Dick's Sporting Goods(DKS) - 2024 Q4 - Annual Report

Financial Performance - Net sales increased by 5.0% to $12.98 billion in fiscal 2023, compared to $12.37 billion in fiscal 2022, with comparable store sales rising by 2.4%[147] - Net income for fiscal 2023 was $1.05 billion, or $12.18 per diluted share, compared to $1.04 billion, or $10.78 per diluted share, in fiscal 2022[147] - Income from operations decreased to $1,282.4 million in Fiscal 2023 from $1,463.0 million in Fiscal 2022[155] - Gross profit rose to $4,533.7 million in Fiscal 2023, with a gross margin increase of 28 basis points, primarily due to lower supply chain costs[156] - Other income increased significantly to $93.8 million in Fiscal 2023 from $15.9 million in Fiscal 2022, driven by higher interest income and reduced expenses from deferred compensation plan investments[159] Expenses and Costs - Selling, general and administrative expenses as a percentage of net sales increased to 24.68% in fiscal 2023, up 200 basis points from 22.68% in fiscal 2022[149] - Selling, general and administrative expenses increased to $3,204.1 million in Fiscal 2023, up 200 basis points as a percentage of net sales, influenced by investments in hourly wage rates and marketing expenses[156] - Pre-opening expenses surged to $47.3 million in Fiscal 2023 from $16.1 million in Fiscal 2022, reflecting the opening of nine DICK'S House of Sport stores[157] - The company incurred pre-tax charges of $84.8 million from its Business Optimization, which included $46.1 million in non-cash impairments and $26.7 million in severance-related costs[140] Inventory and Shrinkage - Inventory shrink increased by approximately 50 basis points relative to historical levels, impacting merchandise margin[144] - A 10% change in obsolete inventory reserves would have affected income before income taxes by approximately $7.2 million in fiscal 2023[183] - A 10% change in shrink reserves would have affected income before income taxes by approximately $3.0 million in fiscal 2023[184] Shareholder Returns - The company repurchased 5.4 million shares of common stock for a total cost of $648.6 million during fiscal 2023[147] - Dividends paid to stockholders in Fiscal 2023 amounted to $351.2 million, with a 10% increase in the quarterly cash dividend declared for 2024[172] - The company repurchased 5.4 million shares for $648.6 million in Fiscal 2023, with an anticipated $300 million in share repurchases for Fiscal 2024[170][171] Store Operations - The company operated 855 stores at the end of fiscal 2023, a net increase of 2 stores from 853 at the end of fiscal 2022[149] - The company closed ten Moosejaw stores as part of its optimization strategy and integrated Moosejaw and Public Lands operations[140] Future Outlook - The company expects selling, general and administrative expenses to leverage as a percentage of net sales in 2024 due to ongoing optimization efforts[144] - Capital expenditures totaled $587.4 million in Fiscal 2023, with anticipated expenditures of approximately $800 million in Fiscal 2024 for new store developments and technology enhancements[168][169] Debt and Financing - Interest expense decreased to $58.0 million in Fiscal 2023 from $95.2 million in Fiscal 2022, due to lower interest following the retirement of Convertible Senior Notes[158] - Cash used in financing activities decreased by $211.9 million in 2023 compared to 2022, primarily due to the exchange of $515.9 million in Convertible Senior Notes in the prior year[178] - The company did not draw on its Credit Facility during fiscal 2023 or fiscal 2022, indicating no outstanding borrowings as of February 3, 2024[189] Economic Factors - Inflation may adversely impact consumer demand and the ability to maintain gross margin levels if product prices do not increase accordingly[192] - A hypothetical 100 basis point change in interest rates would have affected income before income taxes by approximately $16 million based on average cash equivalents during 2023[191] Seasonal Trends - The business has become less affected by seasonal fluctuations, although the highest sales typically occur in the second and fourth fiscal quarters[193]