Dick's Sporting Goods Reports Fourth Quarter and Full Year 2010 Results

PITTSBURGH, March 8, 2011 /PRNewswire/ -- Dick's Sporting Goods, Inc. (NYSE: DKS) today reported sales and earnings results for the fourth quarter and full year ended January 29, 2011.

Fourth Quarter Results

The Company reported consolidated non-GAAP net income for the fourth quarter ended January 29, 2011 of $94.0 million, or $0.76 per diluted share, excluding an after-tax charge of $6.5 million, or $0.05 per diluted share from litigation settlement costs. These costs are from the previously disclosed fourth quarter settlement of wage and hour class action lawsuits and are included in selling, general and administrative expenses. The fourth quarter consolidated non-GAAP earnings per diluted share exceeded estimated earnings expectations provided on November 16, 2010 of $0.69 - 0.71 per diluted share.  

On a GAAP basis, the Company reported consolidated net income for the fourth quarter ended January 29, 2011 of $87.5 million, or $0.71 per diluted share. The GAAP to non-GAAP reconciliations are included in a table later in the release under the heading "Non-GAAP Net Income and Earnings Per Share Reconciliation."  For the fourth quarter ended January 30, 2010, the Company reported consolidated net income of $67.4 million, or $0.56 per diluted share (GAAP and non-GAAP).

Net sales for the fourth quarter of 2010 increased by 13.6% from the fourth quarter of 2009 to $1,518.9 million due primarily to a 9.4% increase in consolidated same store sales and the opening of new stores. The 9.4% consolidated same store sales increase consisted of an 8.6% increase at Dick's Sporting Goods stores, a 2.2% increase at Golf Galaxy and a 36.3% increase in our e-commerce business.

"In 2010, we generated significant earnings growth while maintaining our focus on strengthening our balance sheet," said Edward W. Stack, Chairman and CEO. "We have successfully navigated the storms of the recession and have executed our business plan by posting six consecutive quarters of same store sales gains, opening 26 new stores in 2010, expanding our margin rates and reducing inventory per square foot. As a result, we are solidly positioned to generate further growth and increased operating margins in the coming years."

Stores

In the fourth quarter, the Company opened eight new Dick's Sporting Goods stores, remodeled one Dick's Sporting Goods store, relocated one Dick's Sporting Goods store, closed one Dick's Sporting Goods Store and opened two new Golf Galaxy stores.  The new stores are listed in a table later in the release under the heading "Store Count and Square Footage."

As of January 29, 2011, the Company operated 444 Dick's Sporting Goods stores in 42 states, with approximately 24.6 million square feet and 81 Golf Galaxy stores in 30 states, with approximately 1.3 million square feet.

Balance Sheet

The Company ended the fourth quarter of 2010 with $546 million in cash and cash equivalents and did not have any outstanding borrowings under its $440 million revolving credit facility. At the end of the fourth quarter of 2009, the Company had $226 million in cash and cash equivalents and did not have any outstanding borrowings under its credit facility.

The inventory per square foot was 4.1% lower at the end of the fourth quarter 2010 as compared to the end of the fourth quarter 2009.

Full Year Results

The Company reported consolidated non-GAAP net income for the 52 weeks ended January 29, 2011 of $198.4 million, or $1.63 per diluted share. Non-GAAP earnings exclude Golf Galaxy store closing costs and litigation settlement costs. For the 52 weeks ended January 30, 2010, the Company reported consolidated non-GAAP net income of $141.4 million, or $1.20 per diluted share, which excluded merger and integration costs.

On a GAAP basis, the Company reported consolidated net income for the 52 weeks ended January 29, 2011 of $182.1 million, or $1.50 per diluted share, compared to $135.4 million, or $1.15 per diluted share for the 52 weeks ended January 30, 2010. The GAAP to non-GAAP reconciliations are included later in the release under the heading "Non-GAAP Net Income and Earnings Per Share Reconciliation."

Net sales for the full year 2010 increased 10.4% to $4,871.5 million due primarily to a 7.4% increase in consolidated same store sales and the opening of new stores.

Current 2011 Outlook

The Company's current outlook for 2011 is based on current expectations and includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, as described later in this release.  Although the Company believes that comments reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.

• Full Year 2011
  • Based on an estimated 125 million diluted shares outstanding, the Company currently anticipates reporting consolidated earnings per diluted share of approximately $1.89 – 1.91. For the full year 2010, the Company reported consolidated earnings per diluted share of $1.63, excluding Golf Galaxy store closing costs and litigation settlement costs. On a GAAP basis, the Company reported consolidated earnings per diluted share of $1.50 in 2010.
  • Consolidated same store sales are currently expected to increase approximately 3%. The same store sales calculation for the full year 2011 includes Dick's Sporting Goods stores, Golf Galaxy stores and the Company's e-commerce business.
  • The Company currently expects to open approximately 34 new Dick's Sporting Goods stores, remodel 13 Dick's Sporting Goods stores and open approximately three new Golf Galaxy stores in 2011.

• First Quarter 2011
  • Based on an estimated 124 million diluted shares outstanding, the Company anticipates reporting consolidated earnings per diluted share of approximately $0.26 – 0.28 in the first quarter of 2011. In the first quarter of 2010, the Company reported earnings per diluted share of $0.22.  
  • Consolidated same store sales are expected to increase approximately 4 – 5%. The same store sales calculation for the first quarter 2011 includes Dick's Sporting Goods stores, Golf Galaxy stores and the Company's e-commerce business.
  • The Company expects to open approximately three new Dick's Sporting Goods stores in the first quarter of 2011.

Conference Call Info

The Company will be hosting a conference call today at 10:00 a.m. eastern time to discuss the fourth quarter and full year results.  Investors will have the opportunity to listen to the earnings conference call over the internet through the Company's web site located at http://www.dickssportinggoods.com/investors. To listen to the live call, please go to the web site at least fifteen minutes early to register and download and install any necessary audio software.  

For those who cannot listen to the live webcast, it will be archived on the Company's web site for 30 days.  In addition, a dial-in replay will be available shortly after the call.  To listen to the replay, investors should dial 888-286-8010 (domestic callers) or 617-801-6888 (international callers) and enter confirmation code 60701090.  The dial-in replay will be available for 30 days following the live call.

Forward-Looking Statements Involving Known and Unknown Risks and Uncertainties

Except for historical information contained herein, the statements in this release are forward-looking and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify these statements as those that may predict, forecast, indicate or imply future results, performance or advancements and by forward-looking words such as "believe", "anticipate", "expect", "will", "will be", "will continue", "will result", "could", "may", "might",  or any variations of such words or other words with similar meanings. Forward-looking statements address, among other things, our expectations, our growth strategies, including our plans to open new stores, our efforts to increase profit margins and return on invested capital, plans to grow our private brand business, projections of our future profitability, results of operations, capital expenditures, our financial condition or other "forward-looking" information and include statements about revenues, earnings, spending, margins, costs, liquidity, store openings and operations, inventory, private brand products, our actions, plans or strategies. The following factors, among others, in some cases have affected and in the future could affect our financial performance and actual results, and could cause actual results for fiscal 2011 and beyond to differ materially from those expressed or implied in any forward-looking statements included in this release or otherwise made by our management; the current economic and financial downturn may cause a continued decline in consumer spending; changes in macroeconomic factors and market conditions, including the housing market and fuel costs, that impact the level of consumer spending for the types of merchandise we sell;  changes in general economic and business conditions and in the specialty retail or sporting goods industry in particular; our quarterly operating results and same store sales may fluctuate substantially; potential volatility in our stock price; our ability to access adequate capital and the tightening of availability and higher costs associated with current and new sources of credit resulting from uncertainty in financial markets; the intense competition in the sporting goods industry and actions by our competitors; the current financial and economic crisis may adversely affect our landlords and real estate developers of retail space, which may limit the availability of attractive store locations; risks that could affect our ability to grow our number of stores, including the availability of retail store sites on terms acceptable to us, the cost of real estate and other items related to our stores, and our inability to manage our growth, open new stores on a timely basis or expand successfully in new and existing markets; changes in consumer demand; unauthorized disclosure of sensitive, personal or confidential information; risks associated with our private brand offerings, including fluctuations in the cost of products resulting from  increases in raw material prices and other factors; reliance on foreign sources of production; compliance with government and industry safety standards; and intellectual property risks; our relationships with our vendors, including potential increases in the costs of their products and our ability to pass those cost increases on to our customers, their ability to maintain their inventory and production levels and their ability or willingness to provide us with sufficient quantities of products at acceptable prices; risks and costs relating to the products we sell, including: product liability claims and the availability of recourse to third parties, including under our insurance policies; product recalls; and the regulation of and other hazards associated with certain products we sell, such as hunting rifles and ammunition; disruptions in our or our vendors' supply chain, including as a result of political instability, foreign trade issues, the impact of economic or financial downturn on distributors or other reasons; the loss of our key executives, especially Edward W. Stack, our Chairman and Chief Executive Officer; currency exchange rate fluctuations; costs and risks associated with increased or changing laws and regulations affecting our business, including those relating to labor, employment and the sale of consumer products; risks relating to operating as a multi-channel retailer, including the impact of rapid technological change, internet security and privacy issues, the threat of systems failure or inadequacy, increased or changing governmental regulation and increased competition; risks relating to problems with or disruption of our current management information systems; any serious disruption at our distribution facilities; the seasonality of our business; regional risks because our stores are generally concentrated in the eastern half of the United States; the outcome of litigation or other legal actions against us; risks relating to operational and financial restrictions imposed by our senior secured revolving credit agreement; risks associated with our pursuit of strategic acquisitions, including costs and uncertainties associated with combining businesses and/or assimilating acquired companies; our ability to meet our labor needs; we are controlled by our Chief Executive Officer and his relatives, whose interests may differ from those of our other stockholders; the impact on the U.S. retail environment of foreign instability and conflict; our ability to secure and protect our trademarks, patents and other intellectual property; our current anti-takeover provisions could prevent or delay a change in control of the Company; impairment in the carrying value of goodwill or other acquired intangibles; and changes in our business strategies.

Known and unknown risks and uncertainties are more fully described in the Company's Annual Report on Form 10-K for the year ended January 30, 2010 as filed with the Securities and Exchange Commission ("SEC") on March 18, 2010, and other reports filed with the SEC.  The Company disclaims any obligation and does not intend to update any forward-looking statements except as may be required by the securities laws.

About Dick's Sporting Goods, Inc.

Dick's Sporting Goods, Inc. is an authentic full-line sporting goods retailer offering a broad assortment of brand name sporting goods equipment, apparel and footwear in a specialty store environment. The Company also owns and operates Golf Galaxy, LLC, a multi-channel golf specialty retailer. As of January 29, 2011, the Company operated 444 Dick's Sporting Goods stores in 42 states, 81 Golf Galaxy stores in 30 states and e-commerce and catalog operations for both Dick's Sporting Goods and Golf Galaxy.  The Company's SEC filings, press releases and reconciliation information required pursuant to Regulation G under the Securities Exchange Act of 1934, as amended, are available at www.dickssportinggoods.com/investors. The Company's website is not part of this press release.

Store Count and Square Footage

The stores that opened during the fourth quarter of 2010 are as follows:

The following represents a reconciliation of beginning and ending stores and square footage for the periods indicated:

Non-GAAP Financial Measures

In addition to reporting the Company's financial results in accordance with generally accepted accounting principles ("GAAP"), the Company provides information regarding net income and earnings per diluted share adjusted to exclude a litigation settlement charge and Golf Galaxy store closing costs; earnings before interest, taxes and depreciation, adjusted to exclude certain significant gains and losses ("Adjusted EBITDA"); a reconciliation from the Company's gross capital expenditures net of tenant allowances; and calculations of consolidated and Dick's Sporting Goods new store productivity. These measures are considered non-GAAP and are not preferable to GAAP financial information; however, the Company believes this information provides additional measures of performance that the Company's management, analysts and investors can use to compare core, operating results between reporting periods. These non-GAAP measures are provided below and on the Company's website at http://www.dickssportinggoods.com/investors.

Adjusted EBITDA

Adjusted EBITDA should not be considered as an alternative to net income or any other GAAP measure of performance or liquidity and may not be comparable to similarly titled measures reported by other companies.  Adjusted EBITDA is a key metric used by the Company that provides a measurement of profitability that eliminates the effect of changes resulting from financing decisions, tax regulations, capital investments and other significant items that may vary from period to period and have a disproportionate effect in a given period, which affects the comparability of results. Adjusted EBITDA was determined as follows:

Reconciliation of Gross Capital Expenditures to Net Capital Expenditures

The following table represents a reconciliation of the Company's gross capital expenditures to its capital expenditures, net of tenant allowances.

New Store Productivity Calculation

The following calculations represent: (1) the new store productivity calculation on a consolidated basis; and (2) the new store productivity calculation for Dick's Sporting Goods for the quarter ended January 29, 2011.  Golf Galaxy stores and the Company's e-commerce business are excluded from the Dick's Sporting Goods only calculation.  New store productivity compares the sales increase for all stores not included in the comparable sales calculation with the increase in store square footage.  

SOURCE Dick's Sporting Goods, Inc.