Q2 2024 Dick's Sporting Goods Inc Earnings Call

Krista: Ladies and gentlemen, thank you for standing by my name is Krista and I will be your conference operator today. At this time, I would like to welcome everyone to the Dix Sporting Goods, second quarter, 2020 for Irtings Conference Call.

Operator: At this time, I would like to welcome everyone to the Dick's Sporting Goods 2nd Quarter, 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

Operator: After this speaker's remarks, there'll be a question-and-answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. And if you would like to throw that question again, press star one. Thank you.

Krista: All lines have been placed on mute to prevent any background noise.

Krista: After this speaker's remarks, I'll be a question and answer session.

Krista: If you would like to ask a question during this time, simply press star, followed by the number 1 on your telephone keypad, and if you would like to withdraw that question, at the end press star 1. Thank you. I will now turn the conference over to Nate Phillips, Senior Director of Investor Relations. Nate, you may begin.

Nate Gilch: I will now turn the conference over to Nate Gilch, Senior Director of Investor Relations. Nate, you may begin.

Nate Gilch: Morning, everyone. And thank you for joining us to discuss our 2nd quarter 2024 results. On today's call, we'll be Lauren Hobart, our president and chief executive officer, and Navdeep Gupta, our chief financial officer.

Nate Phillips: Good morning everyone and thank you for joining us to discuss our second quarter 2024 results.

Speaker Change: are President and Chief Executive Officer, and Navdeep Gupta are Chief and Natural Officer.

Nate Gilch: A playback of today's call will be archived and our Investor Relations website located at investors.dix.com for approximately 12 months. As a reminder, we will be making forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Any such statements should be considered in conjunction with cautionary statements in our earnings release, risk factor discussions in our filings with the SEC, including our last annual report on 10-K, as well as cautionary statements made during this call. We assume no obligation to update any of these forward-looking statements or information.

Speaker Change: A playback of today's call will be archives and our investor relations website located at investors.dix.com for approximately 12 months.

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

Speaker Change: Any such statements should be considered in conjunction with cautionary statements in our earnings release, risk factor discussion that are filing with the SEC.

Speaker Change: including our last annual report on Form 10K.

Speaker Change: as well as cautionary statements made during this call.

Speaker Change: We assume no obligation to update any of these forward-looking statements or information.

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

Speaker Change: These refer to our investor relations website to find the reconciliation of our non-gap financial measures for our person too.

Nate Gilch: And finally, through your future scheduling purposes, we are tentatively planning to publish our 3rd quarter 2024 earnings results on November 26, 2024.

Speaker Change: [inaudible]

Speaker Change: And finally, your future scheduling purposes, we are tentatively planning to publish our third quarter, 2024 earnings results, and November 26, 2024.

Lauren Hobart: With that, I will now turn the call over to Lauren. Thank you, Nate, and good morning, everyone. As we announced earlier this morning, we delivered a very strong quarter. Our Q2 results continue to demonstrate how well our long-term strategies are working and the great execution of our teams. Powered by our compelling omni-channel athlete experience, differentiated product adjustment, best-in-class teammate experience, and our ability to create deep engagement with the Dix brand, we are driving sustained top-line momentum and gaining market share. I am really proud of our team. Today, we are again raising our full-year outlook. This reflects our strong Q2 results and the confidence we have in our business.

Speaker Change: and with that, I'll turn the call over to Lauren.

Lauren: Thank you, Nathan, good morning, everyone.

Lauren: As we announced earlier this morning, we delivered a very strong quarter. Our Q2 results continue to demonstrate how well our long-term strategies are working and the great execution of our team.

Lauren: powered by our compelling on-the-channel athlete experience, differentiated product

Lauren: Best-in-class team made experience and our ability to create deep engagement with the Dix brand. We are driving sustained top-line momentum and gaining market share. I am really proud of our team.

Lauren: Today we are again raising our full year outlook.

Lauren: District Fless are strong Q2 results and the confidence we have in our business.

Lauren Hobart: We now expect CompSales growth to the year to be in the range of 2.5% to 3.5%, and EPS to be in the range of $13.55 to $13.90.

Lauren: We now expect confails growth for the year to be in the range of 2.5% to 3.5%.

Speaker Change: I need the S to be in the range of $13.55 to $13.90.

Lauren Hobart: Now, I'm moving to our results. For the second quarter, our sales increased 7.8% to just under $3.5 billion. Adjusting for the calendar shift, our comps increased 4.5%. This strong comp was driven by growth in average ticket and in transactions. We saw more athletes purchase from us, and they spent more each trip compared to the prior year. With growth in sales, growth margin expansion, and SG&A leverage, we achieved EBT margin of nearly 14%, an EPS of $4.37. since both significantly ahead of last year.

Speaker Change: Now I'm living to our results.

Speaker Change: For the second quarter, our sales increased 7.8% to just under $3.5 billion.

Speaker Change: Adjusting for the calendar shift, our comps increased 4.5%.

Speaker Change: The strong conflict driven by growth in average ticket and in transaction.

Speaker Change: We saw more athlete purchase from us and they spent more each trip compared to the prior year.

Speaker Change: With Groath and Fail, Groath's margin expansion and SG&A leverage, we achieved EBT margin of nearly 14% and EPS of $4.37, both significantly ahead of last year.

Operator: Operator today.

Operator: At this time, I would like to welcome everyone to the Dick's Sporting Goods 2nd quarter, 2024 Earnings Conference call. All lines have been placed on mute to prevent any background noise.

Lauren Hobart: At the heart of our strategies is our omnichannel athlete experience. We're continuing to invest across our digital and store experiences to meet our athletes wherever they are, create confidence and excitement, and get product into their hands faster. We continue to be very pleased with the performance of House of Sport and our next generation, 50,000 square foot Dicks locations, which internally we refer to as our field house concept. With House of Sport, we are redefining sports retail and creating very strong engagement with our athletes, our brand partners, and communities. It's also driving significant benefits to our real estate partners.

Speaker Change: At the heart of our strategy is our on-me channel Athletic Experience.

Operator: After this speaker's remarks, there'll be a question and answer session. If you would like to ask a question during this time, simply press star, following the number one on your telephone keypad. And if you would like to draw that question, again, press star one. Thank you.

Speaker Change: We're continuing to invest across our digital and store experiences to meet our athletes wherever they are, create confidence and excitement and get product into their hands faster.

Speaker Change: We continue to be very pleased with the performance of House of Sport and our next generation 50,000 square foot dislocations.

Nate Gilch: I will now turn the conference over to Nate Gilch, Senior Director of Investor Relations. Nate, you may begin. Morning, everyone. And thank you for joining us to discuss our second quarter of 2024 results. On today's call, we'll be Lauren Hobart, our President and Chief Executive Officer, and Navdeep Gupta, our Chief Financial Officer. A playback of today's call will be archives and our Investor Relations website located at investors.dix.com for approximately 12 months.

Speaker Change: which internally we refer to as our fieldhouse concept.

Speaker Change: With House of Sport, we are redefining sports retail and creating very strong engagement with our athletes, our brand partners and communities.

Lauren Hobart: We continue to hear from model operators that our House of Sport locations drive increased traffic, sales per square foot, and occupancy rates for the malls where they operate. House of Sport is drawing unprecedented landlord interest, and the opportunity to join many of the best shopping centers in the country.

Speaker Change: It's also driving significant benefits to our real estate partners.

Speaker Change: We continue to hear from model operators that our House of Sport locations drive increased traffic, sales per square foot, and occupancy rates for the models where they operate.

Nate Gilch: As a reminder, we will be making forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Any such statements should be considered in conjunction with cautionary statements in our earnings release, risk factor discussions in our filings with the SEC, including our last annual report on form 10K, as well as cautionary statements made during this call. 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 reference in today's call.

Speaker Change: House of Sport is drawing unprecedented landlord interest and the opportunity to join many of the best shopping centers in the country.

Lauren Hobart: Later this month, we are excited to open our 15th House of Sport location and look forward to opening another five locations this year. We've also completely revolutionized our most typical format, our 50,000 square foot Dicks store into what we're calling our Field House concept. Field house is inspired by House of Sport and includes interactive experiences and elevated presentation and service. These stores are performing exceptionally well. During Q2, we opened four field house locations, and with 17 now open, we look forward to opening nine more locations this year.

Speaker Change: Later this month we are excited to open our 15th House of Sport location and look forward to opening another five locations this year.

Speaker Change: We've also completely revolutionized our most typical format, our 50,000 square foot dicks door into what we're calling our field house concept.

Speaker Change: Field House is inspired by Health Support and includes interactive experiences and elevated presentation and service.

Nate Gilch: And finally, through your future scheduling purposes, we are tentatively planning to publish our third quarter 2024 earnings results on November 26, 2024.

Speaker Change: These stories are performing exceptionally well.

Speaker Change: During YouTube, we opened four field house locations and with 17 now open, we look forward to opening nine more locations this year.

Lauren Hobart: With that, I'll now turn the call over to Lauren. Thank you, Nate, and good morning, everyone. As we announced earlier this morning, we delivered a very strong quarter. Our Q2 results continue to demonstrate how well our long-term strategies are working and the great execution of our teams. Powered by our compelling omnichannel athlete experience, differentiated product disappointment, best-in-class teammate experience, and our ability to create deep engagement with the Dix brand, we are driving sustained top-line momentum and gaining market share. I am really proud of our team.

Lauren Hobart: Investing in our digital capabilities is central to our omnichannel athlete experience. This includes dicks.com and our dicks mobile app, which continues to be key to our business and have strong engagement with our athletes. We continue to make the digital shopping experience better for our athletes and recently launched several features to help accelerate this journey, including elevated imagery, 3D viewing of select footwear, and AI powered chat features. As we've talked about, we're also focused on digital innovation. With GameChanger, we built a platform that engages with youth sports families in a uniquely authentic way with the content most valuable to them: their kids' sports game.

Speaker Change: Investing in our digital capabilities is central to our Army Channel athlete experience.

Speaker Change: This includes Dix.com and our Dix mobile app, which continues to be key to our business, and have strong engagement with our app.

Speaker Change: We continue to make the digital shopping experience better for our athletes.

Speaker Change: and recently launched several features to help accelerate this journey, including elevated imagery, 3D viewing of select footwear, and AI powered chat features.

Speaker Change: As we talked about, we're also focused on digital innovation.

Lauren Hobart: Today, we are again raising our full-year outlook. This reflects our strong Q2 results and the confidence we have in our business. We now expect CompSales growth to the year to be in the range of 2.5% to 3.5%, an EPS to be in the range of $13.55 to $13.90.

Speaker Change: With GameChanger, we build a platform that engages with youth sports families in a uniquely authentic way, with the content most valuable to them, their kids sports games.

Lauren Hobart: Over 6 million unique users engaged with GameChanger and Q2, an 11% increase from last year, averaging approximately 45 minutes per day in the app, speaking to the power of this content to sport families, coaches, and players. GameChanger allows us to connect with our athletes beyond the traditional shopping experience and reinforces our leadership in sport. Importantly, GameChanger families are some of Dick's most valuable customers. A GameChanger customer who also has a Dicks scorecard spends over 2 times more per year ethics than a typical scorecard customer. The GameChanger business model generates predictable, recurring, high-margined subscription revenue, and during Q2, a trail continued robust sales.

Speaker Change: Over 6 million unique users engaged with game changer in Q2 and 11% increase from last year.

Speaker Change: averaging approximately 45 minutes per day in the app. Speaking to the power of this content to support families' coaches and players.

Lauren Hobart: Now, I'm moving to our results. For the second quarter, our sales increased 7.8% to just under $3.5 billion. Adjusting for the calendar shift our Comp's increased 4.5%. This strong Comp was driven by growth in average ticket and in transactions. We saw more athletes purchase from us and they spent more each trip compared to the prior year. With growth in sales, growth margin extension, and SGNA leverage, we achieved EBT margin of nearly 14%, an EPS of $4.37. Sense, both significantly ahead of last year.

Speaker Change: GameChanger allows us to connect with our athletes beyond the traditional shopping experience.

Speaker Change: and reinforces our leadership in sport.

Speaker Change: Importantly, game-changer families are some of Dick's most valuable customers.

Speaker Change: A game-tanger customer who also has a dick scorecard, then over two times more per year at dick than a typical scorecard customer.

Speaker Change: The GameChanger Business Model generates predictable, recurring, high-margin subscription revenue, and during Q2, it will continue to robust sales growth.

Lauren Hobart: Gross. Providing differentiated on-trend product, which is our second strategic pillar, helps make Dick's a go-to destination for sport in the U.S. We are excited about our assortment for the important fact of school season and the product pipeline from our key brand partners and vertical brands.

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

Lauren Hobart: At the heart of our strategies is our omnichannel athlete experience. We're continuing to invest across our digital and store experiences to meet our athletes wherever they are, create confidence and excitement and get product into their hands faster. We continue to be very pleased with the performance of Housesport and our next generation, 50,000 square foot dicks locations, which internally we refer to as our field house concept. With Housesport, we are redefining sports retail and creating very strong engagement with our athletes, our brand partners and communities.

Speaker Change: We are excited about our assortment for the important fact of school season.

Lauren Hobart: Our teammates are a critical driver of our success, and our third strategic priority is providing a best-in-class teammate experience. Our engagement surveys demonstrate that we are a fun and rewarding place to work. Our teammates are proud, personally committed, and optimistic about our future, and we're seeing fantastic improvement in turnover across our stores.

Speaker Change: and the product pipeline from our Keybrand partners in vertical brands.

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

Speaker Change: Our engagement surveys demonstrate that we are a fun and rewarding place to work.

Speaker Change: Our teammates are proud, personally committed, and optimistic about our future, and we're seeing fantastic improvement in turnover across our stores.

Lauren Hobart: Lastly, we're continuing to invest in Dick's brand building. We recently announced a new partnership with Team USA and LA-28, designating Dick's as the official sporting goods retail provider. During the recent Olympic Games, we launched our latest marketing campaign that celebrates youth athletes and builds on our belief that sports have the power to change lives.

Lauren Hobart: It's also driving significant benefits to our real estate partners. We continue to hear from model operators that our Housesport locations drive increased traffic, sales per square foot and occupancy rates for the malls where they operate. Housesport is drawing unprecedented landlord interest and the opportunity to join many of the best shopping centers in the country.

Speaker Change: Lastly, we're continuing to invest in Dixx brand building.

Speaker Change: We recently announced a new partnership with Team USA and LA28, designating Dix as the official sporting goods retail provider.

Speaker Change: During the recent Olympic Games we launched our latest marketing campaign that celebrates youth athletes and builds on our belief that sports have the power to change lives.

Lauren Hobart: In closing, we are very pleased with our second quarter performance, including the strong results of how to support our field house concept and game changer, and we are highly confident in our strategies to drive sustained and profitable growth. Before concluding, I'd like to thank all of our teammates across this company for their outstanding efforts and continued commitment to Dick's Sporting Goods. Our strong performance is a direct result of their efforts.

Lauren Hobart: Later this month, we are excited to open our 15th Housesport location and look forward to opening another five locations this year. We've also completely revolutionized our most typical format, our 50,000 square foot dicks store into what we're calling our field house concept. Field house is inspired by Housesport and includes interactive experiences and elevated presentation and service. These stores are performing exceptionally well. During Q2, we opened four field house locations and with 17 now open, we look forward to opening nine more locations this year.

Speaker Change: In closing, we are very pleased with our second quarter performance.

Speaker Change: Including the strong results at House of Sport, our Field House concept and game changer, and we are highly confident in our strategies to drive sustained and profitable growth.

Speaker Change: Before concluding, I'd like to thank all of our teammates across this company for their outstanding efforts and continued commitment to dick sporting goods.

Navdeep Gupta: With that, I'll turn the call over to Not Deep to share our financial results in more detail. Thank you, Ron, and good morning, everyone.

Speaker Change: Our strong performance is a direct result of their efforts.

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

Navdeep Gupta: Before jumping into our Q2 results, I want to acknowledge the voluntary 8-KV file last week in which we disclosed that on August 21st, we discovered unauthorized third-party access to our information systems. Based on our current knowledge, we do not believe that this incident is material. It did not disrupt our business. Our stores remained open, and our e-commerce sites were functioning throughout.

Navdeep Gupta: Thank you, Lauren, and good morning everyone.

Navdeep Gupta: Report something into our Q2 results. I want to acknowledge the voluntary 8KV pile last week, in which we disclose that on August 21st, we discovered unauthorized third-party access to our information systems.

Lauren Hobart: Investing in our digital capabilities is central to our academic channel athlete experience. This includes dicks.com and our dicks mobile app which continues to be key to our business and have strong engagement with our athletes. We continue to make the digital shopping experience better for our athletes and recently launched several features to help accelerate this journey, including elevated imagery, 3D viewing of select footwear and AI powered chat features. As we've talked about, we're also focused on digital innovation.

Speaker Change: Based on our current knowledge, we do not believe that this incident is material. It did not disrupt our business, our stores remained open, and our e-commerce sites were functioning throughout.

Navdeep Gupta: Moving to our second quarter results, we are very pleased to report a consolidated sales increase of 7.8% to $3.47 billion. This included a benefit from the calendar shift due to the 53rd week last year of approximately $95 million, or 30 cents in earnings per diluted share. Adjusting for the calendar shift, which we believe provides the clearest view of the business, our comms increase 4.5% as we continue to gain market share. Our strong comms were driven by a 3.5% increase in average ticket and a 1% increase in transactions. We saw strength across key categories led by footwear and athletic apparel.

Speaker Change: Moving to our second quarter results, we have very pleased to report a consolidated sales increase of 7.8% with 3.47 billion dollars.

Lauren Hobart: With GameChanger, we built a platform that engages with youth sports families in a uniquely authentic way with the content most valuable to them, their kids sports game. Over six million unique users engaged with GameChanger and Q2, an 11 percent increase from last year, averaging approximately 45 minutes per day in the app, speaking to the power of this content to sport families, coaches and players. GameChanger allows us to connect with our athletes beyond the traditional shopping experience and reinforces our leadership in sport.

Speaker Change: This included a benefit from the calendar shift due to the 53rd week last year of approximately 95 million dollars for 30 cents in earnings per diluted share.

Speaker Change: A justing for the calendar shift which we believe provides the clearest view of the business, a constant increase 4.5% as we continue to gain market share.

Speaker Change: A strong comps were driven by a 3.5% increase in average ticket and a 1% increase in transactions.

Speaker Change: We saw strength across key categories, lead-bounce footwear and athletic apparel.

Lauren Hobart: Importantly, GameChanger families are some of Dick's most valuable customers. A GameChanger customer who also has a Dick scorecard spends over two times more per year ethics than a typical scorecard customer. The GameChanger business model generates predictable, recurring, high margin subscription revenue, and during Q2, a drug-continued robot sales. Cross-Grow.

Navdeep Gupta: First profit for the second quarter was $1.28 billion or 36.73% of net sales and increased 231 basis points from last year. This increase was driven by a higher merchandise margin of 169 basis points and leverage on occupancy costs due to the higher sales. The increase in merchandise margin was driven by favorable sales mix and the quality of our assortment. It also included lower-year-over-year strength of 83 basis points as the anniversary of higher strengths from 2023 that included an unfavourable through-up based on the physical $186.3 million and leverage 78 basis points compared to last year due to the higher sales.

Speaker Change: Pros profit for the second quarter was $1.28 billion or 36.73% of net sales and increased 231 basis points from last year.

Speaker Change: This increase was driven by a higher merchandise margin of 169 basis points and leverage on occupancy costs due to the higher sales.

Lauren Hobart: Providing differentiated on-trend product, which is our second strategic pillar, helps make Dick's V go to destination for sport in the U.S. We are excited about our assortment for the important fact of school season and the product pipeline from our key brand partners and vertical brands.

Speaker Change: The increase in merchandise margin was driven by favorable sales mix and the quality of our assortment.

Speaker Change: It also included lower year over year strength of 83 basis points as the anniversary in higher strength from 2023 that included an unfair robot through a based on the physical index or age last year.

Lauren Hobart: Our teammates are a critical driver of our success and our third strategic priority is providing a best-in-class teammate experience. Our engagement surveys demonstrate that we are a fun and rewarding place to work. Our teammates are proud, personally committed, and optimistic about our future, and we're seeing fantastic improvement in turnover across our stores.

Speaker Change: On a non-cap basis, as DNA expenses increased 4.1% to 786.3 million dollars and leverage 78 basis points compared to last year due to the higher sales.

Navdeep Gupta: The increase in SGNA dollars included higher incentive compensation expense, planned investment in marketing, and cost in support of our sales growth. Re-opening expenses were $8.9 million, a decrease of $24 million compared to the prior year. This decrease was driven by the timing of our new store opening. EBT in the second quarter was $482.3 million, or 13.9% of net sales. This is up from EBT of $325.9 million, or $10.1% of net sales in Q2 of 2023. In total, we delivered earnings per diluted share of $4.37, an increase of 55% compared to the earnings per diluted share of $2.82 last year.

Speaker Change: The increase in SGNA dollars included higher incentive compensation expense, planned investment in marketing and cost in support of our sales growth.

Lauren Hobart: Lastly, we're continuing to invest in Dick's brand building. We recently announced a new partnership with Team USA and LA-28, designating Dick's as the official sporting goods retail provider. During the recent Olympic Games, we launched our latest marketing campaign that celebrates youth athletes and builds on our belief that sports have the power to change lives.

Speaker Change: Reopening expenses were $8.9 million a decrease of $24 million compared to the prior year.

Speaker Change: This decrease was driven by the timing of our news to our opening.

Speaker Change: EBT in the second quarter was 482.3 million dollars or 13.9% of net sales.

Lauren Hobart: In closing, we are very pleased with our second quarter performance, including the strong results of how to support our field house concept and game changer, and we are highly confident in our strategies to drive sustained and profitable growth. Before concluding, I'd like to thank all of our teammates across this company for their outstanding efforts and continued commitment to Dick's sporting goods. Our strong performance is a direct result of their efforts.

Speaker Change: This is up from EBTF-325.9 million dollars, a 10.1% of net sales in Q2 or 2021.

Speaker Change: In total, we delivered earnings per diluted share of 4 dollars and 37 cents and increase of 55 percent compared to the earnings per diluted share of 2 dollars and 82 cents last year.

Navdeep Gupta: As I mentioned earlier, this included a 30 cents earnings per diluted share benefit from the calendar shift.

Speaker Change: As I mentioned earlier, this included a 30 cents earnings for diluted shape benefit from the calendar shift.

Navdeep Gupta: With that, I'll turn the call over to not deep to share our financial results in more detail. Thank you, Ron. Good morning, everyone.

Navdeep Gupta: Now, looking to our balance sheet, we ended Q2 with approximately $1.7 billion of cash and cash equivalents and no borrowings on our $1.6 billion secured credit facility. As a result of our consistent and strong financial performance and commitment to a healthy balance sheet, Moody's upgraded our credit ratings from BA-3 to BA-2 in early August. Our quarter and inventory levels increased 11% compared to Q2 of last year. This inventory investment has been a conscious decision to lean into differentiated key items and categories, which are expected to drive our growth into the second half of 2024 and into early 2025.

Speaker Change: Now looking to our balance sheet.

Speaker Change: The ended Q2 with approximately 1.7 billion dollars of cash and cash equivalent and no borrowings on our 1.6 billion dollar and secured credit facility.

Navdeep Gupta: Before jumping into our Q2 results, I want to acknowledge the voluntary 8KV file last week, in which we disclose that on August 21st, we discovered unauthorized third-party access to our information systems. Based on our current knowledge, we do not believe that this incident is material. It did not disrupt our business. Our stores remained open, and our e-commerce sites were functioning throughout.

Speaker Change: As a result of our consistent and strong financial performance and commitment to a healthy balance sheet, mood is upgraded our credit ratings from BA-3 to BA-2 in early August.

Speaker Change: A quarter-and-inventory levels increased 11% compared to Q2 of last year.

Navdeep Gupta: Moving to our second quarter results, we are very pleased to report a consolidated sales increase of 7.8% to $3.47 billion. This included a benefit from the calendar shift due to the 53rd week last year of approximately $95 million or 30 cents in earnings per diluted share. Adjusting for the calendar shift, which we believe provides the clearest view of the business, our comms increase 4.5% as we continue to gain market share. Our strong comms were driven by a 3.5% increase in average ticket and a 1% increase in transactions.

Speaker Change: This inventory investment has been a conscious decision to lean into differentiated key items and categories which are expected to drive our growth into the second half of 2024 and into early 2025.

Navdeep Gupta: We believe our inventory is clean and well positioned as we enter into Q3.

Speaker Change: P.B. Lee, Aronventor is clean and well-positioned as we enter into Q3.

Navdeep Gupta: Turning to our second quarter capital allocation, net capital expenditures were $199 million, and we paid $89 million in quarterly dividends. We also repurchased $252,000 shares of our stock for $49.9 million at an average price of $198.5. Thus far, this year we have repurchased a total of $163.6 million of our stock. For the full year, we continue to expect share repurchases of $300 million.

Speaker Change: Daring to Earth's Equal Quarter Capital Allocation.

Speaker Change: Next capital expenditures were $199 million and we paid $89 million in quarterly dividends.

Speaker Change: We also repurchased 250,000 shares of our stock for 49.9 million dollars at an average price of 190 dollars and 5 cents.

Navdeep Gupta: We saw strength across key categories led by footwear and athletic apparel. First profit for the second quarter was $1.28 billion or $36.73% of net sales and increased 231 basis points from last year. This increase was driven by a higher merchandise margin of 169 basis points and leverage on occupancy costs due to the higher sales. The increase in merchandise margin was driven by favorable sales mix and the quality of our assortment. It also included lower-year-over-year shrink of 83 basis points as the anniversary of higher shrinks from 2023 that included an unfavorable through-up based on the physical inventory's last year.

Speaker Change: Thus far this year we have repurchased a total of 163.6 million dollars a past start.

Speaker Change: For the fully have, we continue to expect shared repurchases of 300 million dollars.

Navdeep Gupta: Now moving to our outlook for 2024. As Lauren said, we are again raising our full-year outlook. This reflects our strong Q2 performance and our confidence in our strategic initiatives and operational strength, balanced against the dynamic macroeconomic environment. We continue to expect 2024 consolidated sales in the range of $13.1 billion to $13.2 billion. We now expect fully-accomps sales growth in the range of 2.5% to 3.5% compared to our prior expectation of 2% to 3% growth. EPT margin is now expected to be at 11.2% at the midpoint compared to 11.1% previously. We now expect growth margins to expand year-over-year compared to our expectation for a modest expansion previously.

Speaker Change: Now moving to our outlook for 2024.

Speaker Change: As Lauren said, we are again raising our polier outlaw.

Lauren: This reflects our strong Q2 performance and our confidence in our strategic initiatives and operational strength. Balance against the dynamic macroeconomic environment.

Lauren: We continue to expect 2024 consolidates themselves in the range of $13.1 billion with $13.2 billion.

Speaker Change: We now expect familiar calm sales growth in the range of 2.5% to 3.5% compared to our prior expectation of 2% to 3% growth.

Navdeep Gupta: On a non-cap basis, SGNA expenses increased 4.1% to $786.3 million and leverage 78 basis points compared to last year due to the higher sales. The increase in SGNA dollars included higher incentive compensation expense, planned investment in marketing, and cost in support of our sales growth. Re-opening expenses were $8.9 million a decrease of $24 million compared to the prior year. This decrease was driven by the timing of our new store opening. EBT in the second quarter was $482.3 million or 13.9% of net sales.

Speaker Change: EBT margin is now expected to be at 11.2% at the midpoint compared to 11.1% previously.

Speaker Change: We now expect both margins to expand year over year compared to our expectation for a modest expansion previously.

Navdeep Gupta: Based on the strength of our business, we are making some strategic investments to drive long-term growth, and we now expect S-GNA expenses on a non-GAAP basis to de-leverage modestly year-over-year. For pre-opening expenses, we expect second half expenses to be moderately higher than the first half, driven by the timing and mix of unused door openings. The vast majority of this expense will fall into the third quarter. In total, we now anticipate full year earnings per diluted share to be in the range of $13.55 to $13.90 compared to our prior expectation of $13.35 to $13.75. Our earnings guidance is based on approximately 83 million average diluted shares outstanding and an effective tax rate of approximately 23%.

Speaker Change: Based on the strength of our business, we are making some strategic investments to drive long-term growth and we now expect as DNA expenses on a non-cap basis to deal average modestly year over year.

Speaker Change: i

Speaker Change: For pre-opening expenses, we expect second half expenses to be moderately higher than the first half, driven by the timing and mix of unused or opening.

Navdeep Gupta: This is up from EBT of $325.9 million or 10.1% of net sales in Q2 of 2023. In total, we delivered earnings per diluted share of $4.37 and increase of 55% compared to the earnings per diluted share of $2.82 last year. As I mentioned earlier, this included a 30 cents earnings per diluted share benefit from the calendar shift.

Speaker Change: The vast majority of this expense will fall into the third quarter.

Speaker Change: In total?

Speaker Change: We now anticipate full year earnings for the new year to be in the range of $13.55 to $13.90 compared to our prior expectation of $13.35 with $13.75.

Speaker Change: Arunic guidance is based on approximately 83 million average diluted shares outstanding and an effective tax rate of approximately 23%.

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

Navdeep Gupta: Now looking to our balance sheet, we ended Q2 with approximately $1.7 billion of cash and cash equivalence and no borrowings on our $1.6 billion and secured credit facility. As a result of our consistent and strong financial performance and commitment to a healthy balance sheet, Moody's upgraded our credit ratings from BA3 to BA2 in early August. Our quarter and inventory levels increased 11% compared to Q2 of last year. This inventory investment has been a conscious decision to lean into differentiated key items and categories which are expected to drive our growth into the second half of 2024 and into early 2025.

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

Navdeep Gupta: Lastly, keep in mind that due to the impact of shifted calendar, our reported total sales and EPS benefited by approximately $140 million and approximately 45 cents in earnings per diluted share in the first half. We expect an offsetting negative impact in the second half of the year, with a key back to school week shifting out of Q3 and into Q2 this year. The vast majority of this offset will happen in the third quarter. We estimate the unfavorable impact to Q3 reported total sales to be approximately $105 million or approximately 35 cents in earnings per diluted share.

Speaker Change: Lastly, even mine that due to the impact of shifted calendar are reported total sales and EPS benefited by approximately $140 million, are approximately 45 cents in earnings for the new to share in the first half.

Speaker Change: We expect an offsetting negative impact in the second half of the year.

Speaker Change: with a key back to school week shifting out of Q3 and into Q2 this year, the vast majority of this offset will happen in the third quarter.

Speaker Change: We estimate the unfavorable impact to Q3 reported total sales to be approximately $105 million or approximately 35 cents in earnings per diluted share.

Navdeep Gupta: We believe our inventory is clean and well positioned as we enter into Q3. Turning to our second quarter capital allocation, net capital expenditures were $199 million and we paid $89 million in quarterly dividends. We also repurchased $252,000 shares of our stock for $49.9 million at an average price of $198.5. That's part of this year. We have repurchased a total of $163.6 million of our stock. For the full year, we continue to expect share repurchases of $300 million.

Navdeep Gupta: Excluding the 53rd week last year, which added $170 million or 19 cents in earnings per diluted share, this shift will not impact our fully air reserves.

Speaker Change: Excluding the 50-thousand week last year, which added $117 million, or $0.19 in earnings per diluted share, this shift will not impact our fully-air results.

Navdeep Gupta: In closing, we are very pleased with our second quarter performance and the success of our long-term strategy. We remain very enthusiastic about the future of our business.

Speaker Change: In closing, we are very pleased with our second quarter performance and the success of our

Operator: This concludes our prepared remarks. Thank you for your interest in exporting goods operator.

Speaker Change: We remain very enthusiastic about the future of our business.

Speaker Change: This concludes our prepared remarks. Thank you for your interest in the exploding goods, operators, you may now open the line for questions.

Operator: You may now open the line for questions. Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. And if you'd like to withdraw that question, again, press star one. And we do ask that you please limit yourself to one question in a single follow-up.

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

Speaker Change: If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. And if you'd like to withdraw that question, again press star 1. And we do ask that you please limit yourself to one question in a single follow-up. For any additional questions, please re-cute.

Navdeep Gupta: Now moving to our outlook for 2024. As Lauren said, we are again raising our full year outlook. This reflects our strong Q2 performance and our confidence in our strategic initiatives and operational strength, balanced against the dynamic macroeconomic environment. We continue to expect 2024 consolidated sales in the range of $13.1 billion to $13.2 billion. We now expect fully-accomps sales growth in the range of 2.5% to 3.5% compared to our prior expectation of 2% to 3% growth.

Operator: For any additional questions, please reach out. Thank you.

Adrienne Yih: Your first question comes from Adrienne Yih with Barclays. Please go ahead.

Speaker Change: Your first question comes from Adrian Yee with Barclays. Please go ahead.

Adrienne Yih: Good morning. Let me add my congratulations. It's not often we see this kind of success at, you know, selling out full price in this landscape. So congrats.

Adrian Yee: Good morning. Let me add my congratulations. It's not often received this kind of success at selling up full price in this landscape. So congrats.

Lauren Hobart: Lauren, I guess my first question is going to be pretty high level. I kind of want to just you to go over again. Why? Today, DTS is having the success post-COVID, right? And what arguably is kind of a flowing at leisure or athletic, you know, environment. And can you go through? You did it during the prepared remarks. But can you go through again? Kind of the top three things that Dick's has done, kind of pre-pandemic to post-pandemic. And why you kind of are emerging as the dominant player in the sporting landscape. Thank you.

Adrian Yee: Lauren, I guess my first class is getting pretty high level.

Navdeep Gupta: EPT margin is now expected to be at 11.2% at the midpoint compared to 11.1% previously. We now expect growth margins to expand year over year compared to our expectation for a modest expansion previously. Based on the strength of our business, we are making some strategic investments to drive long-term growth and we now expect SGNA expenses on a non-gab basis to be leveraged modestly year over year. For pre-opening expenses, we expect second-half expenses to be moderately higher than the first half driven by the timing and mix of our new store openings.

Speaker Change: I kinda wanted to just eat to go over again, why?

Speaker Change: [inaudible]

Speaker Change: Right, and what arguably is kind of a flowing athlete or athletic environment. And can you go through, you did it during the prepare of the march, but can you go through again, kind of the top three things that Dick has done kind of pre-pandemic to post-pandemic.

Speaker Change: and why you kind of are emerging as the dominant player in the sporting guest landscape. Thank you.

Lauren Hobart: Thanks, Adrienne. We are appreciate your congratulations. Very, very pleased with the Q2 performance that we just put up 4.5% comp. That was on top of a 2% comp last year. And we are driving market share gains. And I think that really speaks to the fact that our athletes are consumers. We call athletes are holding up very well. They continue to prioritize a healthy outdoor active lifestyle. They're prioritizing team sports. But I think the reason we continue to gain market share is because our long-term strategies are working.

Adrian Yee: Thanks, Adrian.

Speaker Change: We appreciate your congratulations, very, very pleased with you.

Speaker Change: the Q2 performance that we just put up, four and a half percent comps that was on top of a two percent comp last year and we are driving market share games and I think that really speaks to the fact.

Navdeep Gupta: The vast majority of this expense will fall into the third quarter. In total, we now anticipate full year earnings per deluded share to be in the range of $13.55 to $13.90 compared to our prior expectation of $13.35 to $13.75. Our earnings guidance is based on approximately 83 million average deluded shares outstanding and an effective tax rate of approximately 23%. We continue to expect net capital expenditures of approximately $800 million for the year.

Speaker Change: That our athletes are consumer and we call athletes are holding up very well. They continue to prioritize a healthy outdoor active lifestyle, their prioritizing team sports.

Speaker Change: But I think the reason we continue to gain market share is because our long-term strategies are working. So, to your point about what's changed, and it's even before COVID, over the past several years, we have been focused on several key strategic colors.

Lauren Hobart: So, to your point about what's changed. And it's even before COVID. Over the past several years, we have been focused on several key strategic colors. The first one is differentiated product. And our merchant teams have done an absolutely outstanding job bringing in products that are high demand that people are seeking, that teens are seeking, that all athletes are looking for. And that's products that is both for competitive performance athlete, but also a lifestyle for that athlete or for that consumer. And so we now have an assortment that is truly differentiated in the marketplace and enables us to continue to drive.

Speaker Change: The first one is differentiated product.

Speaker Change: and our merchant teams have done an absolutely outstanding job.

Navdeep Gupta: Lastly, keep in mind that due to the impact of shifted calendar, our reported total sales and EPS benefited by approximately $140 million at approximately 45 cents in earnings per deluded share in the first half. We expect an offsetting negative impact in the second half of the year, with the key back-to-school week shifting out of Q3 and into Q2 this year, the vast majority of this offset will happen in the third quarter.

Speaker Change: Bringing in products that are high demand.

Speaker Change: That people are seeking, that teens are seeking, that all athletes are looking for. And that's the product that is both for competitive performance athletes.

Speaker Change: but also a lifestyle for that athlete or for that consumer. So we now have an assortment that is truly differentiated in the marketplace and enables us to continue to drive fails and the healthy margins that you mentioned.

Lauren Hobart: And we have sales and the healthy margins that you mentioned.

Lauren Hobart: Our athlete experience is another thing that we've been incredibly focused on. And that means a lot of things to us. That means both enhancing the service in our stores, making sure that we get on our website, making sure that we get product into people's hands sooner, making sure we get people the right product. And it also speaks to the reinvention of our entire portfolio. We keep reinventing exporting goods. And that's something that's core to our values and our culture, but with houses for it. And the field house, we continue to push what a reinvented model for serving athletes can look like.

Speaker Change: [inaudible]

Speaker Change: Our athlete experience is another thing that we've been incredibly focused on, and that means a lot of things to us. That means both enhancing the service in our stores, making sure that we, and on our website, making sure that we get product into people's hands sooner, making sure we get people.

Navdeep Gupta: We estimate the unfavorable impact to Q3 reported total sales to be approximately $105 million or approximately 35 cents in earnings per deluded share. Excluding the 53rd week last year which added $170 million or 19 cents in earnings per deluded share, this shift will not impact our full year results.

Speaker Change: The Ray product.

Speaker Change: and it also speaks to the re-invention of our entire portfolio. We keep...

Speaker Change: Reinventing.

Speaker Change: Gets Sporting Goods, and that's something that's core to our values in our culture.

Navdeep Gupta: In closing, we are very pleased with our second quarter performance and the success of our long-term strategy. We remain very enthusiastic about the future of our business.

Speaker Change: but with House of Sport and the fieldhouse we continue to push what are reinvented model for serving athletes who can look like and those learnings continue to trade down through our entire company.

Lauren Hobart: And those learnings continue to trade down, triple down through our entire company.

Lauren Hobart: Overall, I'll just say we saw this past quarter, we saw growth across all income demographics, which was terrific. And we saw more athletes purchased from us, spending more trips. So that's the increase in transactions and ticket. And we added 1.6 million athletes to our database in Recorder. So great quarter.

Operator: This concludes our prepared remarks. Thank you for your interest in the exporting goods operator.

Speaker Change: Overall, I'll just say we saw this past quarter, we saw growth across all income demographics which was terrific and we saw more athletes purchased from us, spending more patrips, so that's the increase in transactions and take it and we added 1.6 million athletes.

Operator: You may now open the line for questions. Thank you.

Operator: We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. And if you'd like to withdraw that question, again press star one. And we do ask that you please limit yourself to one question in a single follow-up. For any additional questions, please re- Thank you.

Lauren Hobart: But this has been a long-term, long-term strategy multiple years, starting even pre-pandemic and very, very. with how the team has executed.

Speaker Change: to our database in the quarter. So, great quarter, but this has been a long-term, long-term strategy, multiple years, starting even pre-tandemic and I'm very, very pleased with how the teeth are.

Adrienne Yih: Great.

Navdeep Gupta: And then a quick follow-up for Navdeep on the inventory. Obviously, you are building the inventory with a little bit higher than where we are on sales. Often, you know, that's something that people look at. But can you just describe, you know, there's a time in retail when you actually press on the accelerator and start to, you know, give that more gas to the inventory. And it's when you actually see the cons accelerating. So can you just talk about kind of giving the balance a little more oxygen to give us a taste of comp and how you're de-rusting it on the backside.

Speaker Change: has actually executed.

Adrienne Yih: Your first question comes from Adrienne Yih with Barclays. Please go ahead. Good morning. Let me add my congratulations. It's not often we see this kind of success at, you know, selling out full price in this landscape. So congrats.

Speaker Change: and then a quick follow-up for Navdeep on the inventory, obviously, you are building the inventory with a little bit higher than where we are in sales. Often, you know, that's something that people look at. But can you just describe, you know, there's a time and retail when you actually press on the accelerator and start to, you know, give that more gas to the inventory and it's when you actually see the cons accelerating. Can you just talk about kind of giving that the balance of a little more oxygen to people with a taste that it's called?

Lauren Hobart: Lauren, I guess my first question is going to be pretty high level. I kind of want to just you to go over again. Why? Decay? Decay us is having the success post COVID, right? And what arguably is kind of a flowing at leisure or athletic, you know, environment? And can you go through? You did it during the prepared remarks. But can you go through again? Kind of the top three things that Dick's has done, kind of pre pandemic to post pandemic.

Navdeep Gupta: Are you taking more upfront? Are you, you know, how you're managing that? Thank you.

Speaker Change: and how you're directing it on the backside. Are you taking more of front? Are you, um, you know, how you're managing that? Thank you.

Navdeep Gupta: Adrienne, thank you for that question.

Navdeep Gupta: First of all, I think you framed it really well that this is us pouring a little bit more accelerant into our core strategies. What Lauren talked about. And we see touched upon both of the most important facts on why the inventory investments we are making. First of all, it goes back to the access that we have. The work that our merchants have done in getting the differentiated product into our stores and on the website. This assortment is resonating so well. And so this is we see as a key area.

Navdeep Gupta: Adrian, thank you for that question. First of all, I think that you framed it really well that this is us pouring a little bit more accelerant into our core strategies. What Lauren talked about, and we touched upon both of the most important part facts.

Lauren Hobart: And why you kind of are emerging as the dominant player in the sporting is landscape. Thank you. Thanks, Adrienne. We are, I appreciate your congratulations very, very pleased with the Q2 performance that we just put up 4.5% comp. That was on top of a 2% comp last year. And we are driving market share gains. And I think that really speaks to the fact that our athletes are consumer. We call athletes are holding up very well.

Speaker Change: So, on why the inventory investments we are making, first of all it goes back to the access that we have, the work that our merchants have done in getting the differentiated product.

Speaker Change: In to our stores and on website. This assortment is a resonating so well. And so this is VC as a key area and what I called out in my prepared remarks as a key area of a conscious investment that we are making.

Navdeep Gupta: And what I called out in my prepared remarks as a key area of a conscious investment that we are making. The second thing that I would point to is our inventory is really clean and very well balanced. Our clearance inventory is meaningfully down compared to last year in Q2. And then the third thing is if you look deeper within into the updated guidance that we have provided. This goes back to the confidence that we have in our assortment. We raised our second half comp expectations modestly and actually raised our much margin expectations also modestly in the second half.

Lauren Hobart: They continue to prioritize a healthy outdoor active lifestyle. They're prioritizing team sports. But I think the reason we continue to gain market share is because our long term strategies are working. So to your point about what's changed and it's even before COVID over the past several years. We have been focused on several key strategic colors. The first one is differentiated product. And our merchant teams have done an absolutely outstanding job bringing in products that are high demand that people are seeking that teens are seeking that all athletes are looking for.

Speaker Change: The second thing that I would point to is our inventory is really clean and very well balanced.

Speaker Change: Our clearance inventory is meaningfully down compared to last year and due to, and then the third thing is if you look deeper within into our updated guidance that we have provided, this goes back to the confidence that we have in our assortment, we raised our second half-comp expectations modestly.

Navdeep Gupta: Again, coming back to the quality of assortment that we have, the access that we have to a very differentiated assortment. So we feel really good about the inventory and how we will be a position for back to school season. Yeah, and Adrian, I would just add that the inventory that we've invested in is in things like key items and strike points and brands, and it has a long sale life. So we expect to have this inventory available and ready to sell into the spring and the Q1 of 2025. It's really good inventory.

Speaker Change: and actually raised our merge margin expectations also modestly in the second half. Again, coming back to the quality of assortment that we have, the access that we have to a very differentiated assortment. So we feel really good about the inventory and how well the opposition for back to school see.

Lauren Hobart: And that's products that is both for competitive performance athletes, but also a lifestyle for that athlete or for that consumer. And so we now have an assortment that is truly differentiated in the marketplace and enables us to continue to drive sales and the healthy margins that you mentioned. Our athlete experience is another thing that we've been incredibly focused on. And that means a lot of things to us. That means both enhancing the service in our stores, making sure that we and on our website, making sure that we get product into people's hands sooner, making sure we get people the right product.

Speaker Change: I would just add that the inventory that we've invested in is in things like key items and straight points and brands and it has a long sale life. So we expect to have this inventory available and ready to sell into the spring and the Q1 of 2020. It's really good inventory.

Adrienne Yih: Fantastic. That's too much. Thank you. Thanks, Adrian.

Brian Nagel: Your next question comes from Brian Nagel with Oppenheimer. Please go ahead.

Speaker Change: Can't have sex, that's too much.

Speaker Change: Thank you. Thank you, Lauren.

Speaker Change: Here next question comes from Brian Nagle with Open Heimer. Please go ahead.

Brian Nagel: Good morning. I too would like to add my congratulations on another very nice quarter. Thanks, Ron.

Brian Nagle: Good morning.

Speaker Change: I too would like to add my congratulations on another very nice quarter.

Brian Nagel: The first question I have, I'll ask a high-level question that might follow a more specific. I'm from a high level perspective. You know, a lot of us follow closely. You're your partners, your vendor partners. And, but we're hearing out there. You know, is this refocus, if you will, on. The product innovation, you know, from Nike, Under Rover and many others. So the question I want to ask is, you know, what Dix has been performing very, very well, you know, through a difficult macro backdrop through a global product innovation. Are you starting to see now from these vendors.

Lauren Hobart: And it also speaks to the reinvention of our entire portfolio. We keep reinventing, exporting goods. And that's something that's core to our values and our culture, but with houses for it and the field house, we continue to push what a reinvented model for serving athletes can look like. And those learnings continue to trade you know, trade down, triple down through our entire company overall. I'll just say we saw this past quarter, we saw growth across all income demographics, which was terrific. And we saw more athletes purchased from us, spending more for trips, so that's the increase in transactions and tickets. And we added 1.6 million athletes to our database in a quarter.

Ron: Thanks, Ron!

Brian Nagle: The first quest I had, I was going to hide over the question of my follow-up in Morse.

Speaker Change: said that I'm from a high level perspective, you know.

Speaker Change: You know, look a lot of us follow closely, you know, your partners, your vendor partners. But we're tearing out there, you know, is this refocus of you well on?

Speaker Change: of innovation, a Nike underrover, and many others. So the question I want to ask is, what the fix has been performing very, very well, through a difficult macro backdrop, through a well-approdic innovation. Are you starting to see now from these vendors?

Brian Nagel: You know, because the product innovation is accelerating and to the extent you are, I mean, how much of an incremental tailwind predicts, will this be, you know, as it continues to take shape.

Speaker Change: You know, the Pride Invasion accelerating and to the extent you are, I mean, how much of an incremental tailwind for Dix will this be, you know, as a continues to take shape?

Lauren Hobart: Thanks, Brian. Absolutely. We're seeing our vendor partners focus on innovation, and we ourselves, as I mentioned earlier, are innovating our entire experience as well. With our strategic partners, we have really long-term sharing sessions, strategy sessions where we do look at the pipeline for years to come.

Lauren Hobart: So great quarter, but this has been a long term, long term strategy, multiple years starting even pre pandemic and very, very, with how the team has executed.

Speaker Change: Thanks for the end!

Speaker Change: I'm fully we're seeing our vendor partners focus on innovation and we ourselves as I mentioned earlier are innovating our entire experience as well.

Adrienne Yih: Great.

Navdeep Gupta: And then a quick follow-up for Navdeep on the inventory. Obviously, you are building the inventory with a little bit higher than where we are on sales. Often, you know, that's something that people look at.

Speaker Change: With our strategic partners, we have really long-term sharing sessions, strategy sessions, where we do look at the pipeline for years to come.

Navdeep Gupta: But can you just describe, you know, there's a time and retail when you actually press on the accelerator and start to, you know, give that more gas to the inventory. And it's when you actually see the cons accelerating. So can you just talk about kind of giving the balance a little more oxygen to give us a taste of comp and how you're de-rusting it on the backside. Are you taking more upfront?

Operator: Ladies and gentlemen, this is the operator. We are experiencing technical difficulties. Please remain on the line. Your lines will be placed on a musical. Thank you for your patience.

Speaker Change: Ladies and gentlemen, this is the operator. We are experiencing technical difficulties. Please remain on the line.

Speaker Change: Your lines will be placed on a musical.

Speaker Change: Thank you for your patience.

Navdeep Gupta: Are you, you know, how you're managing that? Thank you. Adrienne, thank you for that question. First of all, I think so you framed it really well that this is us pouring a little bit more accelerant into our core strategies, what Lauren talked about. And we see touched upon both of the most important path facts on why the inventory investments we are making. First of all, it goes back to the access that we have.

Navdeep Gupta: The work that our merchants have done in getting the differentiated product into our stores and on a website. This assortment is resonating so well. And so this is we see as a key area and what I called out in my prepared remarks as a key area of of a conscious investment that we are making. The second thing that I would point to is our inventory is really clean and very well balanced.

Speaker Change: In the next episode, we'll see you in the next episode. We'll see you in the next episode.

Navdeep Gupta: Our clearance inventory is meaningfully down compared to last year in Q2. And then the third thing is if you look deeper within into the updated guidance that we have provided. This goes back to the confidence that we have in our assortment we raised our second half comp expectations modestly and actually raised our much margin expectations also modestly in the second half. Again, coming back to the quality of assortment that we have the access that we have to a very differentiated assortment so we feel really good about the inventory and how will be a position for back to school season.

Operator: And ladies and gentlemen, we will resume Brian Nagel. Your line is now live.

Navdeep Gupta: Yeah, and Adrian, I would just add that the inventory that we've invested in is in things like key items and strike points and brands and it has a long sale life. So we expect to have this inventory available and ready to sell into into the spring and the Q1 of 2025. It's really good inventory.

Speaker Change: And ladies and gentlemen, we will resume Brian Nagle, your line is now live.

Lauren Hobart: Brian, I apologize. I heard your question. And I don't know whether you heard any of my answer or a line drop.

Adrienne Yih: Fantastic. That's so much. Thank you. Thanks Adrian.

Speaker Change: Hi, I'm Paul and I have a question and I don't know what you've heard any of my answer, our line drops, so should I start over?

Brian Nagel: So should I start over? You started to respond. Sorry, but I want to repeat the question. Sure. Why don't we do that? Thank you very much. Sure. So my question was, what we're hearing from a number of your key vendor partners is that they're refocusing on post-pandemic refocusing on product innovation. This has performed extraordinarily well. You know, through a tough macro impact drop in, you know, maybe well product innovation throughout the sector was low. And so the question I have is, you know, A, or you started to see some benefits of this product innovation from your vendor partners.

Speaker Change: You started to respond, so I, but I, I do want to repeat the question. Sure, why don't we do that. Thank you very much.

Brian Nagle: Your next question comes from Brian Nagle with Oppenheimer. Please go ahead. Good morning. I too would like to add my congratulations on another very nice quarter. Thanks, Ron. The first question I have, I'll ask a high level question that might follow a more specific. I'm from a high level perspective, you know, you know, look a lot of us follow closely. You're, you're, you're partners, you're vendor partners and but we're hearing out there.

Speaker Change: Sure, so what my question was.

Speaker Change: We're here in a number of your key vendor partners is that they're re-focusing on post-pandemic re-focusing upon a condensation.

Speaker Change: Diff is performed extraordinarily well.

Speaker Change: You know, through a tough macro and back drop in, you know, maybe while product innovation throughout the sector was low and so the question I have is, you know, as you look, I mean, a or you started to see some benefits of this product innovation from your standard partners and B, you know, how should we think about this refocusing on product innovation on the part of these standard partners as an incremental tailwind predicts, you know, either through the balance of 24 in the 25 or whatever.

Lauren Hobart: Then B, you know, how should we think about this refocusing on product innovation on the part of these vendor partners as an incremental tailwind predicts, you know, either through the balance of 24 and 25 or whatever. Thanks, Brian. Yes, we are excited about the product innovation cycle that we see coming down the pike with our vendor partners. And we have, as you would expect, long term strategy meetings where we get peaks under the tent about what's coming. We're excited about the product innovation. But I would also point out, as I mentioned to Adrian's question, the innovation that we have in our own business in terms of how we are serving athletes, the reinvented portfolio, and the access that we have to highly differentiated products.

Brian Nagle: You know, is this refocus if you will on. Product innovation, you know, from Nike, under robber and many others. So the question I want to ask is, you know, what big has been performing very, very well. You know, through a difficult macro backdrop, through a lower product innovation. Are you starting to see now from these vendors. You know, because the product innovation accelerating and to the extent you are. I mean, how much of an incremental tailwind predicts.

Speaker Change: Thanks, Brian. Yes, we are excited about the product's innovation cycle that we see coming down the pike.

Speaker Change: With our vendor partners, and we have, as you would expect, long-term strategy meetings, where we get peaks under the tent about what's coming. We're excited about the product innovation, but I would also point out as I mentioned to Adrian's question, the innovation that we have in our own business, in terms of how we are.

Brian Nagle: Will this be, you know, as it continues to take shape. Thanks, Brian. Absolutely. We're seeing our vendor partners focus on innovation. And we ourselves, as I mentioned earlier, are innovating our entire experience as well. With our strategic partners, we have, we have really long term sharing sessions, strategy sessions, where we do look at the pipeline for years to come. Ladies and gentlemen, this is the operator. We are experiencing technical difficulties. Please remain on the line.

Brian Nagle: Your lines will be placed on a musical. Thank you for your patience. And ladies and gentlemen, we will resume Brian Nagel. Your line is now live. Brian, I apologize. I heard a question. And I don't know whether you heard any of my answer. Our line drops though. Should I start over? You started to respond. Sorry, but I want to repeat the question. Sure. Why don't we do that? Thank you very much.

Speaker Change: serving athletes, the really invented portfolio and the access that we have to highly differentiated products. So product itself is a key talent for us, has been for some time and we continue to see that due to the access, due to the innovation coming, we take it to keep it for us.

Brian Nagel: So product itself is a key tailwind for us; has been for some time. And we continue to see that, due to the access, due to the innovation coming, we think it's a key pillar for us. Thanks, Lauren. That's helpful.

Navdeep Gupta: Then, my second, my follow-up question, I guess maybe more for not deep. So you mentioned in your, your prepared comments, it sounds like incremental investments that you're going to undertake here in the second half of 24, which changes somewhat kind of a leverage for a part of a business lease near term.

Speaker Change: Episode 2

Speaker Change: Thanks Lauren, that's helpful then. My second question, I guess maybe more from now, if you mentioned in your, your prepared comics, it sounds like incremental investments that you're going to undertake here in this in the second half of 24, which changes some of the kind of leverage profile of a business with your term. So I guess the question I'm asking is what are the, maybe you can elaborate more on those investments?

Navdeep Gupta: So I guess the question I'm asking is what other, maybe you can elaborate more on those investments? Yeah, Brian, just let me give a little bit of color to that. So, if you look at it, we are investing in the core strategy. The strategies that Lauren articulated so well that are working so that are resonating with our athletes and are working so well. So things like repositioning our portfolio is one, the technology investments that are allowing us to provide a very differentiated level of service to our athletes when they walk into our store, or the technology investment that is making our website so much more functional.

Yabran: Yabran, just let me give a little bit of color to that. So if you look at it, we are investing in the core strategy. The strategy is that Lauren articulated so well that are working, so that are resonating whether athletes and are working so well. So things like repositioning that portfolio is one, the technology investments that are...

Yabran: and allowing us to provide a very differentiated level of service to our athletes when they walk into our store or the technology investment that is making our websites so much more functional. Those are the core areas of investment that we are leaning into to continue to position our business for 2025 and beyond in a very differentiated way.

Navdeep Gupta: Those are the core areas of investment that we are leaning into to continue to position our business for 2025 and beyond. In a very differentiated way.

Navdeep Gupta: The, the other comment that I would add to that is the investment in our SGA is balanced against the confidence that we have in our total margin expectations. So if you look deeper into our guidance, we have raised that total margin expectations for full year and invest and then let that against the SGA investment in totality. We actually have taken our operating margin expectations up by 10 basis points compared to our prior guidance. I'm sorry, help.

Speaker Change: The other comment that I would add to that is the investment in our S.G.A.A. is balanced against the confidence that we have in our total margin expectation. So if you look deeper into our guidance, we have raised that total margin expectations for full year.

Speaker Change: and then let that against the as DNA investment in totality, we actually have taken our operating margin expectations of by 10 basis points compared to our prior guidance.

Simeon Gutman: Here, next question comes from Simeon Goutman with Morgan Stanley. Please go ahead.

Speaker Change: Let's go help. Thank you.

Speaker Change: Thank you. Here next question comes from Simeon Bootman with Morgan Stanley. Please go ahead.

Simeon Gutman: Hi.

Simeon Gutman: Good morning, everyone. Lauren, I wanted to start asking about the top line and engagement on the customer side. The angle is this proliferation of some of the strongest brands, and I won't name them all, but there's a handful that are higher profile that are probably driving a good amount of growth, at least that's perception. My question is what are you paying attention to that gives you confidence that you're maintaining engagement with your customers on all of these brands, and my perception is that some of these brands are starting to proliferate into other places. So how is that engagement changing as we see some of these brands and products end up in more places?

Simeon Bootman: Hi, good morning everyone. Lauren, I wanted to start asking about the top line engagement on the customer side.

Speaker Change: and Angle is this proliferation of some of the strongest brands, and I won't name them all, but you know there's a handful that are higher profile.

Speaker Change: that are probably driving a good amount of growth, at least that's the perception. My question is, what are you paying attention to?

Speaker Change: That gives you confidence that you're maintaining engagement with your customers on all of these brands and my perception is that some of these brands are starting to proliferate into other places So how is that engagement changing as we see some of these brands and products end up in more places?

Brian Nagle: So my question was, what we're hearing from a number of your key vendor partners is that they're refocusing on post pandemic refocusing on product innovation. This has performed extraordinarily well. You know, through a tough macro impact drop in, you know, maybe while product innovation throughout the sector was low. So the question is, you know, as you look, I mean, A, or you started to see some benefits of this product innovation from your vendor partners, then B, you know, how should we think about this refocusing on product innovation on the part of these vendor partners as an incremental tailwind predicts, you know, either through the balance of 24, 25 or whatever.

Lauren Hobart: Thanks. I mean, our engagement with our customers we call athletes is as high as this has ever been. And that's a credit to the experience that we have in the stores. It's also a credit to our brand campaign and what our marketing team has done. I know many of you have seen some of the work that came out during the Olympics. So we're top-of-mind awareness is great. But when you get into products, we are unique in our ability to provide both performance and lifestyle head to toe. We know the outfit starts with the footwear for a kid, and we can outfit them, you know, for their entire outfit, both every day in life and on the field as well.

Speaker Change: Thanks a man!

Speaker Change: Our engagement with our customers we call athletes is as high as it's ever been and that's a credit to the experience that we have in the stores. It's also a credit to our brand.

Speaker Change: Campaign and what our marketing team has done. I know many of you have seen some of the work that came out during the Olympics. So we're top of mind awareness is great. But when you get into product.

Brian Nagle: Thanks, Brian. Yes, we are excited about the product innovation cycle that we see coming down the pike with our vendor partners. And we have, as you would expect, long term strategy meetings, where we get peaks under the under the tent about what's coming. We're excited about the product innovation. But I would also point out, as I mentioned to Adrian's question, the innovation that we have in our own business in terms of how we are serving athletes, the reinvented portfolio and the access that we have to highly differentiated products. So product itself is a key tailwind for us has been for some time. And we continue to see that due to the access, due to the innovation coming, we think it's a key pillar for us.

Speaker Change: We are unique in our ability to provide both performance and lifestyle head to toe. We know the outfit starts.

Lauren Hobart: Thanks, Lauren, that's helpful.

Speaker Change: with the footwear for a kid and we can act out for them, you know, for their entire outfit, both every day in life and on the field as well.

Lauren Hobart: So we are excited about the differentiation that we have versus our competitors. We feel really good about the increased access to that we have to products, and we also feel really good about our performance of our vertical brand. So, in general, very optimistic about our continued growth.

Speaker Change: We are excited about the differentiation that we have versus our competitors. We feel really good about the increased access to that we have to product. And we also feel really good about our performance of our vertical brands. So, in general, very optimistic about our continued growth.

Simeon Gutman: A quick follow-up on House of Sport.

Lauren Hobart: Can you talk about the trajectory versus initial forecast and more so in, you know, post the 12 month period. So in the 12th, I think you might don't know what month we're at 18th or month or so, maybe closer to 24 in one or two cases. Anything that's surprising in terms of product categories or merchandise since, you know, versus your foot. Yeah, Simeon, we continue to be really pleased with how our House of Sport stores are performing. We did give Comp guidance at the end of last year that the two had been opened enough to have a Comp positively, and the things that get us very excited about the House of Sport is both the fact that athletes are traveling further.

Speaker Change: a quick follow-up on House of Sport.

Speaker Change: Can you talk about the trajectory versus initial forecast and more so in, you know, post the 12 month period, so in the 12 to I think you might don't know what month or at 18th or month or so maybe closer to 24 and in one or two cases.

Navdeep Gupta: Then my second, my follow-up question, I guess maybe more for not deep. So you mentioned in your, you prepared comics. It sounds like incremental investments that you're going to undertake here in the second half of 24, which changes somewhat kind of a leverage for a part of the business, least near term.

Speaker Change: Anything that's surprising in terms of product categories or merchandise since, you know, fit versus your forecast.

Navdeep Gupta: So I guess the question I'm asking is what other, maybe you can elaborate more on those investments? Yeah, Brian, just, let me give a little bit of color to that. So if you look at it, we are investing in the course strategies, the strategies that Lauren articulated so well that are working so, that are resonating with our athletes and are working so well. So things like repositioning our portfolio is one, the technology investments that are allowing us to provide a very differentiated level of service to our athletes when they walk into our store or the technology investment that is making our website so much more functional.

Speaker Change: Yes, I mean, we continue to be really pleased with how our House of Sport stores.

Speaker Change: are performing. We did give Compt Guidance at the end of last year that the two had been an open enough to have a Compt.

Speaker Change: Compton Positively, and the things that get us very excited about the House of Sport is both the fact that athletes.

Lauren Hobart: They are visiting more frequently, they're increasing the dwell time, the amount of time that they spend in our stores, and in general what we're seeing is that that's the ability to bring a brand to life is really helping us engage in some of that product innovation that you talked about just a moment ago. So we can bring a brand to life in our collaborative spaces, we call them our collabs, in such an engaging way where we can talk about a brand story with some of our existing partners or bring a new brand to life. It really has been a fantastic way to get to know new brand partners and also to develop access with our current partners.

Speaker Change: are traveling further, they are visiting more frequently, they're increasing the dwell time, the amount of time that they...

Speaker Change: Spend in our stores, and in general what we're seeing is that the ability to bring a brand to life is really helping us engage in some of that Protestant innovation that you talked about just a moment ago. So we can bring a brand to life in our collaborative spaces. We call them our co-lab.

Navdeep Gupta: Those are the core areas of investment that we are leaning into to continue to position our business for 2025 and beyond in a very differentiated way. The other comment that I would add to that is the investment in our S.G.N.A, is balance against the confidence that we have in our total margin expectations. So if you look deeper into our guidance, we have raised our total margin expectations for full year and then let that against the S.G.N.A, investment in totality, we actually have taken our operating margin expectations up by 10 basis points compared to our prior guidance.

Navdeep Gupta: Thank you.

Speaker Change: In such an engaging way where we can talk about a brand story with some of our existing partners or bring a new brand to life.

Speaker Change: It really has been a fantastic way to get to know new brand partners and also to develop access with our current partners.

Lauren Hobart: And the last thing I would say that's just been increasingly noticeable is how much noise and excitement that we are making with the landlord and mall owner and operator business, and the fact that when we open a House of Sport, we do see the mall owners are telling us that they see increased traffic, they see increased sales per square foot and occupancy rates. So that's actually giving us access to some of the best malls and the best shopping centers in the country and is a big part of our strategy.

Speaker Change: And the last thing I would say that's just been increasingly noticeable is how much noise and excitement that we are making with the landlord and mall owner and operator business and the fact that

Speaker Change: When we open a house of sport, we do see the mall owners are telling us that they see increased traffic, they see increased sales for square foot and occupancy rates.

Simeon Gutman: Here next question comes from Simeon Gutman with Morgan Stanley. Please go ahead. Hi, good morning everyone.

Lauren Hobart: Lauren, I wanted to start asking about the top line engagement on the customer side. The angle is proliferation of some of the strongest brands and I won't name them all, but there's a handful that are higher profile that are probably driving a good amount of growth at least that's perception. My question is, what are you paying attention to that gives you confidence that you're maintaining engagement with your customers on all of these brands?

Speaker Change: So that's actually giving us access to some of the best malls and the best shopping centers in the country and is a big part of our strategy.

Simeon Gutman: Thanks, well done, good luck.

Simeon Gutman: Thank you, Demand.

Simeon Gutman: Thanks, Demand.

Speaker Change: Thanks. One down. Good luck. Thank you to me and thanks a man.

Robbie Ohms: Your next question comes from Robbie Ohms with Bank of America.

Robbie Ohms: Please go ahead.

Speaker Change: and I'm here next question comes from Robbie Olm's with Bank of America. Please go ahead.

Navdeep Gupta: Hey, good morning guys. Great quarter. My first question, and probably both of them, are actually for Navdeep. Navdeep, can you talk about the House of Sport conversions and sort of how that might have benefited comps in the second quarter and how we should think about House of Sport conversions in the back half as a benefit to comps versus maybe what you saw in the first half. And then another modeling question, I'll just give us the two up front. Would just be for gross margin in the back half, if you could give us any thoughts on puts and takes for us to think about in 3Q versus 4Q, that would be great.

Robbie Olm's: Hey, good morning guys. Great quarter. My first question, and probably both of them are actually for Navdeep.

Robbie Olm's: and you talk about the House of Sport conversions and sort of how that might have benefited in the second quarter and how we should think about House of Sport conversions.

Lauren Hobart: And my perception is that some of these brands are starting to proliferate into other places. So how is that engagement changing as we see some of these brands and products end up in more places? Thanks Simeon. Our engagement with our customers we call athletes is as as high as this ever been and that's a credit to the experience that we have in the stores. It's also a credit to our brand campaign and what our marketing team has done.

Speaker Change: You know, in the back half is a benefit to comps versus maybe what you saw on the first half.

Speaker Change: and then another model in question, I'll just give you the two upfront, would just be for gross margin in the back half, if you could give us any thoughts on puts and takes for us to think about in three, three, two versus four, cue that would be great.

Lauren Hobart: I know many of you have seen some of the work that came out during the Olympics so we're top of mind awareness is great. But when you get into products we are unique in our ability to provide both performance and lifestyle head to toe. We know the outfit starts with the footwear for a kid and we can outfit them for their entire outfit both every day in life and on the field as well.

Navdeep Gupta: Thanks, Robbie. Appreciate your comment on the second quarter performance. So, in terms of the conversion benefit for House of Sport, very consistent with what we had said at the end of last year, we had guided to the fact that our first half will benefit because, as you recall, there were eight House of Sport conversions that we were doing last year that were all closed remodels. And so our first half of the comp for 2024 benefited from those closed remodels, and our expectation for the second half, in the updated guidance that we have given, is that our comps will be again positive in the second half.

Speaker Change: Thank you for being appreciated, comment on the second quarter of the performance. So in terms of the conversion benefit for House of Sport, very consistent with what we had said at the end of last year. We had guided to the fact that our first half will benefit because, as you recall, they were eight House of Sport conversions that we were doing last year that were all closed remarrows.

Lauren Hobart: So we are excited about the differentiation that we have versus our competitors. We feel really good about the increased access that we have to product and we also feel really good about our performance of our vertical brand. So in general very optimistic about our continued growth.

Speaker Change: and so our first half of the camp of 2024 benefited from those closed remarvels.

Speaker Change: and our expectation for the second half in the updated guidance that we have given is that our camps will be again positive and the second half. However, we will see a little bit of a take down of the benefit that we saw on the first half. We continue to remain really confident about the House of Sport over all strategy as-

Navdeep Gupta: However, we'll see a little bit of a take down of the benefit that we saw in the first half. We continue to remain really confident about the House of Sport overall strategy, as Lauren just said in the prior question. The product access that we are having, the differentiated service that we are able to provide, how well that service and the product offering is resonating with our athletes that are traveling further, spending more time in the stores. Our store teams are doing a fantastic job of leveraging the assets that they have in store, including the field, in engaging deeper with the community.

Lauren Hobart: Quick follow up on House of Sport.

Lauren Hobart: Can you talk about the trajectory versus initial forecast and more so in you know post the 12 month period so in the 12th I think you might not know what month we're at 18th or month or so maybe closer to 24 in one or two cases. Anything that's surprising in terms of product categories are merchandise since you know it versus your Ford. Yeah, Simeon, we continue to be really pleased with how our House of Sport stores are performing.

Speaker Change: Lauren just said in the prior question.

Lauren: The product access that we are having, the differentiated service that we are able to provide. How well that service and the product offering is resonating with our athletes that are traveling for their spending more time in the stores. Our store teams are doing a fantastic job of leveraging the assets that they have in store, including the field, in engaging deeper with the community. And that is what is giving us the confidence that you see us taking the house support learning and translating that into the field house concept that we talked this morning about.

Navdeep Gupta: And that is what is giving us the confidence that you see us taking the House of Sport learning and translating that into the field house concept that we talked about this morning. So hopefully that answers your question in terms of the House of Sport, the first half versus the second half.

Lauren Hobart: We did give comp guidance at the end of last year that the two had been opened enough to have a comp positively. And the things that get us very excited about about the House of Sport is both the fact that athletes are traveling further. They are visiting more frequently, they're increasing the dwell time, the amount of time that they spend in our stores. And in general, what we're seeing is that the ability to bring a brand to life is really helping us engage in some of that product innovation that you talked about just a moment ago.

Navdeep Gupta: Coming to the gross margin expectation, it's a great question because there are definitely some puts in tape as you look to the gross margin expectations for the second half. So let's start back to what we said at the end of last year. We said that our occupancy cost will be de-leveraging this year and that was contemplated in our original expectation. We still expect occupancy cost to de-leverage on a foliar basis. However, it will be the de-leverage will be less now because of the elevated sales expectation that we have. The impact of Q3 shift of the important back to schools sales shifting out of Q3 into Q2 to the tune of $105 million needs to be modern and appropriately when you're looking into the Q3 gross profit expectation and likewise keep in mind in fourth quarter.

Speaker Change: So, hopefully that answers your question in terms of the House of Sport, the first half versus the second half, coming to the gross margin expectation, it's a great question because there are definitely some puts in takes as you look to the gross margin expectations for the second half.

Speaker Change: So, let's start back to what we said at the end of last year. We said that our occupancy cost will be deleveraging this year and that was contemplated in our original expectation.

Lauren Hobart: So we can bring a brand to life in our collaborative spaces. We call them our collabs in such an engaging way where we can talk about a brand story with some of our existing partners or bring a new brand to life. It really has been a fantastic way to get to know new brand partners and also to develop access with our current partners. And the last thing I would say that's just been increasingly noticeable is how much noise and excitement that we are making with the landlord and mall owner and operator business and the fact that when we open a House of Sport, we do see the mall owners are telling us that they see increased traffic, they see increased sales per square foot and occupancy rates. So that's actually giving us access to some of the best malls and the best shopping centers in the country and is a big part of our strategy.

Speaker Change: We still expect occupancy cost to the leverage on a fully-a-basis, however it will be, the deal leverage will be less now because of the elevated sales expectation that we have.

Speaker Change: Um, the impact of Q3 shift of the important back to schools, sales shifting out of Q3 into Q2, to the Q&A 105 million dollars needs to be modern and appropriate even they're looking into the Q3 gross profit expectation.

Navdeep Gupta: We had the week 53 as well. So that additional week of 170 million dollars of sales. When you're modeling in the gross profit expectation for fourth quarter needs to be contemplated in totality, what we have said is driven by the strong performance that we have driven in Q2. We have raised our total margin expectations for foliar and also taken modestly up our much margin expectations in second half driven by the confidence that we have in our assortment. Thank you.

Speaker Change: and like was keep in mind in 4th quarter we had the week 53 as well so that additional week of 170 million dollars of sales when you are modeling in the gross profit expectations for 4th quarter needs to be contemplated.

Speaker Change: In totality what we have said is driven by the strong performance that we have driven in Q2. We have raised our total margin expectations for full year and also taken modestly up our much margin expectations in second half driven by the confidence that we have in our

Simeon Gutman: Thanks. Well done. Good luck. Thank you, Demand.

Robbie Ohms: Thanks, Demand. Your next question comes from Robbie Ohms with Bank of America. Please go ahead. Hey, good morning, guys. Great quarter. My first question and probably both of them are actually for Navdeep.

Robbie Ohms: Thanks, Robbie.

Speaker Change: Thank you.

Mike Baker: The next question comes from the line of Mike Baker with DA Davidson.

Speaker Change: Thanks for watching. We are next question comes in the line of Mike Baker with DA Davidson. Please go ahead.

Mike Baker: Please go ahead. Okay. Also a couple of questions.

Navdeep Gupta: Navdeep, can you talk about the, you know, the House of Sport conversions and sort of how that might have benefited comps in the second quarter and how we should think about House of Sport conversions, you know, in the back half as a benefit to comps versus maybe what you saw on the first half. And then another model in question. I'll just give you the two upfront would just be for gross margin in the back half if you could give us any thoughts on puts and takes for us to think about in in three Q versus four Q.

Mike Baker: One, you know, I remember Dix was all about the athlete, and it wasn't really focused in the past as much on lifestyle. I get now that it's still all about the athlete; that that's clear, but it seems like there's been a little bit more of a shift towards, you know, selling lifestyle-type products. Is that just in house of sports, or is that across the entire chain? Am I right in my procession that that shifted a little bit anyway to sort of frame that up a little bit, please?

Mike Baker: Okay, also a couple questions.

Speaker Change: One, you know, I remember Dick was all about the athlete and it wasn't really focused in the past as much on lifestyle. I get now that it's still all about the athlete, that's clear, but it seems like there's been a little bit more of a shift towards

Speaker Change: You know, selling lifestyle types of products, is that just in house of sports or is that across the entire chain and my right and my perception that that shifted a little bit anyway to sort of frame that up a little bit.

Navdeep Gupta: That would be great. Thanks, Robbie. Appreciate your comment on the second quarter performance. So in terms of the conversion benefit for House of Sport, very consistent with what we had said at the end of last year. We had guided to the fact that our first half will benefit because if you recall, they were eight House of Sport conversions that we were doing last year that were all closed remodels. And so our first half of the comp or 2024 benefited from those close remodels and our expectation for the second half in the updated guidance that we have given is that our comps will be again positive in the second half.

Lauren Hobart: Mike, it's a great question. So we have always been rooted in sports, and we remain rooted in sport. We will always be about athletes and performance and getting people confident and excited about the product that they have that's going to increase their capabilities. What we didn't have access to before we started to invest in the premium full-service footwear decks was the product that these kids want. These are athletes as well rooted in sport, but what they're wearing off the field, off the court as well. And it's just a part of their lifestyle, the lifestyle of an athlete.

Speaker Change: Like it's a great question, so we have always been rooted in sports and we remain rooted in sport. We will always be about athletes and performance and getting people confident and excited about the product that they have that's going to increase their capabilities.

Speaker Change: What we didn't have access to before we started to invest in the premium full-service footwear decks.

Speaker Change: was the product that these kids want. These are athletes as well, rooted in sport, but what they're wearing off the field, off the court as well. And it's just a part of their lifestyle of an athlete. So now that we've invested in our premium full-service footwear deck.

Navdeep Gupta: However, we'll see a little bit of a take down off the benefit that we saw in the first half. We continue to remain really confident about the House of Sport overall strategy as Lauren just said in the prior question. The product access that we are having the differentiated service that we are able to provide how well that service and the product offering is resonating with our athletes. There are traveling further, spending more time in the stores.

Navdeep Gupta: So now that we've invested in our premium full service footwear decks, we are correct in saying we have both. We are rooted in sport. We still have incredible both footwear, apparel, and gear for anybody who wants to compete at a high level. And in fact, that continues to improve as we get access even in our footwear decks, things like really elite soccer cleats and things like that. But in the same time, we now have access to the cool shoes, and that's important to the athlete when they come and they can get everything that they need.

Speaker Change: We are correct in saying, we have both, we are rooted in sport, we still have incredible, you know, footwear, apparel and gear for anybody who wants to compete at a high level and in fact that continues to improve as we get access, even in our footwear deck things like really elite soccer cleats and things like that. But in the same time we now have access to the cool shoes and that's important to the athlete when they come and they can get everything that they need.

Navdeep Gupta: Our store teams are doing a fantastic job of leveraging the assets that they have in store, including the field in engaging deeper with the community. And that is what is giving us the confidence that you see us taking the House of Sport learning and translating that into the field house concept that we talked this morning about. So hopefully that answers your question in terms of the House of Sport, the first half versus the second half.

Mike Baker: And Mike, let me build on this. This is much beyond just the house of sport, you know, as long as we have called out in the past 90% of our chain now has a premium full-service footwear deck experience. So the access that that Lauren just talked about goes well beyond our house of sport locations into our field house, and actually it goes into into the almost vast majority of our exporting goods chain as well. Got it, makes sense.

Speaker Change: And Mike, let me build on that this is much beyond just the house of sport, you know, as long as we have called out.

Mike Baker: in the past 90 percent of our chain now has a premium post of the sport wear that experience. So, the access that Lauren just talked about goes well beyond our house support locations into our PL House and actually goes into almost vast majority of our sport and good chain as well.

Navdeep Gupta: Coming to the gross margin expectation, it's a great question because there are definitely some puts in tape as you look to the gross margin expectations for the second half. So let's start back to what we said at the end of last year. We said that our occupancy cost will be de-leveraging this year and that was contemplated in our original expectation. We still expect occupancy cost to de-leverage on a full year basis.

Mike Baker: One fall off in a serious question I'll say, how much is the Celtic help in the quarter? You must have sold a ton of Celtic scare. I bought a lot. Did that help the comp at all? And I do ask, you know, we did actually see a lot of stuff marked down pretty quickly after the championship. I'm just wondering, you know, how that, how the Celtic championship and that kind of licensed product sailed impacted the quarter.

Speaker Change: Got it, make sense, one fall up and end.

Speaker Change: So, a serious question I'll say, how much did it self-decalp in the quarter, you must have told a ton of self-decalp scare.

Navdeep Gupta: However, it will be at the de-leverage will be less now because of the elevated sales expectation that we have the impact of Q3 shift of the important back to schools sales shifting out of Q3 into Q2 to the tune of $105 million needs to be modern and appropriately when you're looking into the Q3 gross profit expectation. And likewise keep in mind in fourth quarter we had the week 53 as well. So that additional week of 170 million dollars of sales.

Speaker Change: I bought him a lot, did that help the comp at all and I do ask, you know, we did actually see a lot of stuff marked down pretty quickly after the championship, I'm just wondering.

Speaker Change: You know how that, how the self-exampling ship and that kind of licensed product sales impacted the quarter.

Lauren Hobart: So we love the Celtics. We love all teams that are winning, but it wasn't material in the quarter. It's always great to have some; it's always great to have license taught, but it wasn't material.

Speaker Change: So we love the Celtics, we love all teams that are winning, but it wasn't material in the quarter. It's always great to have some, it's always great to have license hot, but it wasn't material.

Lauren Hobart: And then onto the markdown question, you will continue to see us being very decisive about the inventory that we have. We want to make sure that we have access as well as space available in stores and online for the right product that can continue to drive this enthusiasm we are seeing from our athletes.

Navdeep Gupta: When you're modeling in the gross profit expectation for fourth quarter needs to be contemplated in totality what we have said is driven by the strong performance that we have driven in Q2. We have raised our total margin expectations for full year and also taken modestly up our much margin expectations in second half driven by the confidence that we have in our assortment. Thank you.

Speaker Change: And then on to the Markdown Question, you will continue to see us being very decisive about the inventory that we want to make sure that we have access as well as space available in stores and online for the right product that can continue to drive this enthusiasm we are seeing from our athletes.

Mike Baker: Awesome. Excellent.

Mike Baker: Thank you.

John Kernan: Your next question comes from John Kernan with TD Cowan.

Speaker Change: Awesome, excellent, thank you.

Speaker Change: Thank you.

John Kernan: Please go ahead. Good morning. Thank you for taking my questions, and we're out on a great quarter. Thank you. Thank you for joining in Fourth Words.

Speaker Change: Your next question comes from John Kernin with TD Cowin, please go ahead.

John Kernin: Good morning, thank you for taking my questions in the Rob Tongue Great Quarter.

Mike Baker: The next question comes from the line of Mike Baker with DA Davidson. Please go ahead. Okay, also a couple of questions. One, I remember Dick's was all about the athlete and was really focused in the past as much on lifestyle. I get now that it's still all about the athlete that's clear but it seems like there's been a little bit more of a shift towards selling lifestyle types of products. Is that just in house of sports or is that across the entire chain? Am I right in my procession that that shifted a little bit anyway to sort of frame that up a little bit please.

Speaker Change: Thank you. Thank you. Thank you.

Speaker Change: and stepping into a very, very hard full-friest self-group, coming in at the another DC opening in fourth worth, can you talk about supply chain going forward your strategy within the entire on the channel strategy and any, you know, how does it, how to, how to cost local and supply chain going into the backyard for you.

Lauren Hobart: Can you talk about supply chain going forward your strategy within the entire army channel strategy and any, you know, how does that cost look like chain going into the back after the year. Yeah, so we couldn't be more excited about the not just the supply chain team, but how well our merchandising team and our supply chain team and our inventory allocation team work closely together because it is all about making sure that you have the right access, but then are able to flow that product in the most efficient. And in the quickest way possible, where if it's a drop product or if it's, as we talked about, the license product that needs to flow at a different speed through the network, and all these three teams work so well together.

Speaker Change: Yeah, so we couldn't be more excited about not just the supply chain team, but how well our merchandising team and our supply chain team and our inventory allocation team work closely together because it is all about making sure you have the right access but then are able to flow that product in the most efficient way and in the quickest way possible, where if it's a drop product or if it's as we talked about the license product that needs to flow at a different speed through the network and all these three teams work so well together. And the investment that we are making into the new DC is driven by the fact that if you look at our business compared to 2019, our business top line is up significantly more than where it was in 2019, the skill, the velocity of the market.

Lauren Hobart: Mike, it's a great question. So we have always been rooted in sports and we remain rooted in sport. We will always be about athletes and performance and getting people confident and excited about the product that they have that's going to increase their capability. What we didn't have access to before we started to invest in the premium full service footwear deck was the product that these kids want these are athletes as well rooted in sport but what they're wearing off the off the field off the court as well.

Lauren Hobart: And the investment that we are making into the new DC is driven by the fact that if you look at our business compared to 2019, our business top line is up significantly more than where it was in 2019. The the skew, the velocity of the skew and the product product product access that we have is so differentiated. So we look at it and say that we need to make some fixed investments into our supply chain.

Speaker Change: of the scale and the product access that we have is so differentiated. So we look at it and say that we need to make some fixed investments into our supply chain. And that's the plan to open the 6DC in Dallas, which will open in early part of 2022.

Lauren Hobart: And it's just a part of their lifestyle the lifestyle of an athlete. So now that we've invested in our premium full service footwear decks. We are correct in saying we have both. We are rooted in sport. We still have incredible both footwear apparel and gear for anybody who wants to compete at a high level. And in fact that continues to improve as we get access even in our footwear decks things like really elite soccer cleats and things like that. But in the same time we now have access to the cool shoes and that's important to the athlete when they come and they can get everything that they need.

Lauren Hobart: And that's the plan to open the six DCs in Dallas, which will open in the early part of 2026. In terms of the second half expectation, there's nothing material to talk about the supply chain. It's running in line with our expectation. The team is doing a fantastic job in kind of continuing to navigate the challenging landscape that we see, especially on the international freight side.

Speaker Change: In terms of the second half expectation, there's nothing material to talk about the supply chain. It's running and lying with our expectation. The team is doing a fantastic job in kind of continuing to navigate the challenging landscape that we see, especially on the international freight side. But overall, we'll be pleased with the partnership that exists in the boycar supply chain team is doing.

Lauren Hobart: But overall, we are pleased with the partnership that exists in the work out supply chain team is doing. John, I just want to add a point to not deep comments about our fulfillment for e-commerce and the fact that our stores have become a really critical part of our supply chain. We fulfill the vast majority of our e-commerce demand through our stores. And that gets us closer to the athlete, quicker delivery, lower cost. And so part of our supply chain, we're opening a 60C to help service all of our stores, but our stores are also an incredible piece of our supply chain as well as being athlete survey.

Navdeep Gupta: And might let me build on this. This is much beyond just the house of sport. You know, as long as we have called out in the past 90% of our chain now has a premium full service footwear deck experience. So the access that that Lauren just talked about goes well beyond our house of sport locations into our field house and actually it goes into into the almost vast majority of our exporting goods chain as well. I got it, makes sense.

Speaker Change: John, I just want to add a point to Navdeep's comments about our fulfillment for e-commerce, and the fact that our stores have become a really critical part of our supply chain. We fulfill the vast majority of our e-commerce.

John Kernin: Demand through our stores and that gets us closer to the athlete, quicker delivery, lower cost, and so part of our supply chain, we're opening a 60C to help service all of our stores, but our stores are also an incredible piece of our supply chain as well as being athlete serving.

Lauren Hobart: One fall off in a serious question, I'll say, how much is the selfless help in the quarter? You must have sold a ton of selfless care. I bought a lot. Did that help the comp at all? And I do ask, we did actually see a lot of stuff marked down pretty quickly after the championship. I'm just wondering how the selfless championship and that kind of licensed product sales impacted the quarter. So we love the Celtics, we love all teams that are winning, but it wasn't material in the quarter.

John Kernan: That's helpful.

John Kernan: Thanks, and maybe Lauren, we'll follow up for you. It seems like some of the private own brands like Kalea Verst and DSG have gained square footage space inside the store. How are those performing versus the chain?

Speaker Change: I'm careful, thanks for making me beat Lauren with follow up for you, it seems like

Speaker Change #100: and some of the private home grants like earlier verse and DST of Gaines Square footage space inside the stores. How are those performing versus the chain and what's the outlook for home grants?

Lauren Hobart: And what's the other for own brands? Thanks. Thank you. We are very excited about how our vertical brands are performing across the board. In particular, I would point to DSG Verst and Kalea. DSG, all three of them actually, are filling a white space in our portfolio. DSG filling a fantastic white space for opening price point product. That's very high function, high fashion, and doing incredibly well. So you're seeing increased space across all of these vertical brands because they are performing so well, and consumers are reacting. From a verse standpoint, we just had a relaunch of our Limitless pant, which is really exciting and doing very well.

Speaker Change #101: Thank you. We are very excited about how our vertical brands are performing across the board. In particular, I would point to DSG, Verst and Kalea, DSG, all three of them actually are filling a white space in our portfolio. DSG, filling a fantastic white space for opening price point product. That's very high function, high fashion.

Lauren Hobart: It's always great to have some, it's always great to have licensed hot, but it wasn't material. And then onto the markdown question, you will continue to see us being very decisive about the inventory that we have. We want to make sure that we have access as well as space available in stores and online for the right product that can continue to drive this enthusiasm we are seeing from our athletes.

Speaker Change #101: and doing incredibly well, so you're seeing increased.

Speaker Change #101: Space across all of these vertical brands because they are performing so well and consumers are reacting. From a first standpoint, we just had a relaunch of our limitless pant, which is really exciting and doing very well. And Kalea continues to do incredibly well. Again, meeting and need in a lifestyle to from the field and out or to the gym and outside and doing incredibly well. So we continue to grow both our strategic brands and our vertical brands. The whole portfolio is doing well.

Mike Baker: Awesome, excellent, thank you.

John Kernan: Thank you. Your next question comes from John Kernan with TD Cowan, please go ahead. Good morning, thank you for taking my questions and we're out on a great quarter. Thank you. John, if your supply chain, that deep your supply chain has evolved quite a bit for the last several years, you're flowing through and setting inventory, very hard full price sell through. I mean, you're not the another DC opening and fourth worth.

Lauren Hobart: And Kalea continues to do incredibly well, again, meeting a need in a lifestyle to from the field and out to the gym and outside and at doing incredibly well. So we continue to grow both our strategic brands and our vertical brands. The whole portfolio is doing well.

Lauren Hobart: Excellent. Thank you.

Chuck Grom: Your next question comes from Chuck Grom with Gordon Haskett.

Edson: Edson, thank you.

Navdeep Gupta: Can you talk about supply chain going forward your strategy within the entire army channel strategy and any, you know, how does that cost look when the supply chain going into the back of the year. Yeah, so we couldn't be more excited about the not just the supply chain team, but how well are merchandising team and our supply chain team and our inventory allocation team work closely together because it is all about making sure that you have the right access but then are able to flow that product in the most efficient way and in the quickest way possible where if it's a drop product or if it's as we talked about the license product that needs to flow at a different speed through the network.

Edson: Thank you.

Chuck Grom: Please go ahead.

Edson: Here next question comes from Chuck Grom with Gordon Hasket. Please go ahead.

Navdeep Gupta: Hi, this is Eric on for Chuck. Just want to ask about the incremental S&A investments you're making. Are these just are you pulling forward investments from 25 into this year, or these purely incremental now just from position of strength? And then how should we think about the timing of these investments in the back half of the year? Yeah, let's say it's a combination of both things. We are seeing some pull forward opportunities from 25 into this year, as well as some incremental investment opportunities to continue to position better for 2025 and beyond. In terms of the timing of these expenses, I would say they would be rightfully between Q3 and Q4.

Eric: Hi, this is Eric on for Chuck. Just want to ask about the incremental S.E.N.A.N. lessons you're making. Are these just, are you pulling forward investments from 25 into this year? Or at least purely incremental challenges from position of strength? And how should we think about the timing of these investments in the back half of the year?

Speaker Change #104: Now it's a combination of both things. We are seeing some poor forward opportunities from 25 into this year as well as some incremental investment opportunities to continue to position.

Speaker Change #105: Berger for 2025 and beyond. In terms of the timing of these expenses, I would say there would be a relatively between Q3 and Q4. One of the things as you are thinking about the modeling, I want you to keep in mind the pre-opening expenses in Q3. That will be an area of investment also when you look to the back half expectations.

Navdeep Gupta: And all these three teams work so well together and the investment that we are making into the new DC is driven by the fact that if you look at our business compared to 2019, our business top line is up significantly more than where it was in 2019. The the skew, the velocity of the skew and the product product product access that we have is so differentiated so we look at it and say that we need to make some fixed investments into our supply chain and that's the plan to open the six DC in Dallas, which will open in early part of 2026.

Navdeep Gupta: One of the things as you are thinking about the modeling, I want you to keep in mind the pre-opening expenses in Q3. That will be an area of investment also when you look to the back half expectations. Great.

Navdeep Gupta: And then Q2 provide any quantitatively how impactful the health and support was as you left the temporary closing from last year of the conversions.

Speaker Change #106: Great, and then, can you just provide any quantitatively, how impactful the House of Sport was as you left the temporary clothing from last year at the conversions and was there any benefit this quarter from the Olympics or the summer soccer tournament and just any commentary on Q3 today?

Navdeep Gupta: And was there any benefit this quarter from the Olympics or the summer soccer tournaments, and just any commentary on Q3 to date? Well, let's start with the last one because I think that's the easiest one.

Navdeep Gupta: We won't provide the commentary. We are very excited about the key back to school season, and we are in the middle of the back to school season, so we will provide more details about Q3 commentary in late November. In terms of the Olympics, Olympics is a fantastic opportunity to continue to showcase the importance of sport and sport lifestyle in all athletes, whether it is the youth athletes or whether it is the adult athletes. So we see that more as an opportunity to showcase the importance of stores and active lifestyle in the communities. It necessarily does not have a significant impact on our calm sales performance that we saw here in Q2.

Navdeep Gupta: In terms of the second half expectation, there's nothing material to talk about the supply chain. It's running in line with our expectation. The team is doing a fantastic job in kind of continuing to navigate the challenging landscape that we see, especially on the international freight side, but overall we are pleased with the with the partnership that exists and the work out supply chain team is doing.

Speaker Change #107: Well, let's start with the last one because I think so that's the easiest one. We've won provide the commentary. We are very excited about the key back to school season and we are in the middle of the back to season. So we'll provide more details about a Q3 commentary in late November. In terms of the Olympics, Olympics is a fantastic opportunity to continue to showcase the importance of sport and sport lifestyle in all athletes, whether it is the youth athletes or whether it is the adult athlete. So we see that more as an opportunity to showcase the importance of sports and active lifestyle in the communities, it necessarily does not have a significant impact to our concepts, performance that we saw here in Q2.

Lauren Hobart: John, I just want to add a point to not deep comments about our fulfillment for e-commerce and the fact that our stores have become a really critical part of our supply chain. We fulfill the vast majority of our e-commerce demand through our stores and that gets us closer to the athlete, quicker delivery, lower costs. And so part of our supply chain, we're opening a 60C to help service all of our stores, but our stores are also an incredible piece of our supply chain as well as being athlete survey. That's helpful. Thanks, and maybe Lauren, we'll follow up for you.

Navdeep Gupta: In terms of the house of sport conversion, we haven't quantified that right now, but like we said, the first half benefited. However, the benefit in Q2 was lower than in Q1, as you can imagine, because last year we started to open some of these closed remodels in the second quarter of last year.

Speaker Change #107: In terms of the House of Sport conversion, I'm going to quantify that right now, but like we said, you know, the first half benefited, but the benefit in Q2 was lower than in Q1 as you can imagine, because last year we started to open some of these reclosed remodels in the second quarter of last year.

Navdeep Gupta: Great, appreciate it.

Lauren Hobart: It seems like some of the private own brands like Kalea Verst and DSG have gained square footage space inside the store. How are those performing versus the chain and what's the other for own brands? Thanks. Thank you. We are very excited about how our vertical brands are performing across the board. In particular, I would point to DSG Verst and Kalea. DSG, all three of them actually are filling a white space in our portfolio.

Will Gertner: Your next question comes from Will Gertner, with Wells Fargo. Please go ahead. Hey guys, thanks for taking my question. Can you guys just provide some more detail on what categories are driving the same-store momentum for you?

Speaker Change #108: Great, appreciate it.

Speaker Change #108: Your next question comes from Will.

Will Gartner: Will a Gartner, with Wells Fargo, please go ahead.

Will Gartner: Hey, hey guys, thanks for taking my question. Can you guys just provide some more detail on what categories are driving this to install momentum for you?

Navdeep Gupta: Yes, well, with a 4.5% comp, we saw growth across many aspects of our business. We did see particular strength in footwear and apparel, and we saw some puts and takes within, within hard lines. But overall, just really pleased across the board. Got it.

Speaker Change #110: Yes, thanks. Well, with a four and a half percent comp, we thought we'd talk growth across many aspects of our business. We did see particular strengths in footwear and apparel, and we saw some puts in takes within hard lines, but overall, just really pleased across the board.

Lauren Hobart: DSG filling a fantastic white space for opening price point product. That's very high function, high fashion, and doing incredibly well. So you're seeing increased space across all of these vertical brands because they are performing so well and consumers are reacting. From a Verst standpoint, we just had a relaunch of our limitless pant, which is really exciting and doing very well. And Kalea continues to do incredibly well, again, meeting a need in a lifestyle to from the field and out to the gym and outside and at doing incredibly well. So we continue to grow both our strategic brands and our vertical brands. The whole portfolio is doing well. Thank you.

Will Gertner: And just one more for me.

Navdeep Gupta: Is one of the reasons why you're bringing in inventory earlier, are you seeing delays with Red Sea? Is that still an issue for you guys? Well, there is some aspect to it, but I won't call that as a material. We are working through a kind of a dynamic supply chain environment that exists, but it's not a material driver of the inventory investment. It's just a slight amount of timing difference between this year, Q2, and last year. Yeah, we're not bringing inventory in earlier.

Speaker Change #111: God, and just one more for me. It's one of the reasons why you're bringing in inventory earlier. Are you seeing delays with Red Sea? Is that still an issue for you guys?

Speaker Change #112: A world that is some aspect of it, but I won't call that as a material. We are working through a kind of a dynamic supply chain and environment that exists, but it's not a material driver of the inventory investment. It's just a slide amount of timing difference between this year, two and last year.

Navdeep Gupta: So to speak, we're making strategic investments, cautious choices to invest in inventory so that we can meet athletes' demand. Understood.

Speaker Change #113: Yeah, we're not bringing inventory in earlier so to speak, we're making strategic investments, cautious choices to invest in inventory so that we can meet athletes demand.

Chuck Grom: Your next question comes from Chuck Grom with Gordon Haskett. Please go ahead. Hi, this is Eric on for Chuck. Just want to ask about the incremental S&A investments you're making. Are these just are you pulling forward investments from 25 into this year or these purely incremental now just from position of strength? And how should we think about the timing of these investments in the back half of the year? Yeah, I would say it's a combination of both things.

Will Gertner: I'll pass it on. Thank you.

Justin Kleber: Your next question comes from Justin Cleber with Beard.

Speaker Change #114: Thank you.

Justin Kleber: Please go ahead.

Speaker Change #114: Here next question comes from Justin Cleber with Beard. Please go ahead.

Navdeep Gupta: Hey, good morning, everyone. It's Justin Claber. Thanks for taking the questions. First one for me was just curious how you're thinking about shrink over the back half of the year. It looks like this quarter. You effectively recaptured all last years. Can you live true up? So did your revised margin outlook assume shrink? Is it a tailwind across the back half of the year?

Justin Klaver: Good morning everyone, it's Justin Klaver. Thanks for taking the question. First one for me was just here's how you're thinking about shrink. Over the back half of the year looks like this quarter you effectively recaptured all last year's cumulative true out. So did you revise margin out look at some shrink is it the tailwind across the back half of the year.

Chuck Grom: We are seeing some pull forward opportunities from 25 into this year as well as some incremental investment opportunities to continue to position better for 2025 and beyond. In terms of the timing of these expenses, I would say they would be relatively between Q3 and Q4. One of the things as you are thinking about the modeling, I want you to keep in mind the pre-opening expenses in Q3. That will be an area of investment also when you look to the back half expectations.

Navdeep Gupta: Yeah, you're correct that we chewed up shrink over last year when we had done the inventory. Then, so you shouldn't expect it to be flat going forward into the second half. Got okay. Thanks.

Speaker Change #116: Yeah, you're correct that we chewed up the strength of over last year when we had done the inventory, and so you shouldn't expect it to be flat going forward into the second half.

Navdeep Gupta: And then one other question just on the guidance that the comp guide was raised, but you held the total sales view.

Speaker Change #117: Good. Okay. Thanks. And then one other question just on the guidance that the Tom guide was raised, but you held the total sales use. So is that just the function of fewer temp, where house stores that that are not in the company, so is there something else going on there?

Navdeep Gupta: So is that just the function of a few or 10 warehouse stores that are not in the compass, or is there something else going on there? Now it's, it's a few of those puts and takes that happened. First of all, there's a little bit of a timing. There's a little bit in the non-com sales as well as you can imagine. And this is there is a rounding factor as well when you're rounding to a billions of the dollars. But yeah, it's a combination of those three things. Okay, okay. Makes sense.

Chuck Grom: Great and then can you just provide any quantitatively how impactful the health support was as you left the temporary closing from last year and the conversions? And was there any benefit this quarter from the Olympics or the summer soccer tournaments and just any commentary on Q3 to date? Well, let's start with the last one because I think so that's the easiest one. We won't provide the commentary.

Speaker Change #118: Now, it's few of those puts and takes that happen first of all, there's a little bit of a timing, there's a little bit in the non-comcales, as well as you can imagine, this is there is a rounding factor as well when you're rounding to a billions of the dollars, but yeah, it's combination of those three things.

Navdeep Gupta: We are very excited about the key back to school season and we are in the middle of the back to season so we'll provide more details about a Q3 commentary in late November. In terms of the Olympics, Olympics is a fantastic opportunity to continue to showcase the importance of sport and sport lifestyle in all athletes whether it is the youth athletes or whether it is the adult athletes. So we see that more as an opportunity to showcase the importance of sports and active lifestyle in the communities.

Justin Kleber: Thanks, guys, and congrats on the course. Thank you.

Speaker Change #119: Okay, make sense, thanks guys, and congrats on the court.

Warren Chang: Your next question comes from Warren Chang with Evercore ISI. Please go ahead.

Speaker Change #119: Thank you.

Speaker Change #120: You're next question, comes from Warren Chang with Evercore ISI. Please go ahead.

Warren Chang: Hey, good morning. I want to ask what's the limit on how much of the change can eventually be upgraded to field health locations, and are you accelerating the pace there? And I want to follow up on that. Was just the SNA load per store. How does that compare to the base for the sale cost location? Yeah, Warren, there's no set limit on how many stores could be upgraded to field house. We have a significant number of our stores that come up for renewal every year and will continue to upgrade as it makes sense or will relocate as it makes sense and develop a field house.

Warren Chang: Hey, good morning. I want to ask, what's the limit on how much of the change in the eventually we upgraded the field health litigation and already accelerated the pace there. And one whole call up on that was just the S.C.A.A. load per store. How does that compare to the pace for the S.C.A. load per store?

Navdeep Gupta: It necessarily does not have a significant impact to our comp sales performance that we saw here in Q2. In terms of the house of sport conversion, we wouldn't quantify that right now but like we said, you know, the first half benefited but the benefit in this in Q2 was lower than in Q1 as you can imagine because last year we started to open some of these close three models in the second quarter of last year. Great, appreciate it.

Warren Chang: You know, Warren, there's no set limit on how many stores could be upgraded to fieldhouse.

Speaker Change #122: We have a significant number of our stores that come up for renewal every year and will continue to upgrade as it makes sense or will relocate as it makes sense and develop a field house. But long-term, that is the future.

Lauren Hobart: But long term, that is the future of exporting goods, and I will pass it to not deep to the SNA question. Yeah, Warren, as you can expect, we are definitely making investments in elevated levels of service and experience in these stores. But keep in mind what we shared last year that the field house stores have both a very strong top line and a bottom line profile within EBITDA margin of 20% or slightly more. So continue to be pleased in balancing the investments that we are making and the returns that we are driving.

Will Gertner: Your next question comes from Will Gertner with Wells Fargo, please go ahead. Hey, guys, thanks for taking my question. Can you guys just provide some more detail on what categories are driving the same store momentum for you?

Speaker Change #123: of Dix Sporting Guids. And I will pass it to Navdeep for the SG&A question.

Speaker Change #123: Jen.

Navdeep Gupta: Yeah, one and as you can expect, we are definitely making investments in elevated levels of service and experience in these stores, but keep in mind what we shared last year that the fieldhouse stores are, I have both a very strong top line and a bottom line profile with an EBITDA margin of 20% of slightly more, so continue to be pleased in balancing the investments that we are making and the returns that we are arriving.

Navdeep Gupta: Yes, thanks. Well, with a 4.5 percent comp, we saw growth across many aspects of our business. We didn't see particular strength in footwear and apparel, and we saw some puts and takes within hard lines, but overall, just really pleased across the board. Got it. And just one more for me, is one of the reasons why you're bringing in inventory earlier, are you seeing delays with red seats? That's still an issue for you guys.

Navdeep Gupta: Gotcha.

Lauren Hobart: Thanks. And then from my follow-up, some of the new House of Sport locations are opening in all of the smallest footprints than the original 120k. If there are some convergence happening between those and the field health locations, then, you know, what really makes the House of Sport different change from the field house kind of, what are the kind of defining characteristics that define House of Sport?

Speaker Change #124: Gotcha, thanks and then from my follow-up some of the new houses for locations are opening in a little bit smaller footprints than the original 120K. Is there some convergence happening between those and the field health locations then what really makes the houses for different shapes from field house kind of what are the kind of defining characteristics that define houses for.

Lauren Hobart: Thank you. Yeah, it's a great, it's a great question. Some of our first House of Sport locations were very large, you know, well over 100,000 square feet, and we continue to iterate; we can adapt that model to any, you know, 100,000 square feet. We can continue to adapt. When we look at a field house concept, it's definitely leaning more toward our original 50k format, and while it has elevated presentation, elevated service, elevated product, there are some of those interactive experiences like a rock climbing wall and track and field and things like that that we simply can't put into a field house location.

Navdeep Gupta: Well, there is some aspect of it, but I won't call that as a material. We are working through a kind of a dynamic supply chain environment that exists, but it's not a material driver of the inventory investment. It's just a slight amount of timing difference between the CRQ 2 and last year. Yeah, we're not bringing inventory in. Earlier, so to speak, we're making strategic investments, cautious choices to invest in inventory, so that we can meet athlete demand. Understood. I'll pass it on.

Speaker Change #125: Thank you. Yeah, it's a great question. Some of our first House of Sport locations.

Justin Kleber: Thank you.

Speaker Change #125: We're a very large, you know, well over a hundred thousand square feet and we continue to iterate, we can adapt that model to

Speaker Change #125: to 100,000 square feet. We can continue to adapt. When we look at a field house concept, it's definitely leaning more toward our original 50K format and while it has elevated.

Speaker Change #125: Presentation, Elevated Service, Elevated Product.

Navdeep Gupta: Your next question comes from Justin Kleber with Beard. Please go ahead. Hey, good morning, everyone. It's Justin Claber. Thanks for taking the questions. First one for me was just curious how you're thinking about shrink.

Speaker Change #125: There's some of those interactive experiences like rock climbing wall and tracking field and things like that that we simply can't put into us into a field house location. But I wouldn't say there's a conversion except for an positive way that the learnings from house support continue to trickle to field house and then to the entire rest of our chain.

Navdeep Gupta: Over the last year when we had done the inventory, and so you shouldn't expect it to be flat going forward into the second half. Got it. Okay. Thanks.

Lauren Hobart: But I wouldn't say there's a conversion except for in a positive way that the learning from House of Sport continue to trickle to Field House and then to the entire rest of our chain.

Warren Chang: Great.

Warren Chang: Thanks for the color.

Warren Chang: Good luck. Thank you.

Paul Lejuez: Here next, your next question comes from Paul Lesures with City.

Speaker Change #126: Great, thanks for the color, good luck.

Speaker Change #127: Thank you. Thank you.

Paul Lejuez: Please go ahead. Hi, thanks.

Speaker Change #128: Here and next, next question comes from Paul Lijers with City. Please go ahead.

Paul Lejuez: This is Kelly on the Paul. Thank you for your question. It looks like the 2HL look assumed comp could have flashed up to just just curious what your assumptions there on the dough low end versus the high end and the differences we should take into account 3Q versus 4Q. The second half guidance is, I would say, if you've modeled it, it won't be flat. We are expecting positive comps in the second half, both in Q3 and Q4. The only thing that between the difference between the high end of the range or the low end of the range is balancing the macroeconomic uncertainties that exist.

Paul Lijers: Hi, thanks for telling us all, thanks for taking care of questions. Looks like this, this two-way job look-as-soon calm could have clad as short to you.

Navdeep Gupta: And then one other question just on the guidance that the comp guide was raised, but you held the total sales view. So is that just the function of a fewer 10 warehouse stores that they're not in the company? So is there something else going on there? Now it's few of those puts and takes that happen. First of all, there's a little bit of a timing. There's a little bit in the in the non-com sales, as well as you can imagine. There is a rounding factor as well when you're rounding to a billions of the dollars, but yeah, it's combination of those three things. Got it. Okay. Makes sense.

Speaker Change #130: Just here is what your assumptions there on those low end versus the high end and the differences you should take into account three-two versus four-two.

Speaker Change #131: Now the second half guidance is, I would say, if you've modeled it won't be flat, it would be, we are expecting positive camps in the second half, both in Q3 and Q4. The only thing that we, between the difference between the high end of the range or the low end of the range is balancing the macroeconomic and third, these are exists. As, you know, the consumer continues to be under pressure and value, we are balancing our optimism and our confidence in our core strategy against the macroeconomic backdrop. Q3 and Q4, I would say, no significant difference is, you know, back to school is an important season when we think of Q3 and then holiday continue to be such an important part of fourth quarter.

Navdeep Gupta: As the consumer continues to be under pressure, and we are balancing our optimism and our confidence in our core strategy against the macroeconomic backdrop. Q3 and Q4, I would say, no significant differences.

Navdeep Gupta: Thanks, guys, and congrats on the course. Thank you.

Warren Chang: Your next question comes from Warren Chang with Evercore ISI. Please go ahead. Hey, good morning. I wanted to ask what's the limit on how much of the change can eventually be upgraded the field house location and are you accelerating the pace there? And one follow up on that was just the SNA load per store. How does that compare to the base for the sale cost location? Yeah, Warren, there's no set limit on how many stores could be upgraded to field house. We have a significant number of our stores that come up for renewal every year and will continue to upgrade as it makes sense, or will relocate as it makes sense and develop a field house.

Navdeep Gupta: Back to school is an important season when we think of Q3, and then holiday continue to be such an important part of fourth quarter. Just to follow, you talked about some of the highest performing brands already, you know, Hocus and on specifically. I think you did roll out some more doors in Q2. Any additional color on the door roll out how they're performing on a life-to-life basis, if there's more opportunities expand doors with these brands in F25. Thanks. Yes, there is more opportunity to expand in both in Hocus and on, and we'll be continuing to do that and that the brands are performing very well where we have them in same doors.

Speaker Change #132: Hi, and just to follow, you talked about some of these high-performing brands already, you don't hope it's an on-specific landing.

Speaker Change #133: You did roll out some more doors and choose you. So any additional color on the door will have how they're performing on a like for like basis, if there's more opportunities expand doors with these brands in F-25. Thanks.

Speaker Change #134: Yes, there is more opportunity to expand in both in Hoka and on and we'll be continuing to do that and that the brands are performing very well where we have them in same stores.

Lauren Hobart: But long term, that is the future of exporting goods. And I will pass it to Nati for the SNA question. Yeah, Warren, as you can expect, we are definitely making investments in elevated levels of service and experience in these stores. But keep in mind what we shared last year that the field house stores are have both a very strong top line and a bottom line profile with an EBITDA margin of 20% or slightly more.

Navdeep Gupta: Thank you.

Michael Lasser: Here, next question comes from Michael Lasser with UBS.

Speaker Change #135: Thank you.

Michael Lasser: Please go ahead. Good morning. Thank you so much for taking my question.

Speaker Change #136: Thank you. Here, next question comes from Michael Lasser with UBS, please go ahead.

Navdeep Gupta: Recognizing that you don't die by quarters, Dixie to outperform the consensus by 50 cents in the second quarter, you're raising the full year guy by 15 to 20 cents. So how at all did your expectations internally for sales and profit change in the back half of the day? You're Michael. Maybe I'll start with the consensus part of the question because one thing that we had guided very clearly at the end of Q1, and hopefully more and more analysts will listen to what we say, is the fact that we set the hundred million dollars of an important back to school, be shifting out of Q3 into Q2. What we told today was 95 million dollars of the benefit that was when you see the delta between the com sales and the total sales. That 95 million dollars was driven by the shift and it benefited the second quarter by the tune of almost about 30 cents.

Michael Lasser: Good morning, thank you so much for taking my question. So recognizing that you don't die by quarters.

Lauren Hobart: So continue to be pleased in balancing the investments that we are making and the returns that we are driving. Gotcha. Thanks. And then from my follow-up, some of the new House of Sport locations are opening in all of the smallest footprints than the original 120k. If there are some convergence happening between those and the field health locations, then, you know, what really makes the House of Sport different change from the field house kind of, what are the kind of defining characteristics that define House of Sport?

Speaker Change #138: Dick's did outperform the consensus by 60 cents in the second quarter, you're raising the full year guy by 15 to 20 cents.

Speaker Change #139: So, how at all, degrade expectations internally for sales and profit change in the back half of the year.

Speaker Change #140: Michael, maybe I'll start with the consensus part of the question, because one thing that we had guided very clearly at the end of Q1 and hopefully more and more analysts will listen to what we say is the fact that we set the 100 million dollars of important back to school, we shifting out of Q3, into Q2 and what we told today was 95 million dollars of the benefit that was when you see the delta between the compounds and the total sales that 95 million dollars was driven by the shift

Lauren Hobart: Thank you. Yeah, it's a great, it's a great question. Some of our first House of Sport locations were very large, you know, well over 100,000 square feet. And we continue to iterate, we can adapt to that model to any, you know, 100,000 square feet, we can continue to adapt. When we look at a field house concept, it's definitely leaning more toward our original 50k format. And while it has elevated presentation, elevated service, elevated product, there's some of those interactive experiences like a rock climbing wall and track and field and things like that that we simply can't put into a field house location.

Navdeep Gupta: So that is one thing that I want to make sure that analysts, everybody's modeling that appropriately. What we did as far as the guidance is concerned, we have flown through the beat that we delivered here in second quarter, both in top line, gross profit expectation as well as on the EPS on a full year basis. In addition to that, we modestly raised our second half compact expectation based on the confidence that we have in our product experiment and our core strategies. Keep in mind, again, as you're looking into Q3 on a year or year basis, you want to keep that $105 million of an unfavorable impact with the back to school week now into Q2 impact in Q3, and we quantify that as well that it's about approximately 35 cents of an unfavorable impact we will see in Q3.

Speaker Change #141: and it benefited the second quarter by the tune of almost about 30 cents. So that is one thing that I want to make sure that analysts, everybody is modeling that appropriately.

Speaker Change #142: What we did as far as the guidance is concerned, we have flown through the beat that we delivered here in second quarter, both in top line, gross profit expectation as well as on the EPS on a fully air basis.

Lauren Hobart: But I wouldn't say, I wouldn't say there's a conversion except for in a positive way that the learning from House of Sport continue to trickle to field house and then to the entire rest of our chain. Great, thanks for the color. Good luck.

Speaker Change #142: In addition to that, we modestly raised our second half compact expectation based on the confidence that we have in our product development and our core strategies.

Navdeep Gupta: Thank you.

Paul Lesures: Here next, your next question comes from Paul Lesures with City. Please go ahead. Hi, I think this is Kelly on the Paul, thank you for your question.

Speaker Change #142: Keep in mind, again, as you're looking into Q3 on a year or a year basis, you want to keep that 105 million dollars of an unfavorable impact with the back-to-school beat now, into Q2.

Navdeep Gupta: It looks like the 2HL look as soon as Paul could applaud us to just curious what your assumptions there on the Domo and versus the high end and the differences we should take to account 3K versus 4K. The second half guidance is, I would say if you've modeled it, it won't be flat. We are expecting positive cons in the second half, both in Q3 and Q4. The only thing that between the difference between the high end of the range or the low end of the range is balancing the macroeconomic uncertainties that exist. As the consumer continues to be under pressure and value, we are balancing our optimism and our confidence in our core strategy against the macroeconomic backdrop. Q3 and Q4, I would say, no significant differences.

Speaker Change #142: In fact, in Q3 and we quantify that as well that it's about approximately 35 cents of an unfavorable impact, we will see in Q3.

Lauren Hobart: Yeah, I want to just build on not these point because it's such an important point. So there was absolutely no deceleration in our back half expectations. In fact, modest improvement in comps as as not deep mentioned, but there may be some confusion in terms of the impact from the third quarter to second quarter and the 53rd week. So, so we'd be happy to answer any questions after the call.

Speaker Change #143: Yeah, I wanted to just build on Navdeep's point because it's such an important point. So there was absolutely no deceleration in our back-calf expectations. In fact, a lot of improvement in comps, as Navdeep mentioned, but there may be some confusion in terms of the impact from third quarter to second quarter and the fifth, third week. So we'd be happy to answer any questions after the call.

Michael Lasser: Thank you very much.

Michael Lasser: My follow-up question is given you have a core base of House of Sports up and running. What have you seen from these locations in terms of their economics that's influencing how you will proceed with the coming crunches of new models that you will be locating given that there should be 60 to 20. The additional house of sport location over the next couple of years.

Speaker Change #144: Thank you very much. My follow-up question is given you have a core base of House of Sports up and running.

Speaker Change #145: What have you seen from these locations in terms of their economics?

Navdeep Gupta: You know, back to school is an important season when we think of Q3 and then holiday continue to be such an important part of fourth quarter.

Speaker Change #146: is influencing how you will proceed.

Speaker Change #147: with the coming crunches of new models that you will be located and given that there should be 60 to 80 additional houses for location.

Navdeep Gupta: Just to follow, you talked about some of the highest performing brands already, you know, Hocus and on specifically. I think you did roll out some more doors in Q2. Any additional color on the door roll out how they're performing on a light for light basis, if there's more opportunities to expand doors with these brands in F25. Thanks. Yes, there is more opportunity to expand in both in Hoka and on and we'll be continuing to do that and that the brands are performing very well where we have them in same doors. Thank you.

Lauren Hobart: Yeah, Michael, I would say that we continue to be really pleased with the performance that we are seeing out of the House of Sport locations. We have almost about we'll have 20 locations by the end of this year, and the performance that we have seen in the first branch of the stores that have already finished that are in the second year of the comp journey with us. Those are those stores are still comping positively. The stores that we have opened last year and this year, they continue to meet not only our financial expectations; more importantly, our expectations from how well they are resonating in the communities that they're opening.

Speaker Change #147: over the next couple of years.

Speaker Change #148: Michael, I would say that we continue to be really pleased with the performance that we are seeing out of the House of Sport locations.

Michael Lasser: We have...

Speaker Change #149: We'll have 20 locations by the end of this year and the performance that we have seen in the first branch of the store that have already finished, that are in the second year of the camp.

Speaker Change #149: Journey with us, those stores are still pumping positively. The stores that we have opened last year and this year they continue to meet are not only our financial expectations, more importantly, our expectations from how well they are resonating in the communities that they are opening. So this is continuing to give us confidence and into positioning our chain even further as we think about these opportunities and we are pretty confident in the long term outlook that we have given for our support.

Michael Lasser: Here next question comes from Michael Lasser with UBS. Please go ahead. Good morning. Thank you so much for taking my question. Recognizing that you don't die by quarters dictated outperforming the consensus by 50 cents in the second quarter, you're raising the full year guy by 15 to 20 cents. So how at all did your expectations internally for sales and profit change in the back half of the day? You're Michael, maybe I'll start with the consensus part of the question, because one thing that we had guided very clearly at the end of Q1 and hopefully more and more analysts will listen to what we say is the fact that we set the $100 million of important back to school, be shifting out of Q3 into Q2 and what we told today was 95 million dollars of the benefit that was when you see the delta between the com sales and the total sales, that 95 million dollars was driven by the shift.

Lauren Hobart: So this is continuing to give us confidence and into positioning our chain even further as we think about these opportunities, and we are pretty confident in the long-term outlook that we have given for House of Sport.

Michael Lasser: Thank you very much, and good luck.

Lauren Hobart: Thank you.

Operator: We have time for one more question, and that question comes from Steven Forbes with Guggenheim.

Speaker Change #150: Thank you very much and good luck.

Speaker Change #151: Thank you.

Speaker Change #151: We have time for one more question and that question comes from Stephen Forbes with Gilchonheim. Please go ahead.

Operator: Please go ahead. Good morning, Lauren.

Lauren Hobart: Maybe just a quick follow-up on Michael's question.

Stephen Forbes: Good morning, Lauren, Navdeep.

Lauren Hobart: Given that you do have both formats sort of maturing here in some end during the comp base, anyway to help frame how the range of profitability and sales are trending relative to the store targets you give, meaning is the range tight in giving you confidence that maybe those original store targets are conservative or anywhere to just help frame up how they're performing versus to perform a plan. They're meeting right in line with our performance expectations. Internally, we look at it from a financial return perspective. They are hurtling right at the level that we expect there is to be.

Stephen Forbes: Let me just a quick follow-up on Michael's question.

Stephen Forbes: I've given that you do have both formats sort of maturing here in some entering the compass. Anyone to help frame how the range of profitability and sales are trending relative to the store targets you give in meaning.

Speaker Change #153: is the range tight and giving you confidence that maybe those original store targets are conservative or any way it just helps frame up how they're performing versus the performer plan.

Michael Lasser: And it benefited the second quarter by the tune of almost about 30 cents. So that is one thing that I want to make sure that analysts, everybody's modeling that appropriately, what we did as far as the guidance is concerned, we have flown through the beat that we delivered here in second quarter, both in top line, gross profit expectation as well as on the EPS on a full year basis. In addition to that, we modestly raised our second half, compact expectation based on the confidence that we have in our product experiment and our core strategies.

Speaker Change #154: There, they're meeting right in line with our performer expectations. Internally, we look at it from a financial return perspective, they are hurtling right at the level that we expect there is to be. And that's the reason you are seeing as not only lean into the house of sports strategy, but also lean in from a capex perspective where we are going and acquiring some of these locations. Because we feel this is a differentiated offering that we can offer to our athletes and also provide a very different level of service and experience to our brand partners and to the hand rod.

Lauren Hobart: And that's the reason you are seeing us not only lean into the house of sports strategy, but also lean in from a CAPEX perspective where we are going and acquiring some of these locations because we feel this is a differentiated offering that we can offer to our athletes and also provide a very different level of service and experience to our brand partners and to the landlords. So we continue to be very confident in the capabilities as well as the returns that we are seeing through the house of sports stores.

Speaker Change #154: So, we continue to be very confident in the capabilities as well as the returns that we are seeing through the House of Sport stores.

Michael Lasser: Keep in mind, again, as you're looking into Q3 on a year or year basis, you want to keep that $105 million of an unfavorable impact with the back to school week now into Q2 impact in Q3 and we quantify that as well that it's about approximately 35 cents of an unfavorable impact we will see in Q3. Yeah, I want to just build on not these point because it's such an important point.

Lauren Hobart: In terms of the long-term outlook, let me just finish one more. In terms of the long-term outlook, we'll share that as we start to provide the more detailed outlook for 2025. However, what I can say is our focus internally and consistently with what we have said in the past is to drive both the sales and profitability for the long term of the business. And that's where we will continue to be focused as we look to the repositioning the portfolio opportunity or the investments that we are making.

Speaker Change #154: in terms of the long term outlook.

Speaker Change #154: Yeah, let me just finish one more. In terms of the long-term outlook, we'll share that as we start to provide the more detailed outlook per 2025, however what I can say is, our focus internally and consistently with what we have said in the past is to drive both the sales and profitability for the long-term of the business and that's where we will continue to be focused as we look to the repositioning the portfolio, opportunity or the investments that we are making.

Michael Lasser: So there was absolutely no deceleration in our back half expectations. In fact, modest improvement in comps as as not deep mentioned, but there may be some confusion in terms of the impact from the third quarter to second quarter and the 53rd week.

Lauren Hobart: And then just a quick follow-up on maybe the makeup of the second half implied comp guidance, given the strength and comp average ticket, but also your comments right around engagement with your athletes, what should we expect to moderate in the back half of the year? Is it more ticket moderation or transaction moderation? Thank you.

Speaker Change #155: And then just a quick follow-up on maybe the makeup of the second half implied comp guidance. And given the strength and comp average ticket, but also your comments right around engagement with your athletes. What should we expect to moderate in the back half of the year? Is it more ticket moderation or transaction moderation? Thank you.

Lauren Hobart: So so we'd be happy to answer any questions after the call. Thank you very much. My follow up question is given you have a core base of house of sports up and running. What have you seen from these locations in terms of their economics that's influencing how you will proceed with the coming crunches of new models that you will be locating given that there should be 60 to 20. The additional house of sport location over the next couple of years.

Lauren Hobart: Yeah, we don't provide the guidance at that level of detail. So I would say, even at the aggregate level, we feel really confident about the core strategies and the core product offerings that we have. We couldn't be more excited about the back-to-school season and the holiday season that is upon us.

Speaker Change #155: [inaudible]

Speaker Change #156: Yeah, we've been providing the guidance at that level of detail. So I would say, even at the aggregate level, we feel really confident about the core strategies and the core product offerings that we have. We couldn't be more excited about the back to school season and the holiday season that is upon us. The range that you're seeing from a guidance perspective on calm basis is primarily driven by the macroeconomic uncertainties that we just want. That we wanted to be acknowledging as we provided the guidance today.

Navdeep Gupta: The range that you are seeing from a guidance perspective on calm basis is primarily driven by the macroeconomic uncertainties that we just wanted to be acknowledging as we provided the guidance today.

Lauren Hobart: Yeah, Michael, I would say that we continue to be really pleased with the performance that we are seeing out of the house of sport locations. We have almost about we'll have 20 locations by the end of this year and the performance that we have seen in the first branch of the stores that have already finished that are in the second year of the comp journey with us. Those are those stores are still comping positively.

Navdeep Gupta: Thank you.

Lauren Hobart: In ladies and gentlemen, I will now turn the conference back over to Lauren Hobart for closing comments. Thank you all for attending our call today and for your interest in the exporting goods into all of our teammates across the country and the world. Thank you so much for all you do to drive our results. Thanks, everybody. See you next quarter.

Lauren Hobart: The stores that we have opened last year and this year they continue to meet are not only our financial expectations, more importantly are expectations from how well they are resonating in the communities that they're opening. So this is continuing to give us confidence and into positioning our chain even further as we think about these opportunities and we are pretty confident in the long term outlook that we have given for house of sport.

Speaker Change #157: and Ladies and Gentlemen, I will now turn.

Speaker Change #157: the conference back over to Lauren Hobart for closing comments.

Lauren Hobart: Thank you very much and good luck.

Lauren Hobart: Thank you all for attending our call today and for your interest in the exporting goods and to all of our teammates across the country and the world. Thank you so much for all you do to drive our results. Thanks everybody. See you next quarter.

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

Speaker Change #159: This concludes today's conference call, thank you for your participation and you may now disconnect.

Speaker Change #160: and a few minutes later, I'll be back in the next video.

Speaker Change #160: [inaudible]

Steven Forbes: Thank you. We have time for one more question and that question comes from Steven Forbes with Guggenheim. Please go ahead.

Lauren Hobart: Good morning, Lauren. Maybe just a quick follow up on Michael's question. Given that you do have both formats sort of maturing here in some end during the database, anyone who helps frame how the range of profitability and sales are trending relative to the store targets you give them, meaning is the range tight and giving you confidence that maybe those original store targets are conservative or anyone who just help frame up how they're performing versus to perform a plan.

Lauren Hobart: They're meeting right in line with our performance expectations internally. We look at it from a financial return perspective. They are hurtling right at the level that we expect there is to be. And that's the reason you are seeing us not only lean into the House of Sports Strategy, but also lean in from a CapEx perspective where we are going and acquiring some of these locations because we feel this is a differentiated offering that we can offer to our athletes and also provide a very different level of service and experience to our brand partners. And to the landlords. So are we continue to be very confident in the capabilities as well as the returns that we are seeing through the House of Sports stores in terms of the long term outlook.

Navdeep Gupta: Yeah, let me just finish one more in terms of the long term outlook. We'll share that, you know, as we start to provide the more detailed outlook for 2025. However, what I can say is our focus internally and consistently with what we have said in the past is to drive both the sales and profitability for the long term. Some of the business and that's where we will continue to be focused as we look to the repositioning the portfolio opportunity or the investments that we are making.

Navdeep Gupta: And then just a quick follow up on maybe the the makeup of the second half implied comp guidance given the strength and comp average ticket, but but also your comments right around engagement with your athletes. What should we expect to moderate in the back half of the year? Is it more ticket moderation or transaction moderation? Thank you. Yeah, we don't provide the guidance at that level of detail. So I would say, even at the aggregate level, we feel really confident about the core strategies and the product offering that we have.

Navdeep Gupta: We couldn't be more excited about the back to school season and the holiday season that is upon us. The range that you are seeing from a guidance perspective on calm basis is primarily driven by the macro economic uncertainties that we just want that we wanted to be acknowledging as we provided the guidance today. Thank you.

Lauren Hobart: And ladies and gentlemen, I will now turn the conference back over to Lauren Hobart for closing comments. Thank you all for attending our call today and for your interest in the exporting goods into all of our teammates across the country and the world. Thank you so much for all you do to drive our results. Thanks, everybody. See you next quarter.

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

Operator: Let's call.