX% up nearly XXXX. increase XX% During and a versus last

enthusiasm has been and athletes energy of responded are stores highly experiential two have with Additionally, expectations. concepts incredible. to a our have House strong communities to Tennessee, Knoxville, Sports these off first York New in very and The and Rochester, which our start DICK'S and exceeded

most and House successful while Looking of grow to will elements ahead, Sport we its stores. rolling continue our into DICK'S core refine

experience, forward the stores distribution our in-store XXX serving hub our Importantly, omnichannel and digital both of of continue our over industry athletes fulfillment. to leading points providing for be

ship-from-store, XX% than sales, our we through more stores During enabled fulfilled online curbside. our of sales of QX, either total our or pickup over XX% and in-store

business. e-commerce robust our to now Turning

to when sales over the online of XXX% pleased growth we to deliver During compared XXXX. were quarter,

drive included increase XXX% As XX% XXXX, versus in a QX we decline of importantly, sales represented to as planned, by our as this store in-store in fixed sustaining the curbside year leveraging a a adoption Most continue which temporary e-commerce pickup cost, as and significant last period closures. profitability and of online targeted channel anniversaried we fewer asset well improvement of nearly promotions.

our half and enhanced continued with shopping XX% been have represented to addition, lead online as includes brands we of XXXX, and the This national times marketplace. athletes the faster stronger. And over merchandising, sporting partnerships our and to same checkout key with our experience. to gain of our profitable well never with the in with to CALIA online our In vertical highly an continue improve our which shopping as experience. our products portfolio, mobile, goods first assortment. delivery for time, At sales provide continues strategy strategic as the traction us differentiated largest additional brand including and meaningful within retailer Within exclusivity partners country, and and growing in the DSG provide exclusive these

pleased merchandise During apparel second of outperformed premium the average. our company performance quarter, double rate been with posted men's also brands We've the digit VRST, new the quite early with margin our brand. that expansion vertical comps

is significantly strategy Our and increasingly merchandise differentiated disciplined cadence, margin assortment, higher our promotional combined driving product rates. with

points During XXXX versus the points XXX our margin XXXX. and we expanded versus XXX quarter, merchandise by basis basis rate

positive were the to in world, talent And Golf redesigned to all these fitting Best this and technology Galaxy we've trusted grow. brand elevated open next to absolutely retailer will We've will enhance and industry our continues We we've of industry response Your We've over at QX. to XX% service TrackMan our invested golf Galaxy Golf in of generation campaign, and the first the Center, nearly And TV, store Golf it stores. enthusiasts also we through to there on our leading tremendous Galaxy remaining week We've golf premium golf in-store levels. rolled leaned the TrackMan Boston. golf last Based in-store weekend, been with all Golf and for the business as XX the the completely out we across one experience Performance in stores position, media. and expand during the of prototype where support Furthermore, both Golf Better seen, lesson efforts number become stores. into team Galaxy our in our looks DICK'S social leadership Next, Galaxy. advisers fantastic. has particularly continued outside model

based equity really and doors We community supporting excited a in In outdoor to can in to to us Lands vehicle also through DICK'S and are the addition focusing Tomorrow store for on growth be marketplace a growth also the Golf in core are great the believe open Galaxy Lands we local first reinvent we morning, here the new we access see conservation, Public our opportunity to and while concepts. Pittsburgh. driving Public real initiatives. businesses, investing

Looking and ahead, raising year second year. enthusiastic our sales and we this the remain earnings guidance we're time for business our very about full

athletes second with our disruption detail chain work potential that is outlook DICK'S their thank company their Sporting and it business. on updated its our our and financial across his hourly recently Our supply Lee in dedication uncertainties all This still results. we show a all very to exist, address Goods I to remarks. related teammates, to teammates particularly greater for relates wages our exciting our their would and for the passion, to will our increased half COVID balances time as like impact outlook to and enthusiasm for our hard appreciation associates. our the in incredible

Playbook for progress moment year and we we Purpose critical sustainability established Before a want Purpose three goals concluding, the to the made which The and I we've Playbook, products the people, areas: highlighting XXXX outlines future. spend last commitments and planet, published month. in last our

in and investing businesses have closing, efforts. new important our vendors committed exciting we teammates, by growth also in contributed concepts. reimagining all the core Our athlete are our In to experience building partners to while community future these

our Our a and I thank in great business want on trajectory results. these to teammates helping again their for tremendous drive efforts us is

discuss our outlook call that last week. like we the I results to Before more announced Lee executive financial over transition to in turn I'd detail, and review to the

this be As will Lee's CFO. you call final as learned,

been plan, Officer As long Officer, effective Xst. Gupta, term succession Financial our part Chief Chief of Senior Accounting Navdeep to October of appointed a President Finance has and Vice

real him with his I of is key team, estate, with including will changer. and CFO. I will and dedicated the him chain, business, for While many working Executive also next turn look have the last had We of And forward to Lee, over and welcoming to that, pleasure Navdeep to you. few it we years, the trusted quarter's know to construction on Ed game President areas service as to you of call. and adviser Lee thank me, over our several continue partner full a supply Lee want years and of overseeing as leadership Vice

Lee Belitsky

Okay. words, Thank you, everyone. kind good for and morning, those Lauren,

Let's increased brief begin our top XX.X% on same Consolidated with last of same-store increase sales a period the billion. XX.X% XX.X% to review increased year. of a in $X.XX Consolidated quarter results. second sales approximately

primary by XX%. as footwear, Our and apparel When strong a driven to growth comps and well as average increase increase of double-digit compared across XXXX, categories in were consolidated in ticket of hardlines, each XX.X% X.X% transactions. increased our sales three a sales

up delivered versus increase comped nearly square compared footage. a the XX% stores when brick-and-mortar Our roughly with sales to and XXXX same XXXX XX%

Our e-commerce sales when compared XXXX. XXX% increased to

XXX% XX% period versus 'XX decline we planned, as of QX sales last anniversaried temporary increase represented a a in a As store included year closures. that this online

merchandise to margin the occupancy merchandise margin in supply increase fewer from as basis be points promotional XX% online our rate last sales E-commerce The in driven quarter As year. and continue in to XX.XX% of constrained. was current percent on XXX expansion net sales, leverage certain points basis XX% the and driven a differentiated Gross was or net billion and significant by business of XXXX primarily it assortment by costs last profit from year. to compared was the improved has quarter. was strategy XX% categories of promotions sales second due the XXX total marketplace increase. $X.XX penetration grown points to disciplined basis fixed in improvement increasingly our cadence in This XXX of and

sales we cover pass supply higher chain favorable to addition, In a increases were through selective and able input price costs to saw mix. and

life recorded margin we write-downs in due quarter's offset better-than-anticipated was to last margin This quarter of inventory on sales initially XXXX last year's first and expansion nearing the the $XX merchandise of quarter of by partially year. merchandise second that of million in recovery the end

GAAP sustained XXX% last strength margin expansion year's to $XX.X brick-and-mortar significant due related percent the store and and a temporary to driven a points basis to to expense million were sales. cost to increase. by significant sales points. net Beyond safety to SG&A. leveraged as $XX XXX gross increases net to following following sales current was saw percent points percent Compared we to occupancy last closures of in as as lower leverage, in improved merchandise XXX wage operating This to margin strong leverage rate to $XX to expansion, sales. period or XXXX, increased SG&A EBT we they our XXX net basis in well delivered SG&A increased rate the record increased margin basis of the and in of SG&A from occupancy expenses This interest payroll dollars points of to due diluted expense and as sales also of of penetration hourly our was increase last to million XXX% On XXX store to compared $X.X compares earnings earnings million, increase. sales year, non-GAAP issued expansion as $XXX.X the on EBT shipping of dollars during as our basis SG&A million higher required diluted million which non-GAAP by related included but basis year compared $X.XX million additional share XX.XX% were of was store and leveraged increase hedge brick-and-mortar of profit due year-over-year immaterial XXXX. promotions from $X.XX. per year temporary increased sales and points, non-GAAP $X.XX million sales second quarterly due were of a support costs settlement store support results. to basis quarter by expense as EBT costs year share sales Compared due as non-GAAP expenses XX% gross last and earnings last merchandise increases expenses. compensation margin noncash fixed year's and earnings QX of a in well operating increase. or both same the XX per GAAP closures. diluted of million XXX COVID of incentive basis to last sales expenses be sales $XXX.X year. This convertible XXXX, our are Compared XX.XX% sales. rate reductions primarily XXXX, fewer points $X.XX. as well sales, increase non-GAAP calculation, as a per share XX.X diluted offset XXXX, delivered or X,XXX higher are million in Driven and EBT our notes share per diluted we $XXX.X a percent net designed in in or Non-GAAP bond In in points record the shares basis, that that total, quarterly $XXX.X share investments we

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

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

X.X% chain end of Our the industry-wide levels despite increased quarterly that challenges, supported of product ahead the strong quarter-end period the our flow compared same last year. inventory record our to sales And were of expectations. supply

product ahead, very is we our to continue inventory clean to chase aggressively meet demand. Looking and

expenses freight at included to outlook. have the updated supply within chain expect of impact least XXXX balance and continuity continue prioritizing over and elevated are our costs We through the

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

price capital repurchased also shareholders to $XXX at repurchase plan. for allocation enhancements we $XX.X have component is strategy important today, of our XXXX and capital XXX,XXX announced and remaining of our Returning approximately share shares stock we average $XX.XX program. our under an our million million We of to an several

share, a we First, cash $XXX per and which return announced special over be $X.XX from will dividend shareholders on million will to hand. funded of our

continue assess $X.XXXX our quarterly ahead, annualized second Next, on an increase to per This dividend year. dividend the we quarterly increase announced on in Board is our XX% looking to or annual $X.XX will calendar a to this share basis. the basis. dividend And also our an

million our our to of a $XXX now $XXX million. Finally, least repurchases of share at includes in plan minimum expectation compared prior

We business capital our committed also the of investing remain $XXX million profitable of includes XXXX continue to firmly expenditures growth in our to plan $XXX million. net and to

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

quarter consolidated to a are XX%. XX% in a sales we of and raising by a to prior sales compared to the is and to results back-to-school third full result start last year. XX% our updated our expectation XX%. midpoint, year versus X% of strong comp As expectation our sales our to of prior increase represents significant and same-store guidance up our of guidance now increase same-store This XX% expect At season, compared QX to XXXX increase consolidated sales the top up on X.X% sales comp a

is fixed XXXX, billion margins midpoint fixed this and and Non-GAAP capture on trends of recent versus leverage the both this versus encouraged the the expenses. to a chain rest promotions the range margin prior balances is non-GAAP significant second versus enthusiasm to of Non-GAAP compared chain is now Within $X.XX be impacting expected supply XXXX product from sales. the to to over year. in expenses by our driven on projected had and consumer costs, merchandise and to continue impact SG&A the billion expected by EBT this in margin for we of sales expected to to $X.XX is the $X.XX basis we've sales our of full so to a XXX% to half assumes it be both affect is modest XXXX and to selective outlook reintroduction supply leverage XXX% approximately versus highly of which XXXX track could year, the This billion challenges and the are far kind deleverage expected demand gross flow XX%. and up billion, due on increase XXXX of ability and positively holiday EBT While global higher outlook higher $X.XX availability, at and up upside with our year increase year. the XXXX.

beginning we distribution mentioned, compensation transitioned we increased store follow for As all we at programs compensation to hourly focus made and the teammates These temporary XX% rate longer-term Lauren top with latest priority is investments from the included in within year year. choice the the teammates. recently as increases an as these employer wages amidst hourly center helps last our pay The a wage of investments been has DICK'S guidance. premiums impact these of Investing our position people labor the market. challenging of and

are $X share addition, non-GAAP our basis, non-GAAP to and diluted to At share XXX% a compared our up we XXXX earnings $XX.XX full of In to prior raising year earnings a $XX.XX updated versus guidance versus of XXX% midpoint on up and the is our per outlook $X.XX. XXXX. to outlook range per

based tax effective outstanding shares guidance rate of diluted and earnings an updated Our on average XX.X million is approximately XX%.

athletic sports, into new believe continued greater there's activities a fitness in and increased months Before has shift more sales we and reopening More the optimistic behavior. outdoor morning, A margin behaviors The investor in lifestyle These line was fundamental believe golf, lift and largely specific accelerated, ahead, We're key stores sustainability. offset power. a while and key has importantly, looking want team for we XXXX more product. this equipment. and outdoor concluding, XX into questions categories seen stimulus providing of fitness now can of and strength, and around staying have home far this apparel last habits these driven participation trends footwear, are health propensity athletic we to payments guidance which in briefly consumer categories and portion potential but been will I not by be sales smaller we in following specifically, importance apparel significant top of like than have our longer-term year. we've strength address like

driven the to fixed exclusive margin. results margins from the continued for now through brands Thank XXX interest national profitability permanent below Goods. shift which line reduce our comments. the also media is about of EBT changes in lastly, than between we Sporting on online enhanced capabilities; expansion of may print are significant optimistic strong with next opportunities costs. vertical corresponding curbside basis growth two closing, as personalization; from pre-COVID of the very extremely offset number of driven remain Operator, and above and product; total our pickup. e-commerce open profitability This efficiencies, promotions, store our more you EBT approximately concludes leverage margins we longer-term to rising targeted other future key Sporting to now differentiated QX you by costs enthusiastic average; to our higher DICK'S expect significantly about exposure and the significantly of your brands rent In with chain vendor Goods. over factors granular and include: in margin, the for digital pleased over channel renewal management by of company of of less up adoption questions. supply XXX with clearance hunt marketing expense Because DICK'S science and company leases and products athlete better these points are basis for to fewer prepared business thirds data are resulting our and we a are partners, of versus in and years; improved more our line five which X,XXX broader promotional levels, points We susceptible pressures; and of fewer to strategies promotions labor a margins These and more changes and higher reduction reduced of the with end-of-life a drive promotions

Operator

[Operator come Morgan Gutman Simeon the Instructions] Stanley. question will with first And from

Simeon Gutman

continues of at the the through or apparel remarks, for goods. for demand industry congratulations and your do of about the think -- fear sports and fall result, Does it footwear but you then a Navdeep. Nice Lee there's thinking end you the order can't prepared about one and to offset do team. and and sporting digestion kind a this you we there? I this this of Lee, that new those compound Because level to preempted guess grow perspective. is trends to durables just the some talk it of high-ticket and a go lot maybe you're period? seeing can from team the And ticket handoff think off I

think how next curious for of years. couple demand the So you about

Lauren Hobart

looking COVID all of than COVID We are all categories, at what you they the are re-baselined significantly for would have maybe and and They XXXX. the intents surging purposes. call higher categories,

categories And back-to-school sports so stayed team peaks the as last has strong, while there have come en downs really looking the some started and are valleys year, demand those and time, some at strong. then in And really, overall, same back ups consumer for versus mentioned. off and masse have we

is the the than So were the nothing from offsetting ticket prior just growth to a you see. pandemic are hardline it level can categories -- really is and at different we -- we not high those it's as

Simeon Gutman

And to tighter especially that those, didn't let's follow-up higher some so and that, to maybe we're a in via lower And have the forward? is in was ticket the a should case I in environment. that related question so then But in and sustainable traffic? unique moment, are was on you a two my sneak the this because ask gross business away band want margin of say, not cyclicality the this getting valid you accelerate, I'll is of make to I to second the of seeing gross going margin traffic areas is, there carried going

Lauren Hobart

significantly. are seeing accelerate we We're AUR accelerate. traffic yes, also seeing So

strong standpoint. the board from business overall, So and the traffic across is that's a whole

differentiated I the of that very tighter what margin. about somewhat issues there think In some had confident have in is that we gross the asking result you're a we've both be of with that expansion has and should of our narrowed, margin that a going And terms year it forward, gross to band at are but up strategy very having more has our supply chain scarcity more very come much and do gotten importantly, fact assortment, disciplined we've this the flexibility. past the with very, with distribution promotional a fact adept

Lee us was promotional mentioned, even lot required media have as to do very before what be we a weeks going advance. So in because would to to to of we that know the release have print things used we marketplace

can we enables data drive the just adapt level more to marketplace promotion. us to be to to personalized the that and right Now of use

So optimism I our margin going forward. think gross lot there's a of in

Operator

Sachs. And will question next the McShane Kate come with from Goldman

Kate McShane

I average. it line with think further. to like remarks, sounds e-commerce as Can margins mentioned in profitability are talk what the now you for your in the Lee, expectations sounds you e-commerce that improve profitability it's that company operating But prepared there's continues also like more runway about to improve?

Lee Belitsky

fulfillment. you as store we with we home, customers' we're our We're orders have don't margin. ship really time, but to I it. now, it with same very as expenses, Well, on the leveraging as at want operating to the look at give guidance And through forward a extra pleased e-commerce infrastructure

to so on. We we it have and save So the distribution on new open to centers don't service fulfillment cost.

pleased we're of profitability it. the So with

pleased We there. our our accelerate like inventory this transit to so and right the on don't to really that point. times with now get to closer with data give we're But this work continue we science want guidance profitability chain line the to but beyond can getting I at in reduce year customer costs really

Kate McShane

and to is any Is my back-to-school give detail so there QX strong. can you've mentioned into lift again has just then been all what question if follow-up on more you it's And being categories far, driven back a is that more general trends seen by team you we as or get across sports of to and the the sports, there return back-to-school normal?

Lauren Hobart

does The Kate, as I team sports trending it's back has certainly been and business strong, strong yes think coming back-to-school. helped whole and has yes.

Operator

Bank next Robbie America question The of Ohmes comes Merrill with Lynch. from

Robbie Ohmes

behave to. versus way think that a Maybe Lauren, versus are at also about could guess, the guys is sort to on from speaking maybe where prior well? what is customers what coming XX% the still you into I you market it XX customers? of Can I'm hoping existing would growth, I saying is as talk -- you year And I tie new may XXXX. over trying two be be it's considered data industry they about grew What basis the million you was get how your above think the share what saying about

Lauren Hobart

growth The strong, database mentioned. been incredibly has as in athlete you our

And this was about it new it in, same of quarter. and of the we've year retention most before. was influx our athletes So kind is this pleased what last those stayed million X.X been of million rate as that there's X has athletes been though athletes past coming even

as were very funnel excited numerator into we the of the people getting a about So very, grew, that. lot still and

weren't done. and So they one just

have extensive another data it and trying our personalized to where science, does sales, customer. as be the higher a and tidbit, are those keeping people about an going does keep curbside ecosystem tend ticket mentioned, is just little we curbside that capability options. seem And we We those as to capability, more mean, profitable, to actively excited with marketing profitability brick-and-mortar working. think other be as -- I those higher in you're I profitability, it's we're that. athlete strong just do an have online And that omnichannel adoption, than very customers

any of it's all. great in and best customer a So customer omnichannel the an is channel

Robbie Ohmes

get of who's to product November about by holiday there then shipped on time a out now to follow-up. discussion get and going a There's need quick whatever. or it you right And lot and just

sure others. you're how have on you any need holiday feel to maybe Just what this guys versus going you year for commentary about just making

Lauren Hobart

so. still we challenge consumer is the us we demand, we've a athletes. Asia supply so The partners aggressively know. brands we -- product strong, will get chain, season. all, all to with has very first of that our as can very, to And keeps our so that directly and Southeast for then excited are months investing And it’s be been has very we about, continue now vertical our both have over challenges about it on XX talked here obviously, holiday as and serve But

this their about they've these at disruption. thing will am over some and past We're really very distribution puts has that is possible. for this needed. to us takes through centers some how for excelled every where XX substitute when year vendors that will of We just picking it partnering the because think season, confident team past up products holiday with has category necessary. I And flexibility they and are athletes, have shown and airfreighting we I things had of the takes, our where months the in manage one actually

live they to willing product, for product, we a brand, a in, So if in do specific they're products if have come that. specific

our out. So portfolio portfolio us that's brand where and really category diverse helps

Operator

next is Morgan. Chris The from question Horvers JP with

Chris Horvers

happening some like until that's comps you Can you margins quarter. you some assuming are but of provide additional And comment sort then I promotionality. overall? the a specific know the the terms phasing That on in the moderation back and moderation. doesn't into that something about fourth don't half Does made on some accelerate color you sound fourth provide of additional quarter?

please. commentary, phasing any So

Lee Belitsky

So on back a of couple the just comments year. the half of

from we We half be the spoke. would up thought have our the we half considerably taken the back last quarter what back of year for when guidance

sales the guidance about the point versus guidance EBT the $XXX the the our midpoint, high midpoint, about points by taken basis the So this gave, points. XXX of the point by million. for the -- high to XXX taken the that's guide took earnings up the our back million. high the time. And time margins the from to about guidance guidance now, at up up to the call up implicit midpoint sales the last we've up taken by we've And point we of last $XXX operating that from our earnings we've basis taken We've taking the we last share half, per about by

previously margins. the of promotions the half gone up back year. And adding million see as We've we're And $XXX So taken back we've in normalizing selectively that, considerably. -- be to single-digit, a for considerably. have a in year don't back within previously up result normalization had the we're thought that comps. our low was promotions we've We really back we've expectations half. of low that that, guidance negative the of wage reduced taken back covering by half saying million. single the said so as increases be we'd We half we kind and mid that, additional taken We've the negative chain rate additional and mid-digit year. EBT hourly now double-digit taken up around we within the sales low of the covering costs promotions of the up But supply $XXX some of to implicit would well. comps, We're

the forward. supply So balancing forward. constraints continued we're could about chain demand our what some be going with very we optimism for business strong going feel good Again,

got to come the year. will of So product be satisfy half harder but we've the season shop think have we're it the store Christmas first for out of and our athletes going into kind get I enough to they little there a upside that this the year as the to

Chris Horvers

And off CAGR CAGR the then in XX% modestly XX% about a quarter, was in the year two quarter. second just first the

how holding So basis can I monthly see August? about on year back-to-school. But played basis, there on a some July July? down see one XX% did in a talk were did on that year August you credit tax trends what in child and in know far two maybe so easier cadence two and bump you is year a that you

Lauren Hobart

but going quarter slightly this this against So stores I lower strong, June very, keeping and at were we're stable and steady, and mind our in not think closed. May we get to July was of XX% were very that being point. up into very

Operator

And the from Evercore Warren with next ISI. question Cheng is

Warren Cheng

and Navdeep. also and Congrats congrats Lee on quarter to the

quarter quarter performance quarters. I pretty as to quarter pieces get last at the go two those compares performance pandemic year, third versus there half? pretty from the to harder second the the in where impacted business or is comp Was similar certain we if are second performance second the the going of are categories look the similar the the So of

Lee Belitsky

businesses pretty even. I the relatively as in The think same about were last were comparable. year was strong The well. comps it second quarter and third

year would because of delayed school back-to-school as not or weren't last typically some back strong going as So all. of be the kids at to categories they

little compare we're start coming into categories categories really the year. of back-to-school softer third the to some tougher on the quarter. and the some have outdoor But pleased So maybe quarter with a third comparisons, we this

Lauren Hobart

just going would is by the that. Warren, more the countering categories I his remarks that Lee are add, in other I offset prepared made shifting that that within any on point think things is than of really important various

very very, feel we positive. So

Warren Cheng

you work forward? on taken. these just the give that detail has my price and increases price strategy response your been? just increases and might the into us them of timing those what And algorithm going customer just you've And is you're on Can where follow-up increases, taking the how then

Lee Belitsky

in prices cost seeing a there's for increases. Well, is to been over hasn't course If the one-off, we'll like on we've primarily do they've year. to continue from as customers, hardlines of them, the when our necessary increases of, and And increases, those but year been cost the There categories that. on I'd taken specific schedule it. like a raise we'll continue we for kind demand not get there some certain this but price we're say of a depending schedule

Operator

question next Cowen. with is John from Kernan The

John Kernan

the promote, shifts and of year? lot in the this full merch margin points-plus year Could first is of this mix change and versus do structural inventory, merch of stimulus you margin activities some much you from way tailwinds some way your think of the How based huge private recently? much adopting is people from points we structural the in you the of a last the cyclical a for about should the label? athletic basis buy How outdoor on it up XXX up full be obviously this year up from It's year talk anywhere for basis this guidance, half year. of XXX

Lauren Hobart

is lack it margin result get the marketplace. digital There's and of of some our print media of assortment, it so surgical. in the we our absolutely But been more really promotion be our structural. strategy, a differentiate elevate multiyear merch media into been Most out has assortment, of could

the mostly So we are do structural. feel that changes

John Kernan

improved different in hardlines. list well. just product others There's with on and A Nike others relationship just quick benefit better private private softlines; the and the across with gaining relationships sounds the more even as the to increasing whether allocations follow-up of lot a label Adidas label. it's too. categories, and the about of It like of and But brands Callaway a you're also, your the Yeti, talk scalability lot brands, then of confidence and

Lauren Hobart

doing always become is with even brand always say, our speaking time, we areas. and been The same and white great the great feeling sales some are and is place vertical really relationship with relationship. but planning they a even with frequently top-to-top our categories growth more those relationships. more elevated are had and a space key on and top-notch. stronger it's in strong, brand that's the relationship filling the in We're future and At in them as strategic driving margin you focused Overall, We've partners brands, we're has about of by our as our perhaps partners. so, the the brands

Lee Belitsky

we lot the bring these brands to got stores in presentation also bring elevating how continue our to A it within presentation we the stores our to of to We've we of life. within store dedicated And the that those And to a to way. along CapEx of lot in ties stores investments with that are brands significant our make and and investments are this brands really apparel footwear them life budget. stores. making a the and their is happy

John Kernan

And then the on of scalability of brands? the just private label, those some

Lee Belitsky

apparel of still lot a There's We believe a of still a there footwear. in growth. little scale the that room for space, bit in there's lot out

Lauren Hobart

would off and But that go the it's it we try I in new out. remarks. encourage apparel to lifestyle out, Yes, people and it I my starting is I just a call It's brand. VRST really, a did fantastic product. launch That just really mentioned fantastic is at great. we're brand, look with which just would and doing men's that absolutely

and So in reason to scalability confident be great. CALIA that's DSG another to continue and do

Operator

The from next be with question Lejuez Citi. Paul will

Paul Lejuez

you would uplift if do you seeing more taking When much that to to share attribute hear big categories market, just taken are year, at recent which And curious versus sales be market those the market performance a share? about you specific the your there half you've just look are. think overall first of you how

Lee Belitsky

stack anybody else within the from goods thrown a and to space years, I are and all space right really tailwinds year year Well, two sporting But close in having certainly there stack well. our at two over the doing XX% increase the there's think players that. two looking sector perspective, it now up within that's sales our XX% don't are

It's market taking sports. it's to It's definitely believe in in in share. We we're hard apparel. footwear. It's team we're So taking say certainly where exactly it.

golf we're we're -- as the and pleased in well. So space pleased

out we're big in in taking with the store are that there market got industry we there categories the pleased strong. being we've to in that So really addition share the

Paul Lejuez

follow-up chain. And on then the supply a just

the Just curious prefer would supply now. some do of seeing more what where you inventory, you you you're where invested? into chain? heavily you to on on run are the And challenges might Where be anticipate

Lee Belitsky

we'd of XX, also past than the the little mean, over of we bit in a I store, the across customer, inventory months XX have to and pockets willing that have the switch exactly kind But we be for, might style of or of hoodie lower they'll don't kind primarily in if footwear. to apparel golf they brand. hoodie looking right another substitute so, has or another proven that like they're

So a lot inventory the we're faster. turning

So concerned about too we're that. not

better over But feel a really our Going QX or less than about next here clarity QX. little There's QX now. to days play around for in-stock that we the forward, XX remain so. right positions will out

Operator

from with UBS. Lasser question next The comes Michael

Michael Lasser

the could prepared capture the we've with new challenges had and and enthusiasm year. and supply sales chain outlook to the Lee the of said sales ability on upside our balances impacting flow it your congratulations remarks, roles. availability affect Navdeep, on far product global Lee, kind in you your impact this so our

it, quarters, right the demand saw I Is would don't inventory ballpark XX% comps number? only the meet the for the XX% wouldn't couple So next that demand? call if do, have for that to know, that you drive, even does the mean you you would because of

Lee Belitsky

around it and for think, now low, kind -- don't have get Michael, improved what double guidance the We our half the to we're we specific to mid-single that negative digits. single middle was of certainly low the back of year, exactly guide digits digits the I clarity may be.

last And upon year the a will, be this we believe what of it's can. seen sites Christmas But the we product long product the say looking of and demand the back couple to so play very our to it we can we've into XX get the to been able way continues we've with comp, and beat then. getting means. just And we're exactly beat that go we and that to it throughout is that flow, based working to satisfy to We product. we a let onto that We're QX. if But we're inventory as now be the we've to half what that expect have we of there, get that. kind plus demand. out into hard year chasing the particularly there's quarters still We us very to believe be bit our with could year be hard that to demand got little challenging the continue that given could get which guidance to and more Web right hard into can going doing the as stores could the our all brands strong. as happening between But

constraints think given potential there. have out but We are on conservative we of our some the appropriately that guidance so, been

Michael Lasser

drivers believe you had Is would been have margin forward us that you is follow-up knowing and really for resistant point? what to lucrative your for in of meaning know recognizing our provide very there, it focused expectations off in My degree. to these XX% or to going on XXXX this what the like margin have some stream all these you're what that all XXXX, extent the had gross you want looked at Can those to would like margin backward earnings at now? to provide actual your that is, base guidance, you XXXX to that if XXXX, earnings it to that reasonable you look apply question factors outlined, guidance we point, XX% market's gross given

Lee Belitsky

substantially that Michael, answer but right specifically can't XXXX. one than would it better I be now,

Operator

The Feldman next question Telsey Group. is Advisory from Joe with

Joe Feldman

Again, and think you like of a that flagship other about that maybe and that there House or just stores. year of should the have? to to ask quarter. And little to not handful of wanted format everywhere, know many do to to Sport on a you're you the year relocations? so as could I a the bring thing that going I how the but could the about want or liked strong of be I congratulations about kind is bit a a rest XX you've will this we excited of elements two chain. be And existing part us an wondering that example could you you was it, give things it's more if transferable mentioned be far

Lauren Hobart

we've is construction. under And now, The House have of Sport while we doing two discussed. as a one locations have amazing we third

actively still opportunities for it is other concept. looking but We a are very new

how continue want see and going have. just talk we're partners to it and to and to So watch continue many we to to learn

as into by then you have stores. some of back don't early that to core the the we are excited results benefits continuing and core than mentioned, very other DICK'S firm we're both So also, to a and pursue bringing other the answer opportunities.

fitting something That's do would the is model of are DICK'S, the experiential incredibly aspects positive. of just strong brought in the model potentially that bringing some back to more rooms idea of really, try elements an where elevated been experience. of There's of examples There be to then themselves. the store in some is And service room Sport people store. the really that DICK'S and much the outfits them we're outfit So that throughout fitting of House stylists having the there's looking people entire entire a into store, even helping one have that.

that that outside of field is can So sign you is there's -- single booked. rock that field minute There's that wall a a every up. is completely climbing the day full

on into looking makes at are large more two and requirements large be not location. those experience perhaps but space and seems really just investments every it working us bullish more to experiences so well. Those And

Lee Belitsky

golf I'll how But we golf always concerned been with about amount can outside just the Sport do House a can we much add business pleased We're the to drive of store. really of that. business from within outstanding DICK'S We've of business has into specialty with stores, to really into elements there. the our stores been try experience golf DICK'S golf We golf those store. some of the we've may the been well. built incorporate as

Lauren Hobart

of more, of combination I just that the into in hardlines looking of you're you stores. have the else one around for really merchandising which store, is so DICK'S walk holistic getting House that's something solutions that and a softlines, nice strategy when is really we're and Sport the

Joe Feldman

show and had is that know And the other going up was of I standard that starting that share wages. new of these regard difficult average what it the you the And is in have pressure you we're we I can well kind up is when the like to then it or to them, the see should rate days. expect? from that also, to with finding them We're just employees? having to as hear go you question probably But the easiest are lot not wage did wage even a time get on companies future. --

Lee Belitsky

to increases in kind in the we increases wage to kind two. been upper the will would August choice February, the is and went we into we of as I Lauren teammates, we're position the that across think this effect a across-the-board to we're board employer say, across year. low fact One are paying our of speak an but we overall, back fairly have single two total for wage Part hourly in of So this and double-digit people we able want. to have another digits had business. folks one the right well now, of due depending get doing on

for of have all across board So profitability teammates we're us. our with some happen the the able that are we to it making share

Labor to Going But with now. we'll pleased forward, are I much really don't some And that a tight of markets next where expect more are. in going continue right change wage we're into year. would Lauren? see inflation. we see I

Lauren Hobart

in of of up a And point, that's think it's second Sporting we to on showing partly part choice -- to many time, to I Goods. hiring about employer are and at your Lee's and DICK'S work fun employees question we difficulty ways the do an because

We of during DICK'S have to how has pandemic. great management with team. the came do teammates But it also together the family and

a there's lot open so of taking discussions. a of And caring, of lot a of people, lot care

them and is And that team is so I've as as seen contagious. energy the pumped ever

And not a exactly so feel we that's really there's think we -- but where obviously I us. hire can't pockets problem how people want we widespread for many

Operator

The next question will Chuck with Grom be Haskett. from Gordon

Chuck Grom

slide In but in database. [XXX you called your ScoreCard your think XX deck, members members out in million the I million]

with convert strategy to ScoreCard Given even I'm loyalty to the continue to members, just the higher more the what sell rates program? curious is

Lauren Hobart

working them the them transact over with to athlete said get program. if we've join to But and engagement single data loyalty because of is e-mail we're is addresses get speak for when capturing that even to can program benefits way every always from we convert to are working our benefits in us and benefits. terms obviously even in to the But they're there's they us member database XX for with are million don't ScoreCard. the active active we not, We people with way, who so every try member into

program entire we activate have in-store experience, online And get and point services. can stays your triple special where making and to now easier much they and a Gold see throughout points. both we're it So the

of of a as we the So just benefits. that have to be people summer if lot are you're keeps mobile out new going to ScoreCard this getting roll benefit going That's bigger and a our and app logged-in finding you bigger. will continue user,

be growing we'll percentage of base. So our that

Chuck Grom

handicap to going follow-up happen think could On are be is up a to XXXX. next around to do through year. then hard at your the what stores, I productivity? continue drive everybody you But on in basis, from best XXX what's And as bucks it's I'm you square productivity. to in going foot store? curious ceiling think I the end the looks And better what when they like per look year knows And around my productivity guess, you sales ultimately, you're XXX sales

Lee Belitsky

Well, don't it. foot square seen We've to per yet new big going want guide forward. again, obviously to I increase sales a in

have point. high. best Our think getting you good, your to best capability guidance don't this so we always stores that, and it your aren't better stores everything foot, give to But we but at want upwards $XXX stores a out have that specific to we I are can the continue of of than certainly as to $XXX, get

Operator

question Yih next is The from Adrienne Barclays. with

Adrienne Yih

think navigate are guys so I and you doing to mean, And last I incredibly an time that said well. it this tough this I is backdrop

Speakers] Lee, and thanks for up last So [Multiple down. getting us through year

I I plan in call but might past, that it, outlook two international So three be mine have next little share of my most to talked actually in is a in XX It question, the asking kind be? years Ed, what this, you've the months. the of nature. long I'm might of range in gains been almost wondering philosophical bit markets, them past. answered, know, market but more looks accelerated about we've premature like

So I first for then capital of this is shareholders think doing to this. one that's mean, my else question. anyone And is is my don't the I Lee. second return astounding quarter.

think we normalized a basis, about how on So ratio? payout should the

Lee Belitsky

a focused on are believe expansion. I we're things. there domestic few still Well,

new of We in really about Sport. excited have at. we're concepts of looking we're the House business driving kind some We're

years, but invest last we'll a business comp, continue stores. the over pleased over with brick-and-mortar of the growth year there scratching to years the couple just well. think our long the the and that XX% We're as still and with And really shown have XXs profitability way to we're And I our DICK'S in ago forward. expansion e-commerce the think there. sales in two we comp within We we've surface with experiences last over upper stay. go of US will to least to the going focused to be going going to the We're return hard lot forward. we little normalization to capital couple within years continue here to special it’s opportunity have of what within for to really States at be With be of the do brick-and-mortar a pleased regard the for are stores to next But shareholders, it we're a figure able the dividend. United and our to do

flow free really possibility a shareholders. to lately returns of outstanding and sales the percent been cash up opening more for Our as that's has

look not years going to lot found that it to We we are continue have a cash looking potential lot there. a been the of because candidly, transaction out a we're just jump and partners But out at number liquidity. And of we've right of for into candidates a now, there. we just haven't acquisition

in in e-commerce to in our going And cash we'll technology, return concepts, continue the forward. flow, invest in we're invest as going we to business. business, invest generate So continue new shareholders to to

Lauren Hobart

saying. want what Lee to add I Adrienne, just is to

share opportunity in Lands so front to We're opening DICK'S so concept. lucky and much incredibly feel States our have We much and just have new Galaxy. Public market in right the us. of United We at opportunity

Operator

Sam And comes with the next Poser question Trading. from Williams

Sam Poser

with existing into getting seeing certain I just price increases vendors on One, couple. holiday? orders are a have you

Lee Belitsky

our price are orders. orders existing same on staying at not increases We're getting outstanding price. No, the

Sam Poser

as more. then think And we two about --

it's I of QX to spring to Asia early difficult you to whole an time seem think about into exceptionally we now you into issues keep in to like do the order make because a they're going sounds in year right doing that lot sure general, going doing vendors And with just are are for looks you situation. during this what happening flow. the are into they late next -- working 'XX, try How like to As it what impact very mean, are because, to be or that? spring,

Lee Belitsky

in is our right to US. way evolving Asia with Well, with now getting issues vendor a to right factories to working of product the try closely Sam, very and this partners COVID most our rapidly the with space We're private expeditious brand Southeast figure out now.

year. do we in we to of along will costs chain customers into balance will our do through As what think there higher really the year to we product way. supply But get to need the satisfy the and we the next be said, here

So you're right.

and Some our into things we're with supply affect vendor we're on of try mitigate right to exposure. to could actively now the QX, that seeing partners working that going chain

Sam Poser

you're assume, you're your very properly? be that to And also about thinking margins availability product and good, there I focus let's on mix the product moving put Am would that be means that would narrow that are next shortages it the your this -- given product to year. for into way, that continue just carrying. going likely And I some to that between merch

Lee Belitsky

I -- from strong, less be which pretty inventories remains seeing inventories, next so. a particularly demand We're and is year perspective, going going we think into the not if pressure promotional seeing light to believe lighter the really will. we're it the

Operator

D.A. And our final question Baker with from today will Mike be Davidson.

Mike Baker

about those flattened a after you questions. ask or it couple One, rounds golf have little played Believe wanted bit I in June. all out the not, a still specifically, just I to business

up comparisons you're tougher. get in comparisons know think slightly against We and I we're tough golf. up

that tough as So Is slow the to do that out able things business are comparisons, there sort of that, to particularly does do fall? and last that how against about they a and get half? as back summer weren't last people able risk other are thinking you much in

Lee Belitsky

golf to unusual versus business. business because in really we're business very at we've see spikes where last it Mike, were So in the to the [LOI] golf and years looking the versus compared two ago. there no year growth of continued change double trend was consistent kind double But [LOI] in

we're they down summer or team the golf the more a than be us. with going for sports very remained But may over business really vacationing has rounds that of and return people little year, strong bit. last up So pleased the were

Mike Baker

XX% XX-month now south basis little encouraging. asked a XX%. ways, People this It's margins more. then gross a of right around but so, And last to or on XXX couple a that's your up points. XXX have one basis different Okay, of are

of vendor cetera. lot Presumably, and tight Some at of some structural markdowns, that a of will changes is is the point. markdowns. lot get that We same of that that because a but you've inventory are really it some thing that come done, having there's back et not every of fewer said

XXX ballpark to the you is comes XXX, can less because clearance? if little will having healthy I think So how couple it’s of that it much And of a back due it basis years over probably point last improvement bit.

So margins? an markdowns impact as are much to generally your how gross

Lee Belitsky

the most on, that this. really we'll in way hold to earlier be believe we think most to in said along we nature it, our we've business changes due that improvement able of is vendors the the narrowing and channels by permanent to Lauren most distribution of As on of made of

improvement course, Of add but to at we're to. going hold will to don't to, exactly we promotions. believe some We when going But know back we're we on expecting the have point, some it. of that most can be

Mike Baker

it just to Is a of Just basis think XXX? that points? when most, maybe, about XXX again it, say is XXX the not but we're So putting just number comfortable it term. longer to you trying

Lee Belitsky

don't Mike, put point. at to want this on I one a number that

Operator

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

Lauren Hobart

I will we next thanks, efforts you. teammates want interest you for listening I thank are Sporting who know DICK'S to send for your our to their Well, Goods. and you everybody, amazing in a quarter. Thank see

Operator

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

may disconnect. You now

DICK'S Sporting Goods (DKS) 25 Aug 212021 Q2 Earnings call transcript