Dick's Sporting Goods(US:DKS)2023-11-21 16:00Sales Performance - Net sales increased by 41.3% in fiscal 2022 compared to fiscal 2019, driven by growth in key categories such as footwear, athletic apparel, team sports, and golf [48]. - Net sales increased by 2.8% to $3.04 billion in the current quarter from $2.96 billion in the same quarter of 2022, driven by a 1.7% increase in comparable store sales [17]. - Comparable store sales increased by 1.7% in the current quarter, down from a 6.5% increase in the same period last year [61]. Profitability and Margins - Merchandise margins increased over 300 basis points as a percentage of net sales in fiscal 2022 compared to fiscal 2019, with pre-tax income as a percentage of net sales growing from 4.7% to 11.2% [49]. - Gross profit increased to $1.06 billion, with a gross profit margin improvement of 67 basis points due to lower supply chain costs [64]. - Selling, general and administrative expenses rose to $776.0 million, increasing as a percentage of net sales by 254 basis points, influenced by business optimization charges and investments in talent and technology [65]. Expenses and Charges - Pre-tax business optimization charges of $52.5 million were incurred in Q3 2023, primarily due to the elimination of positions and integration of Moosejaw operations [53]. - The company anticipates additional pre-tax charges of approximately $10 million during Q4 2023 related to outdoor specialty business optimization [53]. - Selling, general and administrative expenses are expected to moderate by approximately 150 basis points from Q3 as a percentage of net sales [52]. Store Operations - Comparable store sales, including online sales, are considered a key performance indicator, impacting total net sales and cash flow [55]. - The company opened 10 new stores in Q3 2023, bringing the total to 869 stores by the end of the period [57]. Inventory and Supply Chain - Inventory shrink is expected to be approximately 50 basis points higher than fiscal 2022 on a full-year basis, reflecting industry-wide trends [52]. - Supply chain costs are expected to remain lower than fiscal 2022 for the remainder of the fiscal year [52]. Shareholder Returns - The company repurchased 3.5 million shares of common stock for a total cost of $388.1 million under its share repurchase program [17]. - During the 39 weeks ended October 28, 2023, the company repurchased 5.4 million shares at a cost of $648.6 million, leaving $779.6 million remaining under the share repurchase program [86]. - Dividends paid to stockholders during the 39 weeks ended October 28, 2023, amounted to $270.6 million, with a quarterly cash dividend of $1.00 per share declared for December 2023 [88]. Cash Flow and Capital Expenditures - Cash flows from operating activities increased by $729.1 million to $764.7 million for the 39 weeks ended October 28, 2023, compared to the prior year [92]. - Cash used in investing activities rose by $140.4 million to $433.3 million, including investments in DICK'S House of Sport stores and the acquisition of Moosejaw [93]. - Capital expenditures for the 39 weeks ended October 28, 2023, totaled $409.5 million, with expectations for fiscal 2023 capital expenditures between $550 million and $600 million [84][85]. Interest and Tax - Interest expense decreased to $14.4 million in the current quarter from $26.1 million in the prior year quarter, primarily due to lower interest expense on the Convertible Senior Notes following their retirement [67]. - The effective tax rate increased to 25.1% in the current quarter from 24.9% in the prior year quarter [69]. - Other income increased by $67.9 million to $56.3 million, driven by a $44.8 million rise in interest income and a $22.8 million reduction in deferred compensation plan expenses [76]. - The effective tax rate decreased to 18.7% from 24.1%, influenced by a $39.8 million increase in excess tax benefits due to higher employee equity awards [77]. Financial Position - Cash on hand as of October 28, 2023, was $1.41 billion, with an additional $1.6 billion available under the unsecured credit facility [78]. - Liabilities associated with supply chain financing arrangements were $38.9 million as of October 28, 2023, down from $56.1 million a year earlier [90].