Q3 2021 DICK'S Sporting Goods Inc Earnings Call

Core sales reporting practices. Our consolidated same store sales calculation include stores that we temporarily closed last year as a result of COVID-19.

Speaker 1: for sales reporting practice.

Speaker 1: Our consolidated same store sales calculation includes stores that we temporarily closed last year as a result of COVID-19.

The method of calculating comp sales varies across the retail industry, including the treatment of temporary store closures because of COVID-19.

Speaker 1: The method of calculating comp sales varies across the retail industry, including the treatment of temporary foreclosures because of COVID-19.

Speaker 1: Accordingly, our method of calculation might not be the same as other retailers.

Accordingly, our method of calculation might not be the same as other retailers.

Next as a reminder, due to the uneven nature of 2020, we planned 2021 off of 2019 baseline.

Speaker 1: Next, as a reminder, due to the uneven nature of 2020, we plan 2021 off of a 2019 basis.

Accordingly, we will compare 2021 sales and earnings results against both 2019 and 2020.

Speaker 1: Accordingly, we will compare 2021 sales and earnings results against both 2019 and 2020.

And lastly for your future scheduling purposes, we are tentatively planning to publish our fourth quarter 2021 earnings results before the market opens on March eight 2022 with our subsequent earnings call at 10, a M eastern time.

Speaker 1: And lastly, for your future scheduling purposes, we are tentatively planning to publish our fourth quarter 2021 earnings results before the market opens on March 8th, 2022 with our subsequent earnings call at 10 a.m. Eastern time. With that, I will now turn the call over to Ed.

And with that I will now turn the call over to Ed.

Thanks, Nick good morning, everyone.

We're extremely pleased to announce another very strong quarter in which we delivered significant sales and earnings growth over.

Speaker 1: We're extremely pleased to announce another very strong quarter in which we delivered significant sales and earnings growth over both last year and 2019.

Over both last year and 2019.

Speaker 2: I'd like to thank all of our teammates for their hard work and commitment to Dick's Sporting Goods, which helped make this performance possible.

I'd like to thank all of our teammates for their hard work and commitment to Dick's sporting goods.

Which helped to make this performance possible.

Our strategies continue to work as we re imagine the athlete experience in our core business and with the new concepts.

Speaker 2: Our strategies continue to work as we re-imagine the athlete experience in our core business and with the new council.

We've driven strong profitable growth in VIX and earlier this year, we launched two Dick's houses sports stores.

Highly experiential destinations that are redefining sports retail.

Speaker 2: highly experiential destinations that are redefining sports retail.

The innovations we have made in our golf Galaxy business are performing extremely well and.

Speaker 2: The innovations we've made in our Gulf Galaxy business are performing extremely well and our second public land store recently opened, focusing on the outdoor activity. As Lauren will discuss earlier, we've joined forces with Nike in a first-of-its-kind partnership that will deepen our strategic relationship and further differentiate Dick's in the market.

And our second public land store recently opened focusing on the outdoor activities.

<unk> activity.

As Laurie will discuss earlier, we've joined forces with Nike and a first of its kind partnership that will deepen our strategic relationship and further differentiate <unk> in the marketplace.

Looking ahead I couldnt be more excited about the future of Dick's sporting goods.

Speaker 2: Looking ahead, I couldn't be more excited about the future of Dick's Sporting Goods.

Speaker 2: We now expect to deliver cap sales of over 20% for 2021 and remain very confident in the long-term prospects of our business. I'll now turn the call over to Warren.

We now expect to deliver comp sales of over 20% for 2021 and.

And remain very confident in the long term prospects of our business I'll now turn the call over to Laura.

Thank you Ed and good morning, everyone.

As we announced earlier this morning, we delivered another exceptionally strong quarter, achieving record third quarter sales and earnings that significantly exceeded our expectation.

Speaker 3: As we announced earlier this morning, we delivered another exceptionally strong quarter, achieving record third quarter sales and earnings that significantly exceeded our expectations.

Before diving into our Q3 results I think it's important to recognize that our current success is a result of a transformational journey that began in the back half of 2017, when we started to make meaningful changes across our business.

Speaker 3: Before diving into our Q3 results, I think it's important to recognize that our current success is a result of a transformational journey that began in the back half of 2017 when we started to make meaningful changes across our business.

We elevated the athlete experience in our stores through more differentiated and premium product and delivered stronger merchandise presentations.

Speaker 3: We elevated the athlete experience in our stores through more differentiated and premium product and delivered stronger merchandise presence.

Speaker 3: We also improved our service and selling culture, made our stores more experiential, and reallocated floor space to regionally relevant and growing categories.

We also improved our service and selling culture made our stores more experiential and reallocated floor space to regionally relevant and growing categories.

These changes fueled improved results and significantly improved our comp sales trajectory well before the pandemic.

Speaker 3: These changes fueled improved results and significantly improved our crop sales trajectory well before the pandemic.

For years, we've also invested in technology and data science to build our best in class Omnichannel platform.

Speaker 3: For years, we've also invested in technology and data science to build our best-in-class omni-channel platform.

This allowed us to quickly capitalize on athlete needs and strong consumer demand throughout 2020, and deliver our full year comp sales increase of nearly 10%.

Speaker 3: This allowed us to quickly capitalize on athlete needs and strong consumer demand throughout 2020 and deliver a full-year comp sales increase of nearly 10%.

Moving into 2021, we announced today that we've raised our full year guidance for the third time this year and now expect our comp sales to increase between 24 and 25%.

Speaker 3: Moving to 2021, we announced today that we've raised our full year guidance for the third time this year, and now expect RCOMP sales to increase between 24 and 25%.

During a time when consumers are making lasting lifestyle changes with an increased focus on health and fitness and greater participation in outdoor activities. We believe that Dick's sporting goods has become synonymous with sport in the United States.

Nearly our entire category portfolio has re baselines meaningfully higher versus pre COVID-19 sales levels.

Speaker 3: Nearly our entire category portfolio has re-baselined meaningfully higher versus pre-COVID sales levels.

We've capitalized on strong consumer demand and have gained considerable market share in key categories, driven by enhanced product access service and omnichannel capabilities.

Speaker 3: We've capitalized on strong consumer demand and have gained considerable market share in key categories driven by enhanced product access, service, and omni-channel capability.

Looking ahead, we are well positioned to continue gaining share and we remain optimistic about the long term demand trends in our most important categories like athletic apparel footwear team sports and Gulf.

Speaker 3: Looking ahead, we are well-positioned to continue gaining share, and we remain optimistic about the long-term demand trends in our most important categories like athletic apparel, footwear, team sports, and golf.

We also remain very optimistic about longer term EBT margin driven by a number of permanent changes versus pre COVID-19 levels.

Speaker 3: We also remain very optimistic about longer-term EBT margins driven by a number of permanent changes versus pre-COVID levels.

These changes include a highly differentiated product assortment that is less susceptible to broader promotional pressures.

Speaker 3: These changes include a highly differentiated product assortment that is less susceptible to broader promotional pressure.

More granular management of promotions and significantly higher profitability of our E Commerce channel.

Speaker 3: more granular management of promotions, and significantly higher profitability of our e-commerce channel.

Now getting back to our Q3 results.

Consolidated same store sales increased 12, 2% on top of a 23, 2% increase in the same period last year and a 6% increase in Q3 2019.

Speaker 3: Consolidated same-store sales increased 12.2% on top of a 23.2% increase in the same period last year and a 6% increase in Q3 2019.

Driven by our strong sales and gross margin rate expansion on a non-GAAP basis, our third quarter earnings per diluted share of $3 19.

Speaker 3: driven by our strong sales and gross margin rate expansion. On a non-GAAP basis, our third quarter earnings per diluted share of $3.19 increased 59% over last year and 513% over Q3 2019.

Increased 59% over last year and 513% over Q3 2019.

Our Q3 comps were supported by broad based growth across our business as our strong execution diverse category portfolio and World class Omnichannel platform helped us continue to capitalize on and meet robust consumer demand.

Speaker 3: Our Q3 comps were supported by broad-based growth across our business as our strong execution, diverse category portfolio, and world-class omnichannel platform helped us continue to capitalize on and meet robust consumer demand. Despite a dynamic

Despite a dynamic global supply chain.

Speaker 3: We're continuing to see strong retention of the 8.5 million new athletes we acquired last

Speaker 3: and we added another 1.7 million new athletes during this quarter.

Our active athlete database is at a record high.

Speaker 3: Our active athlete database is at a record high.

Our increasingly differentiated product assortment combined with our disciplined promotional strategy and cadence is continuing to drive significantly higher merchandise margin rate.

Speaker 3: Our increasingly differentiated product assortment, combined with our disciplined promotional strategy and cadence, is continuing to drive significantly higher merchandise margin.

During the quarter, we expanded our merchandise margin rate by 301 basis points versus 2020, and by 578 basis points versus 2019.

Speaker 3: During the quarter, we expanded our merchandise margin rate by 301 basis points vs. 2020 and by 578 basis points vs. 2019.

As we discussed previously we are focused on enhancing the athlete experience across our entire omnichannel ecosystem.

Speaker 3: As we discussed previously, we're focused on enhancing the athlete experience across our entire omni-channel ecosystem.

In our stores, we continue to make <unk> a great place to work as we know that our people are a competitive differentiator and a great teammate experience provides a great athlete experience.

Speaker 3: In our stores, we continue to make Dick's a great place to work, as we know that our people are our competitive differentiator, and a great teammate experience drives a great athlete experience.

In fact, we recently earned a place on Fortune's list of best workplaces in retail for 2021.

Speaker 3: In fact, we recently earned a place on Fortune's list of best workplaces in retail for 2021.

We're also engaging our athletes with new and elevated service standards and making our stores more experiential.

Speaker 3: We're also engaging our athletes with new and elevated service standards and making our stores more experiential.

These strategies are working and continue to set us apart within the marketplace.

Speaker 3: These strategies are working and continue to set us apart within the market.

During the quarter, our brick and mortar stores comps up approximately 15% versus last year.

Speaker 3: During the quarter, our brick-and-mortar stores comped up approximately 15% versus last year and delivered a 31% sales increase when compared to 2019.

And delivered a 31% sales increase when compared to 2019.

Importantly, our stores continue to be the hub of our omnichannel strategy, enabling over 90% of our total sales and fulfilling approximately 70% of our online sales in Q3.

Speaker 3: Importantly, our stores continue to be the hub of our omni-channel strategy, enabling over 90% of our total sales and fulfilling approximately 70% of our online sales in Q3.

Moving to our e-commerce business during the quarter, we were pleased to deliver online sales growth of 1%, which was on top of a 95% increase in the same period last year.

Speaker 3: Moving to our e-commerce business, during the quarter we were pleased to deliver online sales growth of 1%, which was on top of a 95% increase in the same period last year.

Our online sales remained substantially above pre COVID-19 levels, increasing nearly 100% when compared to the same period in 2019.

Speaker 3: Our online sales remained substantially above pre-COVID levels, increasing nearly 100 percent when compared to the same period in 2019.

Importantly, we also continued to drive a significant improvement in the profitability of our E Commerce channel by leveraging fixed costs sustained athlete adoption of in store pickup and curbside as well as fewer and more targeted promotions.

Speaker 3: Importantly, we also continue to drive a significant improvement in the profitability of our e-commerce channel by leveraging fixed costs.

Speaker 3: sustained athlete adoption of in-store pickup and curbside, as well as fewer and more targeted promotions.

Beyond our Omnichannel platform, our portfolio of brands is a tremendous asset.

Speaker 3: Beyond our omni-channel platform, our portfolio of brands is a tremendous asset.

We continue to invest substantially in our highly profitable and growing vertical brands.

Speaker 3: We continue to invest substantially in our highly profitable and growing vertical brand.

Key brands, including DSG, calia, and burst or driving exclusivity within our assortment and gaining meaningful traction with our athletes.

Speaker 4: Key brands, including DSG, CALEA, and Burst, are driving exclusivity within our assortment and gaining meaningful traction with our assets.

At the same time, while many national brands continue to narrow distribution and focus more on their most strategic partners Dick's offers them something unique and valuable.

Speaker 4: At the same time, while many national brands continue to narrow distribution and focus more on their most strategic partners, Dix offers them something unique and valuable.

We are rooted in sport and can showcase an entire brand portfolio, including apparel footwear and hard lines across our over 800 stores and online.

Speaker 4: We are rooted in sport and can showcase an entire brand portfolio, including apparel, footwear, and hard lines across our over 800 stores and online.

Our brand partners continue to make significant investments in our business every year and provide us with increasing allocations of exclusive and differentiated products.

Speaker 4: Our brand partners continue to make significant investments in our business every year and provide us with increasing allocations of exclusive and differentiated products.

These top of the line products are highly coveted and rarely promoted driving significant sales and margin momentum.

Speaker 4: These top-of-the-line products are highly coveted and rarely promoted, driving significant sales and margin momentum.

Our strategic partnerships with key brands have never been stronger and we're making big bets with important brand partners.

Speaker 4: Our strategic partnerships with key brands have never been stronger and we're making big bets with important brand partners.

To that end, we recently announced a groundbreaking new partnership with Nike that we see is truly transformative for the sports industry.

Speaker 4: To that end, we recently announced a groundbreaking new partnership with Nike that we see as truly transformative for the sports industry.

Through this collaboration Dixon Nike will create unmatched value for our athletes through exclusive products experiences content and other specialized offers.

Speaker 4: Through this collaboration, Dick's and Nike will create unmatched value for our athletes through exclusive products, experiences, content, and other specialized offers.

Together, we will embrace our collective strengths and capabilities to expand our reach and connect with even more athletes and most importantly serve them better.

Speaker 4: Together, we'll embrace our collective strengths and capabilities to expand our reach, connect with even more athletes, and most importantly, serve them better.

Our companies have a long and successful history of working together and this demonstrates a deepening of the Dick's and Nike relationship.

Speaker 4: Our companies have a long and successful history of working together and this demonstrates a deepening of the Dix and Nike relationship.

This partnership is aimed at driving growth for both companies, while serving our customers in a personalized way.

Speaker 4: This partnership is aimed at driving growth for both companies while serving our customers in a personalized way.

It <unk> part of our strategy is to lead with mobile and we're excited to launch this partnership through our connected marketplace exclusively in our <unk> mobile app.

Speaker 4: At Dix, part of our strategy is to lead with mobile, and we're excited to launch this partnership through our connected marketplace exclusively in our Dix mobile app.

Looking ahead, we will explore additional opportunities to work with Nike and our other strategic partners across our respective physical and digital properties to further enhance convenience.

Speaker 4: Looking ahead, we'll explore additional opportunities to work with Nike and our other strategic partners across our respective physical and digital properties to further enhance convenience, experiences, and content for our athletes.

Experiences and content for our athletes.

Now I'd like to provide a few updates on our newest concept.

Speaker 4: First, we remain very pleased with our first two Dick's House of Sports stores in Rochester and Knoxville.

First we remain very pleased with our first two <unk> houses sport stores and Rochester in Knoxville.

How is the support is built around experience service community and product setting an unparalleled standard for sports retail an athlete engagement.

Speaker 4: House of Sport is built around experience, service, community, and product, setting an unparalleled standard for sports retail and athlete engagement.

Moving forward, we're excited to continue to refine and grow houses support while pulling key learnings into the rest of the Dick's chain.

Speaker 4: Moving forward, we're excited to continue to refine and grow House of Sport while pulling key learnings into the rest of the Dix chain.

We're also excited by the early results of our first two golf Galaxy performance centers located outside of Boston and Minneapolis St. Paul.

Speaker 4: We're also excited by the early results of our first two Golf Galaxy Performance Centers located outside of Boston and Minneapolis-St. Paul.

Golf Galaxy performance Center has been completely redesigned and equipped with Trackman and bottleneck Gulf technologies.

Speaker 4: Golf Galaxy Performance Center has been completely redesigned and equipped with TrackMan and Biomex golf technology.

We've also invested in talent to ensure our teammates become trusted advisors to golf enthusiast of all levels.

Speaker 4: We've also invested in talent to ensure our teammates become trusted advisors to golf enthusiasts of all levels.

In addition to innovating within our core business. We also launched public lands, our new Omnichannel specialty concepts to better serve outdoor athletes.

Speaker 4: In addition to innovating within our core business, we also launched Public Lands, a new omni-channel specialty concept to better serve outdoor apps.

Our first public land store recently opened here in Pittsburgh and our second store opened in Columbus, just a few weeks ago.

Speaker 4: Our first public land store recently opened here in Pittsburgh, and our second store opened in Columbus just a few weeks ago.

We also Lance launched public lands Dot com, a complete e-commerce experience for the outdoor enthusiasts.

Speaker 4: We also launched publiclands.com, a complete e-commerce experience for the outdoor enthusiast.

While it's still early public lands is off to a strong start and we are very enthusiastic about this growth opportunity and its goal to get more people outside exploring and protecting America's public lands.

Speaker 4: While it's still early, public lands is off to a strong start and we are very enthusiastic about this growth opportunity and its goal to get more people outside exploring and protecting America's public lands.

Before concluding I want to spend a moment on the supply chain.

Amidst a very dynamic environment. Our team has done an excellent job working with our vendor partners and with our vertical brand manufacturers to ensure a robust flow of product to meet strong demand.

Speaker 4: Amidst a very dynamic environment, our team has done an excellent job working with our vendor partners and with our vertical brand manufacturers to ensure a robust flow of product to meet strong demands.

Speaker 4: We ordered aggressively to get ahead of this disruption, and our quarter-ending inventory levels increased 7.3% compared to the end of the same period last year.

We ordered aggressively to get ahead of this disruption in our quarter ending inventory levels increased seven 3% compared to the end of the same period last year.

While there will continue to be inventory challenges across the marketplace. Our fourth quarter is off to a strong start and we feel that we are well positioned within our industry. This holiday season.

Speaker 4: Well, there will continue to be inventory challenges across the marketplace. Our fourth quarter is off to a strong start, and we feel that we are well-positioned within our industry this holiday season.

In closing we have exciting growth opportunities ahead of us and as Ed said, we are very confident in the longer term prospects of our business.

Speaker 4: In closing, we have exciting growth opportunities ahead of us, and as Ed said, we are very confident in the longer-term prospects of our business.

As we continue to execute against our strategic priorities and re imagine the athlete experience. We believe the investments we've made to transform our business will strengthen our leadership position within the marketplace.

Speaker 4: As we continue to execute against our strategic priorities and reimagine the athlete experience, we believe the investments we've made to transform our business will strengthen our leadership position within the market.

Our teammates are at the center of this transformation and I would like to thank them all for their continued hard work and dedication to our athletes.

Speaker 4: Our teammates are at the center of this transformation and I would like to thank them all for their continued hard work and dedication to us.

It is now my pleasure to turn the call over to our CFO now deep group, Jeff to review, our financial results and our outlook in more detail.

Speaker 4: It's now my pleasure to turn the call over to our CFO , Navdeep Gupta, to review our financial results and our outlook in more detail.

After joining the company in 2017 as SVP of Finance and Chief Accounting Officer, now deep was appointed to the CFO position last month.

Speaker 4: After joining the company in 2017 as SVP of Finance and Chief Accounting Officer, Naveep was appointed to the CFO position last month. Naveep's impact on our business

Now deep impact on our business has been phenomenal.

Over the last four years, he's led most of the finance functions in the organization and he's become a trusted partner to our entire executive team.

Speaker 4: Over the last four years, he's led most of the finance functions in the organization and he's become a trusted partner to our entire executive team.

He has also driven companywide productivity efforts.

Served on our long term strategic committee and he played a really critical role in securing financing at the outset of Covid.

Speaker 4: served on our long-term strategic committee, and he played a really critical role in securing financing at the outset of COVID.

Prior to <unk> not deep spent 11 years at advance auto parts in various leadership roles. Most recently, serving as senior Vice President of Finance.

Speaker 4: Prior to Dixon, Abid spent 11 years at Advanced Auto Parts in various leadership roles, most recently serving as Senior Vice President of Finance.

Speaker 4: Earlier in his career, Navdeep held a variety of management roles at Sprint Nextel, and he served as a lieutenant in the Indian Navy.

Earlier in his career not deep held a variety of management roles at sprint Nextel and he served as a lieutenant in the Indian Navy.

Now deeps keen financial acumen, and strategic vision will be instrumental to the continued growth and success of <unk>.

Naveed's keen financial acumen and strategic vision will be instrumental to the continued growth and success of DICS. And with that, Naveed, it is my pleasure to hand it over to you.

And with that now it is my pleasure to hand, it over to you.

Thank you Ron for that very kind introduction.

Good morning everyone. It's great to be here on today's call and I'm looking forward to continuing to work with each of you.

Good morning, everyone. It's great to be here on today's call and I'm looking forward to continuing to work with each of you.

With three quarters of the year now behind us our consistent strong results have demonstrated our ability to serve our athletes in a very differentiated way, while driving towards another record sales and earnings here in 2021.

With three quarters of the year now behind us, our consistent, strong results have demonstrated our ability to serve our athletes in a very differentiated way, while driving towards another record sales and earnings year in 2021. Let's begin with a brief review.

Let's begin with a brief review of our third quarter results.

Like Laurent said, we are excited to report a consolidated sales increase of 13, 9% to approximately $2 75 billion.

Like Lauren said, we are excited to report a consolidated sales increase of 13.9% to approximately $2.75 billion.

Holiday that same store sales increased 12, 2% on top of a 23, 2% increase in the same period last year and a 6% increase in Q3 of 2019.

Consolidated same store sales increased 12.2% on top of a 23.2% increase in the same period last year and a 6% increase in Q3 of 2019.

Our strong comps were driven by growth across each of our three primary categories of hard lines apparel.

Our strong comps were driven by growth across each of our three primary categories of hard lines, apparel, and footwear, as well as an 8.5% increase in transaction and a 3.7% increase in average technology.

Footwear.

As well as an eight 5% increase in transaction and a three 7% increase in average ticket.

When compared to 2019 consolidated sales increased 40%.

When compared to 2019, consolidated sales increased 40%.

Our brick and mortar stores comped up approximately 15% versus 2020 and delivered a 31% sales increase when compared to 2019 with roughly the same square footage.

Our brick-and-mortar stores comped up approximately 15% versus 2020 and delivered a 31% sales increase when compared to 2019 with roughly the same square footage.

Our e-commerce sales increased 1% versus last year on top of a 95% online sales increase in the third quarter of 2020.

Our e-commerce sales increased 1% versus last year on top of a 95% online sales increase in the third quarter of 2020.

Compared to Q3 of 2019, our e-commerce sales increased 97%.

Compared to Q3 of 2019, our e-commerce sales increased 97%.

As a percent of total net sales our online business has grown from 13% in 2019% to 19% in the current quarter.

As a percent of total net sales, our online business has grown from 13% in 2019 to 19% in the current quarter. E-commerce penetration was 21% last year.

Ecommerce penetration was 21% last year.

Okay.

Moving to gross profit.

Moving to gross profit, gross profit in the third quarter was $1.06 billion or 38.45% of net sales and improved 354 basis points compared to last year.

Gross profit in the third quarter was 1.06 billion or 30, 845% of net sales and improved 354 basis points compared to last year.

This improvement was driven by merchandise margin rate expansion of 301 basis points and leverage on fixed occupancy cost of 111 basis points from sales increase.

This improvement was driven by merchandise margin rate expansion of 301 basis points and leverage on fixed occupancy cost of 111 basis points from sales income.

The increase in merchandise margin was primarily driven by fewer promotions due to our increasingly differentiated assortment and disciplined promotional strategy at certain categories and the marketplace continue to be supply constrained.

The increase in merchandise margin was primarily driven by fewer promotions due to our increasingly differentiated assortment and disciplined promotional strategy as certain categories in the marketplace continue to be supply constrained. We also saw

We also saw a favorable sales mix.

In addition, we were able to pass through selective price increases to help cover merchandise cost increases from higher supply chain and input costs.

In addition, we were able to pass through selective price increases to help cover merchandise cost increases from higher supply chain and input costs.

As expected these improvements were partially offset by higher freight costs, resulting from global supply chain disruptions and our prioritization of inventory availability over costs.

As expected, these improvements were partially offset by higher freight costs resulting from global supply chain disruptions and our prioritization of inventory availability over cost.

Compared to 2019 gross profit as a percent of net sales improved 886 basis points driven by merchandise margin rate expansion of 578 basis points due to fewer promotions as well as leverage on fixed occupancy cost of 370 basis points, which again was partially.

Compared to 2019, gross profit as a percent of net sales improved 886 basis points driven by merchandise margin rate expansion of 578 basis points due to fewer promotions, as well as leverage on fixed occupancy cost of 370 basis points, which again was possibly offset by higher freight.

Offset by higher freight costs.

SG&A expenses was $631 9 million or 23% of net sales.

SG&A expenses were $631.9 million, or 23% of net sales. However, it leveraged 151 basis points compared to last year, due primarily to the increase in sales.

Robert leveraged 151 basis points compared to last year due primarily to the increase in sales.

SG&A dollars increased $48 million due primarily to current year cost increases to support the growth in sales.

SG&A dollars increased $40.8 million due primarily to current year cost increases to support the growth in sales.

In the prior year quarter SG&A included $43 million of Covid related costs. However, in the current year, we transitioned our hourly teammates to compensation programs with a longer term focus, including increasing and accelerating annual merit increases and higher rate minimums, partially.

In the prior year quarter, SG&A included $43 million of COVID-related costs. However, in the current year, we transitioned our hourly teammates to compensation programs with a longer-term focus, including increasing and accelerating annual merit increases and higher wage minimums, partially offsetting last year's COVID-related costs.

Offsetting last year's corporate related costs.

Compared to 2019 and on a non-GAAP basis SG&A expenses as a percentage of net sales leverage 325 basis points due primarily to the increase in sales.

Compared to 2019, and on a non-GAAP basis, SG&A expenses as a percentage of net sales leverage 325 basis points due primarily to the increase in sales.

SG&A dollars increased $116.8 million due to increase in store payroll and operating expenses to support the increase in sales as well as hourly wage rate investment.

<unk> dollars increased $116 8 million due to increase in store payroll and operating expenses to support the increase in sales as well as hourly wage rate investments.

Driven by our strong sales and gross margin great expansion non-GAAP EBT was $415 6 million or 15, 1%, 2% of net sales and increased $171 8 million or 501 basis points from the same period last year.

Yeah.

Compared to 2019, non-GAAP EBT increased 355.6 million, or approximately 1,200 basis points as a percentage of net sales.

Compared to 2019, non-GAAP EBT increased $355 6 million or approximately 200 basis points as a percentage of net sales.

In total we delivered a non-GAAP earnings per diluted share of $3 19.

In total, we delivered a non-GAAP earnings per diluted share of $3.19.

This compares to a non-GAAP earnings per diluted share of $2 <unk> last year, a 59% year over year increase in our non-GAAP earnings per diluted share of <unk> 52.

This compares to a non-GAAP earnings per diluted share of $2.01 last year, a 59% year-over-year increase, and a non-GAAP earnings per diluted share of $0.52 in 2019, a 513% increase.

In 2019 of 513% increase.

On a GAAP basis, but earnings per diluted share were $2 78.

On a gap basis, our earnings per diluted share were $2.78.

This included $7 7 million and noncash interest expense as well as $12 8 million additional shares that we have designed to be offset by our bond hedge at settlement, but are required in the GAAP diluted share calculation.

This included $7.7 million in non-cash interest expense as well as $12.8 million additional shares that we have designed to be offset by our bond hedge at settlement, but are required in the GAAP diluted share calculation.

Are these are related to our convertible notes we issued in Q1 of 2020.

Both of these are related to our convertible notes we issued in Q1 of 2020.

For additional details on this you can refer to the non-GAAP reconciliation tables of our press release that we issued this morning.

For additional details on this, you can refer to the non-GAAP reconciliation tables of our press release that we issued this morning.

Now looking to our balance sheet, we are in a strong financial position ending Q3 with approximately $1 37 billion of cash and cash equivalents and no borrowings on our $1 $8 5 billion revolving credit facility.

Now, looking to our balance sheet, we are in a strong financial position, ending Q3 with approximately $1.37 billion of cash and cash equivalents and no borrowings on our $1.855 billion revolving credit.

Our quarter end inventory levels increased seven 3% compared to end of Q3 last year.

our quarter end inventory levels increased 7.3% compared to end of Q3 last year.

Looking ahead, we continue to aggressively chase product to meet demand and prioritize inventory availability over cost.

Looking ahead, we continue to aggressively chase product to meet demand and prioritize inventory availability over cost. As part of this, we expect elevated freight expenses to continue at least in the fourth quarter and have included the impact of this within our output.

As part of this we expect elevated freight expenses to continue at least in the fourth quarter and have included the impact of this within our outlook.

To reiterate.

To reiterate Lauren's comment, while there will continue to be supply chain challenges across the marketplace, we feel that we are very well positioned within our industry this holiday season.

Great Lauren's comment while there will continue to be supply chain challenges across the marketplace. We feel that we are very well positioned within our industry. This holiday season.

Turning to our third quarter capital allocation.

Turning to our third quarter capital allocation, during the quarter, net capital expenditure were $54.1 million. We paid $503 million in dividends, which included a special dividend of $5.50 per share that we announced last quarter.

During the quarter net capital expenditures were $54 1 million, we paid $503 million in dividends, which included a special dividend of $5.50 per share that we announced last quarter we.

We also repurchased 217 million shares of our stock for approximately $273 million at an average price of $125 80.

We also repurchased 2.17 million shares of our stock for approximately $273 million at an average price of $125.88.

We have approximately $605 million remaining under our share repurchase program.

We have approximately 605 million remaining under our share repurchase program.

Year-to-date, we have returned nearly $1 billion to shareholders through dividends and share repurchase.

Year to date, we have returned nearly $1 billion to shareholders through dividends and share repurchases.

Looking ahead, we will continue to invest in the profitable growth of our business, while maintaining an appropriate level of cash on the balance sheet.

Looking ahead, we will continue to invest in the profitable growth of our business while maintaining an appropriate level of cash on the balance.

Returning capital to shareholders will also continue to be an important component of our capital allocation strategy.

Returning capital to shareholders will also continue to be an important component of our capital allocation strategy.

Now, let me move on to our fiscal 2021 outlook for sales and earnings.

Now let me move on to our Fiscal 2021 Outlook for Sales and Earnings.

While still early, Q4 is off to a strong start.

While still early Q4 is off to a strong start.

Taking this into account along with our significant Q3 results and expectation of a continued strong consumer demand and our confidence in our ability to navigate the global supply chain challenges. We are raising our consolidated same store sales guidance and now expect our full year comp sales to increase by.

Taking this into account, along with our significant Q3 results, an expectation of a continued strong consumer demand and our confidence in our ability to navigate the global supply chain challenges, we are raising our consolidated same-store sales guidance and now expect the full-year sales to increase by 24% to 25% compared to our prior expectation of up 18% to 20%.

24% to 25% compared to our prior expectation of up 18% to 20%.

This is on top of nine 9% increase in consolidated same store sales last year and a three 7% increase in 2019.

This is on top of 9.9% increase in consolidated same-store sales last year and a 3.7% increase in 2019.

At the midpoint, our updated comp sales guidance represents a 39% sales increase versus 2019 compared to our prior expectation of up 33%.

At the midpoint, our updated comp sales guidance represents a 39% sales increase versus 2019 compared to a prior expectation of up 33%.

On a non-GAAP EBT basis, we expect the full year results to be in the range of $1 89 billion to $1 92 billion compared to our prior outlook of $1 six one to $1 67 billion, which at midpoint and on a non-GAAP basis is up $300.

On a non-GAAP EBT basis, we expect the full year results to be in the range of 1.89 billion to 1.92 billion compared to a prior outlook of 1.61 to 1.67 billion, which at midpoint and on a non-GAAP basis is up 333% versus 2019 and up 160% versus 2020.

33%.

Versus 2019 and up 160% versus 2020.

At the midpoint, non-gap EBT margin is expected to be approximately 15.7%.

At the midpoint non-GAAP EBT margin is expected to be approximately 15, 7%.

Within this gross margin is expected to increase versus both 2019, and 2020 driven by leverage on fixed expenses and higher merchandise margins.

Within this, gross margin is expected to increase versus both 2019 and 2020, driven by leverage on fixed expenses and higher merchandise margin.

This assumes higher freight costs and fewer promotions compared to both 2019 and 2020 for the fourth quarter.

This assumes higher freight costs and fewer promotions compared to both 2019 and 2020 for the fourth quarter.

As G&A expenses is expected to leverage versus both 2019 and 2020 due to the significant projected increase in full year sales.

as G&A expenses is expected to leverage versus both 2019 and 2020 due to the significant projected increase in folio sales.

In total, we are raising our full year non-GAAP earnings for diluted share outlook to a range of $14.60 to $14.80 compared to a prior outlook of $12.45 to $12.95.

In total we are raising our full year non-GAAP earnings per diluted share outlook to a range of $14 60.

<unk> to $14 80.

Compared to our prior outlook of $12 45 to $12 95.

At the midpoint and on a non-GAAP basis, our updated EPS guidance is up 298% versus 2019 and up 140% versus 2020.

At the midpoint and on a non-GAAP basis, our updated EPS guidance is up 298% versus 2019 and up 140% versus 2020.

Updated earnings guidance is based on 99 million average diluted shares outstanding and an effective tax rate of approximately 23, 5%.

Our updated earning guidance is based on 99 million average diluted shares outstanding and an effective tax rate of approximately 23.5%.

In closing the work that we have done over the past several years to re architect our strategy operations and financial sets us up well to deliver improved value to our shareholders over the long term.

In closing, the work that we have done over the past several years to re-architect our strategy, operations, and financial sets us up well to deliver improved value to our shareholders over the long term.

This concludes our prepared remarks. Thank you once again for your interest in Dick's Sporting goods.

This concludes our prepared remarks. Thank you once again for your interest in exporting goods. Operator, you may now open the line for questions.

Operator, you May now open the line for questions.

Thank you. We will now begin the question and answer session.

Thank you we will now begin the question and answer session.

To ask a question, you may press star then 1 on your touch-tone phone. If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys. To withdraw your question, please press star then 1.

To ask a question you May press star one on your Touchtone phone.

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First up your handset before pressing with Hughes.

To withdraw your question. Please press Star then two.

Today's first question comes from Simeon Guttman with Morgan Stanley . Please go ahead.

Today's first question comes from Simeon Gutman with Morgan Stanley. Please go ahead.

Hi.

Hi. Good morning, everyone. My first question on gross margin. Visibility around maintaining some of these, I don't know, COVID-related gains, is it improving? Do you have a sense of that? And are there any examples of categories where promotions may have come back and you're managing that margin at just a structurally higher level? Thanks.

Everyone. My first question on gross margin visibility around maintaining some of these I don't know COVID-19 related gains is it improving do you have a sense of that and are there any examples of categories, where promotions may have come back and you're managing that margin.

Structurally higher level. Thanks.

Hi, Simeon we have we feel very strong.

Hi, Simeon. We have, we feel very strongly about our gross margin improvements because they are not just coming from various COVID related activity. It's more a result of a very differentiated merchandise assortment that we've put in place over the past several years. So we have been less promotional, but really the thing that's driving our merchandise margin increases is our product assortment and the fact that these

Our gross margin improvements because they are not just coming from Barry.

<unk> related activity, it's more a result of a very differentiated merchandise assortment that we've put in place over the past several years.

So we have been less promotional but really the thing thats driving our merchandize margin increases is our product assortment and the fact that these more desirable products don't go on sale. So much and so we do feel long term confidence in our margin.

more desirable products don't go on sale so much and so we do feel long-term confidence in our margin.

Yes, I'll just add.

On the promotions that are coming but we have yet to see a change in the promotional landscape, especially as we look to Q3, we didn't see a significant change it's still early in Q4, and we were playing close attention to the landscape overall for the holiday season here.

on the promotions that are coming. We are yet to see a change in the promotional landscape, especially as we look to Q3. We didn't see a significant change. It's still early in Q4, and we are paying close attention to the landscape overall for the holiday season here.

Thanks, and have deepened and maybe I'll ask you the follow up since you have such an easy comparison for you first you are the CFO initial planning for 'twenty two.

Thanks Navdeep and maybe I'll ask you the follow-up since you have such an easy comparison for your first year as a CFO . Initial planning for 22.

On the top line.

On the top line, I know you won't give us a framework, but is it a year of digestion reversion or do you think the business keeps compounding and grows?

Yes, so I mean, thanks for the comment.

Yeah, Simeon, thanks for the comment. I think it's a little bit too early for us to guide as yet for 22, as you can expect, we are in the process of creating our internal expectations and budgets for 22. So we will share more in due course. However, I think so the comment that I will definitely say is we feel really strongly about the gains that we have seen all throughout this year, especially in some of the key categories like.

I think so it's a little bit too early for us to guide as yet for 'twenty. Two as you can expect we are in the process of creating our internal expectations and budgets for 2002. So we will share more in due course, however, I think the comment that I will definitely say is we feel really strongly about the gains that we've seen all throughout this year, especially in some of the key.

<unk> like <unk>.

Apparel footwear team sports and golf. So those are the core categories for us and we have we have definitely gained share this year consistently and that gives us a lot of confidence as we look to 'twenty two.

peril, footwear, team sports and golf. So those are the core categories for us and we have definitely gained share this year consistently and that gives us a lot of confidence as we look to 22.

Okay. Thanks, everyone happy holidays.

Hey, Thanks Aman.

And our next question today comes from Warren Cheng with Evercore ISI. Please go ahead.

And our next question today comes from Warren Chang with Evercore ISI. Please go ahead.

Hey, good morning, Thanks for taking my question.

I'm just wondering if you can help us think through the normalization, kind of follow-up to Susan's question, just the normalization of even margin.

I was just wondering if you can help us think through the normalization kind of a follow up to <unk> question, just the normalization of EBIT margins.

from what looks to be over 1,000 basis points versus pre-pandemic levels this year. So you talked a little bit about differentiated and merchandise assortment. What are the other areas that you feel most confident are structural and sustainable? And where can we see some normalization in 2022?

What looks to be over 1000 basis points versus pre pandemic levels. This year can you talk a little bit about the differentiated merchandise assortment what are the other areas that you feel most confident are structural and sustainable and where can we see some normalization in 2022.

Good morning, Juan this is an update so let me take that the other areas, where we feel really strong is actually is around the margin management, we have talked about the digital capabilities as well as in.

Good morning Warren, this is Navdeep. So let me take that. The other areas where we feel really strong is actually is around the margin management. We have talked about the digital capabilities as well as the analytics capability that we have built over the last couple of years.

The analytics capability that we have built over the last couple of years.

And the benefits of that are around pricing optimization, promotion optimization, as well as clearance margin management. And those are significantly something that we feel will elevate our.

And the benefits of that are around pricing optimization promotion optimization as well as clearance margin management and those are significantly something that we feel will elevate our profitability when compared to 2019 and the other aspect that I want to draw the attention to is the profitability of our E Commerce business.

profitability when compared to 2019. And the other aspect that I want to draw the attention to is the profitability of e-commerce business.

With the curbside capability that was launched during COVID-19 and the strong adoption that we've seen from the athlete. We are very confident that the overall profitability of the E Com business, which is in line with the overall company's EBT right now it will be a significant permanent uptick in our profitability as we look to the future.

With the curbside capability that was launched during COVID and the strong adoption that we have seen from the athletes, we are very confident that the overall profitability of the e-com business, which is in line with the overall company's EBT right now, will be a significant permanent uptick in our profitability as we look to the future.

Thanks, Nancy and I just had a follow up just on the partnership with Nike I was curious if there is an element of data sharing that is going to go into that relationship either on the customer data side or on the shallow oxide and are there also are there any implications for inventory integration as part of that partnership.

Thanks, Nadip. And I just had a follow-up just on the partnership with Nike. I was curious if there's an element of data sharing that's going to go into that relationship, either on the customer data side or on the sell-off side. And also, are there any implications for inventory integration as part of that partnership?

Hi, Juan Yes. So we are really excited about the new partnership with Nike. We just for everyone's benefit. This is a transformational moment in our partnership where we're taking a decades long partnership and really innovating in the way that we serve our athletes together scorecard users in our apps can now connect their scorecard key.

Hi, Warren. Yeah, so we are really excited about the new partnership with Nike, which is for everyone's benefit. This is a transformational moment in our partnership where we're taking a decades-long partnership and really innovating in the way that we serve our athletes together.

Scorecard users in our app can now connect their scorecard to their Nike membership, and that unlocks a tremendous amount of product, experiences, different content, so there's a real, it opens up a tremendous amount of access to our athletes.

Our Nike membership and that unlocks a tremendous amount of product experiences different content. So there is a real it opens up a tremendous amount of access to our athletes. There is some data sharing the Nike database analytics database have a significant amount of overlap.

There is some data sharing, the Nike database and the Dix database have a significant amount of overlap. Nike is going to get specific Nike-only information, and with that data, we plan to work together to truly create a much more personalized and enriching experience for our combined athletes.

Nike is going to get specific Nike only.

Information and with that data, we plan to work together to truly create a much more <unk>.

Slides and enriching experience for our combined athletes I just want to point out also I'm very excited that the <unk>.

I just want to point out also, I'm very excited that the only way to access this membership is through the DICS app, and that inherently is driving people to download and use the DICS app, which is a key part of our strategy.

On the way to access this membership is through the <unk> app and that inherently is driving people to download a new <unk> app, which is a key part of our strategy.

Okay.

Welcome to deep and good luck over the holiday.

Thanks Lauren.

Thank you and our next question comes from Robbie <unk> with Bank of America. Please go ahead.

Thank you. And our next question today comes from Robbie Holmes with Bank of America.

Hey, good morning, everybody.

Hey, good morning everybody. You know, two questions for me, you know, first is, you know, maybe Lauren, could you, maybe to help us understand the supply chain environment, can you talk about the differences between what you've seen in the supply chain in your private label business versus, you know, with your brand partners?

Two questions from me first is maybe Lauren could you maybe help us understand the supply chain environment can you talk about the differences between what you've seen in supply chain and your private label business versus with your brand partners.

And then my other question is I think.

And then my other question is, I think I forgot to mention the favorable sales mix benefit for the quarter. What was favorable to the gross margin from a sales mix perspective? And also price increases were mentioned. Can you talk a little bit about where you're taking price increases and how much inflation might have helped the same store sales this quarter? Thanks.

Scott, who mentioned the favorable sales mix benefit.

For the quarter, what what was favorable.

To the gross margin from a sales mix perspective, and also price increases. We mentioned can you talk a little bit about where you are taking price increases and where we are how much inflation might have helped the same store sales this quarter.

Thanks, Robby I'll start off Im sure not people weigh in but on the supply chain. We have developed a really amazing muscle across our supply chain organization. Both in terms of how we work with our brand partners to really expedite getting product in and with our manufacturing of our of our vertical brands. So.

I'll start off. I'm sure not people will weigh in. But on the supply chain, we have developed a really amazing muscle across our supply chain organization, both in terms of how we work with our brand partners to really expedite getting product in, and with our manufacturing of our vertical brands. So we have become, honestly, very creative in terms of how we bring product in, and we are prioritizing product.

We have become honestly very creative in terms of how we bring product in and we are doing we are prioritizing product.

over costs and we've got that all baked into our guidance but we want to make sure we keep that that flow of product coming and that's why we're up 7.3 percent in inventory going into this quarter.

Over our costs and we've got that all baked into our guidance, but we want to make sure. We keep that that flow of product coming and Thats why were up seven 3% in inventory going into this quarter.

In terms of where we're taking price increases, I wanted to mention a couple of things. We are gaining share, and also our sales mix, we're gaining share across the board in all of our key categories of footwear, apparel, team sports.

Well, we're taking price increases I wanted you mentioned a couple of things we are gaining share and also our sales mix, we're gaining share across the board in all of our key categories of footwear apparel team sports and golf and footwear in particular is really really strong and we're very excited about that when you look.

and golf and footwear in particular is really really strong and we're very excited about that. When we look at our comp numbers for this quarter at 12.2 percent

Our comp numbers for this quarter at 12, 2% eight 5% of that increase was due to an increase in transaction. So two thirds of our comp was coming from additional transactions either in our stores or on our E. Commerce site. So inflation was very a very minimal part of the story the remaining three seven.

8.5% of that increase was due to an increase in transactions, so two-thirds of our comp was coming from additional transactions either in our stores or on our e-commerce site.

So inflation was a very minimal part of the story. The remaining 3.7% of our comp came from some reduction in promotions. And we did pass along some select.

Percent of our comp came from some reduction in promotions and we did pass along some select cost increases in our hard lines categories, but overall.

cost increases in our hard lines categories, but overall, inflation was not the big driver of our pumps this quarter.

Is it inflation was not was not the big driver of our comps this quarter.

Yeah, Rob let me take the favorable sales mix and price increases. So like we said that the merchandise margin rate expanded 301 basis points. How are the bigger drivers of this merchandise margin rate expansion was actually fewer promotions and the differentiated assortment. There was a slight favorable mix as well as you can imagine like loans.

Yeah, Robby, let me take the favorable sales mix and price increases. So like we said, that the merchandise margin rate expanded 301 basis points. However, the bigger drivers of this merchandise margin rate expansion was actually fewer promotions and the differentiated assortment. There was a slight favorable mix as well, as you can imagine, like Lawrence shared, right? We saw great growth in our.

Sure Greg we saw great growth in our key categories like footwear and apparel that tend to have a higher margin and that was the favorable mix, but the bigger story was much more about the full price selling from differentiated assortment and lower promotions.

key categories like footwear and apparel that tend to have a higher margin and that was the favorable mix. But the bigger story was much more about the full price selling from differentiated assortment and lower promotion.

In terms of the price increases, the only price increases that we have seen and it's been not material is in the hard lines category and that's where we are selectively pricing, passing some of the pricing increases to our athletes. But again, really, really small factor in the overall story for Q3. That's very helpful.

In terms of the price increases the only price increase that we have seen and it's been not material is in the hard lines category and that's where we are selectively pricing are passing some of the caution of price increases to our athletes, but again really really small factor in the overall story for Q3.

That's very helpful. Thank you very much.

Thanks Ravi.

And ladies and gentlemen, our next question comes from Adrian Yee with Barclays.

Our next question comes from Adrian.

With Barclays. Please go ahead.

Good morning, Congrats on another really standout quarter.

Good morning. Congrats on another really standout quarter. Lauren, I guess my kind of high-level question is, you're in a very rare position to have set the margin well above inflation.

Lauren.

I guess, Mike kind of high level question as you are in a very rare condition.

<unk> is well above inflation to be able to invest in it.

to be able to invest in IT, CapEx projects, marketing. Can you talk about where you're putting those dollars to stay ahead of the competition? And then, Naveed, welcome. Good to talk to you again. Can you talk about the AHR, the average hourly rate minimum that you kind of just invested in? Where are you now? And maybe some stats on turnover, employee happiness, et cetera, and how that's also advantaging you. Thank you.

Capex projects marketing can you talk about where you're putting those dollars to stay ahead of the competition and then deep welcome good to talk to you again.

Can you talk about.

The HR the average hourly rate and determine that you've kind of just invested in where are you now and maybe some stats on turnover employee happiness et cetera.

And how that's also advantage and yet thank you.

Adrian.

Agent, good to talk to you. We have been investing in our business.

Talk to you.

Been investing in our business for the long term for many many years now and that's part of this overall transformation that we've been on since 2017, we have invested in our store footprints. We've made our stores more experiential we've elevated the footwear decks in the Gulf areas on a huge baseball attack team.

for the long term for many, many years now. And that's part of this overall transformation that we've been on since 2017. We've invested in our store footprints. We've made our stores more experiential. We've elevated the footwear decks and the golf areas and a huge baseball attack team. We're investing in technology so that when the pandemic happened, we were able to spin up curbside and we're able to leverage our entire Omnichannel ecosystem.

We're investing in technology, so that when the pandemic happened, we were able to spin up curbside, and where we're able to leverage our entire omnichannel ecosystem.

So we continue to invest in all aspects of our entire omni-channel system. I'll let Navdeep speak to the hourly minimums, however, I do want to say that we have become

So we continue to invest in all aspects of our entire Omnichannel system.

I'll, let <unk> speak to the hourly minimums. However, I do want to say that we have become what I would say as an employer of choice and our retention is lower and we're really well staffed going into the holiday. So we feel really good about the way we are engaging with our teammates and how we're going to be such.

What I would say is an employer of choice and our retention is is lower and we're really well staffed going into the holiday. So we feel really good about the way we are engaging with our teammates and and how we're going to be staffed going forward.

Going forward.

They didn't do it.

They're going to hit upon the average wage rate minimum. So I would say two things. One, as you recall, we gave what we call as hero pay last year. And when we transitioned away from the hero pay at the beginning of this year, we gave accelerating as well as an increasing merit increases to our hourly team mates.

Hit upon the average wage rate minimums, so I would say two things one as you recall when we gave on what we call as hero pay last year and when we transitioned away from the hero pay at the beginning of this year, we gave accelerating as well as an increasing.

Merit increases to our hourly teammates we did another similar change here in middle of this year.

We did another similar change here in the middle of this year and our intent here is to continue to provide a very competitive wage within the market that we operate and find the right talent.

And our intent here is to continue to provide a very competitive wage, but then the market that we operate and find the right talent that we need to be able to provide a differentiated experience to our athletes as they walk into the store. So we don't look at it necessarily to say what is the starting minimum wage rates, we pay more attention to finding the right talent.

that we need to be able to provide a differentiated experience to our athletes as they walk into the store. So we don't look at it necessarily to say what is the starting minimum wage rates. We pay more attention to finding the right talent and making sure we can provide a differentiated experience to our athletes as they come into the store.

And making sure we can provide a differentiated experience to our athletes as they come into the store Adriana.

Adrienne, I want to correct one thing. I think I ended up saying that retention is higher. What I meant is we're retaining more people. So we are keeping more employees in our...

Hey, gene I wanted to correct. One thing I think I think I ended up saying that retention is higher what I meant is we're retaining more people are so we are we are keeping more.

Employees in our ecosystem.

Great.

Fantastic. Great stuff, and best of luck for holiday, and happy Thanksgiving.

Best of luck for holiday. Thank you.

Great.

And our next question today comes from John Kernan Cowen. Please go ahead.

And our next question today comes from John Kernan with Cowen. Please go ahead.

That's correct good morning, and thanks for taking my question.

Excellent. Good morning and thanks for taking my question. Now, it's great to get started with you on these calls. Maybe if you could quantify.

Not be great too.

It started with you on this call maybe.

If you could quantify the impact.

from supply chain, just from a sales or cost perspective, any thoughts on the freight impact?

From supply chain to product from a sales or cost perspective, any any thoughts on the freight impact.

From a margin perspective in the back half of this year and as we go into next year, what's your assumption in terms of when freight cost start to normalize.

from a margin perspective in the back half of this year and as we go into next year, what's your assumption in terms of when freight costs start to normalize?

Yes, John I think first of all thanks for the comment on the call out.

Yeah, John , first of all, thanks for the comment and the call out. In terms of the supply chain impact, we called it out that in Q3, it was an unfavorable impact, not significant, but it was included in the results that we set for Q3. I think it's going to be a little bit more pronounced as we look to Q4, as we are continuing to prioritize the availability over the supply chain expenses. And that increase has been, again, contemplated in our guidance.

In terms of.

In terms of the supply chain impact we called it out that in Q3. It was an unfavorable impact on not significant but it was included in the results that we said for Q3, I think it's going to be a little bit more pronounced as we look to Q4.

We are continuing to prioritize the availability over the supply chain expenses and that increase has been again contemplated in our guidance and to look beyond I think that the overall situation remains really fluid and we will continue to monitor really closely to make sure we're doing the prudent decisions, but when the supply chain expense.

And to look beyond, I think the overall situation remains really fluid and we'll continue to monitor really closely to make sure we are doing the prudent decisions between the supply chain expenses and the price increases. However, we feel that this disruptive kind of the place will remain here at least into the first half of 2022, but we'll continue to pay close attention to it.

And the price increases however, we feel that these this disruptive kind of the place will remain here at least into the first half of 2022, but we will continue to play close attention to it.

Understood and just my follow up it goes in a different direction just on capital allocation.

Understood. This is my follow-up. It goes in a different direction. Just on capital allocation. Pre-COVID, <expletive> ,

Pre COVID-19.

With.

was an organization that ran with pretty lean levels of cash on the balance sheet and was opportunistic in terms of returning cash to shareholders through dividends and buybacks and also reinvesting in the business.

An organization that route with pretty good levels of cash on the balance sheet with opportunistic in terms of.

Returning cash to shareholders through dividends and buybacks.

Also reinvesting in the business.

But the end of this year.

It looks like you could have $1 $8 billion in cash $1 4 billion or so of net cash how should we think about.

It looks like you could have $1.8 billion in cash, $1.4 billion or so in net cash. How should we think about?

share buyback capital allocation and then dividend as we go into next year. Thank you.

Share buyback and capital allocation and the dividend as we go into next year. Thank you.

Well John first of all I'll say that we are very.

Yeah, John , first of all, I would say that we are very, very happy with the fact that we were able to return nearly $1 billion of excess cash to the shareholders this year between the special dividend, the normal dividend, as well as the shared buyback. And as you called out, I think that one of the things that we have learned through pandemic is to make sure that we have more than sufficient level of cash on the balance sheet.

Very happy with the fact that we were able to return nearly $1 billion.

Of excess cash to the shareholders win.

And then the special dividend the normal dividend as well as the share buyback.

You called out I think one of the things that we've learned through pandemic is to make sure that we have more than sufficient level of cash on the balance sheet. So we'd like to like I said in my prepared comments, we will keep appropriate level of cash on the balance sheet as we continue to look in the immediate future.

like I said in my prepared comments, we will keep appropriate level of cash on the balance sheet as we continue to look to the immediate future.

In terms of returning the excess cash to the shareholders, we'll continue to do what we have done always, that we will look to continue to grow our dividends and continue to opportunistically buy.

In terms of returning the excess cash to the shareholders. We will continue to do what we have done always that we will look to continue to grow our dividends and continue to opportunistically buy shares.

I feel like when you look at the kind of the elevated levels of cash that you may be seen on the balance sheet.

Feel like the our working capital is continuing to be an area, where we need to invest and because the demand from the continuous to remain strong and we are flowing the product that is that as from the supply chain perspective. However, the in stock potentially has some opportunities actually are working here. So the areas of investment for us would be.

Continuing to work on working capital and like Lauren called out continuing to build some of the new differentiating capabilities that we have been investing.

That's great. Thank you Beth will walk through the holidays.

That's great. Thank you. Best of luck in the holidays.

Thank you, and then our next question today comes from Michael Baker at D a Davidson. Please goahead.

Thank you.

Question for today comes from Michael Baker.

Please go ahead.

Hi, thanks guys. Just a couple. First, not to be so short-term focused, but can you tell us, is your fourth quarter outlook, how does that compare to how you thought about the fourth quarter when you gave the back half outlook or the applied back half outlook three months ago? Are you more confident, less confident, equally confident in what you're seeing in front of the holidays?

Hi, Thanks, guys just a couple first.

Dr. <unk>, so short term focus but can you just tell us.

Fourth quarter outlook.

Does that compare to how you thought about the fourth quarter. When you gave the back half outlook or the implied back half outlook. Three months ago are you more confident less confident equally confident in what youre seeing.

Part of the holidays.

Hi, Michael Yes, we are we are much more confident and in fact, that's why we've taken up our full year guidance to that comp of up 24% to 25%.

Hi, Michael. Yeah, we are we are much more confident. And in fact, that's why we've we've taken up our full year guidance to that comp of up 24 to 25%. We feel as we've gotten closer, and we were always concerned about supply chain. And now that we can see how the quarter is going to shape up from an inventory standpoint, we feel really good about the quarter and have taken the guidance.

We feel as we've gotten closer and we were always concerned.

About supply chain and now that we can see how the quarter is going to shape up from an inventory standpoint, we feel really good about the quarter and have taken the guidance up.

Okay great.

Okay, great, that's helpful.

That's helpful.

One more this is more of a bigger picture one since I just have a short term question can.

One more, this is more of a bigger picture one, since I just asked a short-term question. Can you talk about or quantify or conceptualize in any way the percent of product today that you would consider to be differentiated either because it's a vertical brand or it's one of those exclusive products that you're getting from your vendors compared to where it was, I don't know, pick a year, last year, 2017 when you started this transformation, just some way to sort of conceptualize that would be great, if possible.

Can you talk about or quantify or conceptualize in any way the percent of product today that you would consider to be differentiated either because its a vertical brand or or are those exclusive products that you're getting from your vendors.

Compared to where it was I don't know pick a year last year 2017. When we started this transformation just some way to sort of conceptualize that would be great. If possible, yes, it's a great question.

Yeah, it's a great question. We are significantly more distinctive in our product assortment than we were a few years ago, and versus 2017, meaningfully more so, if you think about.

We are significantly more distinctive in our product assortment and we were a few years ago and versus 2017 meaningfully more. So if you think about the fact that before we even had footwear decks. We just did not get an allocated or high heat access to product at all.

The fact that before we even had footwear decks, we just did not get an allocated or high heat access to product at all. And our vertical brands continue to grow and gain share. So we're not gonna provide the number, but it is a meaningful increase such that we feel like it's a key driver of our margin rate expansion and go forward.

Our vertical brands continue to grow and gain share. So we're not going to provide the number but it is a meaningful increase such that we feel like it's a key driver of our margin rate expansion go forward.

Fair enough. One more quick one, if I could, just in color on team sports versus, you know, some of the categories that were really strong over COVID, like maybe kayaks or bicycles. I imagine team sports are much better than they were a year ago. Are some of those other areas, you know, holding up, even as we're moving further away from the pop at the beginning of the pandemic? So if you could sort of talk about that.

Fair enough one more quick one if I could just any color on team sports versus.

Some of the categories that were really strong over COVID-19 about maybe kayaks by schools.

Yes.

Q4 is a much better than we were a year ago or some of those other areas.

Pulling up even as we're moving further away from that.

The pop at the beginning of the pandemic.

If you could sort of talk about yeah, great. Thanks, Yeah. It's a really great question I think it's a really important question. When you look at the increases that we had from what you would maybe say COVID-19 categories surging categories, you mentioned tie up and bite, but you could say fitness as well.

Yeah, it's a really great question. I think it's a really important question. When you look at the increases that we had from what you would maybe say COVID categories, surging categories, you mentioned kayaks and bikes, but you could say fitness as well. Those, every single category has meaningfully re-baselined versus what the pre-pandemic levels were. That's true of golf as well. Team sports in particular have come back

Every single category has meaningfully re baselines versus what the pre pandemic levels, where that's true of Gulf as well team sports in particular have come back.

Constantly thing Thats longest fresh simple come back really really strong.

guns blazing, that's the wrong expression, but come back really, really strong as that people are really valuing their time outdoors and we're seeing team sports across every single business really, really pick up. At the same time, those other categories are holding their own and are significantly higher than they were two years ago. So that's a meaningful part of our comp stories. Yep, great, appreciate that.

Are really valuing their time outdoors, and we're seeing team sports across every single business really really pick up at the same time those other categories are holding their own and are significantly higher than they were two years ago. So that's a meaningful part of our comp story.

Great I appreciate the color. Thank you. Thank you.

And our next question today comes from Christopher Hoover's.

Morgan. Please go ahead.

Yes.

Thanks, and good morning. So my first question is there are certain categories that are more exposed to areas like Vietnam can you talk about what your expectations are around footwear and golf in terms of the risk that you could see increased out of stocks as you proceed towards Christmas.

Thanks and good morning. So my first question is, you know, there are certain categories that are more exposed to areas like Vietnam. Can you talk about what your expectations are around footwear and golf in terms of, you know, the risk that, you know, you could see increase out of stocks as you proceed towards Christmas?

And then, you know, related to that, there's been a lot of media coverage around potential pull forward of demand. How are you thinking about, you know, how the holiday season and fourth quarter might progress?

And then related to that there's been a lot of media coverage around potential pull forward of demand. How are you thinking about how the how the house Holly.

The holiday season in the fourth quarter might progress.

Yes, so we.

Yeah, so we've been managing supply chain challenges for the entire time of the pandemic, and the more recent challenges that you refer to in Vietnam and Southeast Asia, we have been aware of managing through with our key brand partners, and we do feel we're in a position to continue to gain share and have great access to products.

We've been managing supply chain challenges for the entire time of the pandemic and the more recent challenges that you referred to in Vietnam, and South East Asia, We have been aware of managing clear with our key brand partners and we do feel we're in a position to continue to gain share and have great access to products. So as you look.

So if you look at out-of-stocks for Christmas, not a concern related to those issues. And we feel really good about the inventory levels that we have.

Out of stocks for Christmas not not a concern related to those issues and we feel really good about the inventory levels that we have.

Has consumers pulled forward demand? So far in Q3, we didn't think that was the case. We don't think that's the case. Obviously, we have Thanksgiving this weekend. Anecdotally, the news is buzzing about lack of product availability across every single retailer. So I imagine there will be some pull forward, but time will tell and we'll look at how the quarter shapes out.

Consumers pulled forward demand so far in Q3, we didn't think that was the case, we don't think Thats. The case, obviously, we have Thanksgiving. This weekend anecdotally the needed is buzzing about lack of product availability across every single retailer. So I imagine there will be some pull forward.

But time will tell and we'll look at how the quarter shapes out.

Got it and then as you think about.

Got it. And then as you think about, you know, some other categories, as you get into 22, are there any categories where you say, you know what, like, you know, the momentum in this category can continue to accelerate for one reason or another, maybe it wasn't a COVID beneficiary category, maybe it's, you know, better allocations from vendors, maybe it's, you know, more firm sort of pricing and promotional management.

Some other categories.

As you get into 'twenty two are there any categories, where you say you know what.

The momentum in this category.

Continue to accelerate for one reason or another maybe it wasn't a COVID-19 beneficiary of category, maybe its better allocations from vendors, maybe it's more firm sort of pricing and promotional management.

Yes, Yes, I think I think this is another really important question, but we believe that all of our key categories be it footwear apparel team sports Gulf can continue to gain share and continue to accelerate we have differentiated our assortments such that we do we have brought in $8 5 million.

Yes, I think this is another really important question, but we believe that all of our key categories, be it footwear, apparel, team sports, golf, can continue to gain share and continue to accelerate. We have differentiated our assortment such that we have brought in 8.5 million new customers last year and another 1.7 million.

New customers last year, and another $1 7 million. This past year this past quarter, and we're retaining those customers and at the same time the national brand partners have been very vocal about the fact that they're narrowing distribution and going to be focused on strategic partners and we are.

past year, this past quarter, and we're retaining those customers, and at the same time...

The national brand partners have been very vocal about the fact that they're narrowing distribution and going to be focused on strategic partners and we are fortunate to be in a position where we are strategic partners to all of the key brands in the category. So I believe we're going to see continued momentum in key categories and share.

And it should be in a position, where we are strategic partners to that all of the key brand to keep the brands in the category. So I believe we're going to see continued.

You don't momentum in key categories and share gains.

So I guess just to put a fine point on it, so do you expect that you could see growth from a top line perspective in 22?

So I guess just to put a fine point on that so do you.

Expect that you could see growth from a top line perspective in 'twenty two.

So we're not going to guide to 22 right now we do feel confident that we've meaningfully re baseline versus 2019 and that our profitability has meaningfully expanded since that time, but we're going to have to wait to guide to 2002.

So we're not going to guide to 22 right now. We do feel confident that we've meaningfully rebaselined versus 2019, and that our profitability has meaningfully expanded since that time. But we're going to have to wait to guide to 22.

Thanks, so much have a great holiday season.

Thank you. And our next question today comes from, and pardon the pronunciation, Paul LeJouer with Citi. Please go ahead.

Thank you.

And our next question today comes from partner pronunciation, Paul was right.

Please go ahead.

Okay. Thanks, guys.

I'm curious, are you seeing higher prices from vendors outside of the hard goods category like apparel and footwear as you look out for the first half of 2022, and what's the plan for pricing in those categories specifically? And then second, just curious, just high level, where do you think your market share is coming from and how that might differ on a category-by-category basis? Yeah. Yeah.

Are you seeing higher prices from vendors outside of the hard goods category like apparel and footwear as you look out for the first half of 'twenty, two and what's the plan for pricing in those categories. Specifically and then second just curious just high level, where you think your market share is.

It's coming from and how that might differ on a category by category basis.

Yes, our strategy going into next year is going to be to work with our vendor partners and manage pricing keeping in mind the balance between what's right for the customer and what's right for the business and so we will continue to manage that as we go forward and assess where the pricing is coming in our market share gain.

Yeah, our strategy going into next year is going to be to work with our vendor partners and manage...

pricing, keeping in mind the balance between what's right for the customer and what's right for the business.

And so we will continue to manage that as we go forward and assess where the pricing is coming in.

Our market share gains, as I just mentioned, we believe are coming from multiple places. It's coming from our differentiated assortment, maybe in perhaps categories like footwear.

Because as I just mentioned, we believe are coming from multiple places its coming from our differentiated assortment, maybe perhaps categories like footwear.

But if you look across other categories, we are getting market share in virtually every category in which we compete and we feel really, really confident about that.

But if you look across other categories, we are gaining market share in virtually every category.

We compete in we feel really really confident about that and Paul. This is an update let me add two quick comments on the on the share gains. So we are.

Paul, this is Navdeep. Let me add two quick comments on the share gain. So as you all have heard and we have experienced this as well, there is narrowing of distribution by our key national brands, which is also helping us gain some share, as well as what Lauren talks about a lot in terms of providing better assortment service.

As you all have heard and we have experienced this as well that is narrowing of distribution by a key national brands, which is also helping us gain some share as well as what long talks about a lot in terms of providing better assortment service and experiences and our store is actually helping us attract a lot of new outlet store.

and experiences in our store is actually helping us attract a lot of new athletes to our database, as well as to our company, and which is allowing us to gain share in some of the core categories like footwear.

Our database as well as to our company and which is allowing us to gain share in some of the core categories like footwear apparel team sports as well as golf.

Herald, team sports, as well as golf.

Just a follow up on the new customers that you gained last year anything you could share in terms of their shopping behavior and what they look like in year two of being a <unk> customer versus your one.

Just to follow up on the new customers that you gained last year, anything you can share in terms of their shopping behavior and what they look like in year two of being a Dick's customer versus year one?

Yes, so that we have been delighted with how many athletes we brought into the ecosystem and we're also really happy about how many of them were retaining they.

Yeah, so we have been delighted with how many athletes we've brought into the ecosystem, and we're also really happy about how many of them we're retaining. They are coming in through every channel, be it stores, be it e-com, curbside within e-com. So each of the channels is doing well, and they are repeating at great rates. The one thing that's of note, that we're very pleased with, is that the demographic of the newer customers that we've brought in.

They are coming into every channel be it stores.

Curbside within E com so each of the channels is doing well and they are repeating at great rates.

The one thing that's of note is that we're very pleased with is that the demographic of the newer customers that we brought in us.

use slightly more female, and we've had a ton of initiatives around women and girl team sport athletes as well as.

Slightly more female and we had a ton of initiatives around women and girls team sport athletes as well as athletic female.

female and as well they skew a little bit younger which I think has something to do with our expanded assortment of hot products.

And as long as they skew a little bit younger, which I think has something to do with our expanded assortment of <unk>.

Products and they skew a little bit more urban which we think has to do with the urbanization that happened during the pandemic and people experiencing the brand for the first time so.

And they skew a little bit more urban, which we think has to do with the de-urbanization that happened during the pandemic and people experiencing the brand for the first time. So it's a really good group of new customers. We're working incredibly hard and passionately to retain them and keep them satisfied. Thank you.

It's a really good group of new customers, we're working incredibly hard and passionately to retain them and keep them satisfied.

Thank you best of luck.

Thank you.

And our next question today comes from Chuck Grom Gordon Haskett. Please go ahead.

And our next question today comes from Chuck Grom at Gordon Haskett.

Hey, Thank you very much and then you guys talked about the store being more experimental experimentally as part of the success of the.

Hey, thank you very much. You know, you guys talk about the store being more experimental. Experimental is part of the success of the store here. I'm wondering if there's anything that you're seeing early on in the House of Sports or public lands that you think you could roll over into the typical PIC store format?

The story here I'm wondering if there's anything that you're seeing early on in the house and sports are public with that you think you could.

Rollover into the typical pick sort of quarter.

Yes. Thanks, Chuck we are seeing great result.

Yes. Thanks, Chuck. We are seeing great results from our approach with regard to experience, and that's through across our core DIC stores. So our baseball attack team a few years ago brought hip traction to the store, and that's gaining traction, and we have experience in the golf department and throughout DIC.

<unk> from our approach with regard to experience and that's true across our core <expletive> stores. So our baseball attack team a few years ago, we brought it tracks into the store and that's gaining traction and we have experienced in the Gulf Department and throughout <unk> and then if you look at how support we've elevated further experiences we.

And then if you look at House of Sport, we've elevated.

further experiences. We have a rock climbing wall, we have a track and field outside, we've elevated the service model, and the golf experience at that store is top notch and rivals any specialty.

Our rock climbing wall, we have a track and field outside we've elevated the service model and the Gulf experienced at that store is top notch and rivals any specialty so all of those things are giving us ideas and lessons to bring into the Dicks store. One example is the service model and the fitting.

So all of those things are giving us ideas and lessons to bring into the DICS.

store. One example is the service model in the sitting room experience at House of Sport is very different and very elevated than what you've seen in the past.

From experience that how is this board is very different and very elevated and what you've seen in the past at Dick's and we'll be bringing things like that into the into the dicks stores.

at Dick's and we'll be bringing things like that into the Dick's stores.

Okay. That's helpful. And then just wanted to ask a question you guys just trying to reconcile your comments with the fourth quarter is off to a great start with your implicit fourth quarter comp guide, which on the stock looks like it's a pretty big deceleration I presume, that's just status of being conservative given that it's still early in the quarter, but just wanted to see if you could just flush that of course.

Okay, that's helpful. And then just one neutral question, you guys. I'm just trying to reconcile your comments that the fourth quarter's off to a great start with your implicit fourth quarter comp guide, which on the stacks looks like it's a pretty big deceleration. I presume that's just the status of being conservative, given that it's still early in the quarter, but just wanted to see if you could just flush that out for us.

Yes.

Yes. So we have taken our guidance up significantly as we get closer to the quarter and we are more confident in our inventory levels. I think one thing to note is that even at the midpoint of our guidance,

We have taken our guidance up significantly as we get closer to the quarter and we are more confident in our inventory levels. I think one thing to note is that even at the midpoint of our guidance sales are up 23% to <unk> and we are expecting this to be.

Sales are up 23% to double LY, and we are expecting this to be a much more non-promotional quarter than previous holidays. So there probably is some conservatism baked in. We're still going up and down with the challenges to make sure we have the exact perfect product for everybody that comes in, but we are really feeling good and increasing our guidance each quarter on Q4. Thank you.

Much more non promotional quarter than previous holidays. So there probably is some conservatism baked in we still going up and down with the challenge is to make sure. We have an exact perfect product for everybody. If that comes in but we are really feeling good and increasing our guidance each quarter on Q4.

Great. Thanks, a lot good luck.

Great. Thanks a lot. Good luck. Thank you. And our next question today comes from Michael Lassner, UBS. Please go ahead.

Thank you.

Our next question today comes from Michael Lasser with UBS. Please go ahead.

Good morning, Thanks, a lot for taking my question recognizing that the business is train form in 2017.

Good morning, thanks a lot for taking my question. Recognizing that the business has transformed since 2017, your sales are going to be up by maybe a third since that time, and your EBIT probably triples or quadruples since that time.

Our sales are going to be up by maybe a third since that time.

It probably triples were double or quadruple.

During.

The debate really is what's the sustainable level recognizing you're.

The debate really is what's a sustainable level, recognizing that you're averse to giving us some long-term margin target. Is there a minimum operating margin that you think is realistic for the business? Is it the 8% operating margin that you did in 2020 when your stores were closed for a period of time?

Giving us.

Long term margin target.

Is there a minimum operating margin that you think is realistic for the business.

The 8% operating margin that you did in 2020 when the stores were closed for a period of time.

Hey, Michael This is an update I think the two things I would say to that first of all like we are working through our long term guidance, having said that what we feel internally very confident that our business has significantly baseline higher than where 2019 was.

And Michael, this is an update. I think the two things I would say to that, first of all, like, you know, we are working through our long term guidance. Having said that, what we feel internally very confident that our business has significantly

baseline higher than where 2019 was. So if you think about the athlete demand, the capabilities that we have talked about, as well as the profitability of the e-comm business is at a whole different level. So that's where we feel very confident that the business is significantly baseline much, much, much higher than where it was back even in 2019. So we'll continue to provide more guidance, but we feel very confident about that.

So if you think about the athleisure demand the capabilities that we have talked about as well as the profitability of the E. Comm business is that a whole different level. So that's where I, we feel very confident that the business is significantly baseline much much much higher than where it was back even in 2019. So we will continue to.

To provide more guidance, but we feel very confident about that.

My follow up question is.

My follow-up question is, can you frame out any potential investments that you think are on the horizon in 2022, investing in experiential new stores, the labor market's likely to remain tight? All else being equal, if your sales were flat, do you think you could maintain this operating margin next year?

Can you frame any.

Any potential investments that you think are on the horizon in 2022 investing in experiential new store labor market is likely to remain high.

All else being equal if your sales were flat you think you can maintain.

Operating margin next year.

Yes.

I won't provide any further guidance on 22, but to answer your question, where will we be investing, I think the big areas of investment will continue to be in our footwear, premium foot service footwear expansion. Those have done really well and will continue to invest in similar experiences and both in stores as well as building the capabilities within our e-commerce as well as on the technology side.

Won't provide any further guidance on 'twenty two.

To answer your question that we will be investing I think so.

The big areas of investment will continue to be and not put back.

The mental toughness footwear expansion those have done really well and we'll continue to invest in and similar experiences.

Both in stores as well as building the capabilities within the E Commerce.

As well as on the technology side.

Thank you very much and have a good holiday.

Thank you.

All right, next question today comes from Sam Posner with Williams Trading. Please go ahead.

Our next question today comes from Sam Poser with what I'm sure. Many of <unk>. Please go ahead.

Thank you for taking my questions. I've got a handful here. One, what percent of your business, this is a two-parter, is your loyalty customer doing right now? And have you seen the newer loyalty customers that have been signed up over the last year, almost two years now, be more active than the customers that had signed up previously?

Thank you for taking my questions I've got a handful here one what percent of your business due to the two parter.

Your loyalty customer doing right now and have you seen the newer loyalty customers have been signed up over the last year.

Almost two years now being more active than the.

The customers that had signed up previously.

Yes, the percentage of our business Thats actually in the scorecard database as percentage of our transactions is over 70% and continues to be growing and strong and we have seen new scorecard customers be more active do you see that in the results that we have.

Yeah, the percentage of our business that's actually in the Scorecard database, the percentage of our transactions is over 70% and continues to be growing and strong. And we have seen new Scorecard customers be more active. You see that in the results that we have and the growing comp. So yes, they are more active. They are more omni-channel and more profitable.

The growing comp so yes. They are they are more active they are more omnichannel and more profitable.

And then the two.

And then, this is a two-parter again. Nike, the partnership with Nike, I noticed online that you were getting access to some product that isn't normally as accessible in your channel. So with the partnership, are you going to be seeing a larger degree of, I'll call it launch-type product? And then, secondly,

To partner again Nike.

The partnership with Nike I notice online that you were getting access to some product that isn't normally access as accessible in their channel. So are with the partnership are you going to be seeing.

A larger degree of.

<unk> launch launch type product and then.

Secondly.

Given the supply chain constraints or disruptions.

Given the supply chain constraints or disruptions, how, it sounds to me like your priority with your, you have a very, very high priority with your vendors to be able to have the inventories you have and to feel confident.

How.

It sounds to me like Youre your priority with your you have a very very high priority with your vendors to be able to have the inventories you have and the drill cost for that.

Sure.

should we view that there's any change in sort of the type of inventory levels going into the beginning of next year because that appears to be when the

Should we view that there is any change in sort of the type of inventory levels going into the beginning of next year because that appears to be when the.

Real product availability issues may.

real product availability issues may, you know, may become a little more big.

Maybe come a little more.

Bigger I guess, yes, that's right.

Yes, so to answer the first part of your question you're correct. We are going to see and we already are seeing a larger degree of launch type product in that connected membership experience in both the connected our inventory across.

Yeah, so to answer the first part of your question, you're correct. We are going to see, and we already are seeing a larger degree of launch type product in that connected membership experience. And we've also connected our inventory across the board, so we should be seeing the benefits of that.

Across the board.

You'll be seeing the benefits of that.

We are being prioritized by vendors and our strategic partners.

We are being prioritized by vendors and our strategic partners and so obviously, it's too soon for us to guide into 2022, and some of the supply chain issues that have been going on to the last two years. We will continue they continue to change, but we're well prepared to deliver a good customer experience.

And so, obviously, it's too soon for us to guide into 2022, and some of the supply chain issues that have been going on for the last two years will continue. They continue to change, but we're well prepared to deliver a good customer experience.

Great. Thanks, very much have a happy Thanksgiving and happy holidays.

Thanks very much, have a happy Thanksgiving, happy holidays. Thank you, you too.

You too.

And our next question comes from Seth Bassam with Redwood Securities.

And our next question comes from Seth Basham with Wedbush Securities. Please go ahead.

Thanks, a lot not to be too short term focused but just thinking about the implied guidance for the fourth quarter, obviously, it implies a pretty material slowdown on the top line, but also a much less margin expansion other than more limited leverage of fixed costs and a little bit more freight pressure are there any other headwinds that you're experiencing in the fourth quarter guide.

Thanks a lot. Not to be too short-term focused, but just thinking about the implied guidance for the fourth quarter, obviously it implies a premature slowdown on the top line, but also much less margin expansion. Other than more limited leverage of fixed costs and a little bit more freight pressure, are there any other headwinds that you're experiencing in the fourth quarter guide?

Okay.

Yes. So this is not our model.

I think you nailed the two of the biggest areas as you looked at the profitability of the business. Outside of those, we feel really good that we'll be able to continue to manage and potentially another area that we are looking into would be advertising, considering that this is a peak holiday season and advertising would be another area that I would briefly call.

So you nailed two of the biggest areas as you looked at the profitability of the business outside of those.

We feel really good that we'll be able to continue to manage and potentially in other areas.

We're looking into would be advertising considering that this is this is the this is the peak holiday season, and advertising would be another area that I would I would briefly call.

Got it helpful and my follow up question is just around some of the new concepts like <unk> sports and public plans do you have enough confidence in how those new concepts performing that you'll accelerate store openings in 2022 and beyond.

Got it. Helpful. And my follow-up question is just around some of the new concepts like house of sports and public lands. Do you have enough confidence in how those new concepts are performing that you'll accelerate store openings in 2022 and beyond?

We are really confident in bolthouse of sport and public lands and we do have stores being prepared to open next year for both concepts. So we will continue appropriately to grow the concepts, while we optimize them.

We are really confident in both House of Sport and Public Lands, and we do have stores, you know, being prepared to open next year for both concepts. So we will continue appropriately to grow the concepts while we optimize them and expand them. Yeah, Seth, I would add that, you know, in addition to opening new stores, we also have some of the conversion opportunities on our existing stores. So it's a relocation, conversion, as well as new store opening opportunity when we look at the new concepts. Understood. Thanks a lot.

And expand them. So if I would add that in addition to opening new stores. We also have some of the conversion opportunities on our existing stores. So it's a relocation conversion as well as new store opening opportunity when we look at the new concepts.

Understood. Thanks, a lot and happy holidays.

Thank you.

And ladies and gentlemen, today's final question comes from Joe Feldman at Telsey Advisory Group. Please go ahead.

Ladies and gentlemen for our final question comes from Jennifer.

Telsey Advisory group. Please go ahead.

Hey, Thanks, guys for taking my questions.

Hey, thanks, guys, for taking my questions. I had a question about e-commerce. I think you made a comment that you're now at the same profitability as the overall business on an EBT basis, and I was just wondering how high you think that could go one day. Could it exceed the store-level profitability? I guess it's at that at this point.

Had a question.

Question about E. Commerce, I think you made the comment that you are now.

The same profitability as the overall business on an EBT basis, and I was just wondering.

How high you think that could go one day it could.

<unk> the store level profitability or I guess, it's at that at this point.

Yes, Joe This is Dave I think that to me if you look at the business in a balanced way because we don't want to drive profitability. We want to look at how good up and experience we are providing to the athlete and how much of the topline opportunity exist. So we are very pleased with the profitability of the business will we still have opportunities to continue to optimize but then.

Yeah, Joe, this is Navdeep. I think that to me, we look at the business in a balanced way because we don't want to drive profitability. We want to look at how good of an experience we are providing to the athlete and how much of a top-line opportunity exists. So we are very pleased with the profitability of the business. We still have opportunities to continue to optimize, but then we will look at balancing that against the sales expectation from that channel.

We will look at it.

Balancing that against the sales expectation from that channel.

Got it and then just one quick follow up.

Got it. And then just one quick follow-up. You know, I know you've talked a lot about inventory being in pretty good position, but, you know, we keep hearing so much about footwear being under so much stress, and it sounds like you guys have taken share there, so presumably you're getting a better allocation than normal, or what are you seeing on the footwear side, maybe, that you could share with us? Thanks.

I know you've talked a lot about inventory being in pretty good position, but.

We keep hearing so much about footwear being under some stress and it sounds like you guys are taking share there so presumably youre getting a better allocation of normal or what are you seeing on the footwear side, maybe that you could share with us. Thanks.

Yeah, Joe I think I think you're tapping into this increase in market share that we have in footwear due to the strategic relationship we have with our brand partners and also the fact that we have totally transformed the way we serve footwear athlete in our stores. We've increased the number of footwear premiums from service footwear deck.

Yeah, Joe, I think you're tapping into this increase in market share that we have in footwear due to the strategic relationship we have with our brand partners and also the fact that we've totally transformed the way we serve the footwear athlete in our stores. We've increased the number of footwear premiums for our service footwear decks. And now with this Nike Connected membership, we have access to even higher heat product than we had before. So, yes, we're getting a better allocation than we did in the past. Got it. That's great.

And now with the Nike.

Nike connected membership, we don't have access to even higher heat product than we had before so.

Yes, we are getting a better allocation than we did in the past.

Got it that's great. Thanks, and good luck with the holiday season guys.

Thank you, you lad this gentleman. This concludes our question to answer session. I'd like to time my conference back over to Ho g- funny closing.

Thank you. Thank you.

And gentlemen, this concludes our question and answer session I would like to turn the conference back over to Ron Herbert for any closing remarks.

Well, thank you, everybody, for your interest in DICS. I hope you have a wonderful holiday season. Happy Thanksgiving. And we'll see you early next year. Thank you. And thank you. Today's conference is now concluded. And we thank you all for attending today's presentation.

Okay, well. Thank you everybody for your interest index I Hope you have a wonderful holiday season, and a happy Thanksgiving and we'll see you early next year. Thank you.

Thank you today's conference has now concluded we thank you all for attending today's presentation.