Dick's Sporting Goods(DKS) - 2019 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported first quarter non-GAAP earnings per diluted share of $0.62, an increase from $0.59 in the previous year [5] - Consolidated sales increased by 0.6% to approximately $1.92 billion, with same-store sales remaining flat [6][32] - The merchandise margin rate increased by 20 basis points in the first quarter, reflecting a healthy business [9][36] - Non-GAAP SG&A expenses were $485.9 million, or 25.3% of net sales, which was a deleverage of 67 basis points from the same period last year [37] Business Line Data and Key Metrics Changes - The e-commerce business grew by 15% year-over-year, increasing its share of total net sales to 13% from 11% [7][32] - The athletic apparel business delivered a mid-single-digit comp increase, while private brands continued to perform positively [33] - The hunt category negatively impacted comp sales by 1%, with the largest impact occurring in February [34][72] Market Data and Key Metrics Changes - The company is on track to remove the hunt category from approximately 125 additional stores, reallocating space to faster-growing merchandise categories [12][34] - The company is expanding its merchandise presentations and interactive experiences, such as batting cages, across its stores [13][94] Company Strategy and Development Direction - The company is focused on building the best omni-channel experience in sporting goods, with key investments in e-commerce and store experience [21] - The launch of DSG, a new high-quality, value-oriented performance brand, aims to attract new customers and compete against department stores [16][97] - The company is committed to a strategic review of its hunt business, including Field & Stream stores, to better utilize space and drive growth [10][74] Management's Comments on Operating Environment and Future Outlook - Management expressed enthusiasm about the business and raised full-year earnings guidance to a range of $3.20 to $3.40 [5][45] - There is caution regarding the impact of tariffs on consumer behavior, which may affect sales outlook for the back half of the year [51][62] - The company remains optimistic about its investments driving differentiation in the marketplace [30] Other Important Information - The company announced leadership changes, including the appointment of a new Chief Marketing Officer and Senior Vice President of Strategy and Analytics [18][20] - The company is on track to open two new dedicated e-commerce fulfillment centers in New York and California during the third quarter [27] Q&A Session Summary Question: Was the improvement seen during the quarter due to easier comparisons in the hunt category or significant improvement in other business areas? - Management indicated that both factors contributed, with lessening headwinds and improved performance in key businesses like apparel and footwear [48][49] Question: Why shouldn't comps be better than the guidance provided, given the initiatives in place? - Management expressed caution due to uncertainty around tariffs and their potential impact on consumer behavior [51][65] Question: Can you provide more details on the athletic footwear performance? - Management reported satisfaction with the athletic footwear business and noted improvements in store presentations [56] Question: How is the competitive environment expected to play out over the summer? - Management believes their inventory investments are distinct from competitors, which may mitigate competitive pressures [59] Question: What is the impact of the hunt category on overall comp sales? - The hunt category continues to negatively impact comps, particularly in February, but management is actively reviewing its strategy [72][74] Question: How are tariffs affecting the company? - Management stated that tariffs have not had a major impact so far, with ongoing negotiations with suppliers to manage costs [110][111] Question: What percentage of the current mix is sourced in China? - Management indicated that sourcing from China is concentrated in hard lines and soft lines, but specific percentages are difficult to ascertain [114]