Q4 2024 Dick's Sporting Goods Inc Earnings Call
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you 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 withdraw that question again press Star one thank you and I would now.
Nate Guilt: Now like to turn the conference over to Nate guilt Senior director of Investor Relations. Nate you may begin.
Nate Guilt: Good morning, everyone and thank you for joining us to discuss our fourth quarter and full year 2024 results on today's call will be Lauren Hobart, our president and Chief Executive Officer.
Nate Guilt: <unk>, our chief Financial Officer.
Nate Guilt: Playback of todays call will be archived on our Investor Relations website located at investors Dot <unk> dot 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 that could cause our actual results to differ materially from these statements.
Speaker Change: Any such statements should be considered in conjunction with cautionary statements in our earnings release and risk factor discussions in our filings with the SEC, including our last annual report on Form 10-K, as well as cautionary statements made during this call.
Speaker Change: We assume no obligation to update any of these forward looking statements or information.
Speaker Change: Please refer to our Investor relations website to find the reconciliation of our non-GAAP financial measures referenced in today's call.
Speaker Change: And finally, a few admin items.
Speaker Change: First we previously expected our warehouse sales stores to be temporary in nature, and therefore excluded revenue from these locations from our comparable sales calculations.
Speaker Change: With these stores now operating longer than originally planned starting in fiscal 2025. We will include them as part of our comparable sales beginning in the stores 14 full months of operations similar to our other store locations. These stores will also be included as part of our store counts and square footage.
Speaker Change: At the end of today's prepared remarks, we have a short video to share with you.
Speaker Change: And finally for future scheduling purposes, we are tentatively planning to publish our first quarter 2025 earnings results on May 28 2025.
With that I will now turn the call over to Lauren.
Lauren Hobart: Good morning, everyone.
Lauren Hobart: 24 was another outstanding year for our company.
Lauren Hobart: Powered by our strategic pillars of compelling Omnichannel athlete experience differentiated product assortment.
Lauren Hobart: Deep engagement with the <unk> brand and the strength of our culture and our 50000 plus teammates we achieved another year of growth and strong performance, while continuing to extend our leadership position in the market.
Lauren Hobart: Our long term strategies are clearly working.
Lauren Hobart: Before diving into our results I wanted to take a moment to recognize the passion hard work and dedication of our entire team.
Lauren Hobart: It is our people who make us great and the strong performance. We are discussing this morning is a direct result of their efforts.
Lauren Hobart: For the full year, we are very pleased to have delivered record sales of $13 $4 billion.
Lauren Hobart: Our comps increased five 2% driven by growth in average ticket and transactions and we continued to gain market share as consumers prioritize Dick's sporting goods for all their athletic needs.
Lauren Hobart: Through growth in sales and gross margin expansion, we achieved double digit EBT margin above 11% and EPS of $14 five.
Lauren Hobart: Both well ahead of last year.
Lauren Hobart: Our fourth quarter was an exceptionally strong finish to another great year.
Lauren Hobart: Our Q4 comps increased six 4% driven by growth in average ticket and transactions.
Lauren Hobart: This in context. This growth was on top of a two 9% increase in 2023 and a five 3% increase in 2022.
Lauren Hobart: During Q4, we just continued gross margin expansion and delivered EBIT margin of 10, 2% and EPS of $3 62.
Lauren Hobart: This is the largest omnichannel sports retailer in the United States now commanding just under 9% of the highly fragmented $140 billion industry.
Lauren Hobart: This represents an increase of approximately 50 basis points and our share over the prior year.
Lauren Hobart: We provide an unrivaled experience for our athletes and are an important U S retail partner to the world's leading sport brands.
Lauren Hobart: Our disciplined execution of our four strategic pillars has driven strong consistent performance.
Lauren Hobart: Over the past two years, we have delivered nearly 8% stacked comp gained approximately 100 basis points of market share and expanded our gross margin by approximately 125 basis points on a non-GAAP basis.
Lauren Hobart: Our business has incredible momentum.
Lauren Hobart: We also see tremendous strength and momentum in the U S sports industry, a trend we expect to continue through 2030 and beyond.
Lauren Hobart: With the continued excitement around women's sport the enthusiasm surrounding next year's soccer World Cup matches on U S soil and the anticipation for the 2028 Olympics on the 2031 rugby World Cup, which will be held in the U S. For the first time, the convergence of sport and culture has never been stronger and <expletive>.
Lauren Hobart: Squarely at the center of this exciting intersection.
Lauren Hobart: We're a nation obsessed with sport and no one is better positioned to harness this opportunity even Dick's sporting goods.
Lauren Hobart: From this position of strength, we will make significant investments in digital and in store opportunities to drive our business forward and further expand our market position.
Lauren Hobart: Leaning into our strategic pillars, our focus is on three exciting growth areas each with significant potential.
Lauren Hobart: Repositioning our real estate and store portfolio driving continued strong growth in footwear and accelerating our e-commerce business.
Lauren Hobart: Our first key growth area is delivering an elevated omnichannel athlete experience due to the ongoing work to reposition our real estate and store portfolio with houses support field House and golf Galaxy performance Center.
Lauren Hobart: Since opening our first office port location in 2021, our excitement and conviction in this innovative concept continues to build.
Lauren Hobart: Over the past four years, how is this board has disrupted and redefining sports retail and that approximately $35 million in year. One omnichannel sales. This highly experiential destination is delivering powerful financial results, which non people speak to shortly.
Lauren Hobart: How's the sport has also driven strong engagement with our athletes brand partners and communities.
Lauren Hobart: In fact, we see our houses sport locations, attracting more athletes, who not only spend more time in the store, but have a significantly higher spend than our typical VIX athletes.
Lauren Hobart: Importantly, <unk> sport is opening doors to new brand partnership and strengthening existing relationships as this concept showcases our brand partners in a way no one else can.
Lauren Hobart: In addition to driving strong athlete excitement alpha sport is drawing unprecedented landlord interest, which gives us the opportunity to join some of the best retail centers.
Lauren Hobart: After opening seven Morehouse the sport locations. During 2024, we ended the year with 19 total locations and we look forward to adding approximately 16 more in 2025.
Lauren Hobart: At the end of 2027, we expect to have between 75 to 100 houses port locations across the country.
Lauren Hobart: We've also completely revolutionized our most typical format, our 50000 square foot Dick's store into our field House concept.
Lauren Hobart: Wheelhouse is inspired by house of sport and includes a similar elevated assortment and service model premium experiences and bold visual expression.
Lauren Hobart: Lighthouses sport wheelhouse is delivering incredibly strong results.
After opening 15 additional field house locations. During 2024, we finished the year with a total of 26 locations.
Lauren Hobart: <unk> to add approximately <unk> 18, more this year.
Lauren Hobart: As we've said previously this one two punch of health or support and field House is the future of our Dick's stores.
Lauren Hobart: Our second key growth area is driving continued strong growth in our footwear business.
Lauren Hobart: But where is the one product every athlete needs and it did we say footwear is the engine that pulls the train.
Lauren Hobart: Over the past decade, we've transformed our footwear experience through our premium full service footwear decks.
Lauren Hobart: Which are now in approximately 90% of our dislocations.
Lauren Hobart: We provide our brand partners the ability to showcase their premium footwear for every sport every athlete and every occasion.
And key brands provide us with premium product access driving sustained and robust sales growth.
Lauren Hobart: Even with this success, we have a great opportunity to gain share.
Lauren Hobart: With a strong product pipeline across performance and lifestyle combined with the success of our footwear experience. We're targeting this opportunity through strategic investments in high impact marketing and a dedicated focus on footwear across our in store and digital channels.
Lauren Hobart: We will partner with key brands and the athletes and celebrities who resonate most with our customers to enhance our position as the destination for all of the on French's, both on and off the field.
Lauren Hobart: We're kicking the year off by going Big during March Madness, with an exciting campaign that we can't wait for you to see.
Lauren Hobart: Our third key growth area is accelerating our multibillion dollar highly profitable e-commerce business through strategic investments designed to drive substantial long term market share gains online.
Lauren Hobart: While we have seen strong e-commerce growth over the years, we see an opportunity to significantly expand our online presence and capture share.
Lauren Hobart: We are attacking this opportunity with aggressive investments in technology and marketing aimed at enhancing the omnichannel athlete experience and driving greater consideration predict dot com.
Lauren Hobart: Our technology investments will lean into our speed and convenience and will include a focus on our VIX app, which attract our most loyal athletes.
Lauren Hobart: We will continue to leverage our 800, plus store network for online fulfillment, which positions us closer to our athletes for speedier and more efficient delivery.
and a 5.3% increase in 2022.
During Q4, we drove continued gross margin expansion and delivered EVK margin of 10.2% and EPS of $3.52.
Lauren Hobart: And to further dialup those benefits were expanding the use of RFID technology in store, which enabled our teammates to get product into our athletes hands even faster.
Dick's is the largest on-the-channel sports retailer in the United States, now commanding just under 9% of the highly fragmented $140 billion industry.
Lauren Hobart: As part of our broader digital strategy. We're also enthusiastic about to long term growth opportunities game changer, and the media network.
This represents an increase of approximately 50 basis points in our share over the prior year.
Lauren Hobart: Game changer provides an innovative platform to engage with our athletes in new and compelling ways.
We provide an unrivaled experience for our athletes and are an important US retail partner to the world's leading sport round.
Lauren Hobart: In 2020 for approximately 9 million unique users were active on game changer with an average of nearly $1 8 million daily active users.
Our discipline's execution of our four strategic pillars has driven strong consistent performance.
Lauren Hobart: And we're proud to say that as a highly profitable recurring revenue SaaS platform game changer surpassed $100 million in revenue in 2024.
Over the past two years, we've delivered nearly an 8% stacked comp gained approximately 100 basis points of market share and expanded our growth margin by approximately 125 basis points on a non-get basis. Our business has incredible momentum. Thank you very much.
Lauren Hobart: We have seen close to a 40% revenue CAGR since 2017, and we're bullish about game changer as long term growth opportunity.
Lauren Hobart: In 2025, we expect game changer to reach approximately $150 million in revenue and also to continue positively impacting our gross margin.
We also see tremendous strength and momentum in the US sports industry, the trend we expect to continue through 2030 and beyond.
Lauren Hobart: <expletive> Media network is our emerging retail media network that harnesses the unique power of our robust and growing scorecard loyalty program and database, which is the best data set we use for it.
with the continued excitement around women's sports. [inaudible]
The enthusiasm surrounding next year soccer world cup matches on US soil and the anticipation for the 2028 LA Olympics and the 2031 rugby world cup.
Lauren Hobart: While it's in the early stages. We are very pleased with initial interest in the platform and believe Dick's Media network will become a driver of long term sales growth and an important driver of long term gross margin expansion as we scale and optimize the network.
which will be held in the U.S. for the first time.
The Convergence of Sport and Culture has never been stronger, and <expletive> sits squarely at the center of this exciting intersection.
We're a nation of sex with sport, and no one is better positioned to harness this opportunity than Dick's Sporting Goods. [inaudible]
Lauren Hobart: With all of this in mind for 2025, we expect to drive continued comp growth strategic expansion of our square footage and improved gross margin.
From this official strength, we will make significant investments in digital and in-store opportunities to drive our business forward and further expand our market position.
Lauren Hobart: We anticipate our comp sales to be in the range of 1% to 3%, which at the midpoint represents nearly a 10% three year comp stack.
Leaning into our strategic pillars, our focus is on three exciting growth areas, each with significant potential . . . .
Lauren Hobart: We expect our EPS to be in the range of $13 80 to $14 47.
Re-positioning our real estate and store portfolio, driving continued strong growth in footwear and accelerating our e-commerce business.
Lauren Hobart: Our consistent execution and strong performance give us deep confidence in the growth opportunities we've identified.
Lauren Hobart: Great companies invest from a position of strength and we are leaning into our momentum with strategic investments in the areas that matter most to our athletes and enable us to seize the significant market share opportunity ahead of us.
Our first key growth area is delivering an elevated Ami Channel athlete experience through the ongoing work to reposition our real estate and store portfolio, with house of sports, field house, and golf golf seek performance center.
Lauren Hobart: With a clear strategy, a disciplined approach and our commitment to innovation, we are well positioned to drive sustained sales and profitability growth over the long term.
Since opening our first house of sport location in 2021, our excitement and conviction in this innovative concept continues to build.
Speaker Change: Over the past four years, House of Sport has disrupted and redefined sports retail, and at approximately $35 million in year one on the channel sales, this highly experiential destination is delivering powerful financial results, which on people speak to shortly.
Lauren Hobart: With that I'll turn it over to an update to share more detail on our financial results 2025 outlook and capital allocation now over to you.
Speaker Change: Thank you Ron and good morning, everyone.
Speaker Change: Let's begin with some highlights of our full year 2020 quarter results.
Naddeep: House of Sport has also driven strong engagement with our athletes, brand partners, and communities.
Speaker Change: Our comp sales increased five 2% and we continue to gain market share.
Naddeep: In fact, we see our House of Sport locations attracting more athletes who not only spend more time in the store, but have a significantly higher spend than our typical Dix athletes.
This was on top of a two 6% increase in the comp sales last year.
Speaker Change: These strong comps were driven by a 4% increase in average ticket and a one 2% increase in transactions.
Naddeep: importantly, House of Sport is opening doors to new brand partnership and strengthening existing relationships as this concept showcases our brand partners in a way no one else can [inaudible]
Speaker Change: Consolidated sales increased three 5% in 2024 to a record setting 13 four $4 billion.
Naddeep: In addition to driving strong athlete excitement, House of Sport is drawing unprecedented landlord interests, which gives us the opportunity to join some of the best retail centers.
Speaker Change: As a reminder, last year's sales were positively impacted by $170 million from the 50 <unk> week.
Speaker Change: On a 52 week comparable basis, our consolidated net sales increased four 9%.
Naddeep: After opening seven more houses for sport locations during 2024, we ended the year with 19 total locations and we look forward to adding approximately 15 more in 2025.
Speaker Change: Driven by our strong sales and gross margin expansion EBT was 152 billion.
Speaker Change: 11, 3% of net sales an increase under $16 million or 49 basis points from last year's non-GAAP results.
Naddeep: By the end of 2027, we expect to have between 75 to 100 health and sport locations across the country.
and Nathaniel Gilch
Naddeep: We've also completely revolutionized our most typical format, our 50,000 square foot of Dick's Store, into our fieldhouse concept.
Speaker Change: For the full year, we delivered earnings per diluted share of $14 <unk>. This.
Speaker Change: This compares to last year's non-GAAP earnings per diluted share of $12 91.
Naddeep: Fieldhouse is inspired by house support and includes the similar elevated assortment and service model, premium experiences, and bold visual expressions.
Speaker Change: This included approximately <unk> 19 from.
Speaker Change: From the 50 <unk> week.
Speaker Change: On a 52 week comparable basis. This is a year over year increase up 10, 5%.
Lighthouse is Sport, Fieldhouse is delivering incredibly strong results.
Naddeep: After opening 15 additional field house locations during 2024, we finished the year with a total of 26 locations and expect to add approximately 18 more this year.
Speaker Change: Now moving to our results for Q4.
Speaker Change: We are very pleased to deliver our Q4 comp increase of six 4%.
Naddeep: As we said previously, this one-two punch of health, sport, and fieldhouse is the future of our Dick's Sport.
Speaker Change: This represents nearly 15%.
Speaker Change: Comstock.
Speaker Change: Our strong comps were driven by a four 4% increase in average ticket and a 2% increase in transactions.
Naddeep: Our second key growth area is driving continued strong growth in our footwear business.
Naddeep: But where is the one product every athlete needs? And at Dick's, we say, but where is the engine that pulls the train? [inaudible]
Speaker Change: Consolidated net sales for Q4 increased <unk>, 5% to $3 $89 billion.
Naddeep: Over the past decade, we've transformed our footwear experience through our premium gold service footwear deck which are now in approximately 90% of our dislocation.
Speaker Change: This was the largest sales quarter in the history of our company.
Speaker Change: As we previewed during our prior calls net sales comparison for Q4 was unfavorably impacted by approximately $200 million. This.
Naddeep: We provide our brand partners the ability to showcase their premium footwear for every sport, every athlete, and every occasion.
Speaker Change: This included the extra week last year, which added $170 million in sales in Q4, 2023, as well as the impact of the calendar shift which was neutral for the full year, but unfavorably impacted Q4 sales by $30 million.
Naddeep: and Key Brands provide us with premium product access, thriving sustained and robust sales growth.
Naddeep: Even with this success, we have a great opportunity to gain share
Speaker Change: Gross profit for the fourth quarter remained strong at 136 billion, a $34, 96% of net sales and increased 39 basis points from last year's non-GAAP results.
Naddeep: With a strong product pipeline across performance and lifestyle, combined with the success of our footwear experience, we're targeting this opportunity through strategic investments in high-impact marketing and a dedicated focus on footwear across our indoor and digital channels.
Speaker Change: This increase was driven by lower shipping costs and higher merchandise margin.
Naddeep: We'll partner with key brands and the athletes and celebrities who resonate most with our customers to enhance our position as the destination for all the on-trend shoes both on and off the field.
Speaker Change: This was partially offset by expected deleverage on the occupancy cost due to the 50 <unk> week last year.
Speaker Change: On a non-GAAP basis SG&A expenses for the quarter increased four 8% to $937 6 million and Deleveraged 101 basis points compared to last year's non-GAAP results.
Naddeep: We're kicking the year off by going big during March Madness with an exciting campaign that we can't wait for you to see.
Naddeep: Our third key growth area is accelerating our multi-billion-dollar, highly profitable e-commerce business, through strategic investments designed to drive substantial long-term market share gains online [inaudible]
Speaker Change: This year over year deleverage was expected and due to the strategic investments in our technology talent and marketing based on the strength of our business and also included higher incentive compensation.
Naddeep: While we've seen strong e-commerce growth over the years, we see an opportunity significantly expand our online presence and capture share.
Speaker Change: Q4, Preopening expenses were $10 7 million, an increase of $5 3 million compared to the prior year.
Naddeep: We are attacking this opportunity with aggressive investments in technology and marketing aimed at enhancing the omnichannel athlete experience and driving greater consideration for Dick's.com
Speaker Change: This expected increase was driven by the timing of our new store openings.
Speaker Change: You began in the fourth quarter was $397 3 million or 10, 2% of net sales.
Naddeep: Our technology's resonance will lean into our speed and convenience. I will include a focus on our Big Stop, which attracts our most oil athletes.
Speaker Change: This compares to a non-GAAP EBITDA of $427 7 million, 11.0% to 3% of net sales in Q4 of last year.
Naddeep: We'll continue to leverage our 800-plus store network for online fulfillment, which positions us closer to our athletes for speedier and more efficient delivery.
Speaker Change: EBT margin comparisons, but unfavorably impacted by approximately 27 basis points due to the extra week last year, plus the impact of the calendar shift.
Naddeep: As a further dial-up of those benefits, we're expanding the use of RFID technology in-store, which enables our teammates to get products into our athlete's hands even faster.
Naddeep: As part of our broader digital strategy, we're also enthusiastic about two long-term growth opportunities, Game Changer and the <expletive> Media Network.
Speaker Change: In total we delivered Q4 earnings per diluted share of $3 62.
Speaker Change: This compares with last year and non-GAAP earnings per diluted share of $3 85.
Naddeep: GameChanger provides an innovative platform to engage with our athletes in new and compelling ways.
Life sales and EBT margin EPS comparisons for Q4 was unfavorably impacted by approximately 29 cents per.
Naddeep: In 2024, approximately 9 million unique users were active on game changer, with an average of nearly 1.8 million daily active users.
Speaker Change: Our diluted share due to the extra week last year, which added approximately <unk> 19 per diluted share in Q4, 2023, plus the impact of the calendar shift which was neutral for the full year, but unfavorably impacted Q4, EPS by approximately 10 cents per diluted share.
Naddeep: And we're proud to say that as a highly profitable recurring revenue staff platform, game-changers surpass $100 million in revenue in 2024.
Naddeep: We've been close to a 40% revenue caterer since 2017, and we're bullish about game changers long-term growth opportunity
Speaker Change: Now looking to our balance sheet, we ended the year with approximately $1 7 billion of cash and cash equivalents and no borrowings on our $1 6 billion unsecured credit facility.
Naddeep: In 2025, we expect Game Changer to reach for approximately $150 million in revenue and also to continue positively impacting our gross margin.
Speaker Change: Our year end inventory levels increased 18% compared to last year.
Naddeep: <expletive> Media Network is our emerging retail media network that harnesses the unique power of our robust and growing scorecard loyalty program and database, which is the best data set in use for it.
Speaker Change: We believe our inventory is well positioned with clearance levels at historic lows.
Speaker Change: As we have discussed to maximize the benefits of our differentiated assortment. We have made the deliberate decision lean into key items and categories.
Naddeep: While it's in the early stages, we are very pleased with initial interest in the platform, and believe this meeting network will become a driver of long-term sales growth and an important driver of long-term growth margin expansion as we scale and optimize the network.
Speaker Change: We also invested an earlier spring receipts to more effectively transition seasons and warmer climate markets.
Naddeep: With all of us in mind for 2025, we expect to drive continued compost, strategic expansion of our square footage, and improved growth margin.
Speaker Change: These investments play a vital role in driving our continued strong sales momentum, which we expect to carry into 2025.
Naddeep: We anticipate our comp stale to be in the range of 1% to 3%, which at the mid-point represents nearly a 10% 3-year comp stack.
Speaker Change: Turning to our fourth quarter capital allocation.
Speaker Change: Net capital expenditures were $213 million, and we paid $89 million in quarterly dividends.
Naddeep: We expect our EPS to be in the range of $13.80 to $14.40.
Speaker Change: We also repurchased 848000 shares of our stock for $98 million at an average price of $228 17.
Naddeep: Our consistent execution and strong performance give us deep confidence in the growth opportunities we've identified.
Speaker Change: Now moving to our outlook, which balances the strong confidence we have in our strategic initiatives and operational strength against the dynamic macroeconomic environment.
Naddeep: Great companies invest from a position of strength, and we are leaning into our momentum with strategic investments in the areas that matter most to our athletes and enable us to tease the significant market share opportunity ahead of us.
Speaker Change: Consolidated sales are expected to be in the range of $13 6 billion to $13 9 billion.
Naddeep: With a clear strategy, a disciplined approach, and a commitment to innovation, we are well-positioned to drive sustained sales and profitability growth over the long term.
Speaker Change: As Lorne mentioned, we anticipate comp sales growth in the range of 1% to 3%.
Naddeep: With that, I'll turn it over to Navdeep to share more detail on our financial results 2025 Outlook and Capital Allocation. Navdeep over the hill. Thank you, Lauren, and good morning, everyone. Let's begin with some highlights of our full year 2024 results.
Speaker Change: Which at the midpoint represents nearly a 10% three year Comstock.
Speaker Change: We expect comps to be closer to the high end of our guidance through the third quarter.
Speaker Change: In Q4, we'll be lapping very strong results from 2024.
Navdeep: A calm sales increased 5.2% and we continue to gain market share. This was on top of a 2.6% increase in the calm sales last year.
Speaker Change: Driven by the quality of our assortment, we expect gross margin to again expand year over year, which at midpoint, we expect to improve approximately 75 basis points.
Navdeep: These strong calms were driven by a 4% increase in average second and a 1.2% increase in transactions.
Speaker Change: This brings total expected gross margin expansion over the three year period from 2022 through 2025 to approximately 200 basis points.
Navdeep: Consolidate that sales increased 3.5% in 2024 to a record-setting $13.44 billion in dollars.
Speaker Change: As Loren discussed from this position of strength, we plan to make strategic investments digitally in store and in marketing to better position ourselves over the long term.
Navdeep: As a reminder, last year sales were positively impacted $170 million from the 53rd week.
Speaker Change: Thus, we anticipate gross margin expansion to be offset by SG&A deleverage.
Navdeep: On a 52-week comparable basis, our consolidated net sales increased 4.9%.
Speaker Change: From a pacing standpoint, we expect greater SG&A expense deleverage in the first half.
Navdeep: Driven by a strong sales and gross margin expansion, EBT was $1.52 billion, $11.3% of net sales, and increased $116 million, or 49 basis points from last year's non-GAAP results
Speaker Change: That moderation in the second half as we lap the higher investment levels from the second half of last year.
Speaker Change: Preopening expenses are expected to be in the range of $65 million to $75 million with approximately one third incurred in the first half of the year and the remaining two thirds in the second half.
Navdeep: For the four years, we delivered earnings for the deluded share of $14.00 and 500.
Navdeep: This campaign has stood last year's non-GAAP earnings for the looters' share of $12.91
Speaker Change: We expect both EBIT and EBIT margins to be approximately 11, 1% at the midpoint.
which included approximately 19 cents from the 50,000 B.
Speaker Change: At the high end of our expectations, we expect to drive approximately 10 basis points of EBIT margin expansion on a non-GAAP basis.
Navdeep: On a 52-week comparable basis, this is a year-over-year increase of 10.5%.
Now moving to act results for Q4
Speaker Change: We expect interest expense to remain roughly flat year over year. While we are modeling other income which was comprised primarily of interest income to decline due to the lower interest rate environment compared to the last year.
This represents nearly a 15% three-year Com Start.
Navdeep: A strong count was driven by a 4.4% increase in average ticket and a 2% increase in triangle actions.
Speaker Change: We expect full year earnings per diluted share to be in the range of $13 80 to $14 40.
Consolidated net sales for Q4 increased 0.5% to $3.89 billion $3.89 billion.
Speaker Change: From a pacing perspective, we expect EPS to decline year over year in the first half an increase year over year in the second half.
Navdeep: This was the largest sales quarter in the history of our company [inaudible]
Speaker Change: Our earnings guidance is based on approximately 82 million average diluted shares outstanding and effective tax rate of approximately 24%.
as we previewed during a prior call.
Navdeep: Net sales comparison for Q4 were unfavorably impacted by approximately $200 million million dollars.
Navdeep: This included the extra B class year which added $170 million in sales in 2.4, 2023, as well as the impact of the talent shift, which was neutral for the full year, but unfavorably impacted 2.4 sales by $30 million [inaudible]
Speaker Change: In terms of tariffs given the evolving nature of the discussion a number of unknowns our guidance does not contemplate changes in tariff at this time.
Speaker Change: We successfully managed through Paris, and the prior cycle.
Navdeep: Gross Rapid for the fourth quarter remains strong at $1.36 billion, a $34.96% of net sales, and increased 39 basis points from last year's non-GAAP results.
Speaker Change: Along with our brand partners, we have been diversifying our vertical brand sourcing for several years and we'll continue to do that going forward.
Speaker Change: We will remain flexible and nimble to adapt to the changing environment.
Navdeep: This increase was driven by lower shipping costs and higher merchandise margin.
Speaker Change: I'll now discuss our capital allocation priorities investing in our business to grow our leadership position and drive profitable organic growth remains our top priority.
Navdeep: which was partially offset by expected delivery on the occupancy cost due to the 53rd week last year.
Navdeep: On a non-GAAP basis, SGNA expenses for the quarter increase, $4.8% to $957.6 million, and D-loverage 101 basis points compared to last year's non-GAAP results
Speaker Change: Our 2025 capital allocation plan includes net capital expenditure of approximately $1 billion.
Speaker Change: Which a portion is a shift from 2024 due to the timing of the spend.
Navdeep: This year over here, Deliverage was expected and due to the strategic investments in our technology, talent and marketing based on the strength of our business and also included higher incentive compensation.
Speaker Change: As we continue to reposition our real estate and store portfolio. These investments will be concentrated in store growth relocations and improvements in our existing stores and in support of our ongoing investments in supply chain and technology.
Navdeep: Q for pre-opening expenses for $10.7 million and increase the $5.3 million compared to the prior year.
Our Capex plan also includes the purchase of certain real estate assets related to houses for.
Speaker Change: In 2025, we plan to open approximately 16, moorhouse, who support locations, which will bring the total to approximately 35 by the end of the year.
Navdeep: This expected increase was driven by the timing upon use to operate [inaudible]
Navdeep: If it became the fourth quarter, was $397.3 million, a 10.2% of net sales.
Speaker Change: We also expect to begin construction on approximately 20 houses port locations that are scheduled to open throughout 2026.
Navdeep: This compares to a non-GAAP EBG of $427.7 million on $11.03% of net sales in Q4 of last year.
Speaker Change: And for the field House, we expect to open approximately 18 additional locations for a total of approximately 44 locations by the end of the year.
Navdeep: EBT Margin, Comparisons, but unfavorably impacted by approximately 27 basis points, due to the extra V last year, plus the impact of the calendar share.
Speaker Change: Before continuing I am excited to provide a brief update on why we are so bullish about these new bonds.
Navdeep: In order, we delivered Q4 irons for the limited share of $3.62 cents.
Speaker Change: But our new also support in year, one we continue to expect approximately $35 million in Omnichannel sales and a very strong profitability with an EBITDA margin of approximately 20%.
Navdeep: This compares to last year non-GAAP earnings per diluted share of $3.85. [inaudible]
Navdeep: Flight Sales and EBT Margin, EPS Comparisons for Q-Port, but un favourably impacted by approximately
Speaker Change: In terms of capital our updated expectation is slightly over $20 million, which includes the acquisition of certain real estate.
Navdeep: $0.29 per diluted chair due to the extra B last year, which added approximately $0.19 per diluted
Speaker Change: We are also seeing very attractive returns from our field house locations, where we continue to target year, one omnichannel sales of approximately $14 million and an EBITDA margin of approximately 20%.
Navdeep: which was neutral for the collier, but unfavorably impacted Q4 EPS by approximately 10 cents per
Navdeep: Now looking to our balance sheet, we ended the year with approximately $1.7 billion of cash and cash equivalent and no borrowing on our 1.6 billion unsecured credit facility.
In 2025, we are also excited to grow the footprint of our golf Galaxy business and plan to open approximately 14 golf Galaxy performance Center locations.
A year and inventory levels increased 18% compared to last year [inaudible]
Speaker Change: We focus on maintaining real estate flexibility within our portfolio and expect approximately 70% of our 2025 openings will be relocations are conversions of existing stores into these innovative new format.
Navdeep: We believe our inventory is well-positioned with clearance levels at historic lows.
Navdeep: As we have discussed, to maximize the benefit of our differentiated assortment, we have made a deliberate discussion, lean into key items and categories.
Speaker Change: Collectively these investments are expected to drive nearly a 3% increase in our square footage in 2025, representing an acceleration from our 2024 growth rate.
Navdeep: We also invested in earlier spring receipts to more effectively transition seasons in warmer climate markets.
Navdeep: These investments play a vital role in driving a continued, strong sales momentum which we expect to carry into 2025.
Speaker Change: To support our growth our supply chain investments include the new distribution Center, we are building in Fort worth, Texas, which is expected to open in 2026.
Turning to our Port Water Capital allocation.
Speaker Change: We are evolving our supply chain to better support our growing business and enhance the omnichannel athlete experience through improved cycle times and product availability.
Navdeep: Net capital expenditures were $215 million, and the paid $89 million in quarterly dividends.
Navdeep: We also repurchased $428,000 shares of our stock for $98 million at an average price of $228.17
Speaker Change: Lastly, we continue to invest in technology that will enhance the omnichannel athlete experience and our teammate experience along with exciting growth opportunities like game changer, and VIX media network.
Navdeep: Now moving to our outlook, which balances the strong confidence we have in our strategic initiatives
Speaker Change: We also remain committed to returning significant capital to our shareholders through our quarterly dividend and opportunistic share repurchases.
Navdeep: Consolidated sales are expected to be in the range of $13.6 billion to $13.9 billion [inaudible]
Speaker Change: Over the past three years, we have returned approximately $2 2 billion.
Speaker Change: All the while continuing to invest in the profitable long term growth of our business.
Navdeep: As Lauren mentioned, we anticipate calm sales growth in the range of 1-3%, which at the midpoint represents nearly a 10% 3-year-come start.
Speaker Change: All of this is underpinned by our commitment to a healthy balance sheet and maintaining our investment grade ratings.
Navdeep: We expect Kant to be closer to the high end of our guidance through the third quarter, though and Q4 will be laughing very strong results from 2024.
Speaker Change: Today, we announced a 10% increase in our quarterly dividend to an annualized payout of $4 85 per share or approximately $1 21 on a quarterly basis.
Navdeep: Driven by the quality of our assortment, we expect growth margins to again expand year over year, which at midpoint we expect to improve approximately 75 basis points
Speaker Change: This marks the 11th consecutive year that our shareholders have benefited from a dividend increase.
Speaker Change: Today, we also announced a new five year share repurchase program of up to $3 billion.
Navdeep: This brings total expected growth margin expansion over the three-year period from 2022 to 2025 to approximately 200 basis points.
Speaker Change: By 2025 plan includes our expectation of share repurchases to offset dilution the effect of which is included in our EPS guidance.
Navdeep: As Lauren discusses from this position of strength, we plan to make strategic investments digitally installed and in marketing to better position ourselves over the long term.
Speaker Change: I'd like to end our prepared remarks with a brief video that captures the energy and the enthusiasm we all feel for what we are achieving tiara index. After the video we'll open the line for questions.
Navdeep: Thus, we anticipate gross margin expansion to be offset by S-G-N-A-D leverage
Speaker Change: 2024 was another income.
Navdeep: From a pacing standpoint, we expect greater SG&A expense delivery in the first half with moderation in the second half as we lap the higher investment levels from the second half of last year.
Speaker Change: Well, ladies and gentlemen, this is the operator before we play the video. Please ensure you refresh your webcast page and now we will pause briefly to allow attendees to do so.
Navdeep: Cree-opening expenses are expected to be in the range of $65 to $75 million with approximately one-third incurred in the first half of the year and the remaining two-thirds in the second half.
Navdeep: We expect both EBIT and EBT margins to be approximately 11.1% at the midpoint.
Speaker Change: Another incredible year for <unk>, we delivered strong and consistent performance by executing on our four key strategic pillars.
Navdeep: At the high end of our expectations, we expect to drive approximately 10 basis points of EVIT Martin Expansion on a non-GAAP basis.
Speaker Change: <unk> we've experienced.
Speaker Change: Offering differentiated products strengthening brand engagement and enriching the teammate experience.
Thank you for watching. Thank you. Thank you.
Navdeep: We expect interest expense to remain roughly flat year-over-year, while we are modeling other incomes which is comprised primarily of interest incomes to decline due to the lower interest rate and environment compared to the last year.
Speaker Change: What a year, it's great and we're just getting started.
Navdeep: We expect full year earnings per deluded share to be in the range of $13.80 to $14.40 We expect full year earnings per deluded share
Speaker Change: The convergence of sports and culture has never been stronger with some of the worlds biggest sporting events to take place can be Atlantic States. This presents a huge opportunity as the expected momentum will only grow by 2030 and beyond.
Navdeep: From patient perspective, we expect EPS to decline year-over-year in the first half and increase year-over-year in the second half [inaudible]
Speaker Change: As a company is deeply rooted in sports is uniquely poised to seize this opportunity from a position of strength.
Navdeep: Our earnings guidance is based on approximately 82 million average denoted shares outstanding an effective tax rate of approximately 24%.
Speaker Change: That's why we're investing to drive further growth by attracting three significant growth areas first we will continuing to reposition our real estate and store portfolio. In 2024, we opened seven house of sports stores. While also opening 15 fuel have stores and in 2025, we look to open 60 more household sports stores.
Navdeep: In terms of tariffs, given the evolving nature of the discussion and number of unknowns, our guidance does not contemplate changes in tariff at this time.
Navdeep: We successfully managed through tariffs in the prior cycle, along with our brand partners, we have been diversifying our vertical brand sourcing for several years, and will continue to do that going forward.
Speaker Change: Well as 18, new field house stores.
Speaker Change: Our second growth area is to accelerate our footwear growth through strategic investments in high impact marketing PMA training expertise, while building a suite of technology tools to make the passenger experience more seamless.
Navdeep: We will remain flexible and nimble to adapt to the changing environment.
Copyright Australian Broadcasting Corporation
Navdeep: I'll now discuss our capital allocation priorities investing in our business to grow on leadership position and drive profitable organic growth remains a top priority [inaudible]
Speaker Change: Third we are accelerating our e-commerce growth through strategic investments in high impact marketing and technology, so athletes to navigate how they want to shop, where.
Navdeep: For 2025, capital allocation plan includes net capital expenditure of approximately $1 billion of which the proportion is a shift from 2024 due to the timing of the spend.
Speaker Change: And with Asia and in a way that is more convenient for them.
Speaker Change: All of this brings us closer to our vision to be the best Sports company in the World.
Navdeep: As we continue to reposition our real estate and store port for you, these investments will be concentrated in store growth, relocation, and improvements in our existing stores and in support of our ongoing investments in supply chain and technology.
Yes.
Speaker Change: Yes.
Speaker Change: And ladies and gentlemen, we will now begin the question and answer session. If you would.
Speaker Change: 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. We also ask that you limit yourself to one question and one follow up for any additional questions. Please re queue.
Navdeep: A Capit's plan also includes the purchase of certain real estate assets related to houses for
Navdeep: In 2025, we plan to open approximately 16 more houses for locations which will bring the total to approximately 35 by the end of the year
Speaker Change: Our first question comes from Adrienne <unk> with Barclays. Please go ahead.
Navdeep: We also expect to begin construction on approximately 20 houses for locations that are scheduled to open throughout 2026.
Adrienne: Great Good morning.
Speaker Change: Congratulations I think six 4% the biggest comp that we've seen in the entire holiday related mistaken, but I doubt it.
Navdeep: And for the field house, we expect to open approximately 18 additional locations for a total of approximately 44 locations by the end of the year.
Adrienne: Thanks.
Adrienne: Laurent.
Adrienne: Can you talk about sort of the tariff, but not necessarily.
Navdeep: Before continuing, I'm excited to provide a brief update on why we are so bullish about these new bomb
Adrienne: Sort of like what's happening to you I know, you're 85% branded 50% private label not a lot in China. So that's kind of like the facts of it but can you talk about kind of what happened in the last go around whether the brands are made an attempt to pass through pricing to you. When we talk to some of the footwear brands, they're largely in Vietnam.
Navdeep: For a new house of sport, in year one, we continue to expect approximately $35 million in army channel sales and a very strong profitability, but then EBITDA margin of approximately 20%.
Navdeep: In terms of capital, our updated expectation is slightly over 20 million dollars, which includes the acquisition of certain real estate
Adrienne: Really have as much of a pricing exposure to just kind of what you're seeing on the footwear landscape relative to apparel and then progress that you're having on the Texas market. Thank you.
Adrienne: Thanks, Adrian Yes, we are so proud of the team the six 4% comp and I'd point out the full year being a five 2% comp just a tremendous tremendous year.
Navdeep: They're also seeing very attractive returns from a steel house location.
Navdeep: Where we continue to target Year One Army Channel sales of approximately $14 million and an EBDA margin of approximately 20%.
Adrienne: We actually we feel terrific about our core strategies and they are working and our strategies involve differentiated assortment and we look at this past quarter. We saw growth across every aspect of our business. So soft lines footwear and hard lines and that's a credit to our merchant team for bringing in unbelievably desirable.
Navdeep: In 2025, we are also excited to grow the footprint of our golf gallery business and plan to open approximately 14 golf gallery performance and relocation [inaudible]
Navdeep: We focus on maintaining real estate flexibility within our portfolio and expect approximately 70% of our 2025 openings will be relocations or conversions of existing stores into these innovative new formats.
Adrienne: Across the board our team is executing at an incredibly high level and we're seeing a real focus we've all been pretty on focus on athlete experience, but similarly on teammate experience and making sure that we hire the best team and provide them with the tools they need and they are an incredible team and thats been a huge advantage to us and I.
Navdeep: Collectively, these investments are expected to drive nearly a 3% increase in our Swarth footage in 2025, representing an acceleration from our 2024 draw straight
Adrienne: Also talk about the <unk>.
Adrienne: Consumer and the fact that our consumer has held up really well and if you look at Q4 and the full year.
Navdeep: To support our growth, our supply chain investments include the new distribution center we are building in Port West Texas, which is expected to open in 2026.
Adrienne: We saw growth in ticket and transactions.
Adrienne: We saw growth across every single income demographic in Q4 as well as the full year, we didn't see trade down from best better or better to good and over the course of the year. We gained 7 million new athletes $2 2 million in just the fourth quarter. So I wanted to alternatives of deep to talk about your specific questions, but I can.
Navdeep: We are evolving our supply chain to better support our growing business and enhance the omnichannel athlete experience through improved cycle times and product availability.
Navdeep: Lastly, we continue to invest in technology that will enhance the Omnichannel athlete experience and our teammate experience, along with exciting growth opportunities like Game Changers and DeX Media Network.
Adrienne: Important to start with the fact that we have unbelievable momentum as we go into the year and when you look to our guidance at 1% to 3%, which is a 10% three year stack comp. We are very confident that we can deliver the guidance regardless of what happens in the marketplace with tariffs and such very proud also of our <unk>.
For more information visit www.FEMA.gov
Navdeep: We also remain committed to returning significant capitals to our shareholders, to our quarterly dividend, and our opportunistic shareholders . . . .
Navdeep: Over the past three years, we have returned approximately $2.2 billion to share order while continuing to invest in the profitable long-term growth of our business [inaudible]
Adrienne: EIT margin at 11, 1% at the midpoint, that's a very strong projection and we're very confident we'll be able to hit that guidance update bolt I'll turn it to you to talk about tariffs good morning, Adrian and thanks for your recognition for the work that the team has done in Q4 and all of 2024 in terms of tariff what I said in our prepared comments today there is a lot.
Navdeep: All of this is underpinned by a commitment to a healthy balance sheet and maintaining our investment
Navdeep: Today, we announced a 10% increase in affordability dividends to an annualized payout of $4.85 per share, or approximately $1.21 on affordability basis.
Adrienne: That is still evolving and that is still.
Adrienne: That is unknown and from a tariff perspective, so that is not specifically contemplated in our guidance as far as well.
Navdeep: This marks the 11th consecutive year that our shareholders have benefited from a different increase.
Adrienne: Was that we do we have.
Navdeep: Today we also announce a new five year share repurchase program of up to $3 billion $2.
Adrienne: Including our own vertical brand teams and our National brand partners over the last several years have diversified their production facilities across and not just from a dependence from China <unk> actually <unk> been looking outside.
Navdeep: A 2025 plan includes that expectation of shared repurchases to offset delusion, the effect of which is included in our EPS guidance.
Adrienne: On the footwear side as you called out that there's been a lot of diversification that has happened. However, as we see the landscape of the tariff continuing to evolve and so we will follow what we did back in 2018 2019 and will continue to work very closely with our brand partners appropriately balancing what is the right pricing decisions for us.
Navdeep: I would like to end our prepared remarks with a brief video that captures the energy and the enthusiasm we all feel for what we are achieving here at depth. After the video, we will open the line for questions.
2024 was another incredible year.
Adrienne: At least as well as what is the right pricing decision for our own business. So we'll continue to lean into a strong partnership with our vendors balancing the actions from a pricing perspective, and continuing to make sure that we are providing a well diversified portfolio of products to our athletes who are continuing to come to us and are really excited about.
Speaker Change: Ladies and gentlemen, this is the operator. Before we play the video, please ensure you refresh your webcast page now. We will pause briefly to allow attendees to do so.
Adrienne: The offers that we have within the store as well as the service.
Speaker Change: Great. Thank you very much one question on the Preopening expenses, you gave us the first half.
Another incredible year for Dick's
I think.
Speaker Change: We delivered strong and consistent performance by executing on our four key strategic pillars, enhancing the athlete experience, offering different shooting products, strengthening brand engagement, and enriching the team-made experience.
Speaker Change: Last quarter, we kind of had more of it in the fourth quarter. So can you give us any more quarter specific commentary and just say we can cause there.
Speaker Change: They're just there.
Speaker Change: So the Q1 to Q2, the Preopening would be great. Thank you for a model.
What a year it's been, and we're just getting started.
Speaker Change: Yes, Adrian I will say the Preopening expenses like you called out very depending on the number of new store openings, and we will give a little bit more clarity in terms of you need to be on a quarterly basis and the subsequent calls.
Speaker Change: The convergence of sports and culture has never been stronger, with some of the world's biggest sporting events set to take place in the United States. This presents a huge opportunity as the expected momentum will only grow by 2030 and beyond.
Adrian: Perfect. Thank you very much great great job best of luck.
Speaker Change: Okay.
Speaker Change: Yes.
Simeon Gutman: Next question comes from Simeon Gutman with Morgan Stanley. Please go ahead.
Simeon Gutman: Hey, good morning, everyone.
Simeon Gutman: Good fourth quarter. My question on the 25 guide your EBIT margins up a little bit or flattish I think year over year that you said up 10 basis points.
Speaker Change: That's why we're investing to drive further growth by attacking three significant growth areas.
Simeon Gutman: I wanted to ask SG&A dollars within that looked like they're going to be up 5% gross margin up about 75, Bips can you share or would you be willing to share. How the guide was built did you start with gross margin assumptions on product margin and supply chain and then invest.
Speaker Change: First, we're continuing to reposition our real estate and store portfolio. In 2024, we opened seven House of Sports Stores, while also opening 15 fieldhouse stores. And in 2025, we looked to open 16 more House of Sports Stores, as well as 18 new fieldhouse stores.
Simeon Gutman: Invest the level of SG&A based on that or is there a bottom up level of SG&A that you plan to spend and then create a plan to drive a similar amount of gross margin expansion to offset the deleverage. Thanks.
Speaker Change: Our second growth area is to accelerate our footwear growth through strategic investments in high-impact marketing teammate training and expertise while building a suite of technology tools to make the athlete experience more seamless [inaudible]
Simeon Gutman: Thank you again, thanks for the comments on the Q4 performance I would say maybe I'll clarify one thing just to make sure everybody has that captured appropriately what we said at the high end of our guidance, we expect <unk> EBIT margins or operating income margins to expand 10 basis points on a year over year basis.
Nate Guilt: In terms of the makeup of the SG&A and the margins I think it started out with how we are thinking about the overall topline sales expectations. So like Lauren indicated at 1% to 3% comp at the mid <unk> percent are the mid point, you have a 2% comp expectation this or that.
Speaker Change: All of this brings us closer to our vision to be the best sports company in the world of the world.
Nate Guilt: Which is a 10% <unk> stock comp and then we will look at some of the investments that we have been making over the last few years, India is G&A the benefit of that SG&A investment actually shows up in gross margins. So the two things that we have talked about today in my prepared comments was the work that we have been doing around <unk> media network.
Speaker Change: And ladies and gentlemen, we will now begin the question and answer session [inaudible]
Speaker Change: If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue [inaudible]
Speaker Change: And if you'd like to withdraw that question, again, press star one. We also ask that you limit yourself to one question and one follow up. For any additional questions, please recue. Your first question comes from Adrienne Yih with Barclays. Please go ahead.
Nate Guilt: Game changer, which is a recurring revenue and SaaS business.
Nate Guilt: Can expect has a much higher gross margin. So the benefits of these two capabilities are starting to show up in the gross margin and so but the cost associated with that is within the agenda. So that was the other thing that we factored in and then the third thing that we factored in is is the three exciting growth opportunities and these are existing growth opportunities that.
Adrian Yee: Great, good morning. Congratulations. I think 6.4% of the biggest comp that we've seen in the entire holiday. Maybe mistaken, but I doubt it.
Lauren, can you talk about-
Nate Guilt: Are already doing really well you said, how do we go faster in those between e-commerce footwear as well as repositioning our store and real estate portfolio. So we said what is the right level of investments that are needed to continue to fuel. These trajectory in these strategies and then we balance that against the overall confidence in our product portfolio.
Speaker Change: sort of the tariff, but not necessarily sort of like what's happening to you. I know you're 85% brand a 50% private label, not a lot in China.
So that's kind of like the fact of it [inaudible]
Speaker Change: But can you talk about kind of what happened in the last go-around, whether the brands made an attempt to pass through pricing to you? When we talked to some of the footwear brands, they're largely in Vietnam, so they don't really have as much of this pricing exposure. So just kind of what you're seeing in the footwear landscape relative to apparel.
Nate Guilt: So that's the makeup of the of the guidance that we shared yesterday about 2025, yes, I mean, I would just add that the opportunities that we see ahead of US are so vast so exciting such market share opportunities to gain that we are going to aggressively invest so that whatever.
Speaker Change: and a progress that you're having on the Texas market. Thank you
Speaker Change: Thanks Adrienne, yes, we are so proud of the team, the 6.4% comp, and I'd point out the full year being a 5.2% comp, it's just...
Nate Guilt: Ups and downs happen in the short term so that we are setup for success in the long term as you know this company always has a long term perspective on how and when we invest and we see between the competitive landscape and the momentum we have in our business. We want to go for it and that's exactly what we're going to do this year.
Speaker Change: to Tremendous, Tremendous Year. We actually, we feel terrific about our core strategies and they are working and our strategies.
Speaker Change: involves differentiated assortment. And we look at this past quarter, we saw growth across every aspect of our business.
Speaker Change: So, soft lines, footwear and hard lines, and that's a credit to our merchant team for bringing in unbelievably desirable products across the board. Our team is executing at an incredibly high level, and we've seen a real focus. We've all been putting a focus on athlete experience. [inaudible]
Speaker Change: The quick follow up within the gross margin I assume most of that expansion is product margin not supply chain or how does supply chain or supply chain factor into it and then with related to the house's sport math it looks like the return went down a little bit, but that's because you're choosing to buy.
Speaker Change: but similarly on teammate experience and making sure that we hire the best...
Speaker Change: These real estate it sounds like Youre buying the physical real estate it looks like that's the only difference in the assumption just clarifying that thank you.
team we saw growth in tickets and transactions.
Speaker Change: Yes.
Speaker Change: You are right.
Speaker Change: But the gross margin expectations, we haven't broken out any further than between merch margin and supply chain, but you are right to call out that we continue to expect our merch margin to expand on a year over year basis pretty consistent themes the quality of the product. The access that we have which is so differentiated our merchants do a great job in making sure we are not.
We saw growth across every single income demographic in-
Q4 as well as a full year. [inaudible]
Speaker Change: We didn't see trade-down from fast to better or better to good.
And over the course of the year, we gained...
Speaker Change: Only buying the right product, but we are managing the pricing and promotions around that as well and then we talked about the two new capabilities with <unk> media network and game changer, we do expect slight favorability and supply chain, but we'll continue to watch and see how the overall year unfolds.
Speaker Change: 7 million new athletes, 2.2 million in just the fourth quarter.
Speaker Change: So I want to, I'll turn it to Navdeep to talk about your specific questions but I think it's important to start with the fact that we have unbelievable momentum [inaudible]
Speaker Change: as we go into the year. And when you look to our guidance, one to three percent, which is a ten percent three years.com.
Speaker Change: In terms of the Harsco sport, Marty Youre right, we reiterated it today with a much larger sample compared to one year ago. Now we have the knowledge of the 19 stores actually 21 stores that we have opened as of the year and expect to finish the year with 35 stores, we have not only seen the actual performance of the stores that are.
We are very confident that we can deliver the guidance.
Speaker Change: Regardless of what happens in the marketplace, with tariffs and such, very proud also of our EBIT margin at 11.1% at the midpoint, that's a very strong projection and we're very confident we'll be able to hit that guidance. And I'd be both turnin' to you to talk about tariffs.
Speaker Change: I've already opened but looking to the confidence we have of the stores that will be opened this year. Our expectation continues to be that these stores can deliver a $35 million omnichannel sales with a very strong EBITDA margins, yes. The capex has gone up a little bit of that like you called out the access to real estate that we have is sold.
Abdi: Good morning, Adrienne, and thanks for your recognition for the work that the team has done in Q4 and all of 2024. In terms of tariff, what I said in our prepared comments today, there is a lot that is still evolving and that is still, that is unknown from a tariff perspective, so that is not specifically contemplated in our guidance.
Different than we have ever had in the past the excitement from the landlord community is really high and at the same time, considering the strength of our balance sheet, we are making the investments to actually buy some of these real estate and that's the reason you have slightly higher level of capex than last year, but overall very happy with the returns both on the top line bottom line.
Abdi: As far as the worst that we do, you know, we have... [inaudible]
Abdi: Meaning including our own vertical brand teams and our national brand partners [inaudible]
Abdi: Over the last several years have diversified their production facilities across and not just from a dependence from China perspective, actually even looking outside on the footwear side as you call out, there has been a lot of diversification that has happened. [inaudible]
Speaker Change: And as well as how well these strategies are resonating with our landlord partners and Nebraska.
Oliver, you know, Ed? Yeah.
Abdi: We see the landscape of the tariff continuing to evolve, and so we'll follow what we did back in 2018-2019.
Speaker Change: Thanks, Good luck.
Speaker Change: Thank you your next question.
Abdi: That will continue to work very closely with our brand partners, appropriately balancing what is the right pricing decisions for our athletes, as well as what is the right pricing decision for our own business.
Speaker Change: Next question comes from the line of Kate Mcshane with Goldman Sachs. Please go ahead.
Kate Mcshane: Hi, good morning, Thanks for taking our question our question centers around the footwear strategy that you mentioned within the three pillars that you're investing in this year. It sounds like there will be more of a marketing effort behind that we wondered what that looks like and will we be seeing anything different in the store from an assortment standpoint.
Abdi: So we'll continue to lean into a strong partnership with our vendors, balancing the actions from a pricing perspective [inaudible]
Abdi: And continuing to make sure that we are providing a well diversified portfolio of products to our athletes, who are continuing to come to us and are really excited about the offers that we have within the store as well as the service.
Speaker Change: Thanks, Kate Great question, we are very very excited about footwear and as you know we have spent many years now completely revolutionizing our footwear portfolio. We've had got slipped by a premium full service footwear decks in 90% of our doors, which enables us to get access to the really bad.
Abdi: Great, thank you very much. One neat question. On the pre-opening expenses, you gave us the first half [inaudible]
Speaker Change: I think last quarter we kind of had more of it in the fourth quarter, so can you give us any more quarters with civic commentary just so we can, because they're kind of just, they're just there. So the Q1 to Q2, the pre-opening would be great. Thank you for our models.
Speaker Change: Assortment of product and increased allocation and online. We can also leverage those styles online and so footwear has become a very very important business to us just as a data point when our 10-K comes out youre going to see that our footwear penetration is now at 28% so over 10.
Adrian Yee: Yeah, it will now, I would say the free opening expenses like you called out very depending on the number of news store openings and we'll give a little bit more clarity in terms of you need beyond a quarterly basis in the subsequent calls.
Speaker Change: Years, it's gone up 900 basis points and half of that has happened in the last three years. So footwear is one of our <unk>.
Speaker Change: Perfect. Thank you very much. Great job, that's a lot. Thank you.
Speaker Change: Here next question comes from Simeon Gutman, with Morgan Stanley , please go ahead [inaudible]
Speaker Change: Most important is the signature business for us and we continue to add.
Speaker Change: Drive increased assortment increased focus on athlete experience both in store and online we really feel at Dick's. We've got footwear for every single occasion. So if you've taken athletes. They of course have their needs on court on field, but they also need a pair of running shoes, a pair of training shoes.
Simeon Gutmann: Hey, good morning, everyone. Good for the quarter. My question on the 25-guide, your even margins up a little bit or flatish, I think you're over here. I think you said up 10 basis points, Namdeep. I wanted to ask, SG&A dollars within that look like they're going to be up 5% gross margin up about 75 dips.
Speaker Change: Can you share or would you be willing to share how the guide was built? Did you start with Gross Margin Assumptions on Product Margin and Supply Chain? [inaudible]
Speaker Change: They need slides to go to from practicing games and they and they of course, they want the lifestyle of sport and we're really the only place where they can get something for every single athlete for every single occasion and for every single sport. So we're very very focused on driving our footwear business. When you say what are we going to do what are we going to change your absolutely.
Simeon Gutmann: and then invest the level of S-GNA based on that, or is there a bottom-up level of S-GNA that you plan to spend and then create a plan to drive a similar amount of gross margin expansion to offset that deleverage? Thanks
Speaker Change: Right, we will be focusing on high impact marketing because we want to make sure that consumers know that <unk> is the home for all of the best footwear. So youll see that kickoff in a couple of weeks. We're also in store are leaning into service models as well as online I'm, just making sure that we have access to.
Simeon Gutmann: Simeon, thank you. Again, thanks for the comments on the Q4 performance. I would say maybe I'll clarify one thing just to make sure everybody has that captured appropriately. Thank you very much.
Simeon Gutmann: What we said at the high end of our guidance, we expect our EBIT margins or operating income margins to expand 10 basis points on a year-over-year basis.
Speaker Change: In terms of the makeup of DSGNA and the margins, I think we started out with how we are thinking about the overall top line sales expectations.
Speaker Change: <unk> imagery so for its in store, we're talking about training of our teammates. We just finished a run summit we were hiring experts.
Speaker Change: The like Lauren indicated at 1 to 3% calm at the mid point, you have a 2% calm expectation. This is that.
Speaker Change: We're just really leaning into product knowledge and expertise and with the digital channels, we have things like <unk> imagery for footwear. So that people who are shopping online or in app can really get the best experience.
Speaker Change: which is a 10% 3-year stack comp. And then we will look at some of the investments that we have been making over the last few years in the SG&A. The benefit of that SG&A investment actually shows up in gross margins.
Speaker Change: Other technology enhancements in footwear, our shoe runner capability is is really terrific and it enables us to get product out of the backroom into an athlete pans in just a moment.
Speaker Change: The two things that we have talked about today in my prepared comments was the both that we have been doing around Dick's Media Network
Speaker Change: Our team has created RFID technology, where if you see it in the stores, it's amazing and the team can actually scan the entire footwear deck.
Speaker Change: Game-Tanger, which is a recurring revenue and a SaaS business as you can expect has a much higher gross margin.
Speaker Change: Just moments and figure out what exactly needs to be replenished what has to come out of the back room.
Speaker Change: So, the benefits of these two capabilities are starting to show up in the Bruce Margin, and so, first
Speaker Change: And make sure every single image every single product is out on the floor and then we've really worked on our App experience. So that's working to become the destination for launches and footwear reservation. So that's that's the crux of our strategy. It is of course and an excellent assortment excellent.
Speaker Change: The cost associated with that is within the SG&A. So that was the other thing that we factored in. And then the third thing that we factored in is...
Speaker Change: is the three exciting growth opportunities and these are existing growth opportunities that are already doing really well. You said, how do we go faster in those between e-commerce? [inaudible]
Speaker Change: Access and we continued to grow well on.
Speaker Change: Footwear, as well as repositioning our store and the real estate portfolio. So we said what is the right level of investments that are needed to continue?
Speaker Change: Both of our assortment and access almost 90% of our doors, having premium full service footwear will continue to make that.
Speaker Change: Case.
Speaker Change: to fuel these trajectory in these strategies, and then we balance that against the overall confidence in our product portfolio. So that's the makeup of the guidance that we have shared here today for 2025.
Speaker Change: And just one follow up question to that and you mentioned that penetration is now at 28%, which is significantly higher can we expect that mix to change meaningfully from here.
Speaker Change: Yeah, Simeon, I would just add the opportunities that we see ahead of us are so vast, so exciting, such market share opportunities to gain that we are going to aggressively invest so that whatever ups and downs happen in the short term so that we are set up for success.
Speaker Change: It's our hope to gain significant growth in market share in this category.
Speaker Change: Thank you.
Speaker Change: Your next question comes from the line of Brian Nagel with Oppenheimer. Please go ahead.
Brian Nagel: Hi, good morning.
Speaker Change: First off I wanted to also add my congratulations on a nice quarter and nice here. Thank you Robin.
Speaker Change: in the long term. As you know, this company always has a long-term perspective on how and when we invest, and we see between the competitive landscape and the momentum we have in our business, we want to go for it, and that's exactly what we're going to do this year. [inaudible]
Speaker Change: So the question I have.
Speaker Change: Hello.
Speaker Change: Brian We hear you.
Speaker Change: Brian.
The Quick Follow-up Within the Gross Margin
Speaker Change: Operator can you take the next call and well hope Brian gets back on.
Speaker Change: I sue most of that expansion is product margin, not supply chain or how to supply chain or supply chain factor into it. And then, you know, with related to the house of sport math, it looks like the return went down a little bit but that's because you're choosing to. [inaudible]
Speaker Change: Your next question comes from Joe Feldman with Telsey Advisory Group. Please go ahead.
Joe Feldman: Hi, guys, thanks, and congrats on the strong quarter.
Speaker Change: By these real estate, it sounds like you're buying the physical real estate. It looks like that's the only difference in the assumption just clarifying and thank you. [inaudible]
Joe Feldman: Wanted to ask with regard to the new stores can you share any more detail about where theyre going to open I think I heard you say about 70% will be relocations, where maybe its existing markets, but I was curious as to.
Yes, I mean, you are right, Deloitte.
Speaker Change: With the gross margin expectations, we haven't broken that any further than between Merch margin and supply chain, but you are right to call out that we continue to expect our Merch margin to expand.
Joe Feldman: The mix new markets and.
Joe Feldman: Versus.
Joe Feldman: Existing markets and also related to the real estate.
Speaker Change: on a year-over-year basis, pretty consistent themes, the quality of the product, the access that we have, which is so differentiated, emergence to a great job in making sure we are not only buying the right product, but we are managing the pricing and promotion.
Joe Feldman: Are you seeing landlords contribute at the same rate.
Joe Feldman: The new stores I know that you guys are in high demand among the landlord. So I'm, assuming that's still the case, but just wanted to get a little more color on that.
Speaker Change: around that as well. And then we talked about the two new capabilities with Dick's Media Network and Game Changer. We do expect slice-favorability and supply chain, but we'll continue to watch and see how they're all year-unfought.
Joe Feldman: Thanks.
Joe Feldman: Thanks, Joe for that question and like we said in our prepared remarks, we continue to see the opportunity to re imagine our existing footprint that we have within the store itself. So when the new store openings that we have guided over.
Speaker Change: In terms of the Housesport match, you're right, we reiterated today with a much larger sample compared to an year ago Now we have the knowledge of the 19 stores actually 21 stores that we have opened as of the year and the expected finish the year
Joe Feldman: Also spud locations on the field house, 70% of these locations will be actually re imagination or relocation of the existing footprint. So we continue to see really good opportunities in existing markets and where we actually already have a great relationship with the athlete. So you will see us continuing to lean into that yes, we will.
the 35 stars.
Speaker Change: We have not only seen the actual performance of the stores that are already open, but looking to the confidence we have of the stores that will be open this year, our expectation continues to be that these stores can deliver a $35 million on the channel sales, with a very strong epitome argent . . . .
Joe Feldman: Collectively open some of the other new locations.
Joe Feldman: And those have been incorporated into the expectations.
Speaker Change: Yes, the capex has gone up a little bit, but that, like you called out, you know, the access to real estate that we have is so different than we have ever had in the past. The excitement from the landlord community is really high. And at the same time, considering the strength of our balance sheet, we are making the investments to actually buy some of them.
Joe Feldman: In terms of the participation with the landlord I think there are the participation and support comes in two different forms of one of them like you called out the tenant allowance is definitely an interesting area that we continue our real estate team.
Joe Feldman: Does a great job of negotiating these deals but actually the better opportunity is also coming through in the access to some of the real estate that we in the past would not have access to it. So the excitement is coming from both the tenant allowance, but much more so to the access to some of the premier real estate locations that we may not have had access in the past. So we are excited.
Speaker Change: on these real estate. And that's the reason you have slightly high level of capital and mercy.
Speaker Change: But overall, very happy with the returns both on the top line, bottom line as well as how well these strategies are resonating with a landlord partner and the brand.
Joe Feldman: All of those on both of those fronts, especially around the performance that we see continuing from our existing markets, but some sprinkled in opportunities in new markets.
Thanks Good Luck [inaudible]
Speaker Change: Thank you. Your next question, your next question comes from the line of Kate McShane with Goldman Sachs, please go ahead.
Joe Feldman: That's very helpful. Thank you and then just a follow up.
Kate Mcshane: Hi, good morning. Thanks for taking our question. Our question centers around the footwear strategy that you mentioned within the three pillars that you're investing in.
Joe Feldman: With regard to tariffs.
Joe Feldman: I understand you guys not including it in the guidance go forward, presumably what's been in place like with China.
Speaker Change: This year, it sounds like there will be more of a marketing effort behind that. We wondered what that looked like, and will we be seeing anything different in the store from an assortment standpoint?
Joe Feldman: As in the guidance I, just want to clarify that but also.
Speaker Change: Could you just remind everybody just your exposure to the various countries that are talked about daily.
Thank you.
Speaker Change: Thanks Kate, great question. We are very, very excited about footwear
Speaker Change: And as you know, we have spent many years now completely revolutionizing our footwear portfolio. We've got our premium full service footwear deck in 90% of our doors, which enables us to get access to the really best assortment of product and increased allocation.
Speaker Change: And just what we might be able to think about for this year.
Speaker Change: Yeah, Joe the existing tariffs that have been in place for some time lets say call. It back in 2024 of those have already been contemplated what is not contemplated as all of the new discussions that are happening and that continue to evolve on a daily basis in terms of the exposure very limited to negligible exposure from Mexico and.
Speaker Change: and online, we can also leverage those styles online, and so Footwear has become a very, very...
Important Business To Us
Speaker Change: Just as a data point, when our 10K comes out, you're going to see that our footwear penetration
Speaker Change: Canada.
Speaker Change: For our own vertical brands, we have significantly diversified away from China from an apparel perspective over the last several years.
Speaker Change: is now at 28%, so over 10 years it's gone up 900 basis points, and half of that has happened in the last three years [inaudible]
Speaker Change: There is some exposure associated with the hard lines, but nothing significant to call out and from a vertical brands outside of vertical brands from our national brands, We will continue to work with.
Speaker Change: So, Footwear is one of our most important, it's a signature business for us and we continue to drive increased assortment, increased focus on athlete experience, both in-store and online.
Speaker Change: Their own diversified supply chain.
Speaker Change: And we are confident that the relationship that we have and the partnership opportunity that we see with these vendors will continue to be able to provide an appropriate level of assortment and pricing opportunities.
Speaker Change: We really feel at Dick's, we've got footwear for every single occasion. So, if you take an athlete, they of course have their needs on court, on field, but they also need a pair of running shoes, a pair of training shoes. [inaudible]
Speaker Change: Great. Thanks, guys. Good luck with this quarter.
Joe Feldman: Thanks, Joe.
Speaker Change: They need slides to go to from practicing games, and of course they want the lifestyle of sport, and we are really the only...
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Brian Nagel with Oppenheimer. Please go ahead.
Speaker Change: Place where they can get something for every single athlete, for every single occasion, for every single sport. So we're very very focused on driving our footwear business.
Speaker Change: Hey, good morning, sorry about that my line dropped before I apologize no problem. So first off I want to congratulate you on a nice very nice fourth quarter and full year. Congrats thank you Brian.
Speaker Change: When you say, what are we going to do? What are we going to change? You're absolutely right. We will be focusing on high impact marketing because we want to make...
Speaker Change: So the question I have continued a little touchy feely, but I'm sooner with not my listening to your commentary really resulted watching my screen and I'll be aggregators out there of the new services are you picking up that Jim is talking about a weaker consumer okay. So the way I want to ask the question is you had a very solid fourth quarter, we talked about that you issue.
Speaker Change: makes sure the consumers know that Dick's is the home for all of the best footwear, so you'll see that kick off in a couple of weeks.
Speaker Change: We're also in store leaning into service models as well as online [inaudible]
Speaker Change: to making sure that we have access to incredible imagery. So, in-store, we're talking about training of our teammates.
Speaker Change: Your guidance you have a history of good history of guiding conservatively topping those numbers.
Speaker Change: Are you or are you, saying to us.
Speaker Change: We just finished a run summit. We were hiring experts. We're just really leaning into product knowledge and expertise and with the digital channels, we have things like 3D imagery for footwear so that people who are shopping online or in app can really get the best experience. [inaudible]
Speaker Change: You are seeing a weaker consumer now so maybe so I'll ask you more specifically as you think about that guidance does that reflect a weaker consumer youre seeing now are you seeing some type of noticeable weakness in the current results.
Speaker Change: Brian I'm. So glad you asked the question absolutely not the case, we are not seeing a weaker consumer now we're coming off a fantastic Q4, our guidance merely reflects the fact that there's so much uncertainty in the world today and the geopolitical environment macroeconomic.
Speaker Change: Our team has created RFID technology where if you see it in the stores, it's amazing and the team can actually scan the entire footwear deck
Speaker Change: Macroeconomic environment, where we are just being appropriately cautious and I would give you a couple of other data points about our consumer and why we actually feel optimistic.
Speaker Change: in just moment and figure out what exactly needs to be replenished, what has to come out of the back room and make sure every single image, every single product is out on the floor. And then we've really worked on our app experience. So that's working to become the destination for launches and footwear reservations.
Speaker Change: Our consumer has proven that in times of stress and uncertainty that they are leaning into outdoor being outside going for a run of work going to teams play in our Washington Sports, it's become much more of a necessity than a discretionary item and it makes sense because it is a way for people to.
Speaker Change: So that's the crux of our strategy. It is, of course, pinned on excellent assortment, excellent access and we continue to grow both our assortment and access and with 90% of our doors having premium full service, but where we'll continue to make that the case.
Speaker Change: <unk> com in an otherwise uncertain timeframe.
Speaker Change: The other thing why we feel great is that sports are having a huge moment in the United States, we talked about it in our prepared remarks, but there's this is a nation that is obsessed with sport and that's only going to continue as we have all of these major events on U S soil and so we feel like our industry is also we're in the right Lane from.
Speaker Change: An industry standpoint, we've got something for everybody with our DSG brand opening price point brand, it's got everything gear equipment, amazing and apparel amazingly fashionable functional really really wonderful.
Thank you [inaudible]
Brian Nagel: Your next question comes from the line of Brian Nagel with Oppenheimer, please go ahead
Hi, good morning.
Speaker Change: They're all the way up to the highest of performance equipment in gear for anybody needs. So we definitely are feeling great about our consumer we are just reflecting an appropriate level of caution given so much uncertainty out in the marketplace.
Speaker Change: First off, I want to also add my congratulations on a nice quarter and a nice year. Thank you. Well done.
So the question I have, um, no.
Hello? Brian, we hear you.
Brian ?
Speaker Change: No that's perfect. It makes a ton of sense I appreciate the detail. There my follow up question again also on the touchy feely side, but.
Speaker Change: Operator, can you take the next call and we'll hope Brian gets back on? [inaudible]
Speaker Change: A number of our strawberry closely your manufacturing partners are namely Nike.
Speaker Change: Your next question comes from Joe Feldman with Testly Advisory Group. Please go ahead.
Speaker Change: And they're talking a lot about increased product innovation as you think about.
Joe Feldman: Hi, guys, thanks and congrats on the strong quarter. I wanted to ask, with regard to the news stores, can you share any more detail about where they're going to open? I think I heard you say about 70% will be relocation, so maybe it's just existing markets, but I was curious just to...
Speaker Change: 25, we get planning process are you seeing a resurgence Robert.
Speaker Change: Check even in product innovation and that's from your key partners.
Speaker Change: Yes by the way I'm totally happy if you want to keep asking touchy feely questions I laugh [laughter], where people this isn't over here and we love our business so absolutely.
Speaker Change: From a product that we're seeing brand relationships I would start by saying that our strategic relationships.
Joe Feldman: You know, Existing Markets and also related to the real estate [inaudible]
Speaker Change: A key key competitive advantage for us and that's across the board with Nike Adidas on hook arm, our emerging brands I mean, we spend a lot of time with them.
Speaker Change: Are you seeing landlords contribute at the same rate, you know, to the new stores? I know that you guys are in high demand among the landlords, so I'm assuming that's still the case, but just wanted to get a little more color on that. [inaudible]
Speaker Change: With our partners and just really understanding both the landscape the consumer and what's coming down the Pike, we're particularly excited about all of the product pipeline that we see from our brand partners coming this year I would point to things like the Nike running construct which we're really very excited about but also emerging run.
Thanks.
Speaker Change: Thanks you for that question. And like we said it in our prepared remarks, we continue to see the opportunity to reimagine our existing footprint that we have within the store itself. So in the youth store openings that we have guided to with houses, poor locations and the field house. So in the youth store, we continue to see the opportunity to reimagine our existing footprint that we have within the store
Speaker Change: Footwear from all of our key brands like OCA.
Speaker Change: Other brands are really bringing innovation to the table.
Speaker Change: 70% of these locations will be actually reimagination or relocation of the existing footprints So we continue to see really good opportunities in existing markets and where we actually already have a great relationship with the athletes [inaudible]
Speaker Change: Very excited about basketball footwear, we're excited about lifestyle footwear trends from many brands so across the board, we see a lot of product innovation that gives us the confidence to really lean in to our businesses. This year.
Speaker Change: So you will see us continuing the lean into that, yes, we will selectively open some of the new locations and you know those have been incorporated into the expectations.
No. It's all very helpful. I appreciate it. Thank you. Thank you.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Michael Lasser with UBS. Please go ahead.
Speaker Change: In terms of participation with the landlord, I think there are participation and support comes in two different forms One of them, like you called out, the tenant allowance is definitely an interesting area that we continue our real estate team [inaudible]
Michael Lasser: Good morning. Thank you so much for taking my question so.
Speaker Change: So it sounds like there is a strong commitment to <unk>.
Michael Lasser: <unk> investments.
Speaker Change: That's a great job in negotiating these deals, but actually the better our opportunity is also coming through in the access to some of the real estate that we in the past would not have access to.
Speaker Change: In light of all the.
Michael Lasser: Economic uncertainty out there how much flexibility.
Michael Lasser: In the event that there is start there starts to be a comp shortfall how much variability.
Speaker Change: So the excitement is coming from both the tenant allowance but much more so to the access to some of the premier real estate locations that we may not have had access in the past. So we are excited on both of those fronts.
Is there in your SG&A such that you could support your profitability. This year in the event that you did fall short on the comp.
Speaker Change: especially around the performance that we see continuing from our existing markets with some sprinkles and opportunities in new markets.
Speaker Change: And what is the realistic long term SG&A run rate in terms of the rate of growth. Thank you very much. Thanks.
That's very helpful. Thank you. But just follow-
Michael Lasser: Thanks for the question Michael.
Michael Lasser: We are always going to manage our business for the long term, we've got significant market share and growth opportunities and you're seeing that in terms of our investment areas. We're very excited about them, but of course at the same time, we have been we've been doing this for over 75 years, we're managing the business each and every day each and every call.
Speaker Change: With regard to tariffs, I fully understand you guys not including it and the guidance go forward, presumably what's been in place like with China and is in the guidance, I just want to clarify that but also
Speaker Change: Could you just remind everybody just your exposure to the various countries that are talked about daily and just, you know, what we might be able to think about for this year?
Michael Lasser: Order and we will we've got enough flexibility to make informed decisions if and when we need to do that at the end of it. Our goal is to come out with a business that is capturing as much market share as possible and we can be as flexible as we need to be to do that yes, Michael let me build on what <unk> said as you can expect we have.
Joe Feldman: Yeah, Joe, the existing tariffs that have been in place for some time, let's say, call it back in 2024. Those have already been contemplated. What is not contemplated is all of the new discussions that are happening and that continue to evolve on a daily basis.
Speaker Change: <unk> ability within our own discretionary spend within the SG&A, we will always be very flexible and nimble in making sure that we are operating.
Speaker Change: In terms of the exposure, very limited to negligible exposure from Mexico and Canada, and for our own vertical brands, we have significantly diversified away from China from an apparel perspective over the last several years [inaudible]
Speaker Change: Our business financially responsibly and and like Laurent said the intent is to continue to protect the investments that are the right long term investments. Despite some of the macroeconomic uncertainties that might be happening on a very near term basis.
Speaker Change: There is some exposure associated with the hardlines, but nothing significant to call out. And from a vertical branch, outside a vertical branch, from a national branch, people continue to work with their own diversified supply chain and-
Speaker Change: To answer your question on the SG&A, it's really important to understand the fact that some of these SG&A investments actually are being shown in the SG&A side, but the benefits of those are actually being reflected on the gross margin side and two examples that at a point out is when you look at the technology and the talent investment that we've made in a game changer.
Speaker Change: We are confident that the relationship that we have and the partnership opportunity that we see with these vendors who continue to be able to provide an appropriate level of assortment and pricing opportunities for us.
Speaker Change: That shows up on our SG&A line. However, the benefit of the revenue the higher margin rate from that business and the kind of the sustainability of the relationship with that athlete all of those benefits show up either in the sales line or on the margin line. So that's the geography thing that we have to keep in mind and we consciously.
Great. Thanks, guys. Good luck with this quarter. Thank you.
Thank you.
Speaker Change: Your next question comes from the line of Brian Nagel with Oppenheimer, please go ahead [inaudible]
Brian Nagel: Hey, good morning. Sorry about that. My line dropped before. I apologize. No problem. So first off I want to congratulate you on a nice, very nice fourth quarter of four years of congrats. Thank you, Brian .
Speaker Change: Our focus on that and in terms of the long term growth break we haven't shared a long term role, Greg and I'm not going to do that today, but one thing that will will consistently yogurts you've heard US talk about is the fact that look to us to drive long term sales and profitability growth of the business. There will be some of these interplay between margin and SG&A, but.
Brian Nagel: So the question I have, look, it's a new little touchy feeling, but I'm sooner, I mean, listen to your commentary, reading your results and watching my screen and there's, you know, there's all of the aggregators out there, the new services are, you know, picking up that
Dick's talking about a weaker consumer, okay? Okay.
Speaker Change: So, the way I want to ask the question is, you had a very solid fourth quarter, we talked about that, you issued your guidance, you have a good history of guiding conservatively and topping those numbers [inaudible]
Speaker Change: Our intent is to continue to gain share at 9% market share. We still feel that has a lot of our greenfield opportunities that are ahead of us continuing to position the chain and the business for the long term as well as continuing to drive profitability and provide strong shareholder returns.
Speaker Change: Are you saying to us that you are seeing a weaker consumer now? Maybe so I'll ask them more specifically, as you think about that guided, does that reflect a weaker consumer you're seeing now? Are you seeing some type of noticeable weakness in the current results? [inaudible]
Speaker Change: Got you. Thank you very much for that.
Speaker Change: It looks like based on your comments around quarter to date trends.
Thank you. Bye-bye.
Speaker Change: As well as.
Speaker Change: Brian , I'm so glad you asked the question, absolutely not the case, we are not seeing a weaker consumer now
Speaker Change: The confidence that you have been in the outlook, but you don't you won't need to discount some of the inventory that you have currently in stock, but with that being said how much risk is there given that your inventory was up 18% as at the end of the quarter.
Speaker Change: We're coming off with fantastic Q4. Our guidance merely reflects the fact that there's so much uncertainty in the world today in the geopolitical environment
Acroeconomic environment, we are just...
Speaker Change: being appropriately cautious. And I would give you a couple of other data points about our consumer and why we actually feel optimistic. Our consumer has proven that in times of stress and uncertainty that they are leaning in to outdoor being outside going for a run of walk, going to tea.
Speaker Change: And if some of the adverse weather.
As occurred early in the quarter persists throughout the.
Speaker Change: The rest of the quarter and the rest of the spring selling season, how would you handle.
Speaker Change: The impact of some of your more seasonal category. Thank you very much.
Speaker Change: Michael I think that there are two questions in that so let me take the first one I don't think there'll be provided into account intra quarter commentary on quarter to date performance. We looked at the business on a full year basis, and we are very confident in the guidance that we have provided today. The second question around the inventory let me reiterate the fact that this was a very <unk>.
and watching sports has become much more of a necessity than a...
Speaker Change: on a discretionary item. It makes sense because it is a way for people to find calm and an otherwise uncertain time frame. [inaudible]
Speaker Change: The other thing why we feel great is that sports are having a...
a huge moment.
Speaker Change: <unk> and <unk>.
Speaker Change: Our delegated decision that we made in third quarter and fourth quarter to bring the inventory into the stores and have that assortment available that is driving such strong results. The six 4% comp that we have driven here in fourth quarter could not have been possible on top of a $2, 9% from last year could not have been possible.
Speaker Change: The strength of the assortment that we had available in our stores.
It's got everything here, equipment amazing and apparel amazingly [inaudible]
Speaker Change: <unk> also talked about today is yes, very happy with the balance of the assortment and although that assortment is targeted within our store and our clearance levels being at historic lows and keep in mind in the guidance that we have provided we continue to expect our gross margin and merch margin to expand on a year over year basis in 2020.
Speaker Change: So we definitely are feeling great about our consumer. We are just reflecting appropriate level of caution given so much uncertainty out in the marketplace.
Speaker Change: So look we feel really confident about the product portfolio.
Speaker Change: No, that's perfect. It makes a ton of sense. I appreciate all the detail there. My follow-up question, again also on the Cudgy Feeley side, but look, a number of us follow very closely your manufacturing partners, namely Nike. Thank you.
Speaker Change: The opportunity for us to continue to gain share and drive margin expansion and we'll let the year play out, but we're very confident in the guidance that we provided today.
Speaker Change: And they're talking a lot about increased product innovation. As you think about 25, you know, again, from a planning process, are you, are you seeing a resurgence at all or an uptick even in product innovation at some of your key partners?
Speaker Change: Thank you very much and good luck.
Speaker Change: Thanks.
Speaker Change: When we have time for one more question and that question comes from Christopher <unk> with Jpmorgan. Please go ahead.
Speaker Change: Yes, by the way, I'm totally happy if you want to keep asking touchy silly questions I left. Where are people that live over here and we love our business? So, absolutely. From a product that we're seeing grand relationships, I would start by saying that our strategic relationships...
Thanks, Good morning, everybody. So my first question is on the average ticket can you talk about what the drivers of average ticket ware and related to that and to what extent that footwear drive this and is it purposeful in that.
Speaker Change: Mix to higher price points.
Speaker Change: are a key competitive advantage for us, and that's across the board. It's Nike, Adidas, on Hoka, our emerging brands. I mean, we spend a lot of time...
Speaker Change: Versus maybe ASP inflation on the footwear side.
Speaker Change: Yes, Chris I would say, it's pretty much driven by the fact that we have such differentiated product and the access to the product. So it's always goes back to the product innovation and the availability of the product and then having the differentiated product allows us to continue to monetize the topline benefits a little bit more from a price.
Speaker Change: with our partners and just really understanding both the landscape, the consumer, and what's coming down the pike.
Speaker Change: We're particularly excited about all of the product pipeline that we see from our brand partners coming this year. I would point to things like the Nike running construct, which we're really very excited about. But also emerging running footwear from all of our key brands like Hoka and. [inaudible]
Speaker Change: And promotional already that may be existing and I was definitely existing in fourth quarter. So driven by the mix driven by the quality of our assortment and the service that our team members are providing not driven by inflation.
Speaker Change: and other brands are really bringing innovation to the table. We're very excited about basket ball footwear. We're excited about lifestyle footwear trends from many brands. So across the board, we see a lot of product innovation, and that gives us the confidence to really lean into our businesses this year. [inaudible]
Speaker Change: Yeah.
Speaker Change: Got it. Thank you and then you know these here alternative profit pools don't call alternative profit pools, but.
Speaker Change: You know the advertising and the game changer, you know can you talk about how you think about that on a multiyear basis in terms of like it didn't sound like it was contributory to gross margin. This year it sounds like youre expecting a little bit in 2025, but over time wiring Ts 20 to four.
Speaker Change: No, it's all very helpful. I appreciate it. Thank you. Thank you
Speaker Change: Your next question comes from the line of Michael Lasser with UBS, please go ahead [inaudible]
Michael Lasser: Good morning. Thank you so much for taking my question. So it sounds like there is a strong commitment to continue to make these investments. Thank you very much.
Speaker Change: Basis, 20 basis points, each on an annual basis as you scale up those those businesses.
Michael Lasser: But in light of all the economic uncertainty out there, how much flexibility does Dick's have in the event that? [inaudible]
Speaker Change: Chris It's a great question, we are so very confident and excited in both of these.
Speaker Change: Platforms.
Speaker Change: There starts to be a comm shortfall. How much variability? Is there in your SNA such that you can support your profitability?
Speaker Change: They are both they are seizing unique and different opportunities and actually somewhat.
Speaker Change: They're connected and are really in a really awesome way I mean game changer enables us to be at all parts of the youth sport journey and the platform just keeps growing and growing as we said we have over $100 million in revenue. This year, it's a very profitable subscription as a software business and it's at 40%.
Speaker Change: this year in the event that you did saw shorts on the cup. And what is the realistic long-term S-CNA run rate in terms of the rate of growth? Thank you very much.
Thanks for the question, Michael.
Speaker Change: We are always going to manage our business for the long term. We've got to-
Speaker Change: <unk> CAGR since since 2017, we're very excited what's really cool is that the Dick's media network is also an enormous opportunity and I'll back up a little bit and say, our scorecard data and the fact that we have so much.
Nathaniel Gilchrist
Speaker Change: As to who's playing what sport and what brands and all of that is an enormous asset and then you pair that with game changer, which is really our live media platform for youth sports, where there haven't been eyeballs in the past. So you know when you stream games on game changer, that's an amazing opportunity for brands to put relevant.
Speaker Change: if and when we need to do that. At the end of it, our goal is to come out with a business that is capturing as much market share as possible, and we can be as flexible as we need to.
to do that. [inaudible]
Speaker Change: <unk> into the point of sport in a way that just hasn't been able to be done and certainly not in use sports. So all of those things are giving us incredible enthusiasm and optimism about both platforms, both separately and together so it absolutely will be a very long term big.
Speaker Change: Michael, let me build on what Lauren said. As you can expect, you know, we have flexibility within our own discretionary spend within the SNA. We will always be very flexible and humble in making sure that we are operating our business financially responsibly. And like Lauren said, you know, the intent is to continue to protect the investments that are the right long-term investments. [inaudible]
Speaker Change: Gross margin contributor will get to that when we issue long term guidance in the future, but we are really investing and leaning into both what we think are incredible opportunity.
Speaker Change: Despite some of the macroeconomic uncertainties, that might be happening on a very near term basis.
Speaker Change: To answer your question on the SGA, it's really important to understand the fact that some of the SGA investments...
Speaker Change: Thanks, So much have a great spring.
Speaker Change: Thanks Ross.
Speaker Change: actually are being shown in the SDA side but the benefits of those are actually being reflected on across margin side.
Speaker Change: And that concludes our question and answer session and I will now turn the conference back over to Lauren Hobart, President and Chief Executive Officer for closing remarks.
Speaker Change: And two examples that I'll front out is when you look at the technology and the talent and
Speaker Change: Thanks, everybody for your interest in Dick's sporting goods into our team. Thank you for all your amazing efforts and we'll see you next quarter. Thank you.
Game Change of Business
Speaker Change: That shows up on our S.G.N.A. line, however the benefit of the revenue, the higher margin rate from that business.
Speaker Change: Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation and you may now disconnect.
Speaker Change: and the kind of the sustainability of the relationship but they're actually all of those benefits show up either in the sales line or in the margin line.
Speaker Change: So that's the geography thing that we have to keep in mind and be consciously at focus on that [inaudible]
Speaker Change: In terms of the long-term rubric, we haven't shared a long-term rubric and I'm not going to do that today, but one thing that will consistently you will hear us talk about is a fact that look to us to drive long-term sales and profitability growth of the business [inaudible]
Speaker Change: There will be some of these interplay between Margin and SGNA but the R intent is to continue to gain share at 9% market share we still feel there is a lot of greenfield opportunities that are ahead of us continuing to position the chain and the business for the long term as well as continuing to drive profitability and provide strong shareholderity.
Speaker Change: Gotcha. Thank you very much for that. It sounds like they send your comments around
Speaker Change: As well as the confidence that you have in the outlook that you won't need to discount some of the inventories that you have currently in stock, both that being said, how much risk is there given that your inventory is up 18% as the end of the quarter? I'm not sure.
Speaker Change: And if some of the adverse weather that has occurred early in the quarter persists [inaudible]
Speaker Change: Throughout the rest of the quarter and the rest of the spring's selling season, how would you handle the impact to some of your most seasonal categories? Thank you very much.
Speaker Change: Michael, I think there are two questions in that, so let me take the first one. I don't think so we provided interquarter commentary on quarter to date performance. We looked at the business on a full year basis and we are very confident in the guidance that we have provided today.
Speaker Change: The second question around the inventory, let me reiterate the fact that this was a very focused and a deliberate decision that we made.
Speaker Change: in Third Quarter and in Fourth Quarter to bring the inventory into the stores and have that assortment available that is driving such strong results. The 6.4% comp that we have driven here in Fourth Quarter could not have been possible. [inaudible]
Speaker Change: On top of a 2.9% from last year could not have been possible without the strength of the assortment that we had available in our stores [inaudible]
Speaker Change: What Lauren also talked about today is we are very happy with the balance of the assortment [inaudible]
Speaker Change: and our clearance levels being at historic lows.
Speaker Change: And keep in mind, in the guidance that we have provided, we continue to expect our gross margins and merge margins to expand on a year-over-year basis.
Speaker Change: 2025. So we feel really confident about the product portfolio, the opportunity for us to continue to gain share and drive much margin expansion, and we'll let the year play out, but we are very confident in the guidance that we have provided for you.
Thank you very much and good luck.
Thanks
Speaker Change: We have time for one more question and that question comes from Christopher Horvers with J.P. Morgan. Please go ahead.
Christopher Horvers: Thanks. Good morning, everybody. So my first question is on the average ticket, can you talk about what the drivers of average ticket were and related to that? You know, to what extended footwear drive this? And is it purposeful in that, you know, you've mixed the higher price points, you know, versus, you know, maybe ASP inflation on the footwear side? [inaudible]
Thank you.
Christopher Horvers: Of course, I would say it's pretty much driven by the fact that we have such differentiated product and the access to the product. It always goes back to the product, the innovation.
Christopher Horvers: and the availability of the product, and then having the differentiated product allow us to continue to monetize the top line benefits a little bit more from a pricing and promotionality that may be existing and I was definitely existing in fourth quarter. [inaudible]
Christopher Horvers: So driven by the mix, driven by the quality of our assortment and the service that our team members are providing. Not driven by information.
Speaker Change: Got it, thank you. And then, you know, your alternate profit pools, don't call it alternate profit pools, but, you know, the advertising and the game changer, you know, can you talk about how you think about that on a multi-year basis in terms of like it didn't sound like it was contributory to gross margin this year. It sounds like you're expecting a little bit in 2025, but over time, you know, wiring these, you know, 20 to 40 basis, [inaudible]
Christopher Horvers: and bass points each on an annual basis as you scale up those businesses. [inaudible]
Christopher Horvers: Chris, it's a great question. We are so very confident and excited in both of these.
Christopher Horvers: He's growing and growing, as we said, we have over $100 million in revenue this year. It's a very profitable...
Christopher Horvers: Subscription as a Software Business, and it's had 40% K-Gurts sinceā¦
Since 2017, we're very excited. We're very excited to be here today.
Speaker Change: What's really cool is that the Dick's Media Network is also an enormous opportunity and I'll back up a little bit and say, our scorecard data Yeah.
Speaker Change: and the fact that we have so much access to who's playing what's Ford and what brands and all of that is an enormous asset.
Speaker Change: And then you pair that with Game Changer, which is really a live media platform for youth sports.
Speaker Change: where there haven't been eyeballs in the past. So, you know...
Speaker Change: when you stream games on game-changer, that's an amazing opportunity.
Speaker Change: to put relevant products into the point of sport in a way that just hasn't been able to be done and certainly not in use sports. [inaudible]
Speaker Change: So all of those things are giving us incredible enthusiasm and an option is about both platforms, both separately and together. So it absolutely will be a very long-term big post-margin contributor. We'll get to that when we issue long-term guidance in the future, but we are really investing in leaning in...
Speaker Change: Thanks so much. Have a great spring. Thank you. Thanks for us.
Speaker Change: And that concludes our question and answer session, and I will now turn the conference back over to Lauren Hobart, President and Chief Executive Officer for closing remarks.
Speaker Change: Well, thanks everybody for your interest in the Sporting Goods and to our team. Thank you for all your amazing efforts. And we'll see you next quarter. Thank you
Speaker Change: Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation and you may now disconnect with the next.