DICK’S Sporting Goods (DKS) Q2 2026 Earnings Call August 28, 2025 10:00 AM ET Company ParticipantsNate Gilch - Senior Director of Investor RelationsEdward Stack - Executive ChairmanLauren Hobart - Director, President & CEONavdeep Gupta - Executive VP & CFOSimeon Gutman - Managing DirectorJoseph Feldman - Senior MD & Assistant Director - ResearchJohn Kernan - Managing DirectorPaul Lejuez - Managing DirectorEric Cohen - Research Associate - RetailConference Call ParticipantsBrian Nagel - MD & Senior Analyst - ...

Financial Data and Key Metrics Changes - The company reported a consolidated sales increase of 5% to $3.65 billion for Q2 2025, with comparable sales (comps) also increasing by 5% [16][11] - Gross profit for Q2 was $1.35 billion, representing 37.06% of net sales, an increase of 33 basis points from the previous year [17] - Non-GAAP earnings per diluted share were $4.38, slightly up from $4.37 in the previous year [19] - The company ended Q2 with approximately $1.2 billion in cash and cash equivalents, with no borrowings on its $2 billion unsecured credit facility [19] Business Line Data and Key Metrics Changes - The company opened one additional House of Sport location in Q2 and plans to open 13 more in Q3, marking the highest number of openings in a single quarter [12] - The e-commerce business continues to grow faster than the overall company, driven by a strong product pipeline and app engagement [13][14] Market Data and Key Metrics Changes - The company continues to gain market share from online-only and omni-channel retailers, with a two-year comp stack of 9.5% and a three-year comp stack of 11.5% [16] - The average ticket increased by 4.1%, while transactions rose by 0.9% in Q2 [16] Company Strategy and Development Direction - The company is focused on four strategic pillars: differentiated product assortment, omni-channel athlete experience, teammate experience, and deep engagement with the Dick's brand [10] - The pending acquisition of Foot Locker is expected to create a global leader in the sports retail industry, enhancing partnerships with leading sports brands and expanding the total addressable market [7][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's resilience and the effectiveness of long-term strategies, raising full-year comp sales growth expectations to 2% to 3.5% [21] - The company is navigating a complex macroeconomic environment, including tariff impacts, while maintaining strong consumer demand and sales momentum [38][21] Other Important Information - The company anticipates closing the Foot Locker acquisition on September 8, 2025, and is enthusiastic about the strategic benefits it will bring [7] - The company is investing in digital and in-store initiatives to position itself for long-term growth, with a focus on enhancing the athlete experience [18][21] Q&A Session Summary Question: Update on Foot Locker acquisition and revitalization plans - Management sees a tremendous opportunity with Foot Locker and plans to invest in stores and marketing to turn the business around, with more details expected in the Q3 call [34][33] Question: Impact of tariffs on demand and pricing - Management reported strong performance despite tariff impacts, with surgical price increases and no significant demand slowdown observed [38][36] Question: Consumer behavior and category performance - Management noted broad-based growth across all key segments, with no signs of consumer slowdown, and highlighted the importance of innovation in driving sales [41][42] Question: Gross margin expectations - Management expects gross margin to expand for the full year, driven by product assortment quality and strategic investments, despite balancing various economic factors [73][72] Question: Game Changer performance - Game Changer continues to perform well with 7.4 million unique active users in Q2, and the integration with Dick's Media Network is enhancing personalization and engagement [80][81] Question: Private brands and tariff impacts - Management did not provide specific details on private brand performance but acknowledged ongoing discussions with brand partners regarding pricing strategies in light of tariffs [122]

Financial Data and Key Metrics Changes - The company reported a consolidated sales increase of 5% to $3.65 billion for Q2 2025, with comparable store sales (comps) also increasing by 5% [16][11] - Gross profit for Q2 was $1.35 billion, representing 37.06% of net sales, an increase of 33 basis points from the previous year [17] - Non-GAAP earnings per diluted share were $4.38, slightly up from $4.37 in the previous year [19] - The company raised its full-year comp sales growth expectation to a range of 2% to 3.5%, up from a prior expectation of 1% to 3% [21] Business Line Data and Key Metrics Changes - The company opened one additional House of Sport location in Q2 and plans to open 13 more in Q3, marking the highest number of openings in a single quarter [12] - The e-commerce business continues to grow faster than the overall company, driven by a strong product pipeline and app engagement [13][14] Market Data and Key Metrics Changes - The company continues to gain market share from online-only and omni-channel retailers, with a two-year comp stack of 9.5% and a three-year comp stack of 11.5% [16] - There was broad-based strength across key categories, including footwear, apparel, team sports, and golf, with no signs of consumer slowdown [39] Company Strategy and Development Direction - The company is focused on strategic investments in digital, in-store, and marketing to position itself for long-term growth [21] - The pending acquisition of Foot Locker is expected to create a global leader in the sports retail industry, enhancing partnerships with leading sports brands and expanding the total addressable market [7][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the complex macroeconomic environment, including tariff impacts, while maintaining strong sales momentum [36][21] - The company is optimistic about the future growth potential of both DICK'S and Golf Galaxy businesses, as well as the opportunities presented by the Foot Locker acquisition [14] Other Important Information - The company ended Q2 with approximately $1.2 billion in cash and cash equivalents, with no borrowings on its $2 billion unsecured credit facility [19] - The company expects to incur preopening expenses in the range of $65 million to $75 million for the full year, primarily in Q3 [22] Q&A Session Summary Question: Update on Foot Locker acquisition and revitalization plans - Management sees a tremendous opportunity with Foot Locker and plans to invest in stores and marketing to revitalize the business [32][33] Question: Impact of tariffs on demand and pricing - Management reported strong performance despite sporadic price increases, indicating that consumers are responding well [36] Question: Consumer behavior and potential slowdown - Management noted no signs of consumer slowdown, with growth across all key segments [39] Question: Gross margin expectations - Management expects gross margin to expand for the full year, balancing various factors including tariffs and strategic investments [70][71] Question: Game Changer performance - Game Changer continues to perform well with 7.4 million unique active users in Q2, indicating strong growth [78] Question: Private brands performance and tariff impacts - Management did not provide specific details on private brands but acknowledged the impact of tariffs on cost of goods sold [122]

Core Insights - DICK'S Sporting Goods Inc. (DKS) is expected to report a year-over-year sales increase of 3.6% for Q2 fiscal 2025, with revenues projected at $3.6 billion [1][9] - Earnings per share are anticipated to decline by 1.8% year-over-year to $4.29 [2][9] - The company has a trailing four-quarter earnings surprise average of 5.6% [2] Performance Factors - DKS's quarterly performance is likely to benefit from strategic efforts, brand strength, and market share gains, alongside strong comparable store sales and healthy transaction growth [3] - The company is enhancing service levels through improved digital and store experiences to better meet athletes' needs [5] - Pricing optimization and differentiated product access are expected to support margin benefits in the fiscal second quarter [4] Growth Initiatives - DKS is focusing on three growth pillars: expanding experiential formats, strengthening key categories with premium access, and accelerating its e-commerce and digital ecosystem [5] - The company plans to open approximately 32 new stores across 2025, which includes DICK'S House of Sport and other formats [5] - Ongoing investments in digital, stores, and marketing are aimed at fueling long-term growth [4] Cost Considerations - DKS faces an uncertain macroeconomic environment, with tariff-related challenges expected to pressure performance [6] - Anticipated increases in SG&A expenses are projected to rise by 7.9% year-over-year for the fiscal second quarter due to higher wage rates and investments in talent and technology [6] Earnings Prediction - The Zacks model indicates a strong likelihood of an earnings beat for DKS, supported by a positive Earnings ESP of +0.62% and a Zacks Rank of 3 [7]

Financial Data and Key Metrics Changes - The company reported a consolidated sales increase of 5.2% to $3.17 billion, with Q1 comparable sales increasing by 4.5% [19][12] - Non-GAAP EPS was $3.37, a 2.1% increase from $3.30 in the previous year [23] - Gross profit for Q1 was $1.17 billion, representing 36.7% of net sales, an increase of 41 basis points from last year [20] - The tax rate increased from 19.6% to approximately 24% due to higher employee equity awards exercised in the prior year [22] Business Line Data and Key Metrics Changes - Growth was observed across key categories, particularly in footwear, apparel, and team sports [90] - The average ticket increased by 3.7%, and transactions rose by 0.8% [19] - The company opened two additional House of Sport locations and four new Fieldhouse locations in Q1, with plans to open approximately 16 total in 2025 [15] Market Data and Key Metrics Changes - The company continues to gain market share from online-only and omnichannel retailers, with a 9.8% two-year comp stack and a 13.4% three-year comp stack [19] - The company has acquired over 20 million new athletes in the past three years, indicating strong market penetration [14] Company Strategy and Development Direction - The company announced plans to acquire Foot Locker, aiming to create a global leader in the sports retail industry and participate in a $300 billion global sports retail market [9][10] - The strategic focus includes repositioning real estate, driving growth in key categories, and accelerating e-commerce business [15][16] - The company is investing in technology and marketing to enhance the omnichannel athlete experience [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the complex macroeconomic environment but expressed confidence in the company's strong position and growth strategies [13][14] - The company reaffirmed its guidance for 2025, expecting comp sales growth of 1% to 3% and EPS in the range of $13.80 to $14.40 [14][28] - Management emphasized the importance of long-term investments and the potential for significant synergies from the Foot Locker acquisition [36] Other Important Information - The company ended Q1 with approximately $1 billion in cash and cash equivalents, with no borrowings on its credit facility [23] - Inventory levels increased by 12% compared to last year, with a focus on key items and categories [24] Q&A Session Summary Question: Insights on the Foot Locker transaction - Management acknowledged shareholder concerns but emphasized the long-term benefits of the acquisition, including operational efficiencies and market share growth [36][37] Question: Updates on tariffs and pricing strategies - Management confirmed that all known tariffs have been factored into guidance and expressed confidence in managing pricing effectively [44][45] Question: Durability of comp strength - Management noted that while there are higher comps to lap in the second half of the year, the underlying consumer strength remains robust [51][52] Question: Nike's distribution strategy - Management expressed confidence in the partnership with Nike and anticipated minimal overlap in product distribution [55][56] Question: Category performance in Q1 - Management reported growth across footwear, apparel, and team sports, with positive momentum throughout the quarter [90] Question: Impact of tariffs on inventory - Management indicated no impact from tariffs in Q1 and is working closely with brand partners to manage inventory flow [93] Question: Golf Galaxy performance - Management highlighted the importance of golf as a growth category and the success of Golf Galaxy Performance Centers [100] Question: Game Changer business and crossover with DICK'S shoppers - Management noted that Game Changer users are highly engaged DICK'S shoppers, and efforts are being made to drive crossover between the two [102][104]

Financial Data and Key Metrics Changes - The company reported a consolidated sales increase of 5.2% to $3.17 billion for Q1 2025, with comparable store sales (comps) increasing by 4.5% [18][10] - Non-GAAP earnings per diluted share were $3.37, a 2.1% increase from $3.30 in the previous year [22][11] - Gross profit for Q1 was $1.17 billion, representing 36.7% of net sales, with an increase of 41 basis points from the previous year [19][11] Business Line Data and Key Metrics Changes - Growth was observed across key categories, including footwear, apparel, and team sports, contributing to the overall comp growth [88][10] - The average ticket increased by 3.7%, and transactions rose by 0.8% compared to the previous year [18][11] - The company opened two additional House of Sport locations and four new Fieldhouse locations in Q1, with plans to open approximately 16 total in 2025 [13][10] Market Data and Key Metrics Changes - The company continues to gain market share from online-only and omnichannel retailers, with a two-year comp stack of 9.8% and a three-year comp stack of 13.4% [18][11] - The company has acquired over 20 million new athletes in the past three years, indicating strong market penetration [12][10] Company Strategy and Development Direction - The company announced plans to acquire Foot Locker, aiming to create a global leader in the sports retail industry and expand its reach to over 3,200 stores worldwide [7][6] - The strategic focus includes repositioning real estate, driving growth in key categories, and accelerating e-commerce business [12][10] - The company is investing in technology and marketing to enhance the omnichannel athlete experience and drive greater online presence [14][10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the complex macroeconomic environment but expressed confidence in the company's strong position and ongoing momentum [11][10] - The company reaffirmed its guidance for 2025, expecting comp sales growth in the range of 1% to 3% and EPS between $13.80 and $14.40 [27][12] - Management emphasized the importance of long-term strategic investments rather than short-term gains [35][6] Other Important Information - The company ended Q1 with approximately $1 billion in cash and cash equivalents, with no borrowings on its credit facility [22][11] - Inventory levels increased by 12% compared to the previous year, with management confident in the positioning of inventory [23][11] Q&A Session Summary Question: Insights on the Foot Locker transaction - Management believes the acquisition will strengthen brand relationships and increase operational efficiency, capturing $100 million to $125 million in synergies [34][6] Question: Updates on tariffs and pricing strategies - Management confirmed that all known tariffs have been factored into guidance, and they are actively working with brand partners to navigate pricing [43][10] Question: Durability of comp strength - Management noted that while there are higher comps to lap in the back half of the year, the consumer remains strong and resilient [50][10] Question: Nike's distribution strategy - Management expressed confidence in the partnership with Nike, highlighting their ability to segment products effectively [52][10] Question: Golf Galaxy performance - Golf remains a key category, with plans to expand Golf Galaxy Performance Centers, indicating long-term growth potential [98][10] Question: Game Changer business impact - The Game Changer platform is expected to enhance engagement with youth athletes and drive crossover sales to DICK'S stores [100][10]