Q1 2024 Dick's Sporting Goods Inc Earnings Call

Operator: Thank you for standing by, and welcome to the Dick's Sporting Goods first quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise.

Thank you for standing by and welcome to the Dick's Sporting goods first quarter 2024 earnings conference call.

Speaker Change: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad, if you'd like to withdraw your question again prestige star one. Thank you I'd now like to turn the call over to unique guilt. She.

Operator: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, again, press star one. Thank you. I'd now like to turn the call over to Nate Gilch, Senior Director of Investor Relations. You may begin.

Speaker Change: Our director of Investor Relations you may begin.

Nathaniel A. Gilch: Good morning, everyone, and thank you for joining us to discuss our first quarter 2024 results. On today's call will be Lauren Hobart, our President and Chief Executive Officer, and Navdeep Gupta, our Chief Financial Officer.

Speaker Change: Good morning, everyone and thank you for joining us to discuss our first quarter 2024 results on today's call will be Lauren Hobart, Our president and Chief Executive Officer, <unk> Gupta, our Chief Financial Officer.

Nathaniel A. Gilch: A playback of today's call will be archived on our investor relations website located at investors.dicks.com for approximately 12 minutes. As a reminder, we will be making forward-looking statements that are subject to various risks and uncertainties because our actual results differ materially from these. 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, as well as cautionary statements made during this call.

Speaker Change: A playback of todays call will be archived on our Investor Relations website located at investors subjects Dot com for approximately 12 months.

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

Speaker Change: 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.

Speaker Change: Our cautionary statements made during this call.

Nathaniel A. Gilch: We assume no obligation to update any of these forward-looking statements or information. Please refer to our investor relations website to find the reconciliation of our non-GAAP financial measures referenced in today's call. And finally, a few more minutes.

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

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

Finally, a few admin items.

Nathaniel A. Gilch: First, as we previewed on our last earnings call, beginning this quarter, we have revised our comparable sales calculation to include revenue from our game. Second, beginning this quarter, we have included grand opening advertising costs within pre-opening expenses. These one-time costs incurred in connection with opening new stores were historically presented within SG&A as part of advertising. We have reclassified prior period amounts to conform to our current year presentation. And finally, for future scheduling purposes, we are tentatively planning to publish our second quarter 2024 earnings results on September 4th, 2024. With that, I will now turn the call over to Lauren.

Speaker Change: As we previewed on our last earnings call beginning this quarter, we have revised our comparable sales calculations.

Speaker Change: Revenue from our game changer business.

Speaker Change: Second beginning this quarter, we've included Grand opening advertising costs within Preopening expenses.

Speaker Change: One time costs incurred in connection with opening new stores, where historically presented within SG&A part of advertising costs. We.

Speaker Change: We have reclassified prior period amounts to conform to our current year presentation.

Speaker Change: And finally your future scheduling purposes, we are tentatively planning to publish our second quarter 2024 earnings results on September four 2024.

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

Lauren R. Hobart: Thank you, Nate, and good morning, everyone. We're incredibly proud of our strong Q1 results, which demonstrate how well our strategies are working, powered by our compelling omni-channel athlete experience. Differentiated Product Assortment, deep engagement with the Dick's brand, and our focus on providing a best-in-class teammate experience. We continue to build on the momentum from the fourth quarter. Our execution on these strategic pillars is driving continued market share gains. For the first quarter, our sales increased 6.2% to just over $3 billion. Adjusting for the calendar shift, our comps increased 5.3%, which was on top of a 3.6% comp last year.

Lauren R. Hobart: Thank you Nathan and good morning, everyone.

Lauren R. Hobart: We're incredibly proud of our strong Q1 results, which demonstrate how well our strategies are working.

Lauren R. Hobart: Powered by our compelling Omnichannel athlete experience.

Lauren R. Hobart: Differentiated product Assortments.

Lauren R. Hobart: Deep engagement with the <unk> brand.

Lauren R. Hobart: And our focus on providing a best in class teammate experience.

Lauren R. Hobart: We continued our momentum from the fourth quarter.

Our execution on these strategic pillars is driving continued market share gains.

Lauren R. Hobart: For the first quarter, our sales increased six 2% to just over $3 billion.

Lauren R. Hobart: Adjusting for the calendar shift our comps increased five 3%, which was on top of a three 6% comp last year.

Lauren R. Hobart: This strong comp was driven by growth in transactions and in average tickets. During the quarter, we saw more athletes purchase from us, and they spent more each trip compared to the prior year. Our first quarter growth margin expanded ten basis points, and we achieved double-digit EBT margin of over 11%. In total, we delivered Q1 EPS of $3.30.

Lauren R. Hobart: This strong comp was driven by growth in transactions and average ticket.

Lauren R. Hobart: During the quarter, we saw more athletes purchased from us and they expect more each trip compared to the prior year.

Lauren R. Hobart: Our first quarter gross margin expanded 10 basis points, and we achieved double digit EBT margin of over 11%.

Lauren R. Hobart: In total we delivered Q1 EPS of $3 30.

Lauren R. Hobart: Today we're raising our full-year outlook to reflect our strong Q1 results. We now expect Comptail's growth for the year to be in the range of 2% to 3%, and EPS to be in the range of $13.35 to $13.75. Our emphasis on the omni-channel athlete experience is driving robust athlete engagement. We are continuing to enhance service levels across all our digital and store experiences to meet our athletes wherever they are, provide the support and service they need, and get product into their hands fast.

Lauren R. Hobart: Today, we are raising our full year outlook to reflect our strong Q1 results.

Lauren R. Hobart: We now expect comp sales growth for the year to be in the range of 2% to 3% and EPS to be in the range of $13 35.

Lauren R. Hobart: The $13 75.

Lauren R. Hobart: Our emphasis on the Omnichannel athlete experience is driving robust athlete engagement.

Lauren R. Hobart: We are continuing to enhance service levels across all our digital and store experiences to meet our athletes wherever they are provide the support and services, they need and get product into their hands faster.

Lauren R. Hobart: During Q1, we continued to see growth in our omnichannel athletes, our strongest athletes, who spend more with us and shop more frequently than single-channel ads. As we've talked about previously, our significant investments to reposition our portfolio are key to delivering an elevated omni-channel athlete experience. We expect Health of Sports and our next-generation 50,000-square-foot Dick's store to drive robust omni-channel athlete engagement and generate strong sales and profitability. During Q1, we opened two House of Sport locations and are excited to open six additional locations. We also opened two next-generation 50K locations during the first quarter and look forward to opening an additional 14 locations throughout 2020. We continue to be very pleased with the results of these exciting Dick's concerts.

Lauren R. Hobart: During Q1, we continued to see growth in our Omnichannel athletes are strongest athletes, who spend more with us and shop more frequently than single channel athletes.

Lauren R. Hobart: As we've talked about previously are significant investments to reposition our portfolio are key to delivering an elevated omnichannel athlete experience.

Lauren R. Hobart: We expect also sports in our next generation 50000 square foot Dicks store to drive robust omnichannel athlete engagement and generate strong sales and profitability.

Lauren R. Hobart: During Q1, we opened two houses port locations and are excited to open six additional locations this year.

Lauren R. Hobart: We also opened two next generation 50, K locations during the first quarter and look forward to opening an additional 14 locations throughout 2024.

Lauren R. Hobart: We continue to be very pleased with the results of these exciting <unk> concepts.

Lauren R. Hobart: This one-two punch of House of Sports in our next-generation 50K format, combined with the elevated omni-channel experience our teammates are bringing to life throughout our entire portfolio, is the future of Dick's. We're also growing our Golf Galaxy Performance Centers, an immersive experience for golf enthusiasts of all levels, and opened three new locations during the first quarter. We remain confident in the long-term growth opportunities in golf and are excited to bring this experience to more golfers.

Lauren R. Hobart: This one two punch of household sport in our next generation 50, K formats combined with the elevated omnichannel experience, our teammates are bringing to life throughout our entire portfolio.

Lauren R. Hobart: Is the future of objects.

Lauren R. Hobart: We're also growing our golf Galaxy performance centers and immersive experience for golf enthusiasts of all levels.

Lauren R. Hobart: And opened three new locations during the first quarter.

Lauren R. Hobart: We remain confident in the long term growth opportunity in golf and are excited to bring this experience to more golfers.

Lauren R. Hobart: Investing in our digital capabilities is central to our omni-channel success. I want to briefly talk about game change, the premier live streaming, scheduling, communications, and scorekeeping mobile app where we're building the first and best place to experience. During Q1, Game Changer drove continued strong sales growth. Over 5 million unique users engaged with Game Changer, averaging approximately 30 minutes per day on the app. We saw a robust increase in usage of the app across all sports, including those that are newer to the Game Changer platform, such as basketball, football, soccer, and volleyball.

Lauren R. Hobart: Investing in our digital capabilities is central to our Omnichannel success.

Lauren R. Hobart: I want to briefly talk about game changer, the Premier live streaming scheduling communications and Scorekeeping mobile App, where we're building the first and best place to experience youth sports.

Lauren R. Hobart: During Q1 game changer drove continued strong sales growth.

Lauren R. Hobart: Over 5 million unique users engaged with game changer, averaging approximately 30 minutes per day on the App.

Lauren R. Hobart: We saw a robust increase in usage of the app across all sports, including those that are newer to the game changer platform, such as basketball football soccer and volleyball.

Lauren R. Hobart: We're excited to continue innovating within the fast-growing, multi-billion dollar youth sports technology market and strengthening our relationships with athletes and their families through games. Our access to differentiated, on-trend products, which is our second strategic pillar, helps make Dick's the go-to destination for sport in the U.S. We're excited about the product pipeline from our key brand partners. For example, Nike's recent Paris Innovation Summit highlighted several breakthrough products across apparel and footwear that we look forward to bringing to our athletes.

Lauren R. Hobart: We're excited to continue innovating within the fast growing multibillion dollar youth sports technology market.

Lauren R. Hobart: Strengthening our relationships with athletes and their families through game changer.

Speaker Change: Our access to differentiated on trend product, which is our second strategic pillar helps make JAKKS. The go to destination for sport in the U S.

Speaker Change: We're excited about the product pipeline from our key brand partners.

Speaker Change: For example, nikes recent Paris innovation summit highlighted several breakthrough products across apparel and footwear, but we look forward to bringing to our athletes.

Lauren R. Hobart: Our relationships with our brand partners are stronger than ever, and the innovation of performance and style, in our opinion, has never been better. In addition, our flagship vertical brands, DSG, Kalia, and Versa, are responding very well to our ads.

Speaker Change: Our relationships with our brand partners are stronger than ever and the innovation of performance and style in our opinion has never been better.

Speaker Change: In addition, our flagship vertical brands DSG calia and burst are resonating very well with our athletes.

Lauren R. Hobart: They continue to outpace total company comp growth and contribute greater margin expansion. We see a long runway for sales and profitability growth for our vertical. Our teammates are a critical driver of our success, and our third strategic priority is providing a best-in-class teammate experience. This past quarter, we were named a great place to work for the fourth year in a row.

Speaker Change: They continued to outpace the total company comp growth and contribute greater margin expansion.

Speaker Change: We see a long runway for sales and profitability growth for our vertical brands.

Speaker Change: Our teammates are a critical driver of our success and our third strategic priority is providing a best in class experience.

Speaker Change: This past quarter, we were named a great place to work for the fourth year in a row.

Lauren R. Hobart: We remain focused on providing our teammates with the tools and technology to help them do their jobs better and driving a culture where they can develop and thrive. Lastly, we're creating deeper brand engagement. During the first quarter, we invested in several exciting marketing campaigns and will also continue to invest in Dick's brand building during March. We're excited to celebrate the 10-year anniversary of our Foundation's SportsMatter program and recently announced that the program is giving $2 million in grants to mark its anniversary and empower even more young athletes to pursue their passions.

Speaker Change: We remain focused on providing our teammates with the tools and technology to help them do their jobs, better and driving a culture, where they can develop and thrive.

Speaker Change: Lastly, we're creating deeper brand engagement.

Speaker Change: During the first quarter, we invested in several exciting marketing campaigns and also continued to invest in Dicks brand building during March madness.

Speaker Change: We're excited to celebrate the 10 year anniversary of our foundation sports matter program, and recently announced that the program is giving $2 million in grants to markets anniversary and empower even more young athletes to pursue their passion.

Lauren R. Hobart: In closing, we are very pleased with the strength of our first quarter performance and are highly confident in our strategy to drive sustained profitable growth. Before concluding, I'd like to thank all of our teammates across the company for their tremendous efforts and continued commitment to Dick's Sporting Goods. It's their passion and hard work that make these results possible. They are truly an outstanding group. With that, I'll turn the call over to Navdeep to share our financial results in more detail.

Speaker Change: In closing we are very pleased with the strength of our first quarter performance.

Speaker Change: And are highly confident in our strategy to drive sustained profitable growth.

Speaker Change: Before concluding I'd like to thank all of our teammates across the company for their tremendous efforts and continued commitment to Dick's sporting goods.

Speaker Change: It's their passion and hard work that make these results possible.

Speaker Change: They are truly an outstanding team.

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

Navdeep Gupta: Thank you, Lauren, and good morning, everyone. Let's begin with a brief review of our first quarter results. We are very pleased to report a consolidated sales increase of 6.2% to $3.02 billion. This included a benefit from the calendar shift due to the 53rd week last year of approximately $45 million. Adjusting for the calendar shift, which we believe provides the clearest view of the business, our comps increased 5.3% as we continue to gain market share. However, our strong comps were on top of a 3.6% comp loss.

Naveed: Thank you Lauren and good morning, everyone.

Naveed: Let's begin with a brief review of our first quarter results.

Naveed: We are very pleased to report a consolidated sales increase of six 2% to $3.0 billion to $1 billion.

Naveed: This included a benefit from the calendar shift due to 50 <unk> week last year of approximately $45 million.

Adjusting for the calendar shift, which we believe provides the clearest view of the business our comps increased five 3% as we continued to gain market share.

Naveed: Our strong comps what on top of a three 6% comp last year.

Navdeep Gupta: Our Q1 comps were driven by a 2.7% increase in transactions and a 2.6% increase in average technical performance, and we saw strength across footwear, athletic apparel, and hardware. Gross profit for the first quarter was $1.1 billion, or 36.29% of net sales, an increase of 10 basis points from last quarter. This included leverage on occupancy costs due to higher sales and a decline in merchandise margin of 45 basis points, which included higher year-over-year strength of 22 basis points. It's worth noting that while we anticipated our shrink to be higher than the previous year, the increase in shrink moderated compared to our expectations.

Naveed: Our Q1 comps were driven by a two 7% increase in transactions and a two 6% increase in average ticket.

Naveed: And we saw strength across footwear athletic apparel and hotline.

Naveed: Gross profit for the first quarter was $1 $1 billion or $36 two 9% of net sales an increase 10 basis points from last year.

Naveed: This included leverage on occupancy costs due to higher sales and a decline in merchandise margin of 45 basis points.

Naveed: <unk> included higher year over year strength up 22 basis points.

Naveed: It's worth noting that while we anticipated our shrink to be higher than the previous year, the increase in shrink moderated compared to our expectation.

Navdeep Gupta: On a non-cab basis, as expected, SG&A expenses increased 6.6% to $739.7 million and deleveraged 10 basis points compared to last year. This increase in SG&A dollars included investments in the exciting brand campaigns we introduced earlier this year, supporting Kalia, ESG, as well as Golf Galaxy and Dick's. This also included higher estimated incentive compensation expense and costs in support of our sales. Pre-opening expenses were $21.1 million, an increase of $11.9 million compared to the prior year.

Naveed: On a non-GAAP basis as expected SG&A expenses increased six 6% to $739 7 million and Deleveraged 10 basis points compared to last year.

Naveed: This increase in SG&A dollars included investments in the exciting Brian campaigns, we introduced earlier this year supporting earlier ESG as well as golf Galaxy Index Dot com.

Naveed: This also included higher estimated incentive compensation expense and cost in support of our SaaS growth.

Naveed: Preopening expenses were $21 $1 million, an increase of $11 9 million compared to the prior to yet.

Navdeep Gupta: This expected increase was primarily driven by our Q1 House of Sports Open. As Nate noted earlier, SG&A and pre-opening expenses have been adjusted in the current and prior years to reflect the reclassification of grand opening advertising from SG&A to pre-opening expenses.

Naveed: This expected increase was primarily driven by our Q1 also support opening.

Speaker Change: As Nate noted earlier SG&A and Preopening expenses have been adjusted in the current and prior years the.

Speaker Change: To reflect the reclassification of Grand opening advertising from SG&A to Preopening expenses.

Navdeep Gupta: EBT was $342.4 million, 11.34% of net sales. This compares to EBT of $328.3 million, or 11.55% of net sales, in Q1 of 2020. As expected, our Q1 tax rate grew from 7.2% in last year's quarter to 19.6% this year.

Speaker Change: EBITDA was $342 $4 million 11, three 4% of net sales.

Speaker Change: This compares to EBT up $328 $3 million at 11, 55% of net sales in Q1 of 2023.

Speaker Change: As expected our Q1 tax rate grew from seven 2% in last year's quarter to 19, 6% this year.

Navdeep Gupta: I'll remind you that this approximate 1,200 basis points increase reflects the higher tax deduction from the vesting of employee equity awards and exercises in the priority, which favorably impacted Q1 2023 earnings by approximately 45 cents compared to the current year quarter. In total, we delivered earnings per diluted share of $3.30. This compares to earnings per diluted share of $3.40 last year. Now, looking to our balance. We ended Q1 with approximately $1.6 billion of cash and cash equivalents and no borrowings on our $1.6 billion unsecured credit system. A quarter in inventory levels increased 5.5% compared to Q1 of last year, slightly below our 6.2% increase in sales. We believe our inventory is clean, and I'll...

Speaker Change: I'll remind you that this approximate 200 basis points increase reflects the higher tax deduction from the vesting of employee equity awards and exercises in the priority.

Speaker Change: Which favorably impacted Q1 2023 earnings by approximately 45 cents compared to the current year quarter.

Speaker Change: In total we delivered earnings per diluted share of $3 30.

Speaker Change: This compares to earnings per diluted share of $3 40 last year.

Speaker Change: Now looking to our balance sheet.

Speaker Change: We ended Q1 with approximately $1 $6 billion of cash on cash equivalents and no borrowings on our one 6 billion unsecured credit facility.

Speaker Change: Our quarter end inventory levels increased five 5% compared to Q1 of last year slightly below our six 2% increase in sales.

Speaker Change: Believe our inventory is clean and well positioned.

Navdeep Gupta: Turning to our first quarter capital allocation, net capital expenditures were $126 million, and we paid $94 million in quarterly dividends. We also repurchased 548,000 shares of our stock for $113.6 million, at an average price of $207.32. In 2024, we continue to expect share repurchases of $300 million. Now, we turn to our outlook for 2024. As a result of our strong Q1 performance, our expectations for continued robust demand from athletes, and the confidence we have in our business.

Speaker Change: Turning to our first quarter capital allocation net capital expenditures were $126 million and we paid $94 million in quarterly dividends.

Speaker Change: We also repurchased 548000 shares of our stock for $113 $6 million.

Speaker Change: At an average price of $207 and 32%.

Speaker Change: In 2024, we continue to expect share repurchases of $300 million.

Speaker Change: Now turning to our outlook for 2024.

Speaker Change: As a result of our strong Q1 performance at.

Navdeep Gupta: We are raising our full-year output. We now expect consolidated sales in the range of $13.1 billion to $13.2 billion. In addition, we now expect consales growth in the range of 2% to 3% compared to our prior expectation of 1% to 2%. EBT margin is now planned to be at 11.1% at the midpoint compared to 10.9%. Gross margin is now expected to expand modestly compared to 2023 non-GAAP. We previously expected gross margins to be in line with 2023 non-GAAP results at approximately 35%.

Speaker Change: Our expectations for continued robust demand from athletes and the confidence we have in our business, we are raising our full year outlook.

Speaker Change: We now expect consolidated sales in the range of $13 $1 billion to $13 2 billion.

Speaker Change: In addition, we now expect comp sales growth in the range of 2% to 3% compared to our prior expectation of 1% to 2% growth.

Speaker Change: EBIT margin is now planned to be at 11, 1% at the midpoint compared to 10, 9% previously.

Speaker Change: Gross margin is now expected to expand modestly compared to 2023 non-GAAP results.

Speaker Change: We previously expected gross margins to be in line with 2023 non-GAAP results at approximately 35%.

Navdeep Gupta: We continue to expect SG&A expenses to leverage modestly compared to 2023 non-GAAP. In total, we now anticipate whole year earnings per diluted share to be in the range of $13.35 to $13.75, compared to our prior expectations of $12.85 to $13.25. Our earnings guidance is based on approximately 83 million average diluted shares outstanding and an effective tax rate of approximately 23 percent compared to our prior expectation of approximately 24 percent.

Speaker Change: To expect SG&A expenses to leverage modestly compared to 2023 non-GAAP results.

Speaker Change: In total we now anticipate full year earnings per diluted share to be in the range of $13 35.

Speaker Change: $13 and 75.

Speaker Change: Third to our prior expectations of $12 85 to $13 25.

Speaker Change: Our earnings guidance is based on approximately 83 million average diluted shares outstanding and an effective tax rate of approximately 23% compared to our prior expectation of approximately 24%.

Operator: We continue to expect net capital expenditures of approximately $800 million for the year. Lastly, as you model 2024, I want to point out a couple of things that we expect to impact comparability of our financial results for the second quarter. First, recall that due to the shifted calendar, we expect our reported total sales to be positively impacted in the first half, with an offset in the second half. Specifically, given the impact of the shift on a key back-to-school V, we expect our reported total sales in Q2 to be positively impacted by approximately $100 million versus the prior year, with an offset in Qt.

Speaker Change: We continue to expect net capital expenditures of approximately $800 million for the year.

Speaker Change: Lastly, as you model 2024, I want to point out a couple of things that we expect to impact comparability of our financial results for the second quarter.

Speaker Change: First recall that due to the shifted calendar, we expect our reported total sales to be positively impacted in the first half with an offset in second half.

Speaker Change: Specifically given the impact of the shift on a key back to school, we expect our reported total sales in Q2 to be positively impacted by approximately $100 million versus the prior year.

But then offset in Q3.

Operator: Second, we will begin to anniversary the higher shrink rates from 2023 in the upcoming second quarter. As a reminder, our shrink in Q2 of last year also included a cumulative unfavorable true-up of actual results from our physical inventories, which reflected an 84 basis points increase over 2021. Consequently, we expect to see year-over-year favorability and shrink during this year's second quarter. In closing, we are very pleased with our Q1 results and remain enthusiastic about the future of our business. This concludes our prepared remarks. Thank you for your interest in Dick's Sporting Goods. Operator, you may now open the line for questions.

Speaker Change: Second we will begin to anniversary the higher shrink rate from 2023 in the upcoming second quarter.

Speaker Change: As a reminder, our shrink in Q2 of last year also included a cumulative unfavorable true up of actual results from our physical inventories, which reflected an 84 basis points increase over 2022.

Speaker Change: Consequently, we expect to see year over year favorability and shrink during this year's second quarter.

Speaker Change: In closing we are very pleased with our Q1 results and remain enthusiastic about the future of our business.

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

Speaker Change: Okay.

Operator: Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. We ask that you please limit yourself to one question and one follow-up. Your first question comes from the line of Adrienne Yih from Barclays. Your line is open.

Speaker Change: Thank you we will now the question and answer session, if you'd like to ask a question. Please press star one on your telephone keypad to raise your hand and joined the queue if you'd like to withdraw your question simply press Star. One again, we ask that you. Please limit yourself to one question and one follow up.

Speaker Change: Our first question comes from the line of Adrian <unk> from Barclays. Your line is open.

Lauren R. Hobart: Great, thank you very much and congratulations on a great start to the year. Lauren, we were lucky enough to see House of Sport in Boston during the quarter, and I guess my question for you is kind of more longer term. You know, the notion or the philosophy was that you wanted to create a store such that people wouldn't need to go to another store other than, you know, House of Sport or Dick's Next Gen.

Adrian <unk>: Great. Thank you very much and congratulations on a great start to the year.

Adrian <unk>: Lord we were lucky enough to see houses sport in Boston during the quarter and I guess my question for you is kind of more longer term.

Speaker Change: You know the the notion of the philosophy was that you wanted to create a store such that people wouldn't need to go to another store other than you know hows, the sport or the Dx nextgen.

Lauren R. Hobart: So, to the extent that you see kind of going forward, how do you see the sporting goods landscape kind of panning out? And then my kind of main question is the investment in training, education, service, and then advertising; it's a level above anything that we're seeing currently in the retail landscape. So, can you talk about the kind of investments that you're making there and how that's going to differentiate your concepts versus the rest of retail? Thank you.

Speaker Change: So to the extent that you see kind of going forward, how do you see the sporting goods landscape kind of panning out and then my main question is the investment in training Education service and then advertising, it's a level up or anything that we're seeing currently in the retail landscape. So can you talk.

Adrian <unk>: About kind of the investments that youre, making there and how that is going to differentiate your concepts versus the rest of retail. Thank you great. Thanks, Adrian Yes, we were delighted to have you in a group of people in Boston, We've had a ton of people coming through the house of support there and the excitement in that community has been absolutely just incredible to see.

Lauren R. Hobart: Thanks, Adrienne. Yeah, we were delighted to have you and a group of people in Boston. We've had a ton of people coming through the House of Sport there. And the excitement in that community has been absolutely incredible to see. I think the thing about House of Sport that is truly redefining sports retail is that we are creating an experience that people cannot get anywhere else. And what you're seeing is that athletes are really responding to it, so communities are responding to it. I don't know how many...

Adrian <unk>: The thing about how to support that is truly redefining sports retail is that we are creating an experience that people cannot get anywhere else and what youre seeing is athletes are really responding to it. So communities are responding to it I don't know how much some of your Texas that you saw the blimp going by like there's just so much fanfare and excitement when we open.

Lauren R. Hobart: Some of you texted that you saw the blimp going by, like there's just so much fanfare and excitement when we open a House of Sport, but then as it's open, athletes are coming in, they're driving further, they're spending more time. They're really excited about the product and the experience that they see at House of Sport. Secondly, the brand partners that we have are also very excited because we can bring a brand to life throughout our entire company in a really elevated way.

Adrian <unk>: The sport, but then as its open athletes are coming in they're driving further they are spending more time, they're really excited about the product and the experience that they see it houses sport.

Adrian <unk>: Secondly, the brand partners that we have are also very excited because we can bring our brand to life throughout our entire company in a really elevated way, but in houses for it because we have co lab spaces and other opportunities to truly bring our brand to life, we can showcase our brand and in the best possible way and that is helping us drive both new.

Lauren R. Hobart: But in House of Sport, because we have collaboration spaces and other opportunities to truly bring a brand to life, we can showcase a brand in the best possible way. And that's helping us drive both new partnerships as well as more access and excitement with our current brand partners. And then the last thing I would point out that I think is important to note is that when real estate developers and landlords and mall developers when a house of sport opens in a mall, we are seeing significant increases in traffic to the mall.

Adrian <unk>: Partnerships as well as more access and excitement with our current brand partners and then the last thing I would point out that I think is important to note is that if you look at real estate developers and landlords and mall developers.

Lauren R. Hobart: And so there's a lot of excitement in the marketplace there as well. Across the board, we're just super excited about House of Sport and equally excited about our new 50k square foot format, which is a takedown of the House of Sport, but provides many of the same elements. You asked about investments.

Adrian <unk>: How's the sport opens in a mall, we are seeing significant increases in traffic to the mall and so theres a lot of excitement in the marketplace there as well across the board. We're just super excited about how sport and equally excited about our new 50, K square foot format, which is a takedown of the house. The sport provides many of the same.

Speaker Change: <unk> you asked about investments I, we alternative now deep to talk a little bit about SG&A, but the SG&A expenses in Q1 were as planned and we invested in marketing we will continue to invest to build our brand long term, we invested in training and service and tech tools to drive the athlete experience that our teammates need to to be able to.

Navdeep Gupta: I'll turn it to Navdeep to talk a little bit about SG&A, but the SG&A expenses in Q1 were as planned, and we invested in marketing. We will continue to invest to build our brand long-term. We invested in training and service, and tech tools to drive the athlete experience that our teammates need to be able to deliver. Anything you would add, Navdeep?

Speaker Change: To deliver anything you would add enough yeah I know.

Navdeep Gupta: Good morning, Adrienne. And just building on what Lauren said, the focus continues to be, as Lauren said, it's around the core four pillars, and two of those pillars that we talk a lot about are the athlete experience and the teammate experience and the work that our store team, as well as the merchandising team, are doing in bringing innovative and very differentiated products to our stores. And the store team, the work that they're doing in providing this experience and the kind of the fit experience that we are able to provide to our athletes when they walk into the store, whether it's a baseball bat, whether it's a golf club, that we feel is kind of our differentiator, as we see not only within our own industry players but, quite frankly, again, some of the specialty players that are in the marketplace.

Good morning, Adrian and just building on what alongside the focus continues to be as Lauren said, it's around the core four pillar in two of those pillars that we talk a lot about is about the athlete experience and the teammate experience and the work that our store team as well as the merchandising team is doing in bringing innovative and Barry.

Differentiated product to our stores and the store team the work that they're doing in and providing this experience and kind of the fifth expand that we are able to provide to our athletes when they walk into the store, whether it's a baseball bat, whether it's a it's a golf club that we feel is the is kind of our differentiator as we see not only that.

Lauren R. Hobart: Our own industry, but quite frankly again, some other specialty players that are in the marketplace as well so that will be a key area for our investments in like Lauren indicated.

Navdeep Gupta: So that will be a key area for our investments. And like Lauren indicated, you know, we showcase that with the investments in advertising, including our vertical brands and how differentiated they are as part of Q1. But we expect these investments to continue to be balanced against the sales growth that we are delivering here. Thank you very much. It's definitely showing up in the stores. Thank you.

Lauren R. Hobart: We showcase that with the investments in advertising, including our vertical brands and how differentiated they are as part of Q1, but we expect these investments to continue to be balanced against the sales growth that we're delivering that as well.

Lauren R. Hobart: Yeah.

Speaker Change: Thank you very much it's definitely showing up in the stores. Thanks. Thank you.

Operator: Your next question comes from the line of Simeon Gutman from Morgan Stanley. Your line is open.

Speaker Change: Your next question comes from the line of Simeon Gutman from Morgan Stanley. Your line is open.

Lauren R. Hobart: Good morning, everyone. I wanted to ask about sell-through of seasonal merchandise, spring and summer, as the seasons are transitioning. And in the context of merch margin being down a little this quarter, can you also share with us was merch margin planned to be flat within the overall gross margin guidance, or is the gross margin being elevated by occupancy? Thanks.

Simeon Ari Gutman: Good morning, everyone I wanted to ask about the sell through of seasonal merchandize spring and summer as the seasons are transitioning and in the context of merch margin being down a little this quarter can you also share with US was merch margin or is merch margin plan to be flat within the overall gross.

Speaker Change: Margin guidance for the gross margin being elevated by occupancy.

Speaker Change: Thanks, I mean, yes for the quarter, we were really pleased with our gross margin expanded 10 basis points 30, 629%. There were a ton of puts and takes for the quarter as we expected there would be well.

Lauren R. Hobart: There were a ton of puts and takes during the quarter, as we expected there would be, and an unexpected good surprise with the sales numbers that enabled us to drive more leverage on occupancy costs, and more leverage on supply chain and e-commerce costs. All of that was slightly offset by a 45 basis point decline in merchandise margin that we had anticipated, driven primarily by the shrink, the fact that we're not anniversarying yet, and the shrink reserves that we put into place, and we'll start anniversarying those in Q2.

Speaker Change: And an unexpected good good surprised with the sales numbers that enabled us to drive more leverage on occupancy costs more leverage on supply chain and E. Commerce costs. All of that work was slightly offset by a 45 basis point decline in merch margin, but that we had anticipated driven primarily because of the strength.

Speaker Change: We're not anniversarying, yet the shrink reserves that we put into place and we'll start anniversarying. Those in Q2 I think it's important to note that our one of our core merchandising strategies and one of our core sales driving strategies.

Lauren R. Hobart: I think it's important to note that one of our core merchandising strategies and one of our core sales driving strategies is to keep our inventory clean and fresh. We are constantly moving products through their life cycles so that when people come into our stores or shop online, they're getting a completely differentiated assortment, and they are finding the products that are appealing to them. And so, as expected, merchandise margin was slightly declined in Q1, but for the full year, we are now expecting gross margin to expand modestly, whereas before we had said it was going to be.

Speaker Change: Is to keep our inventory clean and fresh we are constantly moving products through the life cycles that when people come into our stores or shop online they're getting.

Speaker Change: Completely differentiated assortment and they are finding the products that are appealing to them and so as expected merch margin was was slightly too.

Speaker Change: In Q1, but for the full year, we are now expecting gross margin to expand modestly, whereas before we had said it was going to be flat.

Navdeep Gupta: That's helpful. I want to ask... So, I'll just add one more thing to what Lauren said. The merge margin, I would say, in Q1 was in line with our expectations, and we expect merge margin to also expand modestly on a year-over-year basis in 2024 compared to non-GAAP 2024.

Speaker Change: I wanted to ask.

So I mean, I'll I'll just add one more thing to what <unk> said you know the merch margin I would say in Q1 was in line with our expectations and we expect much margin to also expand modestly on a year over year basis in 'twenty four compared to non-GAAP 2023 results.

Navdeep Gupta: Okay, and then follow up Navdeep, the full-year EBIT, or the implied EBIT or EBT, whatever way you look at it, looks like it's being raised above and beyond what was achieved or beat versus the street number in Q1. The comp, I think, looks like it's more of a flow-through from what happened in Q1. So, is that fair?

Speaker Change: Okay, and then follow up on the full year EBIT.

Speaker Change: Or the implied EBIT or EBT, whatever way you look at it it looks like it's being raised above and beyond what was achieved or beat versus the street number in Q1.

Speaker Change: Comp I think it looks like it's more of a flow through from what happened in Q1. So is that fair and what is changing in terms of profit to raise the back half wall sales is kind of moving up by what happened in Q1.

Navdeep Gupta: Yeah, Simeon, that's a great question. First of all, let me start by saying we were really excited by the results that we delivered here in Q1, and we continue to remain really excited about the future and the opportunities that we see ahead of us. As you can imagine, this is just Q1. We have very early in the year, as well as, you know, everybody knows what else is happening on a macro factor basis.

Speaker Change: Assuming that Thats a great question first of all let me start by saying we were really excited by the results that we delivered here in Q1, and we continue to remain really excited about the future and the opportunities that we see I heard of us.

Speaker Change: As you can imagine this is just tier one we have very early in the year as well as.

Speaker Change: Everybody knows what else is happening on a macro factor basis. So what we have done today in terms of the full year guidance as it reflects the results that we posted in Q1, and we maintained largely our expectations for Q2 through Q4, there's a little bit of a disconnect with the external consensus expectation, but I would say you know.

Navdeep Gupta: So what we have done today in terms of the full-year guidance, it reflects the results that we posted here in Q1. And we maintained largely our expectations for Q2. There's a little bit of a disconnect with the external.

Speaker Change: We are appropriately cautious as we think about Q2 through Q4, but we continue to remain really excited about the opportunities that we see for the balance of the year.

Operator: Thanks. Good results. Take care.

Speaker Change: Thanks, Good results take care.

Thank you.

Operator: Your next question comes from the line of Kate McShane from Goldman Sachs. Your line is open.

Speaker Change: Your next question comes from the line of Kate Mcshane from Goldman Sachs. Your line is open.

Lauren R. Hobart: Hi, good morning. Thanks for taking our question. I believe when you last guided same-store sales of 1 to 2, that was mainly based on your assumption of market share gains. With the new comp guide of 2 to 3 today, is there any better view on the health of the industry within that, or is it still primarily driven by market share?

Speaker Change: Hi, good morning, Thanks for taking our question.

Katharine Amanda McShane: I believe when you last guided same store sales of one to two that was mainly based on your assumption of market share gains with the new comp guide of two to three today is there any better view on the health of the industry within that or is it still primarily driven by market share.

Lauren R. Hobart: Okay, we are excited to raise the comp guidance from 1 to 2 to 2 to 3 percent for the balance of the year. As Navdeep just mentioned, a large part of that is flowing through the results that we just had in Q1 so that we do maintain an appropriate level of caution as we go. We obviously do plan on continuing to gain market share. That's one of our key strategies, and we think we have the experience and the product.

Speaker Change: We are excited to raise the comp guidance from one to 2% to 2% to 3% for the balance of year and as I've. Just mentioned the large part of that is flowing through the the results that we just had in Q1. So that we do maintain an appropriate level of caution as we go. We obviously, we do plan on continuing to gain market share that's one of our.

Speaker Change: It's one of our key strategies and we think we have the experience and the product to be able to do that.

Speaker Change: Yeah.

Lauren R. Hobart: Okay, thank you. And then our second question, with the change in accounting for GameChanger and some of your earlier comments in the prepared comments about GameChanger, is there a meaningful strategy change there in terms of how much that can drive the business? And what is the kind of long-term goal and strategy for GameChanger?

Speaker Change: Okay. Thank you and then our second question.

Speaker Change: With the change in accounting for game changer in some of your.

Speaker Change: Earlier comments in the prepared comments about game changer is there.

Speaker Change: A meaningful strategy change there in terms of how much that can drive the business and what is kind of the long term goal and strategy with game changer.

Lauren R. Hobart: Yes, thanks for the question. We are so excited about Game Changer and excited about the fact that it is such an amazing, emotive platform through which people can engage with their kids' sports, with their grandkids' sports, and kids can track their stats and see how they're doing and where they're performing. So, you're hearing the excitement because we've been investing in this digital platform. It's a leading youth sports app. It's got incredible capabilities, and it keeps driving meaningful success.

Speaker Change: Yes. Thanks for the question. We are so excited about game changer and excited in the fact that it is such an amazing.

Speaker Change: <unk> platform through which people can engage with their kids sports with their grandkids sports and kids can track their stocks and see how they're doing and where they're performing so youre hearing the excitement because we've been investing in this digital platform. Its a leading youth sports App, it's got incredible capabilities and.

Lauren R. Hobart: So, 5 million active users on the platform in Q1, on average spending 30 minutes per day on Game Changer. It's an incredible level of engagement. So the way I look at it, the way we look at it, is that it's a key part of our long-term strategy to become synonymous with sports. It's part of our entire ecosystem. You're seeing, we're starting to account for it in comp, a relatively negligible part of that equation right now, but we believe it is a big part of our, Kate. I'll add two more points.

Speaker Change: It keeps driving meaningful success, so 5 million active users on the platform in Q1 on average spending 30 minutes per day on game changer, It's an incredible engagement tool. So the way I look at it the way we look at it is that it's a key part of our long term strategy to become synonymous with sports. It's it's.

Speaker Change: Of our entire ecosystem that youre seeing we're starting to account for it in comps.

Speaker Change: Relatively negligible part of that equation right now, but we believe it is a big part of our future.

Navdeep Gupta: Kate, I'll add two more points to that, to what Lauren said. First of all, the platform itself is experiencing very high growth, both on a sales basis as well as on a revenue basis, and it's a very profitable platform. So, by itself, the business itself is fantastic. The other thing that we have talked about is the fact that the athletes that are both game-changer users and scorecard users have 2x the revenue profile of just a scorecard user. So, that indicates also that the level of engagement that we have with these multi-channel athletes is actually really, really exciting and interesting to us as we look to the long term with this plaque.

Speaker Change: Okay now I'll add two more points of that toward alongside first of all like the platform itself is a very high growth both on a sales basis as well as on a and is a very profitable platform.

Speaker Change: So by itself the business itself is fantastic. The other thing that we have talked about is the fact that the athletes that are both game changer user and the score card user.

Speaker Change: <unk> the revenue profile of adjust our scorecard user so that indicates also that the the level of engagement that we have with these multichannel athletes is actually really really exciting and interesting to us as we look to the long term opportunity with this platform.

Speaker Change: Thank you.

Thank you.

Operator: Your next question comes from a line from Chris Horvers on behalf of Jake Morgan. Your line is open.

Speaker Change: Your next question comes from the line of Chris <unk> from Jpmorgan. Your line is open.

Navdeep Gupta: Thanks, good morning. So my first question is just a follow-up on the merchandise margin. Can you talk about what happened after the first quarter being down? Can you talk about what the drivers of make it go up over the year? You know, and within that answer, maybe address, is it channel inventories clearing up? We've heard about maybe some of the vendors being promotional as the

Speaker Change: Thanks, Good morning.

So my first question is a follow up on the merchandise margin can you talk about what after.

Speaker Change: After the first quarter being down can you talk about what the drivers of what makes it go up over the year.

Speaker Change: Within that answer may be address is it true.

Speaker Change: <unk> inventories clear clearing up we've heard about maybe some of the vendors being promotional as the newness coming is it the house's sports maybe help us think about what are the big drivers are there. Thank you.

Navdeep Gupta: Yeah, Chris, I'll start with the four-year outlook that we provided, so we expect both the gross margin and the merge margin to expand modestly compared to the 2023 non-GAAP results we posted last year. The ingredients within that, if you think about Q1 results, we have already declared.

Chris: Yeah, Chris I'll start with the full year outlook that we provided so we expect both the gross margin and merch margin to expand modestly compared to 2023 non-GAAP results, we posted last year.

Speaker Change: The ingredients within that if you think about Q1 results. We have already declared that a couple of points. We shared today around the Q2 expectations that that you need to be thinking about as you model. That's the first and foremost as you know we had an 84 basis points of accumulative threw up in spring last year than we did the physical inventories in that store.

Navdeep Gupta: There are a couple of points we shared today around the Q2 expectations that you need to be thinking about as you model this. The first and foremost is that we had 84 basis points of cumulative through-up and shrink last year when we did the physical inventories in those stores. And so we don't anticipate having that same impact this year.

Speaker Change: And so we don't anticipate having that same impact this year. So there will be favorability that we expect in shrink results in Q2, and we continue to be appropriately cautious for the balance of the year just on the shrink line itself and then Additionally, as you will remind all of you will recall that we were cleaning up some of the inventory in the outdoor spa.

Navdeep Gupta: So there will be the favorability that we expect in shrink results in Q2. And we continue to be appropriately cautious for the balance of the year, just on the shrink line itself. And in addition, as you recall, we were cleaning up some of the inventory and the outdoor space last year in Q2. So we don't anticipate annualizing those actions either, because where we have exited Q1 this year, we feel really great about our inventory and the quality of the inventory, and most importantly, the assortment that we have available for going into kind of the key selling season here in Q2. So we're excited about the assortment and how clean that assortment is. So we expect that action, again, will not be annualized as we look.

Speaker Change: Last year in Q2, so we don't anticipate on analyzing those actions either because they are you have exited Q1. This year, we feel really great about our inventory and the quality of the inventory and most importantly, the assortment that we have available for going into the kind of the key selling season here in Q2.

Speaker Change: About the assortment and how clean that assortment is so we expect that our auction again will not be annualized as we look to Q2.

Okay.

Lauren R. Hobart: Got it. And then, as a follow-up question, just can you touch on a little bit on how you think about the cadence of comps over the year? I know you don't, you know, drive, speak specifically by quarter, but how should we think about that? I know there was some lift in the first quarter here with regard to lapping the closed stores, the house of sports stores, and I think the general consensus, maybe it was around two points.

Speaker Change: Got it and then in my eyes as a follow up question just can you touch a little bit on how you think about the cadence.

Speaker Change: Cadence of comps over the year I know you don't you don't.

Speaker Change: Drive.

Speaker Change: Speak specifically to by quarter, but how should we think about that I know there was some lift in the first quarter here with regards to lapping the closed stores to house the sports stores I think the general consensus maybe it was around two points. So any comment on that and how do you think about the cadence of comps over the year.

Lauren R. Hobart: So any comment on that and what you think about the cadence of comps over the year? Thanks so much. You're absolutely right. We said originally, and we still hold that the first half of the year, when we had eight of our largest stores being converted to House of Sports and closed for a good part of the first half of last year, is driving stronger comps in Q1. Now we have obviously delivered a stronger comp than we had even expected.

Speaker Change: Thanks, so much.

Speaker Change: You're absolutely right, we set originally and we still hope that the first half of the year, where we had eight of our largest stores being converted to house. The sports on closed for a good part of the first half of last year is driving stronger comps in Q1 now we just obviously delivered stronger comps.

Speaker Change: We had even expected but in the first half we do we will feel that impact and then in the second half will go up against those openings and so that is why we said the deceleration we expect some deceleration in the back half and nothing has changed in that opinion.

Lauren R. Hobart: But in the first half, we will feel that impact. And then in the second half, we'll go up against those openings. And so that is why we said there would be some deceleration in the back half, and nothing has changed in that opinion. We continue to. Great. Thanks so much.

Speaker Change: We continue to believe that.

Speaker Change: Great. Thanks, so much.

Speaker Change: Thank you.

Operator: Your next question comes from a line Robbie Ohmes from Bank of America. Your line is open.

Speaker Change: Your next question comes from the line of Robbie <unk> from Bank of America. Your line is open.

Lauren R. Hobart: Hey, good morning. Great quarter. My first question is just, Lauren, you guys have been leading with apparel and footwear for a little while now. Any signs or expectations that hard lines could start to catch up and grow again for you guys? Thanks, Robbie.

Robbie <unk>: Hey, good morning.

Speaker Change: Great quarter.

Robbie <unk>: My first question if I may just one more you guys have been leading with apparel and footwear for a little while now any signs or expectations at hard lines could start to catch up and grow again for you guys.

Lauren R. Hobart: Thanks Robbie. Yes, what's really great about the quarter we just had with the 5.3% comp is that we saw growth across all aspects of our business. So we saw growth in footwear, we saw growth in athletic apparel, and we saw growth in total. Obviously, there's some puts and takes in there. We've been talking about some of the consumer trends that are right-sizing from the pandemic, but that's a very small piece of our business, and the core hardline categories are doing very well. This past quarter, we had a slightly wetter season, which impacted the game of golf and team sports a little bit, but phenomenally so. In general, we're very, very excited about the hardline.

Speaker Change: Thanks, Robbie yes, what's really great about the quarter, we just had with a five 3% comp as we saw growth across all aspects of our business. So we saw growth in footwear, we saw growth in athletic apparel, we saw growth in total hard lines, obviously, theres some puts and takes in there and.

Speaker Change: We've been talking about some of those some of the consumer.

Speaker Change: Sumer trends that better right sizing from the pandemic, but thats, a very small piece of our business and the core hardline categories are doing very well this past quarter, we had a slightly wetter season impacted the game of golf and team sports a little bit but nominally so in general we're very very excited about the hard lines.

Speaker Change: Yeah.

Lauren R. Hobart: Got it. And then you guys called out Nike at the Paris Summit and in the press release. Can you give a little more color on what you think the pipeline looks like from Nike and your other key vendors versus what you were getting last year heading into the year?

Speaker Change: Got it and then you guys called out Nike and the Paris Summit.

Speaker Change: In the press release can you give a little more color on.

Speaker Change: What you think the pipeline looks like from Nike in your other key vendors.

Speaker Change: Versus what you were getting last year heading into the year.

Lauren R. Hobart: Thanks, Robby. Yes, I would say we're excited about the product pipeline that we see across our strategic partners, and we look long-term. Obviously, we have long-term strategy planning meetings where we're looking at a couple of years with our strategic partners. I'm also very excited, as we all are, about our flagship vertical brands, CALEA, DSG, VERS, doing incredibly well, and some of our emerging brands. Within our strategic partners, we are very excited about the long-term work that we saw at Nike.

Robbie <unk>: Thanks, Robbie Yes, I would say we are excited about the product pipeline that we see across our strategic partners and we look long term. Obviously, we have long term strategy planning meetings, where we're looking out a couple of years with our strategic partners. I'm also very excited as we all are about our flagship vertical brands a CLIA DSG burst.

Robbie <unk>: Incredibly well and some of our emerging brands are within our strategic partners. We are very excited about the long term work that we saw in Nike we were there at the at the innovation Summit and then more recently, we were in their offices and looking at future innovation.

Lauren R. Hobart: We were at the Innovation Summit, and then, more recently, we were in their offices and looking at future innovation. I would call out things like the technology that they are bringing to the Air platform. It's going to be very exciting from a consumer standpoint. We're really excited about the elevation of both performance apparel and footwear and bringing some newness into those categories. Then, they've started to talk about what their Olympic messaging is going to be, and we are really, really excited to see that come to market and just drive consumer noise around the Nike brand. Across the board, we are very excited about that partnership.

Robbie <unk>: Good call out things like the technology that they are bringing to the air platform, it's going to be very exciting from a consumer standpoint, we're really excited about the elevation of both performance apparel and footwear and bringing some newness into those categories and then they they've started to talk about what their Olympic messaging is going to be and we are really really.

Robbie <unk>: We are excited to see that come to market and just drive consumer noise around around the Nike brand. So across the board very excited about that partnership.

Operator: Sounds great; thank you.

Speaker Change: It sounds great. Thank you.

Speaker Change: Thank you.

Operator: Your next question comes from a line Warren Cheng from Evercore ISI. Your line is open.

Robbie <unk>: Sure.

Speaker Change: Your next question comes from the line of Warren Cheng from Evercore ISI. Your line is open.

Navdeep Gupta: Hey, good morning. Congrats on a really solid quarter and a tough environment here. I wanted to ask about how you're thinking about SG&A investment here and whether that's evolving, given the really strong response you're getting to the elevated service levels at House of Sport and the next gen stores. Could the core benefit from kind of a higher level of SG&A and selling personnel? And maybe, just, if you could take a minute and talk about how you're thinking about SG&A in the medium term.

Speaker Change: Hey, good morning, Congrats on a really solid quarter in a tough environment here.

Warren Cheng: I wanted to ask about how youre thinking about SGA and invest in here and.

Warren Cheng: Whether that is evolving given the really strong response, you are getting to the elevated service levels at health of sport in the next Gen stores.

Warren Cheng: Could the core benefit from kind of a higher level of SG&A and selling personnel and maybe just if you could take a minute and talk about how you're thinking about SG&A in the medium term here.

Navdeep Gupta: So Warren, first of all, let's start with where SG&A came in. So SG&A deleveraged 10 basis points here in Q1.

Speaker Change: So I'm wondering how first of all let's let's start with that'd be SG&A came in so SG&A Deleveraged 10 basis points here in Q1 and that was driven by the core investments that we're making is including in advertising. So because we see a clearly an opportunity to continue to position, especially on flagship vertical brands.

Navdeep Gupta: And that was driven by the core investments that we are making, including in advertising. So because we see clearly an opportunity to continue to position, especially our flagship vertical brands, in a much more appropriate fashion with our athletes. Because those brands, like Lauren said, are responding so well.

Speaker Change: <unk> motor appropriate fashion with our athletes because those brands like Lauren said are resonating so well. So you saw us come out with advertising message around.

Navdeep Gupta: So you saw us come out with advertising messages around CLIA, around DSG, as well as drive brand awareness for our.com platform with Dick's.com. So that will be an area that we said we were gonna invest in in Q1 and the early part of the year. And we did that.

Speaker Change: Around ESG as well as drove the brand awareness for our dotcom platform with <unk> Dot com. So that will be an area that we said we were going to invest in Q1 and the early part of the year and we did that and then on a full year basis, what we have guided as we expect our SG&A to modestly leverage on a year over year basis. So we are we have been.

Navdeep Gupta: And then on a full year basis, what we have guided is that we expect our SG&A to modestly leverage on a year over year basis. So we have been prudent in how we are making investments. You called out, we are making investments in talent, in technology, as well as in the store service level, especially as you look at the house of sport, as well as the 50K. And those are kind of planned investments that we are making in addition to investments that we are making in store training.

Speaker Change: We are being prudent in how we are making investments you called out we're making investments in talent and technology as well as in the store service level, especially as you look through the houses sport as well as the 50 gig and those are all kind of the planned investments that we're making in addition to the investments that we're making in store training, but will.

Navdeep Gupta: So we'll continue to look to make these core investments that are driving differentiation in the marketplace and are responding really well with the athletes. However, we also have to balance that against the overall ability to drive leverage on SG&A.

Speaker Change: To look to make these core investments that are driving the differentiation in the marketplace and are resonating really well with the athletes all over to balancing that also against the overall.

Speaker Change: Our ability to drive the leverage on the SG&A line for the full year.

Navdeep Gupta: Thanks, Navdeep. And my follow-up question: can you help us put the $35 million per box number that you gave last quarter in a little bit more context? You know, if once you're fully rolled out to the 75 to 100 target over the next three years, would that represent sort of one of the larger and more productive stores in the chain? Because I know your new house of sports has a lot of different shapes and sizes. Or is that pretty representative of the average that you would expect across the fully scaled out chain? Yeah

Speaker Change: Thanks, Sandeep and my follow up question can you help us put the $35 million per box number that you gave last quarter and a little bit more context.

Speaker Change: Once you are fully rolled out to.

Speaker Change: So the 75 to 100 target over the next three years would that represent sort of one of the larger and more for more productive stores in the chain because I know you're the new houses sports have a lot of different shapes and sizes or is that pretty representative of the average that you would expect across the fully scaled out chain yes.

Navdeep Gupta: Yeah, so the $35 million that we shared last quarter, that's kind of our expectation for an average office sport on an omnichannel basis. That includes both the store as well as the e-com business. And you know, we have rolled out 12 stores; this is based on the learning from those 12 stores that we opened at the end of 2023, and we continue to be really excited with the two store openings that we have done here in Cuba.

Speaker Change: Yes, so the 35 million that we shared last quarter, that's kind of our expectation for an average also sport on an omni basis that includes both the store as well as the E com business and we have rolled out 12 stores base. This is based off of the learning and.

Speaker Change: Informed by those 12 stores that we have opened at the end of 2023, and we continue to be really excited with the with the two store openings that we have done that in Q1.

Lauren R. Hobart: I would point out also that the 50Ks continue to deliver incredibly strong results, and the House of Sport, the ones that have been open the longest, also keep driving growth, so we're really excited not just about how they open but how they grow beyond that.

Speaker Change: I would point out also the 50 case continue to deliver incredibly strong results and how to support the the ones that are have been opened the longest also keep driving growth. So we're really excited not just about how they open but how they grow past that.

Operator: Thanks. Nice quarter. Good luck. Thank you.

Speaker Change: Thanks, Nice quarter and good luck. Thank you. Thank you.

Operator: Your next question comes from the line of Mike Baker from D.A. Davidson. Your line is open.

Speaker Change: Your next question comes from the line of Mike Baker from D. A Davidson your line is open.

Navdeep Gupta: Okay, thanks. Sort of been asked, but maybe ask it another way.

Navdeep Gupta: So, the implied EBT margin for the rest of the year is up, I think, after it was down this quarter. Now, it seems like a lot of that is because of cycling. The second quarter declines from last year. So, I guess the question is this: how should we think about the potential to increase your margins in the back half of the year and then beyond this year? The margins, at least according to your guidance, will be up, I think, 30 basis points on the EBT line this year. Well, you know, we're the long-term margin drivers. Should margins, once we cycle the easy comparison in the second quarter, keep rising?

Speaker Change: Okay. Thanks.

Michael Allen Baker: What have been asked but.

Speaker Change: Maybe asking it another way the so the EBIT the implied EBIT margin for the rest of the year is up.

Michael Allen Baker: I think after was down this quarter and now it seems like a lot of that is because of cycling. The second quarter declined from last year. So I guess the question is this how should we think about the potential to increase your margins in the back half of the year and then beyond this year.

Speaker Change: The margins. According to your guidance would be up I think 30 basis points on the EBIT line this year.

What are the long term margin driver should margins once we cycle the easy comparison second quarter, the margins keep going up.

Navdeep Gupta: Yeah, Mike, great question. I won't provide quarterly guidance today, but what we have given you are some of the key ingredients. On a full year basis, we expect our EBT margin to expand, driven by the fact that we expect gross margin to expand modestly, as well as our SG&A to leverage modestly compared to non-GAAP results for 2023. You called out really well that the drivers of that will definitely be here in Q2. Keep in mind, Q2.

Speaker Change: Yeah, Great question I wanted to provide quarterly guidance today, but what we have given to you accommodate some of the key ingredients on a full year basis, we expect our EBITDA margin.

Speaker Change: Driven by the fact that we expect gross margin to expand modestly as well as our SG&A to.

Speaker Change: Leverage modestly compared to non-GAAP results for 2023, you'll call out really well that the drivers of that will be definitely here in Q2 keep in mind Q2 will also have the higher amount of leverage being driven by the $100 million of sales shift that youre going to see from Q3 into Q2.

Navdeep Gupta: In terms of the long-term expectation,

Speaker Change: In terms of the long term expectation, we continue to be really.

Speaker Change: Excited about both the ability to grow our top line sales as well as the bottom line profitability over the long term.

Navdeep Gupta: Okay, that makes sense. Follow-up question: How much of the $11 million increase in pre-opening costs went to pay Larry Bird, Kevin McHale, and Robert Parrish to show up at your opening?

Speaker Change: Okay that makes sense.

Speaker Change: Follow up question, how much of the $11 million increase in Preopening costs went to pay library, Kevin Mckellen, Robert power to show up in your opening which was amazing.

Navdeep Gupta: Those are, I'll call them, yeah, they're the right investments that, like Lauren said, they are driving such excitement in the community and the overall results that we are driving here in the city. But great questions. Thank you. It was cool.

Speaker Change: No that I hope you all have done that right investment there like Laurent said they are driving such an excitement in the community and the overall results that we are driving yet in these stores.

Speaker Change: But great question question.

Navdeep Gupta: Thank you. It was cool.

It was cool.

Speaker Change: Thank you.

Operator: Your next question comes from the line of Joe Feldman from Telsey Advisory Group. Your line is open.

Speaker Change: Your next question comes from the line of Joe Feldman from Telsey Advisory Group. Your line is open.

Lauren R. Hobart: Yeah, hi guys. Good morning.

Joseph Isaac Feldman: Yeah, Hi, guys good morning.

Joseph Isaac Feldman: I wanted to ask a bit about the promotional environment and what youre seeing out there.

Joseph Isaac Feldman: And it feels like inventory levels are still a bit high from a lot of the competition in some of the brands and just curious about how you're approaching it and what you're seeing thanks. Thanks Joe.

Lauren R. Hobart: Thanks, Joe. We didn't see an unusually promotional environment in Q1. Certainly, the industry overall is in a better place than it was at the end of last year, and our inventory, in particular, 5.5% growth on a 6.2% total comp. We feel really good about our inventory and its healthiness. And so, you know, I think we will continue to manage through whatever promotional environment will come our way, but we have no concerns there, and we know that we have the ability to manage with the tools that we have to drive profits.

Lauren R. Hobart: And I wanted to ask a bit about the promotional environment and what you're seeing out there. Because, you know, it feels like inventory levels are still a bit high from a lot of the competition and some of the brands. And I'm just curious about how you're approaching it and what you're seeing. Thanks.

Speaker Change: We didn't see an unusually promotional environment in Q1, certainly the industry overall is in a better place than it was at the end of last year and our inventory in particular, a five 5% growth on a six 2% total comp we feel really good about our inventory.

Speaker Change: Healthiness of it.

Speaker Change: And so I think we continue to manage through whatever promotional environment will come our way, but we have no.

Speaker Change: With no concerns there and we know that we have the ability to manage with the tools that we have to drive profits.

Speaker Change: Thank you for that and then.

Speaker Change: Wanted to another kind of related question is some of the categories that were asked about but outdoor broadly performing because I know again, we hear it's kind of still soft out there and just wondering if you guys saw a step up in euro door.

Navdeep Gupta: Yeah, Joe, I want to point out that, in the long term, we have tremendous confidence in the outdoor business. It's a $40 billion TAM where you're building...

Performance, Yeah, Joe I want to point out in the long term, we have a tremendous confidence in the outdoor business. It's a $40 billion Tam where you're building public lands, we're working to move strong athletes to bring explores rather to bring them in so that we can really deliver a unique and differentiated.

Speaker Change: Variance in the outdoor category across the board. The industry does continue to have a post pandemic research and we're no different than that than everybody else, but it doesn't take away. It's a small piece of our business first of all at this time and doesn't take away from our confidence our long term confidence that there is a consumer here that we can serve.

Speaker Change: Even even better than they are being served today and participation in the outdoor category continues to be high. So when this when this category rebounds, its going to we believe it's going to be really strong.

Operator: That's great. Thank you guys for that, and good luck with the quarter.

Speaker Change: That's great. Thank you guys for that and good luck with the quarter.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of John Kernan from Cowen Your line is open.

Operator: Good morning, thanks for taking my question and congrats on a great quarter. Thank you.

Hey, good morning, Thanks for taking my question and congrats on a great quarter.

Thank you. Thank you can you talk to footwear.

Speaker Change: Footwear has been a big driver of comps.

Speaker Change: Going back to last year.

Speaker Change: Footwear decks with obviously.

Lauren R. Hobart: Attracted top allocations from Nike, Oka, and On. How many more doors can HOKA and ON get into? How many more premium footwear decks can there be? And maybe just talk to the allocations you're getting at footwear given it's such a big portion of the company. Yeah, great question.

Speaker Change: Attracted top allocations from Nike OCA on how many more doors can HOKA and on.

Speaker Change: <unk>.

Speaker Change: Any more premium footwear deck can there be.

Speaker Change: Just talk to the allocations are getting it footwear, given it's such a big portion of the company.

Lauren R. Hobart: Great question. Footwear certainly has been a big driver of comps, and footwear is a key part of how people shop. It's the engine that drives the train. We're very pleased with our footwear business. Our premium full-service footwear decks, which we started putting into place many years ago, absolutely are driving that elevated experience and then opening us up for more allocations, more specialty brand partners. With Hoka and on, oh, and with the premium footwear decks, we'll be at 90% by the end of the year.

Speaker Change: Yeah, Great question footwear. It certainly has been a big driver of comps and footwear is a key part of how people shop. It's the engine that drives the train like we're very pleased with our with our footwear business our premium full service footwear decks, which we started putting into place many years ago, absolutely are driving that elevated experience and then opening.

Speaker Change: US up for more allocations more more specialty brand partners.

Speaker Change: Okay and on the premium footwear decks will be at 90% by the end of the year and obviously all of our new store development as we re imagine the portfolio we'll have premium.

Lauren R. Hobart: And obviously, all of our new store development. We'll have a service footwear deck. Hoka and On are still in a good portion of the chain. There's still significant upside in both brands, but Hoka is a little further ahead than On at this point, just in terms of the number of door counts. And we're excited to expand those brands as well.

Service footwear decks Hogan on are still in a good portion of the chain. There is still significant upside in both brands Hook a little further ahead than I am at this point just in terms of the number of door count and we're excited to continue to expand those brands as well.

Lauren R. Hobart: Got it. And then maybe, you know, we saw some more sluggish trends within the broader sporting goods industry in the first quarter that you obviously significantly outperformed the Chris, are there any regions that are outperforming? What were the biggest category outperformers in Q1? And how are you thinking about long-term market share? Yeah.

Speaker Change: Got it and then we saw some spot.

Speaker Change: More sluggish trends within the broader sporting goods industry.

Speaker Change: In the first quarter that you obviously significantly outperformed.

Speaker Change: Curious are there any regions that are outperforming what were the biggest category outperformers in Q1, and how are you thinking about long term market share.

Lauren R. Hobart: We had a 5.3% comp. We saw growth. We didn't see sluggish trends across our categories. We saw growth across all of the different areas of our business. Footwear, apparel, total hard lines all grew. And I think we can speak to our story. The consumer is absolutely putting a priority on a healthy and active lifestyle. You see people running and walking, being outdoors. But I think the most important thing is that we are providing them with an experience that they're clearly choosing.

Speaker Change: Yeah.

Speaker Change: We had five 3% comp we saw growth we didn't see sluggish trends across our categories. We saw growth across all of the different areas of our business footwear apparel total hard lines. All grew and I think I think what we can speak to our story the consumer is absolutely putting up.

Speaker Change: Priority on a healthy and active lifestyle, you see people running and walking being outdoors.

Speaker Change: But I think the most important thing is that we are providing them with an experience that they are clearly choosing and thats. Both due to the products that we have in our stores as well as the experience that we provide in store and online and so it's it's.

Lauren R. Hobart: And that's both due to the products that we have in our stores, as well as the experience that we provide in-store and online. And so it's the core strategies that are coming to life that are driving our performance, and we're not seeing any pockets of software.

Speaker Change: It's the core strategies that are coming to life that are driving our performance and we're not seeing any pockets of softness.

Speaker Change: Cross the country.

Operator: Thank you.

Speaker Change: Okay.

Speaker Change #100: Excellent. Thank you.

Speaker Change #101: Thank you.

Operator: Your next question comes from the line of Justin Kleber from Baird. Your line is open.

Speaker Change #102: Your next question comes from the line of Justin Kleber from Baird. Your line is open.

Navdeep Gupta: Good morning, everyone. Thanks for taking the questions. First, just a clarification on the full year merch margin outlook: is it modest expansion, just recapturing the shrink pressure from last year, or are you expecting your I guess what I would call your core merch margins to improve year over year, particularly Navdeep you mentioned lapping the outdoor clearance. So just wanted to clarify that. Yeah, so from a shrink.

Justin E. Kleber: Hey, good morning, everyone. Thanks for taking the questions first just a clarification on the full year merch margin outlook is the modest expansion.

Speaker Change #104: Just recapturing the shrink pressure from last year are you expecting your.

Speaker Change #104: Guess, what I would call your core merch margins to improve year over year.

Speaker Change #104: Particularly not big you mentioned lapping the outdoor clearance. So just wanted to clarify that first.

Navdeep Gupta: Yeah, so from a shrink perspective, you know, we said that we would be having a favorable impact in Q2, and then we continue to be appropriately cautious. We have counted half of the chain, and still half of the chain needs to be counted.

Speaker Change #105: Yeah. So from a shrink perspective, you know, we said that we will be having favorable impact in Q2, and then we continue to be appropriately cautious we accounted half of the chain and still half of the chain needs to be countered. So as you can imagine we want to be cautious in our expectation for shrink and on the most margin side, we continue to be really enthusiastic about the work.

Navdeep Gupta: So, as you can imagine, we want to be cautious in our expectation for shrink. And on the margin side, we continue to be really enthusiastic about the work that our merchant team is doing in terms of the differentiated product assortment that we are bringing to the work that we are doing and how well our flagship vertical brands are performing between Kalia, DSG, and Wurst. And so we continue to be, you know, I won't break down margin expectations much deeper than that, but we expect to grow our margins, both the gross margins and merge margin on a year-over-year basis modestly as we look to the full year.

Speaker Change #105: Our merchant team is doing in terms of the differentiated product assortment, we are bringing the work that we're doing and how well our flagship vertical brands are performing within calia DSG was and so we continue to be in all one breakdown much margin expectations deeper than that but we expect to.

Speaker Change #105: Grow our margins or the gross margin and merch margin on a year over year basis modestly as we look to the full year.

Speaker Change #105: Okay.

Operator: Got it. Okay. Thank you.

Speaker Change #106: Got it okay. Thank you.

Speaker Change #107: Just one other question around the calendar shift I'm curious if you could share the EPS benefit.

Navdeep Gupta: Just one other question around the calendar shift. Curious if you could share the EPS benefit of in one cue. I assume those sales flow through at a much higher incremental margin. But again, just any color on how that 45 million in one cue impacted earnings and then just so we can think about the list and 2Q related to the $100 million and the Calendar Shift Benefit. Thank you.

Speaker Change #108: In <unk> I assume.

Speaker Change #109: Those sales flow through at a much higher incremental margin, but again, just just any color on how that $45 million and <unk> impacted earnings and then just just so we can think about the lift in <unk> related to the 100 million.

Speaker Change #110: Yeah on the calendar shift benefit. Thank you yeah, I would say as you can imagine it's a $45 million. So you can appropriately do a flow through calculation on that and this is this the shift is happening in the early part of the year. So you can appropriately adjust your margin expectation in the SG&A I would say cute.

Navdeep Gupta: Yeah, I would say, you know, as you can imagine, it's $45 million, so you can appropriately do a flow-through calculation on that. And you know, this is this, the shift is happening in the early part of the year or so, you can appropriately adjust your margin expectation and your SG&A. I would say, you know, Q, net between Q2 and Q3, the impact would be neutral. It's just that Q2 is going to have a favorable impact with $100 million in sales, but then

Speaker Change #110: Net book than the Q2 and Q3 the impact would be neutral. It just that Q2 is going to get a favorable impact for the $100 million of sales within approximately the same amount of an offsetting impact in Q3.

Operator: Alright, thank you, and congratulations on the quarter. Thank you. Your next question comes from the line of Joseph Civello from Truist Securities. Your line is open.

Speaker Change #112: Alright, Thank you and congrats on the quarter.

Speaker Change #111: Are you.

Speaker Change #113: Your next question comes from the line of Joseph <unk> from <unk> Securities. Your line is open.

Operator: Hey, good morning, guys. Thanks for taking my questions and congrats on the quarter. I just wanted to ask another question about, you know, the cost.

Speaker Change #114: Hey, good morning, guys. Thanks for taking my questions and congrats on the quarter.

Speaker Change #115: Wanted to ask another question about the cost cadence this year.

Speaker Change #116: In <unk>, obviously, you're going to be lapping a ton of clearance in the outdoor from last year.

Speaker Change #116: Think about recovering all of that or most of that or.

Speaker Change #117: Do you have any guidance there.

Navdeep Gupta: Joe, I don't know if I'll give any more specific guidance on a quarterly basis, but as you can imagine, in addition to the kind of lapping of the clearance activity that you called out, we will be favorable against the shrink-through-up that we had, almost 84 basis points of an unfavorable impact that we saw in Q2. I would look at it on a full-year basis.

Speaker Change #118: [laughter], Yeah, I don't know if I would give any more specific guidance on a quarterly basis, but as you can imagine in addition to it too.

Speaker Change #119: And of the lapping of the clearance activity that you called out <unk> will be favorable against the shrink true up that we had almost about 84 basis points of an unfavorable impact that we saw in Q2 I would look at it on a full year basis. We like we said you know we expect a much margin to expand on a year over year basis as well as the gross margins.

Navdeep Gupta: Like we said, you know, we expect our merge margin to expand on a year-over-year basis as well as the growth. Okay, great. And then just one more question.

Navdeep Gupta: I think you said shrink came in a little bit better than you were expecting. How should we think about that in the second half, as you are, you know, lapping normalized shrink from last year? Yeah, absolutely. Great question.

Speaker Change #120: Okay, Great and then just one more question I think said shrink came in a little bit better than you were expecting how should we think about that in the <unk>.

Speaker Change #121: Second half as you are lapping normalized shrink from last year.

Speaker Change #122: Absolutely great question, so I'd like to shrink like it Deleveraged 22 basis points you had in Q1. It did it's the shrink is still going up on a year over year basis, I want to be clear about it. So that's why we continue to be appropriately cautious as we look to Q3 and Q4 impact on the P&L basis, Although where like you said it did moderate versus our internal <unk>.

Navdeep Gupta: So like shrink, like, you know, it de-leveraged 22 basis points here in Q1. But shrink is still going up on a year-over-year basis. I want to be clear about that.

Navdeep Gupta: So that's where we continue to be appropriately cautious as we look to Q3 and Q4 impact on the P&L basis. However, like you said, it did moderate versus our internal expectation, which is a good news trend, but we have only counted half of our chain. So we'll continue to be appropriately cautious as we look to the balance of the year. I would give a lot of credit to you. Thanks so much.

Speaker Change #122: Spectation, which is a good news trend, but we have only under half of our Haynesville will continue to be appropriately cautious as we look to the balance of the year on shrink line.

Speaker Change #123: I will give a lot of thanks, so much I'll give a little bit of a shout out to our store team and the D. C. G M. The work that they're doing and not just in continuing to move the merchandise make appropriate operating decisions to keep the source and not actually I'd say that is allowing us to have a slightly color moderated growth.

Speaker Change #123: The year over year basis losses on internal expectations.

Speaker Change #124: Got it thanks, so much.

Operator: Our next question comes from a line from Chuck Grom on Gordon Haskett. Your line is open.

Speaker Change #125: Thank you. Our next question comes from the line of Chuck Grom from Gordon Haskett. Your line is open.

Lauren R. Hobart: Hey, good morning. Really great quarter. My question is on traffic. You know, the past year's quarter has been really, really strong, particularly on a two-year basis. Curious if there's a way to unpack new customers versus existing customers.

Charles P. Grom: Good morning, it's a really great quarter. My question is on on traffic in the past three quarters have been really really strong, particularly on a two year basis curious if theres, a way to unpack new customers versus existing customers.

Lauren R. Hobart: We've continued to grow our athlete base over the past several years. I think we had seven million new athletes join last year and one point five million this past quarter. And traffic has continued to be strong. So it's all about new and new athletes. It's also just about the differentiated product that we keep bringing in and the fact that the elevation of the brand and the experience has been strong. So really, really good traffic numbers, and our consumers are holding up very, very well.

Speaker Change #127: So we've continued to grow our athlete base over the past several years.

Lauren R. Hobart: Okay, great. And then my follow-up is just on Game Changer.

Speaker Change #128: We had 7 million new athletes joined last year and $1 $5 million this past quarter.

Speaker Change #128: And then traffic has continued to be strong so I its about new and new athletes. It's also just about the differentiated product that we keep bringing in and the fact that this elevation of the brand and the experience has been strong so really really good traffic numbers and our consumer is holding up very very well.

Lauren R. Hobart: I'm curious how you're thinking about growing that business. You know, I have four kids and new sports. There's just a big appetite, right, to watch your kids.

Speaker Change #129: Okay, Great and then my follow up was just on game changer, I'm curious, how you're thinking about growing that business.

Speaker Change #130: Four kids and your sports Theres, a big appetite to watch your kids Theres a ton of different platforms out there.

Speaker Change #131: But it seems like you guys are taking a poll position here just so curious like how youre thinking about growing it over time.

Lauren R. Hobart: Yep, great question. And we have the same vision you do. It is the best platform. And really, when we started off, Game Changer was a diamond sports focused business. And so while we continue to improve, we're using artificial intelligence to get the video even more exciting and accurate. And there's lots going on behind the scenes there to drive even more excitement. Our biggest thing in the short term is to grow the diamond sport business into other emerging, they're not emerging sports, but they're emerging onto the platform.

Lauren R. Hobart: There are a ton of different platforms out there, but it seems like you guys are taking the lead position here. Just so curious, like how you're thinking about growing it over time? Yep, great question. And we have the same vision.

Speaker Change #132: Yeah, Great question and we are we have the same vision you have it is the best platform and really we started off game changer was the diamond sports focused business and so while we continue to improve we're using artificial intelligence to get the video even more exciting and accurate and there's lots going on behind the scenes there to drive even more excitement.

Speaker Change #132: They're our biggest thing in the short term is to grow the diamond sport business into other emerging non emerging sports, but there are emerging to the platform.

Lauren R. Hobart: You know, things like volleyball and other sports, and basketball is a big priority. So that's how we're going to be growing near term. But our vision is big here, and we are thinking long term and how we can develop that connection with our athletes, not just when they're in the store, but when they're at their practice, at their games, and beyond.

Speaker Change #132: You know things like volleyball, and other sports and basketball is a big priority. So that's how we're going to be growing near term, but our vision is big here and we are thinking long term and how we can continue to develop our connection with our athletes not just when they're in the store, but when they're at their practice at their games and beyond during training.

Speaker Change #133: Great. Thank you.

Speaker Change #134: Thank you. Our next question comes from the line of Paul <unk> from Citi. Your line is open.

Lauren R. Hobart: Thank you. Your next question comes from a line of Paul Lejuez from Citi. Your line is open.

Operator: Hey, thanks, guys. I'm wondering if you could talk a little bit more about stores versus e-com in terms of what you're seeing on transactions versus tickets within both channels. And I'm curious if you could share anything further about what you see in the e-com business in the trade area of a house and sports store when it opens and as it matures. Thanks. Yeah, oh, I'm...

Speaker Change #135: Hey, Thanks, guys I'm wondering if you could talk a little bit more about store versus E. Com in terms of what youre seeing.

Speaker Change #136: These actions reduce ticket.

Speaker Change #137: Within both channels and I'm curious if you could share anything further about what we see.

Speaker Change #138: In the trade area of our house and sports store when it opens and as they mature.

Lauren R. Hobart: Paul, thanks for the question. We no longer break out stores and e-commerce, and that's because, inherently, the customer is so omni-channel and focused that it became a very challenging exercise. But we're very pleased with our digital business and very pleased with how the e-commerce business responds when we open new stores and when a House of Sport comes into the area. It's all a very positive ecosystem.

Speaker Change #138: Yeah.

Paul: Paul Thanks for the question, we don't we no longer break out stores and E comm and that's because the inherently the customers. So omnichannel and focus that it became a very challenging exercise, but we're very pleased with our digital business and very pleased with how the E Commerce business responds when we open new stores and warehouses part comes in the area.

Paul: All very positive ecosystem story.

Lauren R. Hobart: Okay, then just to follow up, did anything change in terms of how you're thinking about category performance as you move throughout the year, just based on what you saw in Q1, maybe relative to your prior expectations, just how each category is contributing to this year's split? Now, overall, the categories are delivering.

Speaker Change #140: Great and then just a follow up did anything change in terms of how you're thinking about category performance.

Speaker Change #141: Move throughout the year just based on what we saw in Q1, maybe relative to your prior expectation just how how each category is contributing to this year's growth.

Lauren R. Hobart: Overall, the categories are delivering on our expectations, above them in Q1, and nothing materially changed.

Speaker Change #142: Overall, the categories are delivering on our expectations above them in Q1 and nothing material has changed.

Speaker Change #143: Thank you.

Speaker Change #144: Thank you.

Operator: Your next question comes from the line of Will Gaertner from Wells Fargo. Your line is open.

Speaker Change #145: Our next question comes from the line of will Gartner from Wells Fargo. Your line is open.

Operator: Hey guys, thanks for taking my questions. Just firstly, where are you guys and who are you taking share from, in your opinion?

Speaker Change #146: Hey, guys. Thanks for thanks for taking my question.

Frederick William Gaertner: Just firstly, where are you guys and who are you guys taking share from in your opinion.

Lauren R. Hobart: Oh, thank you. It's a quick question. Yes. We're taking share really across the board. There's been some consolidation in the industry. We are taking share from I don't want to call out anybody specifically, but our premium footwear assortment, for example, is driving strong interest, our apparel is driving strong interest, our vertical brands are meeting consumer needs, even everything from the opening price point to true lifestyle. So I would say it's across the board and across the industry that we're seeing share gains.

Speaker Change #148: Oh, thank you.

Speaker Change #149: Quick question, Yes, we're taking share really across the board there's been some consolidation in the industry, we are taking share from them.

Operator: Yeah, I got it. Thank you.

Speaker Change #149: So I don't want to call out anybody specifically, but we have our premium footwear assortment. For example is driving strong interest our apparel is driving strong interest our vertical brands are meeting consumer needs.

Speaker Change #149: Even everything from opening price points at price pointed to lifestyle. So I I would say its across.

Speaker Change #149: Cross the board and across the industry that we're seeing share gains.

Speaker Change #149: Okay.

Operator: Um, as far as game changer, it looks like it added 20 basis points to the comp, to the comp, excuse me, last year? Correct. Yeah. How do we think about game changer as far as revenue goes forward? I mean, I think you call that $100 million. Revenue and 4Q. Is there any seasonal way, you know, put some takes there?

Speaker Change #149: Yeah.

Speaker Change #150: Thank you.

Speaker Change #151: As far as game changer. It looks like you added 20 basis points to the comp the comp excuse me last year.

Speaker Change #152: Correct, Yeah, how do we think about future <unk> revenue going forward I mean, I think you called out a $100 million revenue at <unk> is that is there any seasonal.

Navdeep Gupta: I mean, how do we think about Game Changer and how much it's going to add to the comp going forward? Yeah, you said both of the facts really well.

Speaker Change #152: Puts and takes there I mean, how do we think about game changer, and how much is going to add to the comp going forward yeah.

Navdeep Gupta: Yeah, you said both of the facts really well. Yes, the favorable impact to comp was about 20 basis points, and we expect that on a full year basis, it will range between 20 to 30 basis points, and our full year expectation from the Game Changer platform is to deliver about $100 million in sales here in 2024. Thank you. Thank you. Your next question comes from...

Speaker Change #153: You said both of the Fox really well, yes, the favorable but the impact was the favorable impact of comp was about 20 basis points and we expect that on a full year basis will.

Speaker Change #153: Range between 20% to 30 basis points and our full year expectations on the game changer platform is to is to delever about $100 million of sales yet in 2024.

Speaker Change #153: Yeah.

Speaker Change #154: Got it thank you.

Speaker Change #155: Thank you.

Operator: Your next question comes from the line of Seth Basham from Wedbush Securities. Your line is open. Thanks a lot and good morning. My question is just on SG&E, following the business opinions.

Speaker Change #156: Your next question comes from the line of Seth Basham from Wedbush Securities. Your line is open.

Seth Basham: Thanks, a lot and good morning. My question is just on SG&A. Following the business optimization actions you took last year, where are you with reinvesting there or are you still on track to reinvest in the focus areas that you planned.

Seth Basham: And any other color you have on the SG&A outlook.

Navdeep Gupta: Yeah, no, we are definitely focused on investing in appropriate capabilities, and quite frankly, we have been doing this all along 2023 itself.

Speaker Change #158: Yes, no we are definitely focused on and investing in appropriate capabilities and quite frankly, we have been doing this all along 2023 itself the big area of investments continue to be in talent.

Navdeep Gupta: The big area of the investments continues to be in talent, right, bringing in the right talent that is helping us do these store openings at successful openings, not just of the House of Sport but the 50K. There is a lot of investment, as you can imagine, that is going into the technology area, which, you know, as you can imagine, that is allowing us to get the top line returns from those investments.

Speaker Change #158: Bringing the right talent that is helping US do these store openings of the successful openings not just of the house is supported by the 50 K. There is a lot of investment as you can imagine that is going in the technology area, which as you can imagine that is allowing us to get the top line returns from those investments and it's also helping us drive.

Navdeep Gupta: And it's also helping us drive productivity improvement, which we are then able to reinvest that into the business. And then the third area continues to be investment appropriately within the advertising line, driving brand awareness, as well as growth in our.

Speaker Change #158: Activity improvements, which we are then able to reinvest that back into the business and then the third area continues to be investment appropriately, but then the advertising line running the brand awareness as well as the growth in our vertical brands.

Navdeep Gupta: So going forward beyond 2024, SGA leverage is going to be predominantly dependent on top line growth. Is that a fair statement? That's generally a fair statement. But I would say again, you know, we on a long-term basis expect both to drive top line growth, as well as bottom line profitability improvement. It'll be it'll be balanced between, you know, the margin investment opportunity or the

Speaker Change #159: Got it and so going forward beyond 2020 for SG&A leverage is going to be predominantly dependent on top line growth.

Speaker Change #160: Fair statement.

Speaker Change #161: Is that generally a fair statement, but I would say again on a long term basis, we expect both.

Speaker Change #162: The drives topline growth as well as the Bottomline profitability improvement it'll be it'll be a balance between the margin investment opportunity at the SG&A investment opportunity.

Speaker Change #163: Thank you.

Speaker Change #163: Yeah.

Operator: And your final question today comes from the line of Jonathan Matuszewski from Jeffreys. Your line is open.

Speaker Change #164: And your final question today comes from the line of Jonathan <unk> from Jefferies. Your line is open.

Navdeep Gupta: Great, nice results. And thanks for taking my questions. The first one was on tickets; if you could give us just more color on what fueled the ticket growth this quarter looks better than the industry and prepared remarks indicate more spend per trip, so any more color there would be helpful and, and kind of understanding what's embedded in that.

Speaker Change #165: Great Nice results and thanks for taking my question. The first one was on ticket if you could give us just more color on what fueled the ticket growth this quarter looks better than the industry in prepared remarks indicate more spend per trip. So any more color there would be helpful in kind of understanding what's embedded in that.

Speaker Change #166: <unk> comp guide for 2024 regarding ticket whether you know the 50 50 split from <unk> is reasonable.

Navdeep Gupta: Jonathan, I would say the answer to the first question is the same, right? What is driving increased basket size when athletes come to our store, as well as the overall ticket, continues to be driven by the differentiated product that we have access to. This is a product that is highly coveted and highly in demand right now. So having that product allows you to not only capture the demand that is walking into the store or online, but you are able to get a much better recovery on that full price sale as well.

Jonathan: Yeah, Jonathan I would say the answer to the first question is is the same right with the what is driving increased basket size within the athletes come to our store as well as the overall ticket continues to be driven by the differentiated product that we have access to this is the product that is highly coveted highly in demand right now so having that.

Jonathan: <unk> allows you to not only capture the demand that is walking into the store or online, but you are able to get a much better recovery on that full price selling as well so the premium assortment and the premium product as well as the most allocated and sought after product continuous to drive both the ticket side as well as the basket size.

Navdeep Gupta: So the premium assortment and the premium product, as well as the most allocated and sought-after products, continue to drive both the ticket size as well as the basket size when the athletes come. And in terms of guidance, we don't.

Jonathan: The athletes come and in terms of the guidance, we don't provide the guidance at that level. So I'll continue to keep the comp guidance of 2% to 3% for the full year at the highest level and we continue to be really excited about the violence trend that we are driving between the terrific traffic growth as well as the ticket.

Lauren R. Hobart: Great. And just a quick follow-up on the transactions this quarter. Did you see any discernible shift in trends across income cohorts?

Speaker Change #168: Great and just a quick follow up on the transaction. This quarter did you see any discernible shift in trends across income cohorts.

Lauren R. Hobart: We saw growth across all of our income demographics, and we didn't see trade down from best to better, better to good, so pretty consistent across all the income demographics, all cohorts.

Speaker Change #169: We didn't we saw growth across all of our income demographics, and we didn't see trade down from best or better a better good so I'm pretty consistent across all the other income demographics cohorts.

Operator: Thanks so much.

Speaker Change #170: Okay. Thanks, so much.

Speaker Change #171: Thank you.

Lauren R. Hobart: And that concludes our question and answer session. I will now turn the call back over to President and CEO Lauren Hobart for some closing remarks. Thank you.

Lauren R. Hobart: And that concludes our question and answer session I will now turn the call back over to President and CEO Lauren Hobart for some closing remarks, well. Thank you all for your interest in Dick's Sporting goods and I just wanted to take a moment to thank our incredible team and our CSC. Our Dcs our stores are game changer offices is there it is.

Operator: Well, thank you all for your interest in Dick's Sporting Goods, and I just want to take a moment to thank our incredible team in our CSC, our DCs, our stores, and our Game Changer offices. It is they who delivered this really strong quarter. I'm very, very thankful and proud of them. Thank you all.

Lauren R. Hobart: Who deliver the really strong quarter I'm very very thankful and proud of them. Thank you I'll see you next quarter.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change #172: This concludes today's conference call. Thank you for your participation you may now disconnect.

Lauren R. Hobart: Yeah.

Operator: Thank you all, we'll see you next quarter.

Lauren R. Hobart: Change your offices is there it is they who delivered this really strong quarter I'm very very thankful and proud of them. Thank you I'll see you next quarter.

Lauren R. Hobart: This concludes today's.