Dick's Sporting Goods(US:DKS)2025-08-28 20:59markdown [PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Presents the company's financial performance and position through statements and management's analysis [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including statements of income, comprehensive income, balance sheets, changes in stockholders' equity, and cash flows, along with explanatory notes for the 13 and 26 weeks ended August 2, 2025, and comparable prior periods [Condensed Consolidated Statements of Income](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Details the company's revenues, expenses, and net income over specific periods Net Sales (in thousands) | Period | August 2, 2025 | August 3, 2024 | | :--- | :--- | :--- | | 13 Weeks Ended | $3,646,616 | $3,473,635 | | 26 Weeks Ended | $6,821,293 | $6,492,019 | Net Income (in thousands) | Period | August 2, 2025 | August 3, 2024 | | :--- | :--- | :--- | | 13 Weeks Ended | $381,402 | $362,230 | | 26 Weeks Ended | $645,690 | $637,525 | Diluted Earnings Per Common Share | Period | August 2, 2025 | August 3, 2024 | | :--- | :--- | :--- | | 13 Weeks Ended | $4.71 | $4.37 | | 26 Weeks Ended | $7.95 | $7.67 | [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Presents net income and other comprehensive income items, reflecting total changes in equity from non-owner sources Comprehensive Income (in thousands) | Period | August 2, 2025 | August 3, 2024 | | :--- | :--- | :--- | | 13 Weeks Ended | $381,406 | $362,154 | | 26 Weeks Ended | $646,019 | $637,389 | - Foreign currency translation adjustment, net of tax, for the **26 weeks ended** August 2, 2025, was a **gain** of **$329 thousand**, compared to a **loss** of **$136 thousand** in the prior year period[10](index=10&type=chunk) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Provides a snapshot of the company's assets, liabilities, and equity at specific points in time Total Assets (in thousands) | Date | Amount | | :--- | :--- | | August 2, 2025 | $10,690,771 | | February 1, 2025 | $10,458,694 | | August 3, 2024 | $9,935,959 | Total Liabilities (in thousands) | Date | Amount | | :--- | :--- | | August 2, 2025 | $7,335,685 | | February 1, 2025 | $7,260,430 | | August 3, 2024 | $7,011,074 | Total Stockholders' Equity (in thousands) | Date | Amount | | :--- | :--- | | August 2, 2025 | $3,355,086 | | February 1, 2025 | $3,198,264 | | August 3, 2024 | $2,924,885 | - Cash and cash equivalents decreased to **$1.23 billion** as of August 2, 2025, from **$1.69 billion** as of February 1, 2025[13](index=13&type=chunk) - Inventories, net, increased to **$3.40 billion** as of August 2, 2025, from **$3.35 billion** as of February 1, 2025[13](index=13&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Outlines the changes in each component of stockholders' equity over the reporting periods - Retained earnings increased from **$6.39 billion** at February 1, 2025, to **$6.84 billion** at August 2, 2025[14](index=14&type=chunk) - Treasury stock, at cost, increased from **($4.69 billion)** at February 1, 2025, to **($4.99 billion)** at August 2, 2025, reflecting share repurchases[14](index=14&type=chunk) - Cash dividends declared for the **26 weeks ended** August 2, 2025, totaled **$194.8 million**[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Reports the cash generated and used by operating, investing, and financing activities Cash Flows Summary (26 Weeks Ended, in thousands) | Activity | August 2, 2025 | August 3, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $735,641 | $626,148 | | Net cash used in investing activities | $(648,870) | $(366,878) | | Net cash used in financing activities | $(546,018) | $(368,455) | | Net decrease in cash and cash equivalents | $(458,918) | $(109,321) | - Capital expenditures for the **26 weeks ended** August 2, 2025, were **$526.1 million**, up from **$372.1 million** in the prior year[19](index=19&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Provides additional details and explanations for the figures presented in the financial statements [1. Description of Business and Basis of Presentation](index=9&type=section&id=1.%20Description%20of%20Business%20and%20Basis%20of%20Presentation) Describes the company's operations and the accounting principles used for financial statement preparation - The Company operates DICK'S Sporting Goods, Golf Galaxy, Public Lands, Going Going Gone! specialty concept stores, DICK'S House of Sport, Golf Galaxy Performance Center, and GameChanger (a youth sports mobile platform)[20](index=20&type=chunk) - The unaudited interim financial statements are prepared in accordance with Form 10-Q requirements and U.S. GAAP, including only normal recurring adjustments[21](index=21&type=chunk) - The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, modifies and permanently extends certain 2017 Tax Cuts and Jobs Act provisions, increasing deferred tax liability but expected to reduce federal income tax liability and payments without significantly impacting the annual effective tax rate[25](index=25&type=chunk) [2. Earnings Per Common Share](index=10&type=section&id=2.%20Earnings%20Per%20Common%20Share) Details the calculation of basic and diluted earnings per share for common stock Diluted Earnings Per Common Share | Period | August 2, 2025 | August 3, 2024 | | :--- | :--- | :--- | | 13 Weeks Ended | $4.71 | $4.37 | | 26 Weeks Ended | $7.95 | $7.67 | - Weighted average common shares outstanding - diluted for the **13 weeks ended** August 2, 2025, were **81,041 thousand**, compared to **82,814 thousand** in the prior year[27](index=27&type=chunk) [3. Fair Value Measurements](index=10&type=section&id=3.%20Fair%20Value%20Measurements) Explains the valuation techniques and inputs used for assets and liabilities measured at fair value - Deferred compensation plan assets held in trust are recorded at fair value using Level 1 inputs, totaling **$168.3 million** as of August 2, 2025[29](index=29&type=chunk) - Senior notes due 2032 and 2052 are disclosed using Level 2 inputs, based on quoted prices for similar or identical instruments in inactive markets[30](index=30&type=chunk) - During the **26 weeks ended** August 2, 2025, the Company purchased **$119.5 million** of investments, including **$69.5 million** of Foot Locker equity securities, which generated non-cash gains of **$35.9 million** for the **26 weeks ended** August 2, 2025[32](index=32&type=chunk) [4. Leases](index=11&type=section&id=4.%20Leases) Provides information on the company's leasing arrangements and related financial impacts - The Company leases substantially all of its stores, three distribution centers, and certain equipment under non-cancellable operating leases that expire at various dates through 2042[33](index=33&type=chunk) Operating Lease Cash Flow Information (26 Weeks Ended, in thousands) | Metric | August 2, 2025 | August 3, 2024 | | :--- | :--- | :--- | | Cash paid for operating lease liabilities | $274,271 | $352,205 | | Non-cash operating lease assets obtained | $410,846 | $403,648 | [5. Revolving Credit Facility](index=12&type=section&id=5.%20Revolving%20Credit%20Facility) Describes the company's credit facility, its terms, and current utilization - On June 6, 2025, the Company entered into a new **$2.0 billion** unsecured revolving credit facility, maturing on June 6, 2030, replacing the existing **$1.6 billion** facility[35](index=35&type=chunk) - As of August 2, 2025, there were no borrowings outstanding, and the total remaining borrowing capacity was **$1.98 billion** (after adjusting for **$19.9 million** in letters of credit)[36](index=36&type=chunk) - The Company was in compliance with all covenants of the Credit Agreement as of August 2, 2025[37](index=37&type=chunk) [6. Segment Reporting](index=12&type=section&id=6.%20Segment%20Reporting) Identifies the company's operating segments and provides financial information about them - The Company operates as a single reportable segment, an omni-channel sporting goods retailer[38](index=38&type=chunk) Segment Net Income (in thousands) | Period | August 2, 2025 | August 3, 2024 | | :--- | :--- | :--- | | 13 Weeks Ended | $381,402 | $362,230 | | 26 Weeks Ended | $645,690 | $637,525 | [7. Planned Acquisition of Foot Locker, Inc.](index=13&type=section&id=7.%20Planned%20Acquisition%20of%20Foot%20Locker,%20Inc.) Details the proposed acquisition of Foot Locker, Inc., including terms and financing - On May 15, 2025, the Company announced a definitive merger agreement to acquire Foot Locker for approximately **$2.4 billion** equity value and **$2.5 billion** enterprise value, with an expected closing date of September 8, 2025[41](index=41&type=chunk) - Foot Locker shareholders approved the merger on August 22, 2025, and all required regulatory approvals have been received[41](index=41&type=chunk) - Pre-tax Foot Locker acquisition-related costs of **$12.5 million** were incurred during the **13 weeks ended** August 2, 2025, including **$8.0 million** in merger and integration costs and **$4.5 million** in interest expense[46](index=46&type=chunk) - A **$2.4 billion** Bridge Facility (reduced to **$1.75 billion**) is in place to finance the transaction, and an exchange offer for Foot Locker Notes has seen **94.94%** tendered as of August 26, 2025[42](index=42&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk) [8. Subsequent Event](index=14&type=section&id=8.%20Subsequent%20Event) Reports significant events that occurred after the balance sheet date but before the financial statements were issued - On August 27, 2025, the Board of Directors declared a quarterly cash dividend of **$1.2125** per share on common stock and Class B common stock, payable on September 26, 2025[47](index=47&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, including an overview of the business, key performance indicators, critical accounting policies, detailed analysis of financial results for the current and prior periods, and a discussion of liquidity and capital resources. Management discusses strategic initiatives, the Foot Locker acquisition, macroeconomic factors, and financial outlook, emphasizing comparable sales growth and investments in omni-channel capabilities [FORWARD-LOOKING STATEMENTS](index=15&type=section&id=FORWARD-LOOKING%20STATEMENTS) Cautions readers about statements regarding future events and financial performance, which are subject to risks and uncertainties - The report contains forward-looking statements identifiable by words like 'believe', 'anticipate', 'expect', etc., covering future performance, financial results, plans, and the benefits of the Foot Locker acquisition[49](index=49&type=chunk) - Key risk factors include macroeconomic conditions (inflation, interest rates, consumer spending), intense competition, strategic plan execution, product costs, supply chain disruptions, cybersecurity, regulatory changes, and risks related to the Foot Locker acquisition[50](index=50&type=chunk)[52](index=52&type=chunk) - The company does not assume any obligation to update or revise forward-looking statements unless required by securities laws[51](index=51&type=chunk) [OVERVIEW](index=17&type=section&id=OVERVIEW) Provides a general summary of the company's business, strategic initiatives, and the current economic environment - DICK'S Sporting Goods is a leading omni-channel retailer, operating various store concepts and the GameChanger platform, focused on athlete experience, differentiated product, brand engagement, and teammate experience[53](index=53&type=chunk)[54](index=54&type=chunk) - The company anticipates continued strength in the U.S. sports industry, driven by events like the 2026 World Cup and 2028 Olympics, and plans investments in digital and in-store to grow market share[55](index=55&type=chunk) - Full-year 2025 outlook raised: comparable sales growth expected in the range of **2.0%** to **3.5%** and earnings per diluted share in the range of **$13.90** to **$14.50** (excluding acquisition-related costs and investment gains)[61](index=61&type=chunk) [Agreement to Acquire Foot Locker](index=17&type=section&id=Agreement%20to%20Acquire%20Foot%20Locker) Details the strategic rationale, financial terms, and expected synergies of the Foot Locker acquisition - The definitive merger agreement to acquire Foot Locker for approximately **$2.4 billion** equity value and **$2.5 billion** enterprise value is expected to close on September 8, 2025[56](index=56&type=chunk)[57](index=57&type=chunk) - The acquisition is anticipated to create a global platform, serving a broader set of athletes and delivering **$100 million** to **$125 million** in cost synergies in the medium-term[56](index=56&type=chunk)[57](index=57&type=chunk) - Pre-tax Foot Locker acquisition-related costs of **$12.5 million** were incurred during the **13 weeks ended** August 2, 2025[58](index=58&type=chunk) [Business Environment](index=17&type=section&id=Business%20Environment) Discusses the macroeconomic factors and industry trends influencing the company's operations and performance - The macroeconomic environment remains dynamic due to elevated interest rates, inflationary pressures, and changes to international trade policies[59](index=59&type=chunk) - Despite challenges, the company continues to drive comparable sales growth through core strategies, strong vendor relationships, and operational strength, positioning it for long-term growth[60](index=60&type=chunk) [Overview of current trends affecting 2025](index=18&type=section&id=Overview%20of%20current%20trends%20affecting%202025) Highlights key trends and legislative changes, such as the OBBBA, impacting the company's financial outlook for 2025 - The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, is anticipated to reduce federal income tax liability and related tax payments for current and future years, without significantly impacting the annual effective tax rate for fiscal 2025[62](index=62&type=chunk) [How We Evaluate Our Operations](index=18&type=section&id=How%20We%20Evaluate%20Our%20Operations) Explains the key financial and operational metrics management uses to assess business performance - Management focuses on key indicators including comparable sales performance, earnings before taxes and operating margin, cash flows from operating activities, quality of merchandise offerings, and store productivity[65](index=65&type=chunk) - The company expects gross margin expansion and selling, general and administrative expenses to deleverage in fiscal 2025, with deleverage moderating in the second half of the fiscal year[64](index=64&type=chunk) [CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES](index=19&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20USE%20OF%20ESTIMATES) Reaffirms the company's critical accounting policies and the significant judgments involved in financial reporting - There have been no significant changes to the Company's critical accounting policies and estimates from those disclosed in its 2024 Annual Report, which include inventory obsolescence, inventory shrink, goodwill and intangible assets, and impairment of long-lived assets[66](index=66&type=chunk) [RESULTS OF OPERATIONS AND OTHER SELECTED DATA](index=19&type=section&id=RESULTS%20OF%20OPERATIONS%20AND%20OTHER%20SELECTED%20DATA) Presents a detailed analysis of the company's financial results for the reported periods [Executive Summary](index=19&type=section&id=Executive%20Summary) Provides a high-level summary of the company's recent financial performance and key operational highlights - Net sales increased **5.0%** to **$3.65 billion** in the current quarter, with comparable sales up **5.0%**[69](index=69&type=chunk) - Net income for the current quarter was **$381.4 million**, or **$4.71** per diluted share, including **$36.8 million** (net of tax) non-cash gains from Foot Locker equity securities and **$10.3 million** (net of tax) Foot Locker acquisition-related costs[69](index=69&type=chunk) Store Count Activity (Fiscal 2025) | Store Type | Beginning Stores | New Stores | Closed Stores | Relocated / Converted | Ending Stores | | :--- | :--- | :--- | :--- | :--- | :--- | | DICK'S Sporting Goods | 723 | 2 | (3) | — | 722 | | Other Specialty Concepts | 162 | 9 | (4) | — | 167 | | **Total** | **885** | **11** | **(7)** | **—** | **889** | [13 Weeks Ended August 2, 2025 Compared to the 13 Weeks Ended August 3, 2024](index=22&type=section&id=13%20Weeks%20Ended%20August%202,%202025%20Compared%20to%20the%2013%20Weeks%20Ended%20August%203,%202024) Compares the financial performance for the current 13-week period against the prior year's comparable period Financial Performance (13 Weeks Ended) | Metric | Aug 2, 2025 | Aug 3, 2024 | Basis Point Change | | :--- | :--- | :--- | :--- | | Net sales % | 100.00% | 100.00% | N/A | | Cost of goods sold % | 62.94% | 63.27% | (33) | | Gross profit % | 37.06% | 36.73% | 33 | | SG&A expenses % | 24.10% | 22.93% | 117 | | Income from operations % | 12.40% | 13.53% | (113) | | Net income % | 10.46% | 10.43% | 3 | | Comparable sales increase | 5.0% | 4.5% | N/A | - Net sales increased **5.0%** to **$3.65 billion**, primarily due to a **5.0%** increase in comparable sales, driven by a **4.1%** increase in sales per transaction and a **0.9%** increase in transactions[75](index=75&type=chunk) - Gross profit increased by **33 basis points** as a percentage of net sales, with merchandise margins up **18 basis points** due to assortment quality and occupancy costs leveraging eight basis points[77](index=77&type=chunk) - Selling, general and administrative expenses increased **117 basis points** as a percentage of net sales, primarily due to strategic digital and in-store investments[78](index=78&type=chunk) - Other income increased by **$47.9 million**, primarily driven by **$49.7 million** in non-cash gains from Foot Locker equity securities[80](index=80&type=chunk) [26 Weeks Ended August 2, 2025 Compared to the 26 Weeks Ended August 3, 2024](index=22&type=section&id=26%20Weeks%20Ended%20August%202,%202025%20Compared%20to%20the%2026%20Weeks%20Ended%20August%203,%202024) Compares the financial performance for the current 26-week period against the prior year's comparable period Financial Performance (26 Weeks Ended) | Metric | Aug 2, 2025 | Aug 3, 2024 | Basis Point Change | | :--- | :--- | :--- | :--- | | Net sales % | 100.00% | 100.00% | N/A | | Cost of goods sold % | 63.11% | 63.48% | (37) | | Gross profit % | 36.89% | 36.52% | 37 | | SG&A expenses % | 24.40% | 23.72% | 68 | | Income from operations % | 12.00% | 12.34% | (34) | | Net income % | 9.47% | 9.82% | (35) | | Comparable sales increase | 4.7% | 4.9% | N/A | - Net sales increased **5.1%** to **$6.82 billion**, primarily due to a **4.7%** increase in comparable sales, driven by a **3.9%** increase in sales per transaction and a **0.8%** increase in transactions[82](index=82&type=chunk) - Gross profit increased by **37 basis points** as a percentage of net sales, with merchandise margins up **27 basis points** due to assortment quality and occupancy costs leveraging two basis points[84](index=84&type=chunk) - Selling, general and administrative expenses increased **68 basis points** as a percentage of net sales, primarily due to strategic digital and in-store investments[85](index=85&type=chunk) - Other income increased by **$16.4 million**, primarily due to **$35.9 million** in non-cash gains from Foot Locker equity securities, partially offset by a **$19.2 million** decrease in interest income[87](index=87&type=chunk) - The effective tax rate increased to **24.7%** from **22.7%**, with the prior year favorably impacted by higher excess tax benefits from employee equity awards[88](index=88&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=23&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) Discusses the company's ability to generate and manage cash, including its financing arrangements and capital allocation - The company maintains a strong liquidity position with **$1.2 billion** cash on hand as of August 2, 2025, and a **$2.0 billion** unsecured Credit Facility, which are believed to be sufficient to operate the business and complete the Foot Locker acquisition[89](index=89&type=chunk) [Agreement to Acquire Foot Locker](index=23&type=section&id=Agreement%20to%20Acquire%20Foot%20Locker) Details the financing strategy and available resources for the Foot Locker acquisition - The Foot Locker acquisition is expected to close on September 8, 2025, and will be financed through a combination of cash-on-hand, revolving borrowings, and other new debt[92](index=92&type=chunk) - The Bridge Facility has **$1.75 billion** available as of August 2, 2025, and **94.94%** of Foot Locker Notes have been tendered in the exchange offer as of August 26, 2025[93](index=93&type=chunk) [Leases](index=24&type=section&id=Leases) Discusses the impact of lease obligations on the company's liquidity and real estate flexibility - Approximately three-quarters of DICK'S Sporting Goods stores will be up for lease renewal at the company's option over the next five years, providing significant real estate flexibility[94](index=94&type=chunk) [Revolving Credit Facility](index=24&type=section&id=Revolving%20Credit%20Facility) Provides an update on the company's revolving credit facility and its borrowing capacity - The new **$2.0 billion** unsecured revolving credit facility has a remaining borrowing capacity of **$1.98 billion** as of August 2, 2025, with no outstanding borrowings[95](index=95&type=chunk) - The Company was in compliance with all covenants under the Credit Facility agreement at August 2, 2025[95](index=95&type=chunk) [Senior Notes](index=24&type=section&id=Senior%20Notes) Describes the company's outstanding senior notes and their credit ratings - As of August 2, 2025, the Company has **$750 million** principal amount of 2032 Notes (**3.15%** interest) and **$750 million** principal amount of 2052 Notes (**4.10%** interest) outstanding[96](index=96&type=chunk) - The Senior Notes have long-term credit ratings of Baa2 by Moody's and BBB by Standard & Poor's[97](index=97&type=chunk) [Capital Expenditures](index=24&type=section&id=Capital%20Expenditures) Outlines the company's investment plans in property, plant, and equipment for growth and improvements - Capital expenditures for the **26 weeks ended** August 2, 2025, totaled **$526.1 million** on a gross basis and **$455.5 million** on a net basis[98](index=98&type=chunk) - Anticipated fiscal 2025 capital expenditures are approximately **$1.0 billion** (net), focused on store growth, relocations, and improvements[99](index=99&type=chunk) - Plans include opening approximately **16** DICK'S House of Sport, **15** DICK'S Field House, and **8** Golf Galaxy Performance Center locations in 2025, with **75-100** DICK'S House of Sport locations expected by the end of 2027[99](index=99&type=chunk) [Share Repurchases](index=24&type=section&id=Share%20Repurchases) Details the company's share repurchase activities and remaining authorization - During the **26 weeks ended** August 2, 2025, the Company repurchased **1.4 million** shares of common stock at a cost of **$298.7 million**[100](index=100&type=chunk) - As of August 2, 2025, **$212.9 million** remained available under the December 2021 share repurchase program, and an additional **$3.0 billion** five-year share repurchase program was authorized on March 10, 2025[100](index=100&type=chunk) [Dividends](index=26&type=section&id=Dividends) Reports on dividend payments to stockholders and recent declarations - During the **26 weeks ended** August 2, 2025, the Company paid **$196.1 million** in dividends to stockholders[102](index=102&type=chunk) - A quarterly cash dividend of **$1.2125** per share was authorized and declared on August 27, 2025[102](index=102&type=chunk) [Supply Chain Financing](index=26&type=section&id=Supply%20Chain%20Financing) Explains the company's supply chain financing arrangements and related liabilities - The Company has supply chain financing arrangements allowing suppliers to settle outstanding payment obligations early at a discount[104](index=104&type=chunk) - Liabilities associated with funded participation in these arrangements were **$37.9 million** as of August 2, 2025[104](index=104&type=chunk) [Cash Flows](index=26&type=section&id=Cash%20Flows) Summarizes the cash inflows and outflows from operating, investing, and financing activities Net Decrease in Cash and Cash Equivalents (26 Weeks Ended, in thousands) | Period | August 2, 2025 | August 3, 2024 | | :--- | :--- | :--- | | Net decrease | $(458,918) | $(109,321) | [Operating Activities](index=26&type=section&id=Operating%20Activities) Details the cash generated or used from the company's primary business operations - Cash flows provided by operating activities increased **$109.5 million** for the **26 weeks ended** August 2, 2025, primarily due to the timing of income tax deductions from the OBBBA and changes in inventory levels and accounts payable[106](index=106&type=chunk) [Investing Activities](index=26&type=section&id=Investing%20Activities) Reports the cash flows related to the acquisition and disposal of long-term assets and investments - Cash used in investing activities increased **$282.0 million** for the **26 weeks ended** August 2, 2025, driven by a **$154.0 million** increase in gross capital expenditures and **$119.5 million** in purchases of investments (including Foot Locker equity securities)[107](index=107&type=chunk) [Financing Activities](index=26&type=section&id=Financing%20Activities) Describes the cash flows associated with debt, equity, and dividend transactions - Cash used in financing activities increased **$177.6 million** for the **26 weeks ended** August 2, 2025, primarily due to higher share repurchases[108](index=108&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes in the company's market risk exposures from those reported in its 2024 Annual Report - No material changes in the Company's market risk exposures from those reported in the 2024 Annual Report[109](index=109&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of August 2, 2025, and notes no material changes in internal control over financial reporting during the second fiscal quarter of 2025 - The Company's disclosure controls and procedures were effective as of August 2, 2025[111](index=111&type=chunk) - There were no changes in the Company's internal control over financial reporting that materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the second quarter of fiscal 2025[110](index=110&type=chunk) - Management acknowledges the inherent limitations in the effectiveness of any control system, including potential for human error and circumvention[112](index=112&type=chunk) [PART II. OTHER INFORMATION](index=28&type=section&id=PART%20II.%20OTHER%20INFORMATION) Covers legal proceedings, risk factors, equity sales, and other supplementary disclosures [Item 1. Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) This section details ongoing legal proceedings, including a shareholder class action (Securities Litigation) and two stockholder derivative actions, both alleging misrepresentations and breaches of fiduciary duty related to the company's business and financial condition - A shareholder class action (Securities Litigation) was filed on February 16, 2024, alleging violations of Section 10(b) and 20(a) of the Securities Exchange Act of 1934, related to inventory, margins, business prospects, and inventory shrinkage[114](index=114&type=chunk) - Two stockholder derivative actions were filed on February 13, 2025, and May 2, 2025, alleging violations of Section 14(a) and 10(b), breach of fiduciary duty, and unjust enrichment, similar to the Securities Litigation[115](index=115&type=chunk) - The Company intends to vigorously defend both cases, believing the complaints do not state meritorious claims, and has received demands for inspection of books and records related to these allegations[114](index=114&type=chunk)[115](index=115&type=chunk)[116](index=116&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors affecting the company from those previously disclosed in its 2024 Annual Report and prior 10-Q filing - There have been no material changes to the risk factors affecting the Company from those disclosed in Part I, Item 1A. 'Risk Factors' of the Company's 2024 Annual Report and in Part II, Item 1A. 'Risk Factors' of the Company's Form 10-Q filed on June 9, 2025[118](index=118&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section provides a table detailing repurchases of common stock during the second quarter of 2025 under existing share repurchase programs Common Stock Repurchases (Q2 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | May 4, 2025 to May 31, 2025 | 89 | $193.78 | | June 1, 2025 to July 5, 2025 | 810 | $178.17 | | July 6, 2025 to August 2, 2025 | 3,871 | $204.42 | | **Total** | **4,770** | **$199.77** | - These repurchases were made under the **$2.0 billion** five-year share repurchase program authorized in December 2021[119](index=119&type=chunk) [Item 5. Other Information](index=29&type=section&id=Item%205.%20Other%20Information) This section reports on trading arrangements, specifically a Rule 10b5-1 plan entered into by the President and CEO - Lauren Hobart, President and Chief Executive Officer, entered into a Rule 10b5-1 trading arrangement on July 1, 2025, for the potential sale of up to **40,166** shares of common stock[120](index=120&type=chunk) - The plan commences on September 29, 2025, and will terminate by March 10, 2026[120](index=120&type=chunk) - No other directors or officers adopted, modified, or terminated trading arrangements during the quarter ended August 2, 2025[121](index=121&type=chunk) [Item 6. Exhibits](index=30&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed or furnished as part of the Quarterly Report on Form 10-Q, including merger agreements, certificates of incorporation, credit agreements, and certifications, which provide supporting documentation for the financial statements and other disclosures in the report [SIGNATURES](index=32&type=section&id=SIGNATURES) Confirms the official certification and submission of the quarterly report by authorized executives - The Quarterly Report on Form 10-Q was signed on August 28, 2025, by Lauren R. Hobart, President and Chief Executive Officer, and Navdeep Gupta, Executive Vice President – Chief Financial Officer[124](index=124&type=chunk)[125](index=125&type=chunk)