Q3 2023 DICK'S Sporting Goods Inc Earnings Call

Please standby we're about to begin.

Speaker 1: Please stand by, we're about to begin.

Speaker 1: Good morning, ladies and gentlemen, and welcome to the Q3 2023 Dick's Sporting Goods Earnings Conference Call.

Good morning, ladies and gentlemen, and welcome to the Q3 2023, Dick's Sporting goods earnings Conference call. At this time, all participants are in a listen only mode and please be advised that this call is being recorded after the speakers' prepared remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press.

Speaker 1: At this time, all participants are in a listen-only mode, and please be advised that this call is being recorded.

Speaker 1: After the speaker's prepared remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star one on your telephone keypad, and if you would like to withdraw your question, simply press star one again.

Star one on your telephone keypad and if you would like to withdraw your question Press Star. One again, we also ask that you. Please limit yourself to one question and one follow up question.

Speaker 1: We also ask that you please limit yourself to one question and one follow-up question.

Speaker 1: And now at this time, I would like to turn things over to Mr. Nate Gilch, Senior Director Investor Relations. Please go ahead.

And now at this time I would like to turn things over to Mr. Gil <unk> Senior director of Investor Relations. Please go ahead Sir.

Speaker 2: Good morning everyone and thank you for joining us to discuss our third quarter 2023 results on today's call will be Lauren Hobart, our president and chief executive officer.

Okay.

Good morning, everyone.

Thank you for joining us to discuss our third quarter 2023 results on today's call will be Lauren Hobart, our president and Chief Executive Officer <unk> <unk>.

Our Chief Financial Officer.

Speaker 2: Playback of today's call will be archived in our investor relations website, located at investors.dix.com for approximately 12 months.

Playback of todays call will be archived on our Investor Relations website located at investors <unk> Dot com for approximately 12 months.

Speaker 2: As a reminder, we will be making forward-looking statements which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements.

As a reminder, we'll be making forward looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements.

Speaker 2: Any such statements should be considered in conjunction with cautionary statements in our earnings release and risk-factor discussions in our filings.

Any such statements should be considered in conjunction with cautionary statements in our earnings release and risk factor discussions in our filings with the SEC, including our last annual report on Form 10-K, and our most recent Form 10-Q filings as well as cautionary statements made during this call.

Speaker 2: including our last annual report on Form 10-K and our most recent Form 10-Q filing, as well as cautionary statements made during this call. We assume no obligation other than that.

We assume no obligation to update any of these forward looking statements or information.

Speaker 2: Please refer to our investor relations website to find the reconciliation of our non-GAAP financial measures reference.

Please refer to our Investor relations website to find the reconciliation of our non-GAAP financial measures referenced in today's call.

Speaker 2: And finally, for your future scheduling purposes, we are tentatively planning to publish our fourth quarter 2023 earnings results on March 11th, 2024 with that and I'll turn the call over to Lauren.

And finally for your future scheduling purposes, we are tentatively planning to publish our fourth quarter 2023 earnings results on March 11 2024.

With that I will now turn the call over to Lauren.

Thank you Nate and good morning, everyone.

Speaker 3: We are very pleased with our third quarter results, which demonstrate the ongoing strength of our business and the focused execution of our.

We are very pleased with our third quarter results, which demonstrate the ongoing strength of our business and the focused execution of our team.

Speaker 3: We had a very strong back-to-school season, driven by our best-in-class athlete experience and differentiated assortment.

We had a very strong back to school season, driven by our best in class athlete experience and differentiated assortment and we continue to gain market share as consumers prioritize Dick's sporting goods to meet their needs.

Speaker 3: And we continue to gain market share as consumers prioritize exporting goods to meet their needs.

Speaker 3: Our third quarter sales increased 2.8% to $3.04 billion, and our comps increased 1.7% driven by increases in both transactions.

Our third quarter sales increased two 8% to $3 4 billion and our comps increased one 7% driven by increases in both transactions and average ticket.

Speaker 3: This strong comp was on top of a 6.5% increase in the same period last year and during the quarter we saw more athletes purchase from us while spending more each trip.

This strong comp was on top of a six 5% increase from the same period last year and during the quarter. We saw them more athletes purchased from us while spending more each trip.

Speaker 3: On a non-GAAP basis, our Q3 growth margin extended by 88 basis points.

On a non-GAAP basis, our Q3 gross margin expanded by 88 basis points versus the prior year period and looking to Q4, we expect to see continued year over year gross margin expansion.

Speaker 3: And looking to Q4, we expect to see continued year-over-year gross margin.

Speaker 3: We achieved double-digit non-GAAP EBT margin of 10.6% and delivered non-GAAP EPS of $2.85, up 10% overall.

We achieved double digit non-GAAP EBT margin of 10, 6% and delivered non-GAAP EPS of $2 85.

Up 10% over Q3 last year.

Speaker 3: As a result of our strong Q3 performance, we are raising our full-year outlook.

As a result of our strong Q3 performance, we are raising our full year outlook.

Speaker 3: Our updated guidance balances the confidence we have in our key strategies with an acknowledgement of the uncertain macroeconomic

Our updated guidance balances the confidence we have in our key strategies with an acknowledgement of the uncertain macroeconomic environment.

Speaker 3: For the year, we now expect non-GAAP earnings per diluted share in the range of $12 to $12.60.

For the year, we now expect non-GAAP earnings per diluted share in the range of $12 to $12 60.

Compared to our prior expectation of $11 50 to $12 37.

Speaker 3: compared to our prior expectation of $11.50 to $12.30.

Speaker 3: In addition, we now expect comparable store sales in the range of positive 0.5% to positive 2% compared to our prior expectation.

In addition, we now expect comparable store sales in the range of positive <unk>, 5% to positive 2% compared to our prior expectation of flat to positive 2%.

Speaker 3: At the midpoint, non-GAAP EBT margin is expected to be approximately 10.4%.

At the midpoint non-GAAP EBT margin is expected to be approximately 10, 4%.

Speaker 3: We have a tremendous long-term growth opportunity ahead of us and we're making strategic investments that position us well for growth and enable us to continue gaining share in a large fragment

We have a tremendous long term growth opportunity ahead of us and we're making strategic investments that position us well for growth and enable us to continue gaining share in a large fragmented industry.

Speaker 3: These investments include accelerating innovation in our omni-channel athletic.

These investments included accelerating innovation in our Omnichannel athlete experience and expanding our new concepts like houses sports and our new 50000 square foot prototypes, which are resonating exceptionally well with our athletes.

Speaker 3: and expanding our new concepts like House of Sports and our new 50,000 square foot prototype, which are resonating exceptionally well with our assets.

Speaker 3: As we outlined on our last call, we've done extensive work to optimize our business so we can capture the opportunity ahead of us.

As we outlined on our last call. We've done extensive work to optimize our business. So we can capture the opportunity ahead of us.

Speaker 3: This includes better aligning our talent, organizational design, and spending in support of our most significant growth opportunities, while also streamlining.

This includes better aligning our talent organizational design and spending in support of our most significant growth opportunities. While also streamlining our overall cost structure.

Speaker 3: First, as we discussed last quarter, we are resourcing for growth and refocusing our team on our 4 key strategic pillars. A differentiated product athlete experience. He made experience and brand engagement. Second.

First as we discussed last quarter, we are resourcing Dick's for growth and refocusing our team on our four key strategic pillars of differentiated products athlete experience teammate experience and brand engagement.

Second we are optimizing our outdoor specialty business.

Speaker 3: This primarily includes integrating the operations of Moose Jaw and public.

This primarily includes integrating the operations of Moose jaw and public land to enhance our ability to fulfill outdoor athletes demand more effectively.

Speaker 3: to enhance our ability to fulfill outdoor athlete demand more effectively.

Speaker 3: This new structure immediately improves operational efficiency and strategically positions this business for profitable growth within the $40 billion outdoor industry.

This new structure immediately improves operational efficiency and strategically positions this business for profitable growth within the $40 billion outdoor industry.

Speaker 3: Nadeeb will share more details about our business optimization plans, including the expected SQA benefits and the charges related to expediting.

Now people share more details about our business optimization plans, including the expected SG&A benefits and the charges related to executing these plans.

Speaker 3: Innovating within the Omnichannel athlete experience is at the heart of our growth strategy.

Innovating within the Omnichannel athlete experience is at the heart of our growth strategy.

Speaker 3: Our newest disc concepts have proven to be tremendously successful and are a key part of our future as we continue to reimagine our store portfolio and

Our newest Dick's concepts have proven to be tremendously successful and are a key part of our future as we continue to re imagine our store portfolio and footprint.

First we continue to be pleased with the results from our Dick's houses port locations.

Speaker 3: First, we continue to be pleased with the results from our DICT houses support locations. We opened two new houses of support at the beginning of Q3 and now have a total of

We opened two new houses of support at the beginning of Q3 and now have a total of 12 locations opened nine of which we opened this year.

We're excited to open approximately 10 additional locations throughout 2024, including at the Prudential Center in Boston as well as locations in Pittsburgh, Miami and Tampa.

Speaker 3: We're excited to open approximately 10 additional locations throughout 2024, including at the Prudential Center in Boston, as well as locations in Pittsburgh, Miami and Tampa.

We continue to expect that by 2027, we will have between 75 to 100 across the country.

Speaker 3: We continue to expect that by 2027, we will have between 75 to 100 across the country.

Speaker 3: In addition to House of Sport, we're rolling out our next generation Dixie.

In addition to house the sport, we're rolling out our next generation Dick's store, which revolutionized is our most typical 50000 square foot formats.

Speaker 3: revolutionizes our most typical 50,000 square foot format.

During Q3, we're excited to have opened another five locations and earlier this month, we opened three more.

Speaker 3: During Q3, we're excited to have opened another five locations and earlier this month, we opened

With a total of 11 next generation locations now open we are pleased with the performance and confident in the long term opportunity of this new 50000 square foot prototype.

Speaker 3: With a total of 11 next-generation locations now open, we are pleased with the performance and confident in the long-term opportunity of this new 50,000-square-foot project.

Speaker 3: We're also growing our GolfGalaxy footprint through GolfGalaxy Performance Center, an immersive experience for golf and

We're also growing our golf galaxy footprint through golf Galaxy performance Center.

And immersive experience for golf enthusiasts of all levels.

Speaker 3: During Q3, we opened seven new Gulf Galaxy performance centers, expanding our Gulf Galaxy chain to 104 locations.

During Q3, we opened seven new golf Galaxy performance centers, expanding our golf Galaxy chain to 104 locations, including 13 performance centers.

Speaker 3: We believe there is a significant long-term growth opportunity in golf.

We believe there is a significant long term growth opportunity in golf.

Speaker 3: Over the next four years, we expect to have as many as 40 to 50 Gulf Galaxy performance centers across the U.S., including approximately 10,000.

Over the next four years, we expect to have as many as 40 to 50 golf Galaxy performance centers across the U S, including approximately 10 new locations in 2024.

In combination with our stores our digital experience remains an integral part of our success in the investments we are making in technology are strengthening our athletes omnichannel experience and driving increased engagement.

Speaker 3: In combination with our stores, our digital experience remains an integral part of our success, and the investments we are making in technology are strengthening our athletes' omni-channel experience and driving increased engagement. This quarter, we added 1.6 million new athletes.

This quarter, we added $1 6 million new athletes.

Our further growing our base of Omnichannel athletes.

Speaker 3: Omni-channel athletes make up the majority of our sales and they spend more and shop with us more frequently than single-channel athletes.

Omnichannel athletes make up the majority of our sales and they spend more and shop with us more frequently than single channel athletes.

As we invest in data science and personalization. We're excited to continue building one to one relationships and better serving these athletes.

Speaker 3: As we invest in data science and personalization, we're excited to continue building one-to-one relationships and better serving these athletes.

Speaker 3: We remain focused on ensuring DICS is a convenient, one-stop shop and have enhanced our multiple delivery and pickup options by expanding same-day delivery.

We remain focused on ensuring <unk> is a convenient one stop shop and have enhanced our multiple delivery and pickup options.

<unk> same day delivery.

Speaker 3: In fact, athletes can now filter online for same-day delivery, and this holiday season, we will offer same-day delivery service up until 12 noon on Christmas Eve for last.

In fact athletes can now filter online for same day delivery and this holiday season, we will offer same day delivery service up until 12 noon on Christmas Eve for last minute gifting.

Speaker 3: In closing, we're very pleased with our strong third quarter results and remain enthusiastic about the future of our business.

In closing, we're very pleased with our strong third quarter results and remain enthusiastic about the future of our business.

Speaker 3: We're excited for the upcoming holiday season and the product, service and experience we're providing to our athletes.

We're excited for the upcoming holiday season, and the product service and experience, we're providing to our athletes.

Speaker 3: I'd like to thank all of our teammates for their hard work and commitment to Dick's Sporting Goods, and for their upcoming efforts during the fourth.

I'd like to thank all of our teammates for their hard work and commitment to Dick's sporting goods and for their upcoming of efforts during the fourth quarter.

Speaker 3: With that, I'll turn the call over to Naveed to share our financial results in more.

With that I'll turn the call over to dive deep to share our financial results in more detail.

Speaker 4: Thank you, Lauren. And good morning, everyone. Let's begin with a brief review of our third quarter results.

Thank you Lauren and good morning, everyone.

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

Speaker 4: We are very pleased to report consolidated sales increased 2.8% to $3.04 billion as we continue to gain market share.

We are very pleased to report consolidated sales increased two 8% to $3.04 billion as we continue to gain market share.

Speaker 4: Comp store sales increased 1.7% on top of a 6.5% increase in the same period last year.

Comp store sales increased one 7% on top of a six 5% increase in the same period last year.

Speaker 4: Our strong comps were driven by a 1.1% increase in transactions and a 0.6% increase in average tickets.

Our strong comps were driven by a one 1% increase in transactions.

0.6% increase in average ticket.

Collectively our back to school categories did very well and we were pleased with the results from my Hustles port locations.

Speaker 4: Collectively, our back-to-school categories did very well, and we were pleased with the results from our House of Sports locations.

Speaker 4: Our non-comp sales growth of roughly 110 basis points this quarter was primarily driven by sales at Moose.

Our non comp sales growth of roughly 110 basis points. This quarter was primarily driven by sales at Montreal.

On a non-GAAP basis gross profit in the third quarter was $1.07 billion or 35, 1% of net sales and improved 88 basis points compared to last year.

Speaker 4: On a non-cap basis, gross profit in the third quarter was $1.07 billion or 35.1% of net sales and improved 88 basis points compared to last year.

Speaker 4: This improvement was driven by lower supply chain costs, which leveraged 78 bases.

This improvement was driven by lower supply chain costs.

Which leveraged 78 basis points.

Speaker 4: Merchandise margin increased 23 basis points and as expected, this increase was primarily driven by anniversary of our clearance activity from last.

Merchandise margin increased 23 basis points and as expected. This increase was primarily driven by the anniversary of our clearance activity from last year, and partially offset by higher shrink of approximately 50 basis points.

Speaker 4: and partially offset by higher strength of approximately 50 base.

Speaker 4: To be clear, absent the shrink headband, our merchandise margin would have increased over 70 days.

To be clear.

Absent the shrink headwind our merchandise margin would have increased over 70 basis points.

Speaker 4: Combating theft remains a top priority, and we continue to invest in efforts to keep our stores, teammates, and athletes safe.

Combining <unk> remains a top priority and we continue to invest in efforts to keep our stores teammates and athletes faith.

Speaker 4: On a non-CAB basis, SG&A expense increased $50.1 million to $729.9 million and deleveraged 102 basis points compared to last year.

On a non-GAAP basis, SG&A expense increased $51 million to $729 9 million and Deleveraged 102 basis points compared to last year.

Speaker 4: This was favorable versus our expectation due to better than expected sales, targeted actions to control discretionary costs, and benefits from our business optimization.

This was favorable versus our expectation due to better than expected sales targeted actions to control discretionary costs and benefits from our business optimization actions.

Speaker 4: As we have highlighted on prior calls, the year-over-year de-leverage this quarter was driven by investments in our wage rate, talent, and technology to create a better athlete experience, as well as investments in marketing.

As we have highlighted on prior calls the year over year deleverage. This quarter was driven by investments in our base rate talent and technology to create a better athlete experience as well as investments in marketing.

Speaker 4: These areas of investments were partially offset by $8.2 million of expense reduction or 26 basis points of leverage associated with changes in the investment value of our deferred compensation plan, which is fully offset in other instances.

These areas of investments were partially offset by $8 2 million of expense reduction or 26 basis points of leverage associated with the changes in the investment value of our deferred compensation plan, which is fully offset in other income.

Speaker 4: Interest expense was $14.4 million, a decrease of $11.7 million compared to the same period last year.

Interest expense was $14 4 million, a decrease of $11 $7 million compared to the same period last year.

Speaker 4: This decrease was primarily due to the inducement charges incurred in the prior year related to the exchange of our convertible senior notes and the interest savings this year from the retirement of those.

This decrease was primarily due to the inducement charges incurred in the prior year related to the exchange of our convertible senior notes and the interest savings. This.

This year from the retirement of those notes.

Speaker 4: Other incomes total $10.1 million, compared to $4.8 million in the same period last year.

Other income totaled $10 $1 million compared to $48 million in the same last year.

Speaker 4: This $5.3 million increase in income was driven by a $13.3 million increase in interest income as a result of higher average interest rates on our cash and cash equivalent.

This $5 $3 million increase in income was driven by a $13 $3 million increase in interest income as a result of higher average interest rates on our cash and cash equivalents.

Speaker 4: This increase to other income was partially offset by $8.2 million expense increase from change in the value of our deferred compensation plan.

This increase to other income was partially offset by $8 2 million dollar expense increased from change in the value of our deferred compensation plans.

Speaker 4: which fully offsets the SG&A expense reduction I mentioned earlier.

Which fully offsets the ex SG&A expense reduction I mentioned earlier.

Speaker 4: Driven by a strong sales, higher gross margin, along with lower interest expense, non-GAAP EBT was $321.1 million, or 10.6% of net sales.

Driven by our strong sales and gross margin along with lower interest expense non-GAAP <unk> was $321 1 million or 10, 6% of net sales.

Speaker 4: This compares to an EBT of $304.2 million or 10.3% of net sales in 2020.

This compares to an EBT of $304 2 million or 10, 3% of net sales in 2022.

Speaker 4: In total, we delivered non-GAAP earnings per diluted share of $2.85. This compares to a non-GAAP earnings per diluted share of $2.60 last year, an increase of 10%.

In total we delivered non-GAAP earnings per diluted share of $2 85. This.

This compares to a non-GAAP earnings per diluted share of $2 60 last year, an increase of 10%.

Speaker 4: As Lauren said, to continue fueling our long-term growth, we have optimized our organization to better align our talent, organizational design, and spending in support of our most critical strategies while also streamlining our overall cost.

As Lauren said to continue fueling our long term growth, we have optimized our organization to better align our talent organizational design and spending in support of our most critical strategies, while also streamlining our overall cost structure.

Speaker 4: First, we are resourcing decks for growth. As we have discussed, as we discussed on our last call, during the third quarter, we took actions to change our resourcing and organizational structure primarily at our customer support center.

First we are resourcing to export growth.

As we have discussed as we discussed on our last call. During the third quarter, we took actions to change our resourcing and organizational structure, primarily at our customer support centers.

Speaker 4: Second, we are taking steps to optimize our outdoor specialty business and are forming one team that will support the operations of Public Lands and Moose Jaw.

We are taking steps to optimize our outdoor specialty business and are forming one team that will support the operations of public clients and Moscow.

Speaker 4: This will allow us to quickly leverage the best practices across our outdoor specialty business to drive growth while operating more efficiently.

This will allow us to quickly leverage the best practices across our outdoor specialty business to drive growth.

Operating more efficiently.

Speaker 4: We started to see PSG&A benefits from these actions during the third quarter and expect to see continued benefits into Q4 and 2024.

We started to see the SG&A benefits from these actions during the third quarter and expect to see continued benefit into Q4 and 2024.

Speaker 4: These actions, along with our overall focus on improving productivity and reducing discretionary cost will help enable us to significantly moderate our SG&A expense growth in 2024 as compared to this year.

These actions along with our overall focus on improving productivity and reducing discretionary costs, both help enable us to significantly moderate our SG&A expense growth in 2024 as compared to this year.

Speaker 4: As a result of these actions, we incurred pre-tax charges totaling $52.5 million during the third quarter. This included a $6.3 million of inventory related write down associated with rationalization of non go forward Moosejaw inventory.

As a result of these actions, we incurred pre tax charges totaling $52 $5 million during the third quarter.

This included a $6 $3 million of inventory related write down associated with rationalization of non go forward Moose jaw inventory.

Speaker 4: These charges were included in our GAAP earnings per diluted share of $2.39.

These charges were included in our GAAP earnings per diluted share of $2 39.

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

Speaker 4: For additional details on this, you can refer to a non-GAAP reconciliation table of our press release that we issued this morning.

Now looking to our balance sheet we ended.

Speaker 4: We ended Q3 with approximately $1.4 billion of cash and cash equivalents and no borrowings on our $1.6 billion unsecured credit.

Ended Q3, with approximately $1 4 billion of cash and cash equivalents and no borrowings on our $1 6 billion unsecured credit facility.

Speaker 4: A quarter and inventory levels decreased 2% compared to Q3 of last year. Our inventory is well positioned and we are excited about our assortment for the holiday.

Our quarter end inventory levels decreased 2% compared to Q3 of last year at.

Our inventory is well positioned and we are excited about our assortment for the holiday season.

Speaker 4: Turning to our third quarter capital allocation, net capital expenditures were $151 million and we paid $81 million in quarterly dividends.

Turning to our third quarter capital allocation net capital expenditures $151 million, and we paid $81 million in quarterly dividends.

Speaker 4: We also repurchased 3.5 million shares of our stock for $388.1 million at an average price of $112.46.

We also repurchased three 5 million shares of our stock for $388 $1 million.

At an average price of $112 and <unk> 46.

Speaker 4: Year-to-date, we have returned over $900 million to shareholders through share repurchases and dividends. Let me wrap up.

Year to date, we have returned over $900 million to shareholders through share repurchases and dividends.

Let me wrap up with our outlook for 2023.

Speaker 4: As Lauren noted, as a result of our Q3 performance, we are raising our foliar output.

As Laura noted as a result of our Q3 performance, we are raising our full year outlook.

Speaker 4: They are confident in our key strategies and are well positioned to execute against what is in our control. At the same time,

We are confident in our key strategies and are well positioned to execute against what is in our control.

At the same time.

Speaker 4: We are being appropriately cautious, particularly at the low end of our expectation, considering the ongoing macroeconomic uncertainty.

We are being appropriately cautious, particularly at the low end of our expectation considering the ongoing macroeconomic uncertainties.

For the year, we now expect non-GAAP earnings per diluted share in the range of $12 to $12 60.

Speaker 4: For the year, we now expect non-GAAP earnings for diluted share in the range of $12 to $12.60 compared to our prior expectation of $11.50 to $12.30.

Compared to our prior expectation of $11 50 to $12 two and 30.

Speaker 4: This continues to include approximately 20 cents coming from the 53rd.

This continues to include approximately 20.

<unk> from the 50 <unk> week.

Speaker 4: In addition, we now expect comparable store sales in the range of positive 0.5 percent to positive 2 percent compared to our prior expectation of flat to positive.

In addition, we now expect comparable store sales in the range of positive <unk>, 5% to positive 2% compared to our prior expectation of flat to positive 2%.

Including the 50 <unk> week, we expect roughly 250 basis points of non comp sales growth for the full year.

Speaker 4: Including the 53rd week, we expect roughly 250 basis points of non-comp sales growth for the full year.

Speaker 4: Specifically, this includes approximately $150 million in sales from the 53rd week, which is a smaller than average sales week for us.

Specifically this includes approximately $150 million in sales from the 50, <unk> week, which is a smaller than average sales week for us.

Speaker 4: At the midpoint, non-GAAP EVT margin is expected to be approximately 10.4% compared to our prior expectation of 10.2%.

At the midpoint non-GAAP EBT margin is expected to be approximately 10, 4% compared to our prior expectation of 10, 2%.

We expect modest improvement in gross margin for the full year, which continues to include an approximate 50 basis points unfavorable impact from higher shrink compared to 2022.

Speaker 4: We expect modest improvement in gross margin for the full year, which continues to include an approximate 50 basis points unfavorable impact from higher shrink compared to 2020.

Speaker 4: Specific to Q4, we expect to deliver continued gross margin and merged margin expansion on a year-over-year basis with some improvement versus our Q3.

Specific to Q4, we expect to deliver continued gross margin and much margin expansion on a year over year basis with some improvement versus our Q3 expansion.

We also continue to expect SG&A expenses to deleverage on a full year, primarily due to the proactive investments in our growth strategies.

Speaker 4: We also continue to expect SG&A expenses to deleverage on a full year primarily due to the proactive investments in our growth strategy.

Speaker 4: Specific to Q4, we expect LGNA to deleverage by a similar magnitude as the third quarter.

Specific to Q4, we expect SG&A to deleverage biosimilar magnitude as the <unk>.

Third quarter.

Speaker 4: Our earnings guidance is based on an effective tax rate of approximately 21% and an approximately 86 million average diluted shares outstanding compared to our prior expectation of approximately 87 million average diluted shares outstanding.

Our earnings guidance is based on an effective tax rate of approximately 21% and an approximately 86 million average diluted shares outstanding compared to our prior expectation of approximately 87 million average diluted shares outstanding.

Speaker 4: In addition, we expect net capital expenditures between 550 to 600 million dollars for the year.

In addition, we expect net capital expenditures between $550 million to $600 million for the year.

Speaker 4: As part of our business optimization, we incurred pre-tax charges totaling $52.5 million during the third quarter and currently expect to incur charges of approximately $10 million in fourth quarter.

As part of our business optimization, we incurred pre tax charges totaling $52 $5 million during the third quarter and currently expect to incur charges of approximately $10 million in fourth quarter.

These charges were excluded from today's non-GAAP outlook, we are still conducting our business optimization review, which we expect to be completed during fiscal 2023.

Speaker 4: These charges were excluded from today's non GAP outlook. We are still conducting our business optimization review, which we expect to be completed during fiscal 2020.

This concludes our prepared comments. Thank you for your interest in Dick's Sporting goods. Operator, you may now open the line for questions.

Speaker 4: This concludes our prepared comments. Thank you for your interest in exporting goods. Operator, you may now open the line for questions.

Speaker 1: Thank you. Ladies and gentlemen, at this time, if you do have any questions, again, star one, please. And we do ask that you please limit yourselves to one question and one follow-up question. We'll go first this morning to Simeon Gutmann.

Thank you ladies and gentlemen at this time if you do you have any questions again star one fleet and we do ask you. Please limit yourself to one question and one follow up question.

We'll go first this morning to Simeon Gutman at Morgan Stanley.

Speaker 1: Hey, good morning everyone. My first question is on the comps of the business, which have been much better than most retail categories and more resilient over the last couple of years. So you see the detail, you see the product categories, the trends, as you look at this composition and how the consumer is going, I'm trying to assess what the puts and takes are as you look forward. And if you want to share how you think about 24 fine, but more interested in what gives you confidence and what gives you pause.

Hey, Good morning, everyone. My first question is on the comps of the business, which have been much better than most retail categories and more resilient over the last couple of years. So you've seen the detail you see the product categories. The trends as you look at this composition and how the consumer is going.

I'm trying to assess what the puts and takes are as you look forward and if you want to share. How you think about 'twenty four fine, but more interested in what gives you confidence and what gives you pause.

Thanks Simeon.

Speaker 3: Yeah, we, we are pleased with how our consumer is holding up within the sporting goods industry and then particularly that they're choosing decks increasingly to meet their needs. People are prioritizing a healthy and active lifestyle. They're prioritizing team sports, outdoors, living, running, walking all of those things.

We are pleased with how our consumer is holding up within the sporting goods industry, and particularly that they are choosing <unk> increasingly to meet their needs people are prioritizing a healthy and active lifestyle that prioritizing team sports outdoors living running walking all of those things.

Speaker 3: And so we, we felt in this past quarter, particularly pleased with an increase in.

So we felt in this past quarter, particularly pleased with the increase in transactions and ticket.

Speaker 3: and tickets and the fact that our consumers are not trading down, that our consumer has held up very, very well. So, as we look into Q4, as you've heard in our guidance, we are very excited about what we have within our control for Q4. Our products are in stock. We've got tremendous

And the fact that our consumers are not trading down that our consumer has held up very very well. So as we look into Q4 as you've heard in our guidance. We are very excited about what we have within our control for Q4 are our products are in stock we've got tremendous.

Speaker 3: Again, if you look at LinkedIn, I know you follow DSG, hashtag DSG life, but you'll see what we call reindeer runs going on all across the country, and the teens are pumped.

Games and if you look at if you look at Linkedin I know, you've followed ESG hashtag ESG likely you'll see what we call reindeer runs going on all across the country and the teams are pumped to deliver an amazing holiday experience. We're balancing all of that caught with caution about the macroeconomic environment and the consumer because we know that consumers are going.

Speaker 3: to deliver an amazing holiday experience. We're balancing all of that with caution about the macroeconomic environment and the consumers because we know that the consumers.

Through a lot right now so I think we've been reasonably cautious in our guidance, but we're very excited about how our consumers.

Speaker 3: I think we've been reasonably cautious in our guidance, but we're very excited about how our.

Speaker 1: Okay, I'll shift the follow-up to gross margin, although I have some more on the top line, but I'll do it offline. On the gross margin, so in the last two years,

Okay, I'll I'll shift to follow up the gross margin, although I have some more on topline, but do it offline on the gross margin. So in the last two years.

Speaker 5: Last year you had, you worked with a vendor to move some inventory. This year you had some outdoor markdowns. So if you think about gross margins rebasing.

Last year, you had you worked with a vendor to move some inventory. This year you had some outdoor mark markdowns.

If you think about gross margins re basing.

Speaker 5: Do you look at those events as anomalies and you recapture that margin, or is this level the right baseline that, you know, gives you flexibility and then you could offer some upside from here?

When you look at those events as anomalies and you recapture that margin or is this level. The right baseline gives you flexibility in there that you could offer some upside from here.

Yeah, Thanks, Simeon I.

Speaker 3: that I think it's important when you look at the gross margin to understand that our product mix has become increasingly differentiated. And as a result of that, one of our core operating philosophies is always to be very decisive.

I think it's important when you look at the gross margin to understand that our product mix has become increasingly differentiated and as a result of that one of our core operating philosophies is always to be very decisive and move inventory. So that we can make room for clean and fresh receipts and that is really what that's what drove our comp this past quarter and what's been done.

Speaker 3: and move inventory so that we can make room for clean and fresh receipts. And that is really what that's what drove our comp this past quarter and what's been driving our comp.

Diving our comp for for some time.

Speaker 3: for some time. Last year, what you're mentioning, there were a few unusual events.

Last year, you, what you're mentioning there were a few unusual events.

Speaker 3: There was, there was a lump in outdoor equipment related to the pandemic. There was a lump in athletic apparel related to the pandemic. That is not the story of this quarter this quarter. We are very happy with the inventory that we're bringing in and we move decisively to move the products that's in the stores through to clearance and to outdoor and to online channels that we could make room to have an amazing.

There was a lump in outdoor equipment related to the pandemic. There was a lumpiness like apparel related to the pandemic that is not the story of this quarter. This quarter. We are very happy with the inventory that we're bringing in and we move decisively to move the product that's in the stores through to clearance into outdoor and online channels that we could make room tablet.

Using Q4 amazing holiday season, I do think Thats, what what drove our comps and I would remind you that we are still.

Speaker 1: for an amazing holiday season. I do think that's what drove our comps. And I would remind you that we are still, you take out the impact of shrink, we are still 50% higher on our merge margin basis from where we were before. So we're very proud of where we are from a gross margin standpoint and expected to continue to improve. Fair enough.

Take out the impact of shrink we are still 50% higher on a merch margin basis from where we were before so we're very proud of our but where we are from a gross margin standpoint, and expect it to continue to improve.

Fair enough, thanks, and happy Thanksgiving. Thank you.

Thank you. We'll go next now to Robby <unk> Bank of America.

Hey, good morning, guys great quarter.

Speaker 6: Hey, good morning guys great quarter, you know, just really just 2 questions. The 1st was.

Just a really just two questions the first one.

Speaker 6: Just on House of Sport, any more color you can give on how, you know, the ones that are comping are comping and also is the store economic model outlook improving? You know, you mentioned the Prudential Center in Boston. I'm assuming you might be getting great lease rates on that relative to that location, you know, maybe some, some thoughts on that.

Just on how sport anymore color you can give on how are you.

The ones that are Comping are comping and also was the store economic model outlook, improving you mentioned the Prudential Center in Boston I'm, assuming you might be getting great lease rates on that relative to that location, maybe some some thoughts on that and then the second question is just going going on.

Speaker 6: And then the second question is just, you know, going, going on and pop-up stores, can you...

And pop up stores can you.

Speaker 6: Tell us what kind of role that they played in non-comp sales in the third quarter and how you're thinking about those for the fourth quarter. Thanks.

Tell us what kind of role that they played in non comp sales in the third quarter and how youre thinking about those for the fourth quarter. Thanks.

Speaker 3: Robbie, I'll start and I'll turn it over to Abdi. House of Sports stores are performing very, very well. I think it's important to note that as much as we got a positive impact from those stores, both the first three that we opened more than a year ago and the new stores that just opened in the past six months, we also had growth across the balance of our portfolio and our omnichannel business as well. So it was a very balanced portfolio, which we're very happy with from a comp standpoint.

Thanks, Robbie I'll start and I'll turn it over to Mike Deep houses sport stores are performing very very well I think it's important to note that as much as we got a positive impact from those stores. Both the first three that we opened more than a year ago and the new stores that just opened in the past six months, we also had growth across.

The balance of our portfolio in our Omnichannel business as well. So it was a very balanced portfolio, which we're very happy with from a comp standpoint, the economics of how to support our very good I'll turn it over to deep to talk about how were leased.

Speaker 4: The economics of House of Sport are very good. I'll turn it over to Navdeep to talk about how we're, the lease rates and such, we're probably not going to get into that. But we have a very high standard for how we look at our real estate investments, and we don't do anything unless we hurdle a certain amount of ROI. So Navdeep, anything you would add? Yeah. Ravi, thanks for your comments. As far as the House of Sport is concerned, like we have talked about,

Lease rates and such we're probably not going to get into that but we have a very high standard for how we look at our real estate investments and we don't do anything unless we hurdle a certain amount of ROI. So now keep anything you would add yeah Ravi thanks for your comments and as.

As far as the houses, Florida is concerned like we have talked about.

Speaker 4: continue to be, first of all, pleased with the performance of the 12 stores that we have opened and the benefit is not just coming from an economic point of view, which is also great, but we are also seeing.

We continue to be first of all pleased with the performance of the 12 stores that we have opened and the benefit is not just coming from an economic point of view, which is also great. But we are also seeing.

Speaker 4: You know, our ability to be able to attract new brands and new partners that are coming to showcase their product at houses for location and we feel credential center will be another kind of for that top notch location where the brands would love to showcase the product will share more details about the economics of these boxes when we share our 2024 expectations.

Our ability to be able to attract new brands and new partners that are coming to showcase their product that houses port location, and we feel Prudential center will be another kind of that top notch location, where the brands would love to showcase their products will share more details about the economics of these boxes, when we share our 2024 expectations.

Speaker 4: because our plan is to open 10 additional locations in 24.

Because we our plan is to open 10 additional locations in 24.

Speaker 4: Coming to your question about going, going gone, the going, going gone chain and the warehouse plus locations as we call them continue to play a very important role in our overall clearance strategy. Like Lauren talked about.

Going to your question about going going gone going going gone chain and the warehouse plus locations as we call them continue to play a very important role in our overall clearance strategy like Lorne talked about the core differentiator for US continues to be the product assortment that we have available to drive the engaged relationship with that athlete we are seeing.

Speaker 4: Co-differentiator for us continues to be the product assortment that we have available to drive the engaged relationship with our athletes.

Speaker 4: We are seeing our assortment resonate really well with the athletes and having fresh and new vibrant assortment available in stores is is a key part of that strategy and going going gone allows us to move any access or clearance inventory very efficiently into those locations and get a much better economic return than we were able to get in the past.

Our assortment resonated really well with the athletes and having fresh and new vibrant assortment available in stores is a key part of that strategy and going going gone allows us to move any.

Any excess clearance inventory very efficiently into those locations and get a much better economic return then we were able to get in the past in terms of the non comp impact it didn't have a significant non comp impact because the number of stores that we had in Q3. This year are very comparable to the number of stores that we had last year.

Speaker 4: In terms of the non-comp impact, it didn't have a significant non-comp impact because the number of stores that we had in Q3 this year are very comparable to the number of stores that we had last year. So, you know, 58 stores this year compared to call it 56 stores last year in Q3. So it's a very comparable view. The non-comp benefit in the Q3 of this year was driven by the Moose job.

So 58 stores this year compared to call. It 56 stores last year in Q3, so it's a very comparable view the non comp benefit in Q3 of this year was driven by the most job business.

Speaker 6: Gotcha, that's helpful. And just Navdeep, for 4Q, do you expect sort of similar number of stores versus last year for going on?

Got you that's helpful and just deep for <unk> do you expect sort of similar number of stores versus last year for drilling going on.

Yes, we expect similar store count to be because we feel like we have reached a good point about all we can you can operate those number of stores very efficiently the non comp in fourth quarter will be moose jaw as well as the 50 <unk> week as we've called out.

Speaker 7: Yes, we expect similar store count to be because we feel like, you know, we have reached a good point of where we can operate those number of stores very efficiently. The non-comp in fourth quarter will be Moose Jaw as well as the 53rd week as we have called out. Fantastic. Thanks so much. Thanks.

Fantastic. Thanks, so much.

Thanks Robby.

We'll go next now to Kate Mcshane at Goldman Sachs.

Speaker 8: Hi, good morning. Thanks for taking our question. I wonder if you could talk to any category performance. During the quarter, just maybe how apparel and footwear looked relative to the 2nd quarter a year of the year. And are you seeing any stabilization in some of the bigger ticket categories that maybe were code beneficiary categories a couple of years ago?

Hi, good morning, Thanks for taking our question I Wonder if you could talk any category performance during the quarter, just maybe how apparel and footwear look relative to the second quarter year over year and are you seeing any stabilization in some of the bigger ticket categories.

Cove tunnel grocery categories.

For two years ago.

Speaker 3: Kate, the story in 2.3 from a category level really was about the strength of our back-to-school business. We saw strength as, you know, back-to-school has different cycles throughout the country, early, mid, and late back-to-school, and we could literally see the comps follow those trends. The back-to-school categories were performing so well. So, collectively, that is footwear and apparel and hydration, which is doing incredibly well, and then other accessories like backpacks, socks.

Thanks Kate.

Story in Q3 from a category level really was about the strength of our back to school business. We saw strength as back to school has different cycles throughout the country early mid and late back to school and we can literally see the comps.

Followed those trends with the back to school categories. We're performing so well so collectively that is footwear and apparel and hydration, which is doing incredibly well and then other accessories like backpacks Occidental.

Sorts of thing so.

Speaker 3: So we're very pleased with overall how our key categories performed in Q3. Looking at the higher ticket, the COVID categories, I want to just remind you, they are a smaller percentage of our business, and across the board, they remain significantly higher than our pre-COVID levels. We do expect long-term growth in those categories. We're just managing through them, but they are a small percentage of our business relative to.

So we're very pleased with overall how are keeps key categories performed in Q3.

Looking at the higher ticket Covid categories I wanted to just remind you. They are a smaller percentage of our business and across the board they remain significantly higher than our pre COVID-19 levels. We do expect long term growth in those categories are just managing through them, but they are a small percentage of our business relative to the.

The rest.

Thank you and we can just have a follow up question with regards to your commentary around.

Speaker 8: Thank you and if we can just have a follow up question with regards to your commentary around how to. At the brands, can you talk at all as to what those are and maybe how the brand. Distribution or or just what brands are carrying.

Also.

Can you talk at all.

What they are and maybe how the brand is.

So for granted.

Granted.

Speaker 3: Yeah, sure. I think how the sport is unique in that it is

Okay.

Yeah sure I think how the sport it is unique in that it is.

Speaker 3: It's totally rooted in sport and it's a fantastic destination for all of our brands. So if you look at some of our bigger brand partners, it's one of the best presentations they've said, one of the best presentations of their brands that they see. It's also an opportunity because of the size and

Totally rooted in sport and it's a fantastic destination for all of our brands. So if you look at some of our bigger brand partners. It's one of the best presentations, they've said one of the best presentations of their brands that they see it's also an opportunity because of the size and the level of service, where we can bring in new and emerging.

Speaker 3: and the level of service where we can bring in new and emerging brands.

Brands and through that channel, we brought in brands like FP movement and on in OCA.

Speaker 3: And through that channel, we brought in brands like FT Movement and ON and HOKA. And so and those then, you know, have ability to transfer down to the rest of the chain as.

And so and those then.

Ability to transfer down to the rest of the chain as we become partners. So our vertical brands also have incredible presence in our houses sports stores, we lead with them across the across the board in many of our entrances and they're doing quite well too. So overall just a fantastic presentation.

Speaker 3: partners. So our vertical brands also have incredible presence in our House of Sports stores. We leave with them across the board in many of our entrances and they're doing quite well too. So overall just it's a fantastic presentation and really puts a brand puts brands in their best light.

And really puts our brand puts brands and it's in their best light.

Thank you.

Thank you. We'll go next now to Mike Baker at D. A Davidson.

Speaker 9: Okay, thanks guys. So, a couple of margin questions. One, you talked about SG&A growing less next year.

Okay. Thanks, guys.

So a couple of margin questions. One you talked about SG&A growing less next year.

Okay.

Speaker 9: Can you talk about what your break-even comp is in terms of SG&A? What kind of comp do you need next year to leverage your SG&A? Maybe along the same lines, what kind of comp do you need for total EBT margins to be up? In other words, incorporating what might go on a gross margin in that as well.

So have you can you talk about what your breakeven comp is in terms of SG&A, what kind of comp do you need next year to leverage your SG&A and maybe along the same was what kind of comp do you need for total EBIT PBT margins to be up in other words, incorporating what might go on a gross margin in that as well.

Speaker 4: Yeah, Mike, thanks for the question. Maybe I'll start with the Q3 performance that we saw in the SG&A. So the SG&A came in from a rate perspective. It's still de-leveraged 100 basis points. But it was lower than the expectation that we had given at the end of Q2, driven by three primary things. First, the top line came in at the higher end of our expectations. So we're very pleased with the productivity that we were able to drive from just the leverage on the higher level of top line performance.

Yeah, Mike. Thanks for the question, maybe I'll start with the Q3 performance that we saw on the SG&A. So the SG&A came in from a rate perspective, its still deleveraged 100 basis points, but it was lower than that the expectation that we had given at the end of Q2, driven by three primary things plus the topline came in at the higher end of our.

Our expectations are we are very pleased with the productivity that we were able to drive from just the leverage on the higher level of top line performance.

Speaker 4: Second, really, really focused about the work that got done within the collective organization to be able to drive productivity and efficiency.

Really really focused about the work that got done, but then the R. But then the collective organization to be able to drive productivity.

And efficiency pretty much in the discretionary areas away from the core strategies on the company. So you saw there is also of that manifest through the P&L that we delivered and then some of the actions that we undertook here on the business optimization. The early parts of those benefits, but also in Q3.

Speaker 4: pretty much in the discretionary areas away from the core strategies of the company. So you saw the results of that manifest through the P&L that we delivered. And then some of the actions that we undertook here in the business optimization, the early parts of those benefits were also in Q3.

Speaker 4: And we expect a similar outlook as we shared for Q4, we expect SGNA to deleverage in the similar zone as where the deleverage for NQ3 came in.

We expect a similar outlook as we as we shared for Q4, we expect SG&A to deleverage in a similar zone as where the deleverage in Q3 came in in terms of 2024, here's the way I'll say it because we are not ready to provide guidance as yet for 2020 forward, but here's a framework to think about it the business optimization actions.

Speaker 4: In terms of 2024, here's the way I'll say it, because we are not ready to provide guidance as yet for 2024, but here's a framework to think about it. The business optimization actions that we have taken, particularly in the Moose Jaw and public lands businesses being brought together, that benefit will continue into 2024. And that's the reason we said, you know, our SGA will significantly moderate in terms of the growth as we go into 2024.

We have taken particularly in the in the Mojo and public clients businesses being brought together that benefit will continue into 2024 and that's the reason we said you know our SG&A will significantly moderate in terms of the growth as we go into 'twenty. Four in addition to the work that we're doing currently on I've done in the discretionary cost areas.

Speaker 4: In addition, the work that we are doing currently on have done in the discretionary cost area in Q3 and in Q4, we expect that benefit also to continue into into 2024. So we'll share more at the next earnings call about your 24 expectations, including the top line and the SG&A and the profitability.

In Q3 and in Q4, we expect that benefit also to continue into into 2024. So we'll share more at the next earnings call about the 24 expectations, including the top line and the SG&A and the profitability expectation.

Speaker 9: Okay, fair enough. One other, I guess, follow-up, but candidly, a different topic. Historically, in a lot of ways, back-to-school is a very good leading indicator for holiday sales. You had a very good back-to-school. Historically, in your business, have you seen that kind of correlation between holiday sales and back-to-school?

Okay Fair enough one other I guess falloff, but Kevin really a different topic.

Historically in a lot of ways back to school is a very good leading indicator for holiday sales you had a very good back to school historically in your business have you seen that kind of correlation between holiday sales in back to school.

Speaker 4: So, I would say what we are really pleased is the fact that our consumer is holding up really well. We are seeing growth both in our transaction and in our ticket. And as Lauren indicated, we have not seen any trade downs and all income demographics across our portfolio actually.

I would say what.

What we are really pleased with the fact that our consumer is holding up really well we are seeing growth both in our transaction and then our ticket and as Lauren indicated.

Have not seen any trade downs and all income demographics across our portfolio actually grew however, the competent upset and holidays is different and then back to school season. So we are very optimistic about the things that are within our control our assortment our service levels as well as the experience in the stores.

Speaker 4: However, the competitive set in holidays is different than, um, then back to school season. So, you know, we are very optimistic about the things that are within our control at assortment, our service level, as well as the experience in the stores are ready to serve our athletes and we couldn't be more excited about the holidays.

Our ready to serve our athletes and we couldnt be more excited about the holiday season.

Speaker 9: Great, fair enough. Look forward to seeing the new store in the Prudential Center up here in Boston.

Alright fair enough look forward to seeing the new store on the Prudential Center up here in Boston.

I see.

Us too.

Thank you well go next now to Warren Cheng at Evercore ISI.

Hey, good morning, guys.

Speaker 6: Just to follow up on your answer to Simeon's question on the 4Q comp, so the guidance implies a deceleration from that 1.7 from 3Q, so if we use that 3 Q1 .7 level as an anchor, the compares get easier going in the fourth quarter on both a year-over-year and multi-year basis.

Just a follow up on your answers Siemens question on the <unk> comp. So the guidance implies a deceleration from that $1 seven from <unk>. So if we use that three Q1 dollars seven levels as an anchor the compares get easier going in the fourth quarter on both a year over year and multiyear basis. It sounds like the inventories are well stocked <unk>.

Speaker 10: It sounds like the inventories are well stocked. 3Q had some unseasonable weather. So as we think about that 3Q to 4Q sequential slowdown, are there factors that we should consider? Or is that entirely just a macro caution that you talked about?

You had some unseasonable weather so as we think about that <unk> to <unk> sequential slowdown are there factors that we should consider.

Or is that is that entirely just the macro caution that you've talked about.

Speaker 3: Yeah, Warren, we are, we are being conservative on the low end of our guidance. Just given I would not deep just said, first of all, we compete with everyone in the world during the, the 4th quarter and also the, the consumers going through an awful lot and we're.

Yeah Lauren.

We are we are being conservative on the low end of our guidance just given we're not deep just said first of all we compete with everyone in the world during the fourth quarter.

Also the consumers going through an awful lot and we're just we're trying to be cautious and so I wouldn't read into anything other than we are.

Speaker 3: trying to be cautious. And so I wouldn't read into anything other than we are trying to model in an appropriate level of caution due to the uncertain macroeconomic.

Trying to model and an appropriate level of caution due to the uncertain macroeconomic environment.

Speaker 10: Got it. Thanks. And then a follow-up on margins. So, just on freight, I think it flipped to a big tailwind around third quarter or fourth quarter last year. How should we think about the spillover into 4Q in 2024? And then also, just on, to round up the gross margin piece, how should we think about occupancy expense growth in next year as you sort of ramp up Golf Galaxy and, sorry, Golf Galaxy and House of Sports?

Got it thanks, and then a follow up on on margins. So just on freight I think it flipped to a big tailwind around third quarter or fourth quarter last year, how should we think about the spillover into <unk> in 2024.

And then also just on to round out the.

The gross margin piece, how should we think about occupancy expense growth next year as you sort of ramp up golf Galaxy and public golf Galaxy and.

All sports.

Yeah, why don't I'll stay away from 2024 guidance, we'll provide that at the next quarter, but I'll I'll, maybe I'll answer your first part of the question in terms of the freight expenses I would say that the freight expenses to your point did start to moderate in terms of the growth last year. So we started to see the benefits of the lower freight expenses in the back half of <unk>.

Speaker 4: Yeah, Warren, I'll stay away from 2024 guidance. We'll provide that at the next quarter, but maybe I'll answer your first part of the question in terms of the freight expenses.

Speaker 4: I would say that the freight expenses, to your point, did start to moderate in terms of the growth last year. It's also, we started to see the benefits of the lower freight expenses in the back half of last year, and I would say they were a little bit more pronounced into Q4. So if you look at our prepared comments from last year, you'll be able to get to a good approximation for the Q4 expectations.

Yeah, and I would say that we're a little bit more pronounced into Q4. So if you look at our prepared comments from last year, you will be able to you'll be able to get to a good approximation for the Q4 expectations and above the occupancy we'll talk about more but when houses port and galaxy because that all ties into how we think about the overall operating model.

Speaker 11: And about the occupancy, we'll talk about more between House of Sport and Galaxy, because that all ties into how we think about the overall operating model. But like Lauren said, the core growth opportunities that we see between the House of Sport locations, the next-gen 50K, as well as Golf Galaxy, we are very excited about all of those opportunities, and we'll share more at the next quarter meeting. Thanks, Nadeem. Thanks, Lauren. Good luck. Thank you.

But like Laurent said, the core growth opportunities that we see between the houses port locations. The next Gen 50, K as well as golf Galaxy. We are very excited about all of those opportunities and we'll share more at the next quarter meeting.

Thanks, Dan Thanks, Lauren and good luck.

Yes.

The next now to Christopher J P. Morgan.

Thanks, Good morning.

Speaker 12: So just following up on, you talked about, you know, strength in the business, you talked about strengthening back to school and demographics and so forth.

So just following up on you talked about strength in the business you talked about strength in back to school and demographics and so forth a lot of retailers have talked about some moderation in October.

Speaker 12: A lot of retailers have talked about some moderation in October , so is it, I know you don't give monthlies, but is it fair to say that, you know, there was some, the strength was, you know, the confidence were highest around the back to school season.

I know you don't give monthly but is it fair to say that.

There was the.

The strength was the comps were highest around the back to school season.

Speaker 12: and then moderated, and then I guess related to that, how are you thinking about how the holiday season plays out? Are we reverting back to like 2019 where sales are very focused around events, whether that's Black Friday and Cyber Monday, and then the last two weeks for Christmas?

And then moderated and then I guess related to that how are you thinking about how the holiday season plays out are we are we reverting back to like 2019, where sales are very focused around events, whether that's black Friday and cyber Monday and then.

The last two weeks for Christmas.

Speaker 3: Yeah, Chris, so in terms of the strength of our quarter, the calendarization of our quarter, you are correct that the back to school strength drove significant comps in August and September . We did see a moderation in October of comps, but we also had unfavorable weather as a warmer weather as an impact. So nothing significant. But but, yes, we saw moderation in October as we look to the holiday season. Obviously, you know, we have the biggest.

Yeah, Chris.

In terms of the strength of our quarter the calendar as Asian of our quarter. You are correct that the back to school strength drove.

Significant comps in August and September we did see a moderation in October of comps, but we also had unfavorable weather.

Warmer weather has an impact so nothing significant but yes, we saw a moderation in October as we look to the holiday season. Obviously, we have the biggest weeks coming up ahead of us and it will be busy right until.

Speaker 3: Coming up ahead of us, and it'll be busy right until December 25th and we are seeing holidays kicking off as this has been going on now for a few years earlier in November . We've been talking about that for some time. We're seeing it now and we expect it'll be, it'll be a key 5 or 6 weeks here and I'll.

December 25th and we are seeing holiday is kicking off.

This has been going on now for a few years earlier in November we've been talking about that for some time, we are seeing it now and we expect it'll be it'll be a key five or six weeks here it'll it'll be.

Speaker 3: similar timing to what it was before, with events driving a lot of

Similar timing to what it was before with events driving a lot of excitement.

Speaker 12: And then my follow-up is, you know, I just think about innovation in 2024 across different categories. You've had a lot of success this year on having high heat product. And on the apparel side, you've also had, you know, expanded a few key brands around in the footwear category. So thinking about those categories in particular, how are you thinking about innovation as you look at 2024 and maybe as well on the golf side? Thank you.

And then my follow up is.

You know I had.

Just think about innovation in 2024 across different categories.

A lot of success this year on having high heat product and on the apparel side. You've also had expanded a few key brands around the in the footwear category. So.

Thinking about those categories in particular, how are you how are you thinking about innovation as you look at 2024, and maybe as well on the on the golf side.

Yeah.

Speaker 3: But we're excited, generally speaking, we're excited about the innovation in our business. We're excited about the new formats that we're innovating. We're excited about innovation in our service model. And we're excited about the product that we're seeing from many of our brand partners. We think it's going to be very, it will be a great year from, without me giving guidance. And I'm excited about the product that I'm.

Generally speaking we're excited about the innovation in our business. We're excited about the new formats that we're innovating we're excited about innovation and our service model and we're excited about the product that we're seeing from for many of our brand partners.

It's going to be very it'll be a great year from without me, giving guidance anyway I'm excited about the product that I'm seeing in 2024.

Speaker 3: or innovation across the board. You know, categories get interestingly hot from time to time. It's interesting to see what's happening with hydration in the past few years. There could be other.

Innovation across the board categories.

Interestingly Hot from time to time, it's interesting to see what's happening with hydration in the past few years that there could be other.

Speaker 3: categories that pop next year, but we see really exciting product in all the key categories of apparel and footwear.

Categories that pop next year, but we see we see really exciting product and all of the key categories of apparel and footwear and golf.

And maybe what I'll add one more point, we still see organic opportunity for us to continue to expand our premium full service footwear decks into the into the larger part of the overall company portfolio of stores and as we do that that opens up more access to brands as well as deeper access within those brands as well. So there are organic actions.

Speaker 4: Maybe, but I'll add one more point. You know, we still see organic opportunity for us to continue to expand our premium full-service footwear decks into the larger part of the overall company portfolio of stores, and as we do that, that opens up more access to brands as well as deeper access within those brands as well. So, there are organic actions that we have at our disposal and quite frankly that have done really well that give us confidence as we look to 24.

We have.

At our disposal and quite frankly that have done really well that give us confidence as we look to 'twenty four.

Speaker 12: And Navdeep, could you just remind us where you are from a penetration perspective on the foot word X and where it's going?

And now Dave could you just remind us where you are from a penetration perspective on the footwear decks and where it's going.

Speaker 12: Yeah, about 75% of the stores today have that capability. Got it. All right, thanks very much. Have a great Thanksgiving.

Yeah, Hey, I'm about 75% of the.

The stores do they have that capability.

Got it alright, thanks, very much have a great Thanksgiving.

Thank you you too.

Thank you well go next now to Michael Lasser at UBS.

Speaker 13: Good morning. Thank you so much for taking my question. Last quarter, you had planned some gross margin pressure to keep your inventories fresh as you moved through the course of the year. Have you used more or less of that flexibility than you anticipated? And would you consider that now just the cost of doing business that's going to be part of the cost structure moving forward?

Good morning. Thank you so much for taking my question.

Last quarter you had planned.

Some gross margin pressure to keep your inventories fresh as you move through the course of the year have you used more or less of that flexibility that than.

Than you anticipated and would you consider that now just the cost of doing business that is going to be part of the cost structure moving forward.

Hi, Michael Yes, we are we I would say one of our core operating philosophies and what is driving our top line sales is our ability to keep our inventory fresh and clean and especially the more that the inventory has become highly differentiated it's important to bring it in when it's when it's hot.

Speaker 3: Hi, Michael. Yes, we are. We, I would say 1 of our core operating philosophies and what is driving our top line sales is our ability to keep our inventory fresh and clean. And especially the more that the inventory has become highly differentiated. It's important to bring it in when it's when it's hot when it's.

When it and keep the stores are constantly evolving and so we are.

Speaker 3: stores are constantly evolving. And so as our gross margin materialized through the quarter, we were slightly more aggressive in terms of moving stuff out. The environment was slightly more promotional than we had originally expected. But generally speaking, we were decisive just

As our gross margin materialized through the quarter, we were slightly more aggressive in terms of moving stuff out that the environment was slightly more promotional than we had originally expected, but generally speaking we were decisive just to keep the stores clean nothing extraordinary or out of the ordinary I should say happened during the quarter.

Speaker 3: doors clean. Nothing extraordinary or out of the ordinary I should say happened during the quarter and we're very pleased that we were able to grow gross margin and we booked a Q4. We're expecting accelerated gains. We're also very pleased with the overall.

We're very pleased that we were able to grow gross margin and we look to Q4, we are expecting accelerated green gains were also very pleased with the overall profitability of the business.

Okay.

Speaker 13: And Lauren, your comment that the environment was a bit more promotional than you expected, how does that feed into your expectation for 4Q? And is the fact that your gross margin expansion going to accelerate in this quarter simply a function of an accelerating benefit from the lower freight?

Your comment that the environment was a bit more promotional than you expected how does that feed into your expectation for.

<unk> is the fact that your gross margin expansion going to accelerate in this quarter simply a function of an accelerating benefit from the lower free card.

Yes, actually the Q4 gross margin acceleration also factors in the fact that Q4 was a very promotional clearance times the industry had a glut of apparel last year at this time.

Speaker 3: Yeah, actually, the Q4 gross margin acceleration also factors in the fact that Q4 was a very promotional clearance time.

Speaker 3: that had a glut of apparel last year at this time. And so when we were saying we are looking to Q4, we are seeing some increased promotional activity. We're seeing more map breaks and we will be participating surgically where and when we feel it's necessary for us to stay competitive. We have factored all of that into our guidance and still expect gross margin to accelerate.

And so when we are saying we are looking to Q4, we are seeing some increased promotional activity. We're seeing more map breaks and we will be participating surgically, where where and when we feel it's necessary for us to stay competitive we have factored all of that into our guidance and still expect gross margin to accelerate in Q4.

Sure.

Michael Let me add one more thing just yet.

Speaker 4: Michael, let me add one more thing, just to clarify on the last part of the question. As in my prepared comments, I talked about that we expect both the gross profit as well as the merge margin to expand as we go into the fourth quarter. So, the merge margin would be on like the things that Lauren talked about would be kind of the annualization of the actions and the capabilities that we have. And to your last part of the question, that lower rate cost benefits would be part of the gross profit.

A large part of the question is in my prepared comments I talked about that we expect both the gross profit as well as the merch margin to expand as we go into the fourth quarter. So the.

How much margin would be unlike the things that Loren talked about would be kind of the amortization of the actions and the capabilities that we have and on to your last part of the question that lower freight.

Cost benefits would be part of the gross profit.

Speaker 11: Got you. I hope everyone has a great holiday season. Thank you so much. You too. Happy Thanksgiving. Thanks, Michael. Thanks.

I hope everyone has a great holiday season. Thank you. So much you too happy Thanksgiving. Thanks, Michael.

Thank you well go next now to Paul Cooney at Barclays.

Speaker 5: Hey, good morning. Thanks for taking my question. Uh, just on that on the promotional conversation, wondering if you can comment. On maybe by category, what you're seeing is more promotional. Is it that apparel is just more promotional than you would expect it to be? Are you seeing. Promotions elsewhere in the store and footwear and hard lines. And could you comment on the level of vendor support relative to last year? Thanks.

Hey, good morning, Thanks for taking my question.

And on the promotional conversation wondering if you can comment on maybe by category, what you're seeing is more promotional as about apparel was just more promotional than you would expect it to be or are you seeing promotions elsewhere in the stored in footwear and hardwoods.

Can you comment on the level of vendor support relative to last year.

Yes.

Q4, as I mentioned, we compete with with everything from jewelry to appliances to.

Speaker 3: with everything from jewelry to appliances to everything.

Everything.

Speaker 3: That could possibly be a gift. And so, the promotions by category are what you would expect. I wouldn't say there's an area of the store that's more promotional. We're making sure we have hot deals for consumers who are coming in and excited to shop during the holiday season. Vendor support, we work ongoing with our vendors. This is a week in, week out, month in, month out. And that's something we're not going to comment on specifically. But.

That could possibly be a gift and so the promotions by category or what you would expect there is I wouldnt say theres an area of the store that's more promotional we're making sure we have hot.

Deals for consumers, who are coming in and excited shop during the holiday season vendor support we work ongoing with our vendors. This is it.

We can week out month in month out and that's something we're not going to comment on specifically, but a continues to be a key part of our operating model.

Okay great.

Speaker 14: Okay, great. And just a quick follow up. Could you maybe just refresh us on the capital allocation priority as we think about next year and into the future through via assuming a continuation of share repurchases as part of that strategy? And where does that fall? Thank you.

A quick follow up could you maybe just refresh us on the capital allocation priority as we think about next year and into the future to review, assuming a continuation of share repurchases as part of that strategy and where does that fall. Thank you.

Speaker 4: Yeah, Paul, you know, consistent with what we have said, the capital allocation priority continues to remain consistent. We are focused on maintaining an appropriate level of cash on the balance sheet. And the 2nd is to continue to maintain our investment grade status that we have. And the 3rd priority continues to be invested into the business. And as as part of our updated guidance, we are maintained.

Yeah, Paul I'll Paul.

And with what we have said the capital allocation priority continues to remain consistent we are focused on maintaining an appropriate level of cash on the balance sheet and the second is to continue to maintain our investment grade status that we have and the third priority continues to be invest into the business and as part of our updated guidance we have maintained.

Speaker 4: a capital investment expectation of 550 to $600 million.

The capital investment expectation of $550 million to $600 million. What you saw US do in Q3 is when we see that as an opportunistic auto dislocation in our stock price, we will step in based on where the stock prices and the long term confidence we have in our company and we stepped in and bought 388 million.

Speaker 4: What you saw us do in Q3 is when we see there is an opportunistic or a dislocation in our stock price, we will step in based on where the stock price is and the long-term confidence we have in our company. And we stepped in and bought $388 million worth of stock. And from our return to the shareholders, our priority continues to be able to give a good return in terms of the dividend, which we doubled this year, as well as continuing to opportunistically buy back shares.

Worth of stock and from a return to the shareholders. Our priority continues to be able to give a good return in terms of the dividend, which we doubled this year as well as continuing to Opportunistically buy back shares.

Thank you so much that's looking at all of this.

Thank you.

Speaker 1: Thank you. We go next now to Paul Leshway at Citigroup.

Thank you well go next now to Paul Lajoie at Citigroup.

Speaker 8: Hi, this is Kelly on the call. Thanks for taking your question. I just want to follow up on how the sport stores. I hope you can parse out the performance of some of the newly converted. Has a sports stores that are included in the company's relative to how. Legacy stores performed in the 3rd quarter.

Hi, this is.

Paul Thanks for taking my question I, just want to follow up on the fourth floor.

First that the performance of some of the newly converted fourth.

The stores that are included in the comp base.

Relative to how legacy Nixdorf performed.

The third quarter.

Speaker 4: to have a follow up. Yeah, Kelly, thanks for that question. Let me clarify one thing.

The follow up.

Well that question, let me clarify one thing you never took out those stores that were converted into houses bought out of the comp base. So they were part of our comp base even in the first half of this year and quite frankly, we have talked about that they've got an unfavorable impact as we were converting them.

Speaker 4: never took out those stores that were converted into houses for out of the company. So they were part of our company even in the first half of this year. And quite frankly, we had talked about that they were an unfavorable impact as we were converting.

Speaker 4: In terms of the performance that we have seen from these stores, we couldn't be more excited. There are only eight of them that, collectively 12 of them, but the original stores are doing really well. The new group of stores are doing extremely well as well. And, yes, they had a favorable impact to our comp, but we were very pleased with the overall portfolio of the brick and mortar and the Omni comp that we were able to deliver. So, overall, very pleased with the performance of House of Sport Location as well as the core business that we.

In terms of the performance that we have seen from these stores, we couldn't be more excited that only eight of them that collectively all of them, but the original stores are doing really well the new group of stores are doing extremely well as well and yes. They had a favorable impact of our comp, but we were very pleased with the overall portfolio of the.

Brick and mortar and omni comp that we were able to deliver so overall very pleased with the performance of houses port location as well as the core business that we saw in Q3.

Speaker 8: Got it. And then on the public land move job plans, can you just give us an update on how many public land stores you have and whether, you know, your plan for new businesses includes more stores? What's sort of the go forward plan for that outdoor category outside of the, you know, the core DIC store? Thanks.

Got it and then on the.

Public or withdraw plan can you just give us how many product lands towards you have and whether you plan for these businesses include more storage.

What's sort of the go forward plan for that outdoor category outside of it.

The core Dick's store.

Speaker 4: Yeah, this is let me start on that. But let's, let's talk a little bit about our overall excitement about the, the outdoor category, you know,

Yeah.

Let me start on that but let's let's talk a little bit about our overall excitement about the the outdoor category.

Like we have talked about Moose jaw and public clients collectively serve the outdoor athletes and that industry is it's a $40 billion highly fragmented industry, but not a clear leader so as we see the collective.

Speaker 4: We have talked about Moose Jaw and Public Lands collectively serve the outdoor athlete and that industry is a $40 billion, highly fragmented industry, but not a clear leader. So as we see the collective.

Speaker 4: capability that we have between the Moose Jaw brand as well as the Public Lands brand, we are extremely excited about that opportunity to continue to differentiate and provide a much more synergistic way of serving that athlete as we look forward.

Capability that we have between the mudra, Brian as well as a public clients. Brian we are extremely excited about that opportunity to continue to differentiate and provider are much more synergistic way of.

So having that athlete as we look forward. So what we talked about in Q3 was we were as you can imagine after the acquisition. We are integrating the back office operations of the Moose jaw and public clients team and bringing one team together to solve these athletes.

Speaker 4: So, what we talked about in Q3 was we were, as you can imagine, after the acquisition, we are integrating the back office operations of the Moose Jaw and Public Lands team and bringing one team together to serve these.

Speaker 4: In terms of the number of public land stores that we have, we have seven public land locations right now, and we are excited about the ongoing business that we see here collectively between both these brands.

In terms of the number of public clients stores that we have we have seven public land locations right now and we are excited about the ongoing business that we see here are collectively between both these brands.

But any plans to open more.

Well, we'll share more details.

In 2024, but yes, our plans are to continue.

Testing and learning into those Brian and opening more stores as we go look into the future.

Got it thank you.

Thank you. We'll go next now to John Kernan at TD Cowen.

Yeah.

Good morning, Thanks for taking my question.

Keep it on the house of sport themes, how should we think about the.

Speaker 2: contribution to unit growth and top line into next year. And then also, as we think about the four wall margin on these stores versus the existing chain.

The contribution to unit growth in top line into next year and then also should we think about the four wall.

Margin on these stores versus the existing chain.

Yes, John I would say first of all as we have talked about most of the 12 stores that we've opened are either a conversion or a relocation of an existing store. So what youre what youre looking here is not a significant expansion in the square footage of the overall company.

What we are seeing is a very differentiated experiences that we are able to providing these in these stores will share more specifics in fourth quarter, but I can give you. This that from a sales productivity perspective as well as the contribution perspective, we are very happy with the financial returns that we are delivering on these investments.

Speaker 4: sales productivity perspective as well as the contribution perspective, we are very happy with the financial returns that we are delivering on these investments.

Yeah.

Got it and then maybe just a quick follow up on SG&A and some of the cost savings that you are looking at some of the business optimization initiatives, how should we think about the net savings that you'll see.

Into 2024 and beyond.

Speaker 4: So, in our prepared comments, what we shared was that we expect our SGNA growth to significantly moderate, especially considering the growth that we have seen in our SGNA.

So the in our prepared comments, what we shared was that we expect that SG&A growth to significantly moderate, especially considering the growth that we've seen in our SG&A. This year, but as you can imagine it's a combination of multiple things going on what do we expect the sales growth to be next year, but also.

Speaker 4: this year. But as you can imagine, it's a combination of multiple things. You know, what do we expect the sales growth to be next year? But so we'll share more, but the framework that I would use is, first of all, the business optimization work that we're doing, especially with bringing the Moose Jaw and the public lands business together, will have continued benefit, actually bigger benefits into 2024.

I'll share more but the framework that I would use is first of all the business optimization work that we're doing especially.

Bringing the <unk> and the public land business together, we'll have continued benefit actually bigger benefits into 2024 as well as the productivity and the efficiency conversation that we talked about in Q3 and Q4 those actions will continue to.

Speaker 4: as well as the productivity and the efficiency conversation that we talked about in Q3 and Q4, those actions will continue to kind of help us mitigate the growth in SG&A as we look to the future. Got it.

Kind of help us mitigate the the growth in SG&A as we look to the future.

Got it thank you happy Thanksgiving.

Thank you you too.

Thank you. We'll go next now to Joe Feldman at Telsey Advisory Group.

Speaker 1: Thank you. We go next now to Joe Feldman at Telsey Advisory Group. Great. Thanks, guys.

Great Thanks, guys and congrats on the quarter.

Speaker 15: Wanted to go back to the comments you made about weather and how much of a factor does weather have for you guys in the fourth quarter? Like, you know, will apparel be an issue if weather doesn't really get cold here? And because it seems like it did, you know, it was softer for everybody, not just you in October because weather was a little more warm than normal. So just wondering how to think about the fourth quarter and apparel.

Wanted to go back to the comments you made about weather.

And how much of a factor because weather has for you guys in the fourth quarter like it will apparel <unk>.

Issue, if weather doesn't really get cold here and because it seems like you did.

It was softer for everybody not just you in October because where there was little more warm warmer than normal so.

I'm just wondering how to think about the fourth quarter in apparel.

Speaker 3: Yeah, thanks Joe. Certainly Q4 is the most weather dependent category. We've over time mitigated some of the volatility of that factor because we can't control the weather by just making sure we have all sorts of lightweight as, you know, fleets is a big driver for us and things that don't depend on super extreme cold. That said, we like cold. So I'm hoping for a snowy Thanksgiving.

Yeah. Thanks, Joe.

Certainly Q4 is the most weather dependent category, we've over time mitigated some of the.

Volatility of that factor, because we can't control the weather, but just making sure. We have all sorts of lightweight is fleets is a big driver for us and things that don't depend on Super extreme cold that said, we like cold, So I'm, hoping hoping for Thanksgiving and Christmas.

Speaker 15: Okay, and then another question just you know, I know inventories in good shape But you know, how are you guys planning it? You know and get through the fourth quarter and then at your initial thoughts on 24 like how you'll plan You know, will it be up? Will it still be down a little bit? You know, like we've been seeing this year How should we think about it?

Okay, Okay and then.

Another question, just I know what inventories in good shape, but how are you guys planning.

Okay.

Get through in the fourth quarter and then at your initial thoughts on 'twenty for like how you'll plan.

Or will it be at will it still be down a little bit you know like we've been seeing this year, how should we think about it.

Speaker 4: Yeah, I would say that, you know, we haven't given the guidance for Q4 on inventory, but I would start to say by the fact that if you look at our sales were up 3% almost in Q3 and our inventory was down 2%. So that kind of indicates how well we are managing the overall inventory position. And I would say a similar sentiment as we look to

Yeah, I would say that.

We haven't given the guidance for Q4 on inventory, but I would start to say by the fact that if you look at our sales were up 3% almost in Q3, and our inventory was down 2%. So that kind of indicates how well we are managing the overall inventory position and I would say similar sentiment as we look to.

Speaker 4: to Q4 as well. You know, we are right now in the middle of our budget season for 2024, and we are planning through the top line, the bottom line expectations, and the inventory. So we'll share more about exact 2024 working capital investment as we share the guidance in next quarter.

Q4 as well.

Yeah right now in the middle of our budget season for 'twenty 'twenty four and we are planning through the topline and the bottomline expectations on the inventory. So we'll share more about exact 2024 working capital investment as we shared the guidance.

Next quarter.

Speaker 15: got it. Thanks, guys, and good luck this quarter. Happy Thanksgiving.

Got it thanks, guys and good luck this quarter and happy Thanksgiving.

Thank you you too.

We'll go next now two wheel Gartner at Wells Fargo.

Speaker 16: Hey, you guys, thanks for squeezing me in here. Can you guys just give us a breakdown of store openings for the balance of the year and perhaps in the next year how you're thinking about store openings and, you know, how we should be modeling that?

Hey, guys. Thanks for squeezing me in here.

Could you guys just give us a breakdown of store openings for the balance of the year and perhaps into next year, how youre thinking about store openings.

Or we should be modeling that.

Yeah the store openings.

Speaker 4: Yeah, the store openings for Q4 are primarily done with the holiday season, so not too many stores are expected to open here in the fourth quarter. What we have guided in terms of the preliminary 2024 expectation is ten houses for openings. You can see us continuing to open more Golf Galaxy locations.

Q4.

I'm really done.

With the holiday season so.

Not too many stores that are expected to open here in the fourth quarter, what we have guided in terms of the preliminary 2024 expectation is 10 households, part openings you can see us continuing to open more golf Galaxy locations.

Speaker 4: 2024, we continue to be really pleased with the overall performance of the Galaxy Performance Center. In addition, we will also be remodeling our stores to continue to keep our overall assortment within those stores fresh and have the right capability and experience investment in the core part of the DIC stores.

Into 2024, we continue to be really pleased with the overall performance of the Galaxy performance Center. In addition, we will also be remodeling our stores, who continue to keep our overall assortment.

But then those stores fresh and have the right capability and experienced investment invest in the core part of the Dick's stores as well.

Speaker 16: Got it. And then maybe just talk a little bit about inventory in the channel. What were you seeing, you know, what categories you're seeing are heaviest, which are lean? And just give us a little bit of context and, you know, what categories you're seeing from an inventory perspective.

Got it.

And then maybe just talk a little bit about inventory in the channel where are you seeing.

What categories, you're seeing are heaviest which are which are.

Can you just give us a little bit of context.

What categories, you're seeing are from an inventory perspective.

Yeah, well I, there's nothing extraordinary or out of the ordinary going on with inventory in the categories are.

Speaker 17: Yeah, well, there's nothing extraordinary or out of the ordinary going on with inventory in the categories or, you know, where appropriately moving through product the whole industry is. But it isn't the way it was last year where there was really distorted levels of inventory. Got it. Thanks. I'll pass it along. Thank you.

We're appropriately moving through product the whole industry is but it isn't the way it was last year, where there was real.

Really distorted levels of inventory.

Okay.

Got it.

I'll pass it along.

Okay.

Thank you we'll go next now to Joseph below at Truest.

Yeah.

And Mr. <unk>. Your line is open Sir if you do have a question.

Hi, sorry about that thanks, so much for taking my call.

Speaker 18: Quick questions, quick follow-up on the House of Sport locations. All right, can you guys call out anything in terms of like ticket or transaction benefits that you see of House of Sport versus other locations?

A quick question a quick follow up on the house's sport locations or can you guys call out anything in terms of like particular transaction benefits that you have how sport versus other locations.

Speaker 19: Yeah, I would say, you know, first of all, our overall portfolio of the house of sport is resonating really well with the athlete. So we see benefits in in how many athletes and how far they're traveling to come and visit these experiential locations that we have. In addition, we are also seeing benefits in the overall basket size. So I really encouraged by the, the makeup of the athlete, the engagement that we are able to drive with those athletes as well as the basket size. Great. Thanks so much.

Yeah, I would say first of all our overall portfolio of the houses part is resonating really well with the athletes will be see benefits in data and how many athletes and how far they are traveling to come and visit these experiential locations like we have in addition, we are also seeing benefits in the overall basket size. So.

Really encouraged by the the amaze us off the athletes.

The engagement that we're able to drive that those athletes as well as the basket size.

Great. Thanks, so much.

We'll go next to Justin clever at Baird.

Speaker 16: Yeah, hey, guys, good morning. Thanks for taking the question. Just 1 for me on the implied 4 Q revenue guide. If I take the midpoint.

Yeah, Hey, guys. Good morning, Thanks for taking the question just one from me on the implied <unk> revenue guide if I take the mid points of the comp and non comp benchmarks you Sharon it looks like.

Speaker 16: of the comp and the non-comp benchmarks you shared. It looks like.

Speaker 16: Guidance assumes that revenues will lift sequentially. Kind of in the high teams range, you know, if I exclude the extra week, and if I go back pre pandemic. Your 4 key revenues used to grow north of 30%. Quarter over quarter, so just can you help me?

This assumes that revenues will lift sequentially kind of in the high teens range, if I exclude the extra week and if I go back pre pandemic. Your <unk> revenue is used to grow north of 30%.

Quarter over quarter. So just.

Can you help me.

Reconcile why that's not the case anymore why that relationship doesn't hold are you just more disciplined with promotions around the holiday or is the mix of the business that that much different just trying to understand.

Speaker 16: not the case anymore? Why that relationship doesn't hold? Are you just more disciplined with promotions around the holiday? Or is the mix of the business that much different? Just trying to understand that. Thank you.

I understand that thank you.

Okay.

Speaker 4: Yeah, it just and this is not the I'll take an attempt at that. The way we have thought about 4th quarter is is very comparable to how we think about the holiday season. Holiday season is a very distinct and a different season. When we compare that to the back to school season. So we look at it much more on a sequential year over year basis versus the 3 Q to 4 Q build. But to your point, you know, when we look.

Yeah. Justin this is an update ball I'll take an attempt at that.

The way we have thought about fourth quarter is very comparable to how we think about the holiday season holiday season is a very distinct and a different season. When can we compare that to the back to school season. So we look at it much more on a sequential year over year basis versus the <unk> <unk> to <unk> build.

But to your point when we look.

Speaker 4: the fourth quarter expectation that we guided to. First of all, we are up against a 5.3% calm.

Fourth quarter expectation that we guided to first of all we are up against a five 3% comp. It's a much more wider competitive set compared to the back to school season, and we continue to be really confident on the high end of the expectation that we have that we have driven about the things that we have within our control we moderated the low end of our Q4.

Speaker 4: It's a much more wider competitive set compared to the back to school season. And we continue to be really confident on the high end of the expectation that we have, that we have driven about the things that we have within our control. We moderated the low end of our Q4 expectation, just considering the macroeconomic landscape that we'll be competing with everybody else in fourth quarter. So we feel we have appropriately balanced the outlook and maybe we can take that offline and if we have a deeper look.

Station just country, just considering the macroeconomic landscape that would be that we will be competing with everybody else in fourth quarter. So we feel we have appropriately balanced.

Outlook and maybe we can take that offline and we have a depot question on that Justin I would just add one thing that and again, we don't have the numbers compared to multiple years ago on this particular topic, but I'm I would hypothesize that the strength that we've had in our business in Q3 between them back to school categories team sports over the years.

Speaker 3: Yeah, Justin, I would just add 1 thing that and again, we don't have the numbers compared to multiple years ago on this particular topic, but I'm, but I would hypothesize that the strength that we've had in our business.

Speaker 3: between back to school categories, team sports over the years, and just footwear and apparel is probably has even smoothed out that curve a little bit.

And Ed just footwear and apparel is probably has even smoothed out that that curve a little bit.

Yes, Okay that makes sense guys. Thanks, so much and best of luck over the holidays.

Speaker 11: Yep. Okay. That makes sense guys. Thanks so much and best of luck over the holidays. Thank you. Thank you. And our final

Thank you.

Thank you and our final question comes from Daniel Umbro at Stephens.

Yeah, Hey, good morning, everybody, thanks for taking our questions.

Speaker 18: Maybe my first one, just on inventory and then the optimization actions, I guess the inventory write down, Navdeep, is that all within the outdoor categories that were maybe left over from last quarter? And is there anything left to do on the inventory side? It does look like on the website, there's still some decent promotions in bikes and outdoors. I'm trying to think about, are we through that inventory kind of write down or optimization?

Maybe first one just on inventory and then the optimization actions I guess the inventory write down.

All within the outdoor category leftover from last quarter and is there anything left to do on the inventory side. It does look like on the website theres still some decent promotions and bikes and outdoor is I'm trying to think about or are we through that inventory write down of optimization.

Speaker 4: Yeah, Daniel, let me clarify that the two things are totally separate and distinct the the one time action that is included in our gap outlook in the inventory. Write down actually is associated with the moves job brand. We have some tertiary skills in that in that business that will not be part of the go forward assortment as we look to bring the two brands together. And so that.

Yeah, Danielle let me clarify that the two things are totally separate and distinct.

The onetime action that is included in our GAAP outlook and the inventory write down actually is associated with the most job brand. We have some tertiary skus in that business that will not be part of the go forward assortment as we look to bring the two brands together and so that's what you're seeing is the action around the moon.

Speaker 4: the action around the Moose Jaw business, not necessarily anything to do with the actions that we talked about in Q2. Overall, our inventory is really clean and we are really excited about the assortment that we have available for Q4. And if you look at the overall inventory, we were down 2% on top line, growth of 3%. So we continue to manage the overall inventory really well and excited for the holidays.

Business not necessarily anything to do with the actions that we talked about in Q2 overall, our inventory is really clean and we are really excited about the assortment that we have available.

Q4, and if you look at the overall inventory we were down 2% on top line growth of 3%. So we continue to manage the overall inventory really well and excited for the holiday season.

Speaker 19: Great. And then maybe as a related follow up, Lauren, you know, you're not seeing any trade down today, and that's maybe surprising, but encouraging. I'm curious how you're thinking about buying inventory or how you're telling your buyers today to handle that. Are you preparing for a further trade down? Are you building inventory in that part of the price spectrum? And maybe if not, if we see a trade down, could there be a mismatch between the inventory you built and where the consumer checks out?

Great and then maybe as it related follow up Loren you don't you're not seeing any trade down today, and that's maybe it's surprising but encouraging I'm curious, how you're thinking about buying inventory or how you're telling your buyers today to handle that or are you preparing for further trade down or are you building inventory in that part of the price spectrum and maybe if not if we see a trade down could there be a myth.

Match between the inventory built and we're in.

Consumer shakes out.

Speaker 3: Dan, that's a great question. We make sure that we have inventory for every single shopper at every single price point. So while some of our products have become even more premium as we've got access to premium footwear and just hotter products in general, we at the same time have made meaningful inroads with our DSG brand, which is an opening price point brand that has tremendous value and tremendous fashion and a great price point.

Yeah, no. It's a great question, we make sure that we have inventory for every single shopper at every single price point, so while some of our products have become even more premium as we've got access to premium footwear and hotter products in general we at the same time have made meaningful inroads with our DSG brand, which is an open.

Price point brand that has tremendous value and tremendous passion and a great price point. So I think we're perfectly suited to match the consumer needs and we've been very happy to see that the consumers and shifting down, but we can flex and we will have what they need when they need it.

Speaker 3: So I think we're perfectly suited to match the consumer needs, and we've been very happy to see that the consumers are shifting down, but we can flex and we'll have what they need when they need it.

Great I'll leave it there thanks, a lot for the color.

Speaker 1: Thank you. At this time, I would like to turn things back over to you, Ms. Hobart, President and CEO for any closing.

Thank you at this time I would like to turn things back over to U S. Hobart, President and CEO for any closing comments.

Speaker 3: Thank you very much. I hope everybody has a wonderful Thanksgiving. Thanks for your interest.

Well. Thank you very much I hope everybody has a wonderful Thanksgiving and thanks for your interest in Dick's Sporting goods and we'll see you in.

New year. Thank you.

Speaker 1: Thank you, Ms. Hobart. Ladies and gentlemen, at this time, it does conclude the Q3 2023 Dick's Sporting Goods Earnings Conference call. Thank you so much for joining us and we wish you all a great day. Goodbye.

Thank you Ms Hobart, ladies and gentlemen at this time that does conclude the Q3 2023, Dick's Sporting goods, earning conference call. Thank you so much for joining us and we wish you all a great day Goodbye.

Okay.

According to <unk>, earning conference call. Thank you so much for joining us and we wish you.

Speaker 1: Goods Earnings Conference call. Thank you so much for joining us and we wish