Q1 2025 Dick's Sporting Goods Inc Earnings Call

Okay.

Yeah.

Operator: Ladies and gentlemen, thank you for standing by.

Christa: Ladies and gentlemen, thank you for standing by my name is Christa and I will be your conference operator today at this time I would like to welcome everyone to the Dick's Sporting goods first quarter. It's only 25 earnings conference call. All lines have been placed on mute to prevent any background noise. After.

Krista: My name is Krista and I will be your conference operator today.

Nate Gilch: At this time, I would like to welcome everyone to the Dick's Sporting Goods first quarter 2025 earnings conference call. All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's 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 on your telephone keypad. And if you'd like to withdraw that question, simply press star one again. Thank you.

Speaker Change: The Speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad and if you'd like to withdraw that question simply press Star. One again, thank you and I would now like to turn the conference over to Nate guilt senior director of Investor relation.

Nate Gilch: And I would now like to turn the conference over to Nate Gilch, Senior Director of Investor Relations. You may begin.

Nate Guilt: You may begin.

Ed Stack: Good morning, everyone, and thank you for joining us to discuss our first quarter 2025 results.

Nate Guilt: Good morning, everyone.

Ed Scott: Thank you for joining us to discuss our first quarter 2025 results on today's call will be Ed Scott Executive Chairman, Lauren Hobart, our President and Chief Executive Officer and <unk>.

Nate Gilch: On today's call will be Ed Stack, our Executive Chairman, Lauren Hobart, our President and Chief Executive Officer, and Navdeep Gupta, our Chief Financial Officer. Playback of today's call will be archived in our investor relations website located at investors.dix.com for approximately 12 As a reminder, we will be making forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Any such statements should be considered in conjunction with cautionary statements in our earnings release 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.

Ed Scott: Matthew.

Matthew: Our Chief Financial Officer.

Speaker Change: A playback of todays call will be archived on our Investor Relations website located at investors not fix dot com for approximately 12 months.

Christa: 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.

Christa: 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.

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

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

Nate Gilch: please refer to our investor relations website to find the reconciliation of our non-GAAP financial measures referenced in today's.

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

Nate Gilch: In addition, certain important information related to the transaction will be included in the registration statement on Form S-4 that will be filed by Dick's Sporting Goods in connection with the transaction. Investors are encouraged to read the Form S-4 and other documents filed with the SEC in connection with the transaction. In addition, Dick's and Foot Locker and their directors and officers may be deemed to be participating in a solicitation of proxies in favor of the proposed transaction.

Christa: In addition, certain important information related to the transaction will be included in the registration statement on form S. Four that will be filed by Dick's sporting goods in connection with the transaction.

Christa: Investors are encouraged to read the form S. Four and other documents filed with the SEC Mexican with the transaction and.

Christa: In addition, Dick's and foot locker, and our directors and officers maybe deemed to be participating in the solicitation of proxies in favor of the proposed transaction.

Nate Gilch: please refer to the disclaimer information included in our earnings.

Christa: Please refer to the disclaimer information included in our earnings release.

Nate Gilch: And finally, for future scheduling purposes, we are tentatively planning to publish our second quarter 2025 earnings results on September 3rd, 2020.

Christa: And finally for future scheduling purposes, we are tentatively planning to publish our second quarter 2025 earnings results on September three 2025.

Ed Stack: With that, I'll now turn the call over to Thanks, Nate. Good morning, everyone. As announced earlier this morning, we had a very strong start to the year, with another quarter over a 4% cut. Our momentum is significant, and our long-term strategies are clearly working.

Ed Scott: With that I'll now turn the call over to Ed.

Ed Scott: Thanks, Nate good morning, everyone.

Christa: As announced earlier this morning, we had a very strong start to the year with another quarter over a 4% comp.

Christa: Our momentum is significant.

Christa: Long term strategies are clearly working.

Ed Stack: On May 15th, we announced our plans to acquire Foot Locker, a move that represents a truly exciting and transformational moment for debt. While we spoke our strategic rationale and the significant benefits of this acquisition on our most recent investor call, I wanted to take a moment to reiterate why we're so excited about this combination and why it makes sense for Dick's at this time. The convergence of sport and culture has never been stronger, and we're seeing tremendous momentum and opportunity across our industry. For many years, we've admired Foot Locker's brand and the powerful community they've built in sneaker culture.

Christa: On may 15th we announced our plans to acquire a foot locker.

Christa: I move that represents a truly exciting and transformational moment predicts.

Christa: Well, we spoke or strategic rationale and the significant benefits of this acquisition and our most recent investor call I wanted to take a moment to reiterate why we're so excited about this combination of why it makes sense to predict at this time.

Christa: The convergence of sports the culture has never been stronger and we're seeing tremendous momentum and opportunity across our industry.

Christa: For many years, we've admired foot lockers brand and a powerful community they built in sneaker culture.

Ed Stack: By bringing our two great brands together, we see the opportunity to create a global leader in the sports retail industry. One that serves more types of athletes, consumers, and communities than we do today. This combination positions us to participate in a $300 billion global sports retail market. and Xpansa reached over 3200 stores worldwide. By applying the operational expertise we've built over the years, we will help unlock the next chapter of growth for Foot Locker. We believe this makes us an even more important partner to the world's leading sports brand. giving them a larger, more connected platform to reach athletes across geographies, channels, and banners.

Christa: By bringing our two great brands together, we see the opportunity to create a global leader in sports retail industry.

Christa: One that serves more types of athletes consumers. Thank you.

Christa: These than we do today.

Christa: This combination positions us to participate in a $300 billion global sports retail market.

Christa: An experienced reached over 3200 stores worldwide.

Christa: By applying the operational expertise we built over the years, we will help unlock the next chapter of growth for Fuller.

Christa: We believe this makes us an even more important partner to the world's leading sports brands.

Christa: Giving them a larger more connected platform to reach at least across geographies channels and banners.

Ed Stack: As we said earlier, we expect the transaction to be accretive to Dick's EPS in the first full fiscal year post-close. and we see a clear path to unlocking meaningful cost synergies over the medium. We're proud of the strong position we're in today, and incredibly excited about the future we believe is ahead, in combination with Foot Locker.

Christa: As we said earlier, we expect the transaction to be accretive predict EPS in the first full fiscal year post close.

Christa: And we see a clear path to unlocking meaningful cost synergies over the medium term.

Christa: We're proud of the strong position we're in today and incredibly excited about the future. We believe is ahead in combination with foot locker.

Ed Stack: While this morning we're focused on our strong Q1 results, we look forward to sharing updates as we move through this process.

Christa: Well. This morning, we're focused on our strong Q1 results. We look forward to sharing updates as we move through this process I will now turn the call over to Laura.

Lauren Hobart: I'll now turn the call over to Lauren. Thank you, Ed. And good morning, everyone. We are very pleased with our first quarter results, which we previewed for you almost two weeks ago. Our performance demonstrates the momentum and strength of our long-term strategies and the consistency of our execution. Our Q1 comps increased 4.5% driven by our four strategic pillars of omni-channel athlete experience, differentiated product assortment, deep engagement with the Dick's brand, and our knowledgeable and passionate teammates who are integral to our success. This is the fifth straight quarter where our team has delivered over 4% comp growth.

Laura: Thank you Ed and good morning, everyone.

Speaker Change: We are very pleased that our first quarter results, which we previewed for you two weeks ago.

Speaker Change: Our performance demonstrates the momentum and strength of our long term strategy and the consistency of our execution.

Speaker Change: Our Q1 comps increased four 5% driven by our four strategic pillars of Omnichannel shopping experience.

Laura: Brian created product assortment.

Laura: Deep engagement with the biggest brands and our knowledgeable and passionate teammates who are integral to our success.

Laura: This is the fifth straight quarter, where our team has delivered over 4% comp growth.

Lauren Hobart: In Q1, we saw growth in both average ticket and transaction In fact, compared to the same period last year, more athletes purchased from us, they purchased more frequently, and they spent more each trip. Our first quarter growth margin expanded over 40 basis driven by higher merchandise margins, and we delivered non-gap EPS of $3.37 ahead of last year.

Laura: In Q1, we saw growth in both average ticket and transaction.

Laura: In fact compared to the same period last year more athletes purchased from us they purchased more frequently and they spend more each track.

Laura: Our first quarter gross margin expanded over 40 basis points, driven by higher merchandise margin and we delivered non-GAAP EPS of $3.37 ahead of last year.

Lauren Hobart: As we reflect on our strong results and look to the rest of the year, I want to acknowledge that we're operating in an increasingly complex macroeconomic environment. One shaped by shifting trade policies and a more cautious consumer mindset. However, despite this uncertainty, we continue to operate from a position of strength. We hold a unique and compelling position in the industry, and we've seen that people continue to prioritize healthy lifestyles, sports, and fitness, and are increasingly looking to Dick's Sporting Goods to meet these needs. It's worth highlighting that over the past three years, we've acquired over 20 million new assets.

Laura: As we reflect on our strong results and look to the rest of the year I want to acknowledge that we're operating in an increasingly complex macroeconomic environment.

Laura: One shaped by shifting trade policy and a more cautious consumer mindset.

Laura: However, despite this uncertainty we continue to operate from a position of strength.

Laura: We hold a unique and compelling position in the industry and we've seen that people continue to prioritize healthy lifestyle sports and fitness and are increasingly looking to Dick's sporting goods to meet these needs.

Laura: It's worth highlighting that over the past three years, we've acquired over 20 million new athlete.

Lauren Hobart: With all of this in mind, we are reaffirming the guidance we provided for 2025, which includes the expected impact from all tariffs currently in effect. We continue to expect our comp sales to be in the range of 1% to 3%, which at the midpoint represents nearly a 10% three-year comp stack. We continue to expect our EPS to be in the range of $13.80 to $14.40.

Laura: With all of this in mind, we are reaffirming the guidance we provided for 2025, which includes the expected impact from all tariffs currently in effect.

Laura: We continue to expect our comp sales to be in the range of 1% to 3%, which at the midpoint represents nearly a 10% three year comp stack.

Laura: We continue to expect our EPS to be in the range of $13 87 to $14 47.

Lauren Hobart: As we outlined on last quarter's call, we are leaning into our strategic pillars while focusing on three exciting growth areas with significant potential. Repositioning our real estate and store portfolios, driving continued strong growth in key categories, and accelerating our e-commerce. First, we continue to make meaningful progress in repositioning our real estate and store portfolio. We opened two additional House of Sport locations in Q1, followed by another location earlier this month, and continue to expect to open approximately 16 total in 2025. We also added four new Fieldhouse locations in Q1, with two more opening a few weeks ago, and are on track to open approximately 16 total this year.

Laura: As we outlined on last quarters call, we are leaning into our strategic pillars, while focusing on three exciting growth areas with significant potential.

Laura: Repositioning our real estate and store portfolio driving continued strong growth in key categories and accelerating our e-commerce business.

Laura: First we continue to make meaningful progress in repositioning our real estate and store portfolio.

Laura: We added two additional houses sport locations in Q1, followed by another location earlier this month.

Laura: Continue to expect to open approximately 16 total in 2025.

Laura: We also added four new field house locations in Q1 with two more opening a few weeks ago and are on track to open approximately 16 total this year.

Lauren Hobart: The response to these openings has been incredibly positive and reinforces the strength of our approach to elevating the athlete experience and the importance of continuing to invest in the long-term growth opportunity ahead of us.

Laura: The response to these openings have been incredibly positive and reinforces the strength of our approach to elevating athlete experience.

Laura: And the importance of continuing to invest in the long term growth opportunity ahead of us.

Lauren Hobart: The second of our three major growth areas is driving growth across key categories. Our strong access to top tier products from national and emerging brands, combined with our premium in-store and digital experiences, are fueling robust demand, including strong sell-through on launch.

Laura: The second of our three major growth areas is driving growth across key categories.

Laura: Our strong access to top tier product from national and emerging brands combined with our premium in store and digital experiences are fueling robust demand, including strong sell through on launches.

Lauren Hobart: Our third major growth area is accelerating our multibillion dollar, highly profitable e-commerce business, where we see significant opportunity to grow our online presence and gain market share from online only and omnichannel retailers alike. To capture this opportunity, we're investing aggressively in technology and marketing to enhance the omni-channel athlete experience and drive greater consideration for Dick's.com. We are seeing the impact of these investments. We delivered strong e-commerce growth in Q1, which again outpaced the total company growth. Our in-app capabilities have been instrumental in building excitement and driving the success of our launches across categories. And this past quarter, we delivered our biggest Diamond Sport launches ever, supported by our elevated and diverse assortment that positions us as the destination for new props.

Laura: Our third major growth area is accelerating our multibillion dollar highly profitable e-commerce business, where we see significant opportunity to grow our online presence and gain market share from online only and omnichannel retailers alike.

Laura: To capture this opportunity, we're investing aggressively in technology and marketing to enhance the omnichannel athlete experience and drive greater consideration perfect Dot com.

Laura: We are seeing the impact of these investments.

Laura: We delivered strong e-commerce growth in Q1, which again outpaced the total company growth.

Laura: Our in house capabilities have been instrumental in building excitement and driving the success of our launches across categories.

Laura: And this past quarter, we delivered our biggest signing sport launches ever supported by our elevated and diverse assortment that positions us as the destination for new products.

Lauren Hobart: Lastly, as part of our broader digital strategy, we remain very enthusiastic about two long term growth opportunities. Game Changer, and Dick's Media Network, both of which are delivering strong profitable growth as they scale. Looking more closely at the Game Changer business, we had over 6.5 million unique active users during the first quarter, with an average of approximately 2.2 million daily active users. a nearly 28% year-over-year increase. I'd like to thank all of our teammates for their hard work and commitment to Dick's Sporting Goods and for their focus on delivering great experiences for our athletes this summer season.

Laura: Lastly, as part of our broader digital strategy, we remain very enthusiastic about to long term growth opportunities.

Laura: Game changer, and <expletive> Media network, both of which are delivering strong profitable growth as they scale.

Laura: Looking more closely at the game changer business, we had over $6 5 million unique active users during the first quarter with an average of approximately $2 2 million daily active users a.

Laura: Nearly 28% year over year increase.

Speaker Change: I'd like to thank all of our teammates for their hard work and commitment to Dick's sporting goods and for their focus on delivering great experiences for athletes this summer season.

Navdeep Gupta: With that, I'll turn it over to Navdeep to share more detail on our financial results and 2025 outlook. Navdeep, over to you. Thank you, Lauren, and good morning, everyone. Let's begin with a brief review of our first quarter results. We are very pleased to report a consolidated sales increase of 5.2% to $3.17 billion. Our Q1 comps increased 4.5% and we continue to gain market share from online only and from omni-channel retail. This represents a 9.8% 2-year comp stack and a 13.4% 3-year comp These strong counts were driven by a 3.7% increase in average tickets and a 0.8% increase in transactions.

Speaker Change: With that I'll turn it over to an update to share more detail on our financial results and 2025 outlook now D. OBO.

Speaker Change: Thank you Laura and good morning, everyone.

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

Speaker Change: We are very pleased to report a consolidated sales increase of five 2% to 317 billion.

Speaker Change: Our Q1 comps increased four 5% and we continue to gain market share from online only and from Omnichannel retailer.

Speaker Change: This represents a nine 8% two year comp stock and a 13, 4% two year Comstock.

Speaker Change: These strong comps were driven by a three 7% increase in average ticket and a 0.8% increase in transaction.

Navdeep Gupta: We saw strength across key categories and a vertical brand, led by DSG, CALEA, and WURTH. which all continue to resonate very well with our audience. Gross profit for the first quarter remains strong at $1.17 billion or 36.7% of net sales and increased 41 basis points from last year. This increase was driven by higher merchandise markets. On a non-GAAP basis, SG&A expenses increased 7% to $791.2 million and deleveraged 42 basis points compared to last year's non-GAAP results. As we previewed during last quarter's call, this year-over-year de-leverage was expected and driven by strategic investment digitally, in-store, and in marketing to better position ourselves over the long term.

Speaker Change: We saw strength across key categories, and our vertical Brian led by DSG Korea and books.

Speaker Change: With all continue to resonate very well with that IP.

Speaker Change: Gross profit for the fourth quarter remained strong at $1.17 billion or 36, 7% of net sales and increased 41 basis points from last year.

Speaker Change: This increase was driven by higher merchandise margin.

Speaker Change: On a non-GAAP basis, SG&A expenses increased 7% to $791 $2 million and deleverage 42 basis points compared to last year's non-GAAP results.

Speaker Change: As we previewed during last quarter's call. This year over year deleverage was expected and driven by strategic investments digitally in store and in marketing to better position ourselves over the long term.

Navdeep Gupta: This was partially offset by lower incentive compensation expense compared to the prior Pre-opening expenses were $13.4 million, a decrease of $7.7 million compared to the prior year, and in line with our expectations. non-cap operating income was $360.4 million or 11.35% of net sale. This is up from non-GAAP operating income of $334.5 million, 11.08% of net sales in Q1 of 2020. On a non-cap basis, other income primarily comprised of interest income was $13.3 million, down $8.3 million from the prior year. This decline resulted from lower cash on hand and an expected lower interest rate environment. Non-GAAP EBT was 361.6 million, 11.39% of net.

Speaker Change: This was partially offset by lower incentive compensation expense compared to the prior year.

Speaker Change: Preopening expenses were $13 4 million.

Speaker Change: A decrease of $7 7 million compared to the prior year and in line with our expectations.

Speaker Change: non-GAAP operating income was 364 million or 11, 35% of net sales.

Speaker Change: This is up from non-GAAP operating income of $334 5 million 11 zero, 8% of net sales in Q1 of 2024.

Speaker Change: On a non-GAAP basis. Other income primarily comprised of interest income was $13 3 million down $8 3 million from the prior year.

Speaker Change: This decline resulted from lower cash on hand, and unexpected lower interest rate environment.

Speaker Change: non-GAAP <unk> was $361 6 million or $11 three 9% of net sales. This.

Navdeep Gupta: This is up from EBT of $342.4 million, 11.34% of net sales in Q1 of 2021. As expected, our Q1 tax rate grew from 19.6% last year to approximately 24% this year. This approximate 440 basis points increase reflects the higher tax deduction from greater number of Employee Equity Awards being exercised in the prior year, which favorably impacted Q1 2024 earnings by approximately 19 cents compared to the current year quarter. In total, we delivered non-GAAP earnings for diluted share of $3.37, an increase of 2.1% compared to the earnings for diluted share of $3.30 last year. On a gap basis, our earnings per diluted share was $3.24.

Speaker Change: This is up from <unk> of $342 4 million or $11 three 4% of net sales in Q1 of 2024.

Speaker Change: As expected our Q1 tax rate grew from 19, 6% last year to approximately 24% this year.

Speaker Change: This approximate 440 basis points increase reflects the higher tax deduction from greater number of employee equity awards being exercised in the prior year, which favorably impacted Q1 2020 quarter earnings by approximately 19%.

Speaker Change: Compared to the current year quarter.

Speaker Change: In total we delivered non-GAAP earnings per diluted share of $3 37.

Speaker Change: An increase of two 1% compared to the earnings per diluted share of $3 30 last year.

Speaker Change: On a GAAP basis, our earnings per diluted share was $3 2014. This includes noncash losses from non operating investment and foot locker stock.

Navdeep Gupta: This includes non-cash losses from non-operating investment in footlocker stocks. For additional details on this, you can refer to the non-GAAP reconciliation tables of our press release that we issued this morning.

Speaker Change: For additional details on this you can refer to the non-GAAP reconciliation tables.

Speaker Change: Our press release that we issued this morning.

Navdeep Gupta: Now looking to our balance sheet. We ended Q1 with approximately $1 billion of cash and cash equivalents and no borrowings on our $1.6 billion unsecured credit. Our quarter-end inventory levels increased 12% compared to Q1 of last year. We believe our inventory is wealth of As we have discussed, our deliberate investment in key items and categories continue to fuel our sales.

Speaker Change: Now looking to our balance sheet.

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

Speaker Change: Our quarter end inventory levels increased 12% compared to Q1 of last year.

Speaker Change: We believe our inventory is well positioned.

Speaker Change: As we have discussed our deliberate investment in key items and categories continue to fuel our sales momentum.

Navdeep Gupta: Coming to our first quarter capital allocation. Net capital expenditures were $242 million and we paid $100 million in quarterly dividends. We also repurchase 1.4 million shares of our stock for 298.7 million at an average price of $218.65.

Speaker Change: Turning to our first quarter capital allocation.

Speaker Change: Net capital expenditures were $242 million, and we paid $100 million and quarterly dividend.

Speaker Change: We also repurchased one 4 million shares of our stock for $298 7 million at an average price of $218 65.

Navdeep Gupta: Now moving to our outlook for 2025, which does not include acquisition-related costs, investment losses, or results from recently announced for plot-by-acquisition. Assuming no material changes in consumer spending, we are reaffirming our expectations for consales and EPS. This balances our strong start to the year, our confidence in our strategic initiatives and our operational strength against an increasingly complex macroeconomic environment. We continue to expect consul growth in the range of 1% to 3% with comp closer to the high end of our guidance through the third quarter. Consolidated sales are expected to remain in the range of $13.6 billion to $13.9 billion.

Speaker Change: Now moving to our outlook for 2025, which does not include acquisition related cost investment losses, our results from recently announced four o'clock on acquisition.

Speaker Change: Assuming no material changes in consumer spending we are reaffirming our expectations for comp sales and EPS.

Speaker Change: This balance is a strong start to the year, our confidence in our strategic initiatives and our operational strength against an increasingly complex macroeconomic environment.

Speaker Change: We continue to expect comp sales growth in the range of 1% to 3%, but closer to the high end of our guidance through the third quarter.

Speaker Change: Consolidated sales are expected to remain in the range of $13 6 billion to $13 9 billion.

Navdeep Gupta: Driven by the quality of our assortment, we also continue to expect gross margins to improve by approximately 75 basis points at the mid. As we have 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. Thus, we anticipate our gross margin expansion to be offset by SG&A DRAM. From a pacing standpoint, we continue to expect greater SG&A expense deleverage in the first half, with moderation in the second half as we lap the higher investment levels from the second half of the last quarter.

Speaker Change: Driven by the quality of our assortment. We also continue to expect gross margins to improve by approximately 75 basis points at the midpoint.

Speaker Change: As we have 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.

Speaker Change: Thus, we anticipate our gross margin expansion to be offset by SG&A deleverage.

Speaker Change: From a pacing standpoint, we continue to expect greater SG&A expense deleverage in the first half this moderation in the second half as we lap the higher investment levels from the second half of the last year.

Navdeep Gupta: We continue to expect pre-opening expenses 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. We continue to expect operating margin to be approximately 11.1% at the mid-term. And at the high end of our expectations, we continue to expect to drive approximately 10 basis points of operating margin. We continue to expect full year earnings for diluted share to be in the range of $13.80 to $14.40. As a reminder, this does not include the acquisition-related costs, investment losses, or results from the recently announced footlocker acquisition.

Speaker Change: We continue to expect Preopening expenses 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.

Speaker Change: We continue to expect operating margin to be approximately 11, 1% at the midpoint.

Speaker Change: And at the high end of our expectations. We continue to expect to drive approximately 10 basis points of operating margin expansion.

Speaker Change: We continue to expect full year earnings per diluted share to be in the range of $13 80 to $14 40.

Speaker Change: As a reminder.

Speaker Change: This does not include the acquisition related cost investment losses, our results from the recently announced Footlocker acquisition.

Navdeep Gupta: From a patient perspective, we continue to expect EPS to decline year-over-year in the first half and increase year-over-year in the second. Our earnings guidance is based on approximately 81 million average diluted shares outstanding, compared to the prior expectation of 82 million, and an effective tax rate of approximately 24%. We continue to expect net capital expenditures of approximately $1 billion for the year.

Speaker Change: From a pacing perspective, we continue to expect EPS to decline year over year in the first half an increase year over year in the second half.

Speaker Change: Our earnings guidance is based on approximately 81 million average diluted shares outstanding compared to the prior expectation of $82 million and an effective tax rate of approximately 24%.

Speaker Change: We continue to expect net capital expenditures of approximately $1 billion for the year.

Navdeep Gupta: As Lauren mentioned, our guidance includes the expected impact from all tariffs currently in effect. We are working closely with our manufacturing and brand partners to mitigate potential impacts, and we are making continued progress in diversifying our direct sourcing. As I mentioned, our inventory is well-positioned at healthy levels across key categories. We have navigated similar environments before and we are confident we have the team, tools and relationships to manage through them.

Speaker Change: As Lauren mentioned our guidance includes the expected impact from all tariffs currently in effect.

Speaker Change: We are working closely with our manufacturing and brand partners to mitigate potential impact and we are making continued progress and diversify our direct sourcing footprint.

Speaker Change: As I mentioned, our inventory is well positioned.

Speaker Change: Healthy levels across key categories.

Speaker Change: We have navigated similar environments before and we are confident we have the team tools and relationships to manage through that.

Navdeep Gupta: This concludes our prepared remarks. Thank you for your interest in Dick's Sporting Goods.

Speaker Change: This concludes our prepared remarks, thank you for your interest in Dick's Sporting goods.

Operator: Operator, you may now open the line for questions. Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. And if you'd like to withdraw that question, simply press star 1 again.

Speaker Change: Operator, you May now open the line for questions.

Speaker Change: Okay.

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

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

Brian Nagel: Your first question comes from Brian Nagel with Oppenheimer. Please go ahead. Hey, good morning.

Speaker Change: Your first question comes from Brian Nagel with Oppenheimer. Please go ahead.

Brian Nagel: Hi, good morning.

Ed Stack: My first question is for Ed, with regard to the proposed transaction with Port Locker. I think a lot of us have studied this very closely. I know you have been talking to a number of potential investors out there. you know, you touted, you know, the kind of merits of the transaction. The question I have is, is your, is your talking to investors and with Dick's stocks still being down from the time of announcement, what do you think? Is there anything clear that you think the market's really missing on the potential for this transaction, both near or maybe longer term?

Brian Nagel: My first question is for Ed.

Speaker Change: And with regard to the proposed transaction with boardwalk or so.

Speaker Change: While this has studied this very closely I know you've been talking to a number.

Speaker Change: Investors or potential investors out there.

Speaker Change: Your childhood.

Speaker Change: Yes.

Speaker Change: The transaction, but the question I have is your as you're talking to investors.

Speaker Change: <unk> will be down from the time of announcement, what do you think is there even clearer, but you think the market's missing on the potential for this transaction, both near and longer term.

Ed Stack: Brian, thanks for the question. We understand that there's really a group of people out there, shareholders, that would really prefer we just continue to do what we're doing. Our business is very strong, we've got a lot of momentum around... what's going on from a house of sports standpoint, what's going on from a field house. And we've got these projects firmly under control and people would just be wishing we just continue to do what we're doing. We don't think that's right long term for the business.

Speaker Change: Yeah, Brian Thanks for the thanks for the question.

Speaker Change: But we understand that Theres really.

Speaker Change: A group of people out there are shareholders that would really prefer we just continue to do what we're doing.

Speaker Change: So our business is very strong we've got a lot of momentum around.

Speaker Change: What's going on from a house the sports standpoint, what's going on from.

Speaker Change: The field house and.

Speaker Change: We've got these projects firmly under control and people would just be wishing. We just continue to do what we're doing we don't think that's right long term for the business. So.

Ed Stack: So The Foot Locker transaction, we see several opportunities. It really gives us a unique opportunity to strengthen our brand relationships through a global perspective. gives us the ability to service a portion of the market that we just, we can't service today with our Dick's Sporting Goods. We believe we can bring greater operational efficiency to the footlocker business and increase its profitability. We've kind of talked to Will. Capture $100 to $125 million of synergies through the medium. And we've been very clear that we believe this will be accretive to our earnings in the first full fiscal year following the close.

Speaker Change: The foot locker transaction, we see several opportunities.

Speaker Change: It really gives us a unique opportunity to strengthen our brand relationships through global presence.

Speaker Change: Gives us the ability to service a portion of the markets that we just we can't service today is it was.

Speaker Change: Dick's sporting goods stores.

Speaker Change: We believe we can bring greater operational efficiency to the foot locker business and increase its profitability.

Speaker Change: We've kind of talked it will.

Speaker Change: Captured $100 million to $125 million of synergies through the medium term.

Speaker Change: And we've been very clear that we believe this will be accretive to our earnings in the first full fiscal year following the close.

Ed Stack: As we take a look at why we did this, we believe sport and culture have intersected around the globe and it's only going to get stronger over time. This gives us an opportunity to compete for that market share and not just abdicate it to other retailers around the globe. We just don't feel that we should do that. And what the street needs to understand is that, like it or not, we don't make investments or decisions for a quarter or two. We make these decisions and investments for a lifetime. And we do know that it's up to us to prove to the street and to everybody that this was the right decision to make.

Speaker Change: As we take a look at why we did this we believe sport and culture, if intersected around the globe and it's only going to get stronger over time.

Speaker Change: This gives us an opportunity to compete for that market share and not just abdicated to other retailers around the globe. We just don't feel that we should do that.

Speaker Change: I think what the street needs to understand is that.

Speaker Change: Like it or not we don't make investments or decisions for a quarter or two we make these decisions and investments for a lifetime and we do know that it's up to us to prove to.

Speaker Change: To the street and to everybody that this was the.

Speaker Change: Right decision to make we're confident that we'll be able to do that so we're.

Brian Nagel: We're confident that we'll be able to do that. So we're really excited about this acquisition. We think it's going to be very good for our shareholders. It's very good for the footlocker shareholders. We do not expect to be interrupted, so we're pretty excited about that. And that's very helpful, Ed. I appreciate it. Thank you.

Speaker Change: We're really excited about this.

Speaker Change: With this acquisition, we think it's going to be very good for our shareholders. It's very good for the foot locker shareholders.

Speaker Change: It'd be good for the consumer out there and the momentum we have with our <unk> business, we do not expect to be interrupted so.

Speaker Change: We're pretty excited about this.

Speaker Change: Thanks, that's very helpful. I appreciate it sure.

Speaker Change: Thank you.

Brian Nagel: So the second question for Lauren, just on the business, and look, we're all still really focused here on tariffs and obviously it's a very fluid backdrop.

Speaker Change: Second question.

Speaker Change: Lauren.

Speaker Change: On the business and Okay. We're all still really focused here on tariffs obviously, it's very fluid backdrop. So I guess the question I wanted to ask is how is your.

Lauren Hobart: So I guess the question I want to ask is, you know, as you're talking to your brand partners out there, is there any update on how we should think about Dick's plan to deal with tariffs? I mean, recognizing we really don't know what the tariffs are going to be yet.

Speaker Change: As youre talking to your.

Speaker Change: Youre part of your brand partners out there or is there any.

Speaker Change: Is there any update you on how we should think about <unk> plans to deal with tariffs and we recognize that we really don't know what the tariffs are going to be yet.

Lauren Hobart: Thanks, Brian. Yes, I want to point to the fact that we are starting with, you know, this year started with such incredible momentum. And it's actually been a trend that's been going on now five consecutive quarters of over 4% comp growth. And we have tremendous momentum in many aspects of our business. So obviously, our long term strategies are clearly working. And that's everything from our differentiated product assortment, to how we are elevating our athlete experience, our team is operating at an absolutely incredible level. And they are really to be given the credit for the incredible performance that we have.

Speaker Change: Thanks, Brian, Yes, I want to point to the fact that we are starting with you.

Speaker Change: This year started with such incredible momentum and it's actually been a trend that's been going on now five consecutive quarters of over 4% comp growth and we have tremendous momentum in many aspects of our business. So obviously, our long term strategies are clearly working and that's everything from our differentiated product assortment.

Speaker Change: How we are elevating our athlete experience our team is operating at an absolutely incredible level and they are really to be given the credit for the incredible performance that we have.

Lauren Hobart: And importantly, our consumer has held up very well. And this has been a trend for some time. And it continues to be a trend where people are prioritizing activities, healthy, active lifestyle, team sports, running, walking, being outside with their kids. And so this quarter, we actually saw no trade down from best to better to better to good, we saw growth across all income demographics. And we saw growth in ticket and transaction. So I say all that because as we look to tariffs, we have now factored in all of the known tariffs into our guidance, we are able to affirm our guidance going forward, both top line and bottom line and 75 basic points of growth margin improvement.

Speaker Change: And importantly, our consumer has held up very well and this has been a trend for some time and it continues to be a trend where people are prioritizing activities healthy active lifestyle team sports running walking being outside with their kids and so this quarter, we actually saw no trade down from.

Speaker Change: First to better to better good we saw growth across all income demographics, and we saw growth in ticket and transactions. So I say all that because as we look to tariffs.

Speaker Change: We have now factored in all of the known tariffs into our guidance, we are able to affirm our guidance going forward, both topline and bottom line and 75 basis points of gross margin improvement and we will continue to work incredibly closely with our brand partners and our manufacturing partners to navigate we are constantly making decisions on.

Lauren Hobart: And we will continue to work incredibly closely with our brand partners and our manufacturing partners to navigate, we are constantly making decisions on what the best thing is for athletes, and what the best thing is for the businesses and the profitability. And we'll continue to balance that we have an incredibly dynamic pricing ability, but very pleased today to be able to confirm that we are holding to our guidance, top line and bottom.

Speaker Change: What the best thing is for athletes and what the best thing is for the businesses and the profitability and will continue to balance that we have an incredibly dynamic pricing ability, but very pleased today to be able to confirm that we are holding to our guidance topline and bottomline.

Brian Nagel: Much appreciated.

Operator: Thank you.

Speaker Change: I appreciate it. Thank you. Thank you.

Simeon Gutman: Your next question comes from Simeon Gutman with Morgan Stanley. Please go ahead. Hey, good morning, everyone, and good quarter. I want to ask about the durability of the comp strength. So most discretionary businesses that we cover, they've comp negative for two to three years. You haven't had that. Now, you've five in a row plus four, and you're guiding one to three for the full year. You mentioned dynamic backdrop, and it sounds like maybe some tough compares by the fourth quarter. Is that the rationale of keeping the one to three, or is there anything unique? Meaning, why can't it be eight quarters in a row of four, given how the business keeps performing?

Simeon Gutman: Your next question comes from Simeon Gutman with Morgan Stanley. Please go ahead.

Simeon Gutman: Hey, good morning, everyone and good quarter I wanted to ask about the durability of the comp strength. So most discretionary businesses that we cover they've comped negative for two to three years you haven't had that now you have five in a row, plus four and Youre guiding one to three for the full year, you mentioned dynamic backdrop and it sounds like.

Speaker Change: Maybe some tough compares by the fourth quarter is that the rationale of keeping the 1% to three or is there anything unique meaning why can't it be eight quarters in a row four given how the business keeps performing thanks, yes.

Simeon Gutman: Thanks.

Lauren Hobart: Yes, thanks, Simeon. Our consumer, as I said, is incredibly strong. Our business has a tremendous amount of momentum. We do have higher comps that we're lapping in the back half of the year, and so that's a factor, but we feel incredibly strong about the factors that we can control in our business and incredibly confident as we go forward. I would point to the fact that the fact that the consumer has held up well does speak somewhat to the fact that our business is very resilient, and people are increasingly prioritizing these categories with the available income that they have, and we can I suspect that that will be the case throughout the year.

Speaker Change: Yes, Thanks, I mean, our consumer as I said is incredibly strong our business has a tremendous amount of momentum we do have higher comps that were lapping in the back half of the year and so that's a factor, but we feel incredibly strong about the factors that.

Speaker Change: We can control in our business and incredibly confident as we go forward I would point to the fact that the fact that the consumer has held up well does speak so much. The fact that our business is very resilient and people are increasingly prioritizing these categories with the available income that they have and we continue to expect that that will.

Speaker Change: Be the case throughout the year.

Simeon Gutman: Okay, my follow-up, I want to ask about Nike. I realize there's maybe sensitivity to talk about one brand, but I think the importance of it goes higher now for Dick's and then in the future with Foot Locker. And I don't think there's a company or people better suited to give us a perspective.

Speaker Change: Okay. My follow up I wanted to ask about Nike I realize theres maybe sensitivity.

Speaker Change: To talk about one brand, but I think the importance of it.

Speaker Change: Those higher now for Dick's and then in the future with foot locker.

Speaker Change: And I don't think Theres, a company or people better suited to give us a perspective, so if youre willing assessment, where the brand is in terms of cleaning up inventories in the marketplace do they have a defined distribution strategy and then what you what your assessment of opinion on product innovation is just your thoughts I realize you can't speak for them.

Lauren Hobart: So if you're willing, assessment where the brand is in terms of cleaning up inventories on the marketplace, you know, do they have a defined distribution strategy and then what your assessment or opinion on product innovation is. Just your thoughts. I realize you can't speak for them. Yes, thanks, Simeon. So, yeah, Nike is a very important strategic partner for us, and we continue to be really happy both with our partnership and the strategic nature of it, the fact that we're innovating and working on longer-term consumer trends and product pipelines. What we see coming down the pike we're very excited about, and Nike continues to perform really, really well for us.

Simeon Gutman: Yes. Thanks, Simeon so yes, Nike is a very important strategic partner for us and we continue to be really happy both with the with our partnership and the strategic nature of it. The fact that we're innovating in working on longer term consumer trends and product pipeline.

Simeon Gutman: What we see coming down the Pike, we're very excited about and Nike continues to perform really really well for us. So as we look to the future. We did we've heard about some distribution changes we work very closely with all of our brand partners and one thing that you can say about Nike time in time out.

Lauren Hobart: So, as we look to the future, we've heard about some distribution changes. We work very closely with all of our brand partners. And one thing that you can say about Nike time in and time out is that they are very good at segmenting their products, and we have no reason to expect that that won't be the same. So, we expect segmentation of the market. We expect minimal overlap with some of the new distribution. And we're excited about a lot of product innovation coming down the pike, the running constructs, some of the lifestyle apparel, women's basketball.

Simeon Gutman: Is that they are very good at segmenting their products and we have no reason to expect that that won't be the same. So we expect segmentation of the market. We expect minimal overlap with some of the new distribution and we're excited about a lot of product innovation coming down the pike running construct some of the lifestyle apparel.

Simeon Gutman: There's a lot of great stuff going on. So, we feel terrific about the Nike team. Okay, thank you. Good luck.

Simeon Gutman: Men's basketball is a lot of great stuff going on so we feel terrific about the Nike partnership.

Simeon Gutman: Okay. Thank you good luck. Thank you.

Simeon Gutman: Yes.

Adrienne Yih: Your next question comes from the line of Adrienne Yih with Barclays. Please go ahead. Great, thank you very much. And congratulations on another, you know, very well executed quarter.

Speaker Change: Your next question comes from the line of Adrienne <unk> with Barclays. Please go ahead.

Adrienne: Great. Thank you very much and congratulations on another very well executed quarter.

Adrienne Yih: Lauren. You're welcome.

Speaker Change: Lauren.

Lauren Hobart: For you, it's about, you know, the the price increases or the, you know, inevitable pricing cases, I might say, it seems like at this level of the 30% China 10% elsewhere, that the the price increases needed are not terribly daunting, I would say maybe low to mid single digit. How do you think about, you know, when you take prices in your own direct, you know, your direct segment, versus when you're seeing the price increases off the view from the brand? Thank you. Yeah, no, you're right. And that's why we were able to just confirm our guidance is that we believe with the tariffs that are known to date, we can manage and we are continuing to do that.

Speaker Change: Will it come.

Speaker Change: For you. It's about you know the the price increases or the inevitable.

Speaker Change: Inevitable price increases I might say it seems like at this level of the 30% China at 10% out there.

Speaker Change: That the price increase is needed or not terribly daunting I would say maybe low to mid single digit how do you think about when.

Speaker Change: When you take pricing and your own direct.

Speaker Change: No your direct segment versus when you're seeing the price increases asks have you from the brands. Thank you.

Speaker Change: Yeah, No you're right and that's why we were able to just confirm our guidance is that we believe with the tariffs that are known to date, we can manage and we are continuing to do that we.

Navdeep Gupta: We are constantly assessing our pricing, down to the item level, the queue level. And we do that based on consumer demand and the profitability of the business. We have a very advanced pricing capability, much more advanced than we used to have and much more enabled to make real time and quick decisions. And so this is just a core. This is something we do. This is a core strength of ours. We will continue to navigate. And I would take comfort in the fact that our margin, we just guided at the midpoint up 75 basis points. We feel very confident.

Speaker Change: We are constantly assessing our pricing down to the item level SKU level, and we do that based on consumer demand and the profitability of the business. We are we have a very advanced.

Speaker Change: Pricing capability much more advanced than we used to have and much more enabled to make real time and quick decisions and so this is just a court. This is something we do this is a core strength of ours, we will continue to navigate and I would take comfort in the fact that our margin. We just guided at the midpoint up 75 basis points, we feel very confident.

Adrienne Yih: Great.

Navdeep Gupta: And then Navdeep, my follow up is on inventory for you. You pulled forward some, it seems. When would the tariff and or, you know, the costs start to come through the P&L? And how are you thinking about units versus dollars as we end the quarter and start into the fall season?

Speaker Change: Great and then I think my follow up is on inventory for you and you pulled forward. Some it seems when would be terrorists and are the.

Speaker Change: The cost start to come through the P&L and how are you thinking about units versus dollars as we end the quarter and start into the fall season. Thank you.

Navdeep Gupta: Thank you.

Navdeep Gupta: Adrienne, let me start with where we finished in Q1. Our inventory growth was 12%. One of the important things that we have said consistently is the fact that this is the differentiated inventory that is allowing us to drive this differentiated top line results. Like Lauren called out, this was the fifth straight quarter with over 4% of comp. That is driven as one of the core strategies that we have is the differentiated access to the product. The focused investments that we made at the end of Q4 of spring products earlier actually worked really well.

Speaker Change: Adrian let me start with where we finished in Q O.

Speaker Change: Q1, our inventory growth was 12%.

Speaker Change: The important thing is that we have said consistently is the fact that this is the differentiated inventory that is allowing us to drive this differentiator topline results as Lauren called out this was the fifth straight quarter, but the dollar 4% of that is driven as one of the core strategies that we have as a as a differentiator and access for the product.

Speaker Change: The bulk of the investments that we made at the end of Q4, bringing the spring product earlier actually worked really well and that's what you saw was.

Robbie Ohmes: That is what you saw was the outsized comp that we were able to In terms of the inventory growth and the impact from tariff, you know, we expect that the inventory growth will moderate, even with some of the tariff headwinds that that we have anticipated in that, as we especially as we start to lap the investments that were made in the second half of Your next question comes from the line of Robbie Ohmes with Bank of America.

Speaker Change: Outside of comp that you were able to deliver in terms of the inventory growth and net impact from tariffs.

Speaker Change: Expect that inventory growth will moderate even with some of the tariff headwinds.

Speaker Change: We have anticipated and that as we especially as we start to lap the investments that were made in the second half of 2024.

Speaker Change: Your next question comes from the line of Ravi owns with Bank of America. Please go ahead.

Robbie Ohmes: Please go ahead. Oh, hey, good morning. Thanks for taking my question, Mike.

Speaker Change: Hey, good morning, Thanks for taking my question, Mike It's really two follow ups one is just.

Robbie Ohmes: It's really two follow ups. One is just, you know, can you guys talk about, you know, the the way how you took share from Foot Locker over the last few years? And how much of that was a, you know, driver to growth? And then, I think you guys called out you're going to be you're gaining share from digital and omni channel? You know, is there a shift in who you're taking share from? And, and how are you thinking about taking that share as people like Amazon maybe be getting better allocations from people like Nike?

Speaker Change: Can you guys talk about.

Speaker Change: The way how you took share from foot locker over the last few years and how much of that was a driver to growth and then.

Speaker Change: Thank you guys called out Youre going to Youre, gaining share from digital and Omnichannel.

Speaker Change: A shift in who you're taking share from them.

Speaker Change: How are you thinking about taking that share as people like Amazon, maybe be getting better allocations from people like Nike and then my follow up is just quickly on.

Lauren Hobart: And then my follow up is just quickly on what it's just remind us what the expectations are for for FTC approvals for the merger. Thanks, Ravi. So we have been gaining share for some time now. We have been operating in $140 billion TAM in the US. And we have been driving point of growth in the last year, and it's continued. The great thing about our industry is we only have an 8% market share, despite all of the growth that we've had and the fact that we are a dominant player. And, you know, we have incredible We have such a strong business, and yet there is so much market share to be gained.

Speaker Change: Just remind us what the expectations are for FTC approvals for the merger.

Speaker Change: Thanks, Robby so we have been gaining share for some time now we havent been operating in $140 billion Tam in the U S and we have been driving a point of growth in the last year and it's continued the great thing about our industry is we only have 8% market share despite all.

Speaker Change: All of the growth that we've had and the fact that we are a dominant player.

Speaker Change: We have incredible.

Speaker Change: We have such a strong business and yet there is so much market share.

Speaker Change: To be gained and so we are gaining share from from many places we're getting gaining share from digital channels were gaining share from omni channel and as I mentioned before we continue to feel very confident that our brands appreciate that they can bring their whole brand to life in our store from from head to toe, including gear and equipment.

Lauren Hobart: And so we're gaining share from many places. We're gaining share from digital channels. We're gaining share from Omnichannel. And as I mentioned before, we continue to feel very confident that our brands appreciate that they can bring their whole brand to life in our store from head to toe, including gear and equipment. We can tell a whole brand story, and we are rooted in sport. And that gives us an advantage versus our competitors, both online and online.

Speaker Change: We can tell a whole brands story and we are rooted in sport and that gives us an advantage versus our competitors, both online and Omnichannel I'll turn it to <unk> to talk about the FTC.

Navdeep Gupta: I'll turn it to Navdeep to talk about the Yeah, Robbie, let me just quickly build on what Lauren answered. In terms of the share gain, also, we have to keep in mind that the gain are coming from the core product focus category.

Speaker Change: Yes, Ravi let me just quickly build on what Laura answer in terms of the share gain also we have to keep in mind that again are coming from the core product focus categories. So it's apparel, it's what Brad It seems for the world. Our merchant teams are doing even in some other outdoor categories are the drivers of our differentiation in terms of the FTC approval on the merger.

Navdeep Gupta: So it's apparel, it's footwear, it's team sports, the work our merchant teams are doing, even in some of the outdoor categories are the drivers of our In terms of the FTC approval on the merger, we anticipate that will be somewhere in the second half. And just in terms of Amazon, just do you expect segmentation to, you know, be be favorable to Dick's Sporting Goods still? Yes, Nike has a Nike and all of our brands do a good job segmenting and we are expecting at Minimoa. Terrific. Thank you.

Speaker Change: We anticipate.

Speaker Change: That would be something that in the second half of this year.

Speaker Change: And just in terms of Amazon just do you expect segmentation to be.

Speaker Change: <unk> be favorable to Dick's sporting goods still.

Speaker Change: Nike has a Nike in all of our brands do a good job segmenting and we are expecting this will be no different we expect minimal overlap.

Speaker Change: Terrific. Thank you. Thank you thanks Ravi.

Robbie Ohmes: Thanks for having me.

Michael Baker: Your next question comes from the line of Michael Baker with D.A. Davidson. Please go ahead.

Speaker Change: Your next question comes from the line of Michael Baker with D. A Davidson. Please go ahead.

Michael Baker: I wanted to ask about a different acquisition. Can you talk a little bit about the investment you made or your affiliate made in Unrivaled Sports and how that impacts your Game Changer business and was that contemplated in the guidance that you'd given for the year for Game Changers? Just wanted to dig into that a little bit if I could.

Michael Baker: Hi, I wanted to ask about a different acquisition can you talk talk a little bit about the investment you made in on or your your affiliate made an unrivaled sports and how that impacts your game change your business and was that contemplated in the guidance that you'd given for the year for game changer, just just wanted to dig into that a little bit.

Lauren Hobart: Yeah, Michael, thank you so much for that question because we are very, very excited about the investment that we've made in Unrivaled and that we continue to make in Game Changers. So let me start quickly with Game Changer, that business over $100 million last year growing to $150 million, highly profitable software as a subscription business. But more importantly, it enables us as Dick's to get involved in all aspects of the athlete's journey from the time they sign up for a team, to when they're playing, to Game Changers case when they're watching the game, fans, parents, watching scores, stats, it's an incredibly rich database.

Michael Baker: Yeah, Michael Thank you so much for that question because we are very very excited about the investment that we've made and unrivaled and that we continue to making game changer. So let me start quickly with game changer that business over $100 million last year growing to $150 million highly profitable software as its friction business, but more.

Michael Baker: Importantly, it enables us as Dick's to get involved in all aspects of the athletes journey from the time they sign upfront for a team to when they're playing to game changers case, when they are watching the game fans parents watching scores fast it's an incredibly rich database and it also continues.

Lauren Hobart: And it also continues to fuel our Dick's Media Network, which Game Changer is a live sports platform, a media platform that we're very excited to be able to put into our Dick's Media Network.

Michael Baker: To fuel our <unk> media network, which is a game changer is alive sports platform media platform that we're very excited to be able to put into our <unk> media network.

Lauren Hobart: Unrivaled, we're so excited because they are on the ground and they're providing youth sport experiences at places like Cooperstown, All-Star Village, and are hosting 600,000 youth athletes, 2 million families in the course of the year. And we're so excited to be able to be at that point of sport when kids are competing and elevate the experience and share just best practices and a lot of business opportunities unlocked.

Michael Baker: Arrival, we're so excited because they are there on the ground and they are providing us support experiences at places like Cooperstown, I'll start village and our hosting 600000 youth athletes 2 million families and of course of the year and we're so excited to be able to be at that point of sport when kids are competing and elevate.

Michael Baker: The experience and share best practices, and a lot of business opportunities as well.

Navdeep Gupta: Michael, let me quickly build on what Lauren said. If you think about the opportunity that we talk about in the youth sports infrastructure, that opportunity goes well beyond what happens during the physical game day, where GameChanger is one of the most dominant and the most differentiated product platform that is out there. Now, with the partnership and the equity investment that we have unrivaled in, this gives us an opportunity to actually look at the ecosystem much more holistically and much more collectively between the GameChanger business and the unrivaled opportunity. couldn't be more excited about this overall $40 billion TAM, which is growing really well.

Speaker Change: So let me quickly build on what Laura said, if you think about the opportunity that we talk about in the youth sports infrastructure that opportunity goes well beyond what happens during the physical game day.

Speaker Change: Game changer is one of the most dominant and most differentiated product platform that is out there now that the partnership on the equity investment that we have unrivaled and this gives us an opportunity to actually look at the ecosystem much more holistically and much more collectively between the game change our business and the unrivaled opportunity that we have.

Speaker Change: Couldn't be more excited about this overall 40 billion dollar time, which is growing really well and the capability. We have a game changer and other partnerships that we have with unrivaled. This will allow us to really differentiate in that space even further.

Michael Baker: And with the capability, we have a game changer. And now the partnership that we have with Enviable, this will allow us to really even further. Got it. Makes sense.

Speaker Change: Got it makes sense, if I could ask one more follow up from a previous question asking you to comment on your on the competitive situation again.

Michael Baker: If I could ask one more follow up from a previous question, asking you to comment on the competitive situation again. Nike tried to sell through Amazon in the past. It didn't work. They pulled back on it. Why would this be different? Do you have any insight as to what your competitors are doing differently this time versus when they first tried that partnership? Yeah, well, I don't we don't speak on behalf of Nike. They they are I know, have an effort to clean up the marketplace. And that's a driver of what they're doing now. I'll let them speak to what their motives are.

Speaker Change: I can try to sell through Amazon in the past it didn't work they pulled back on it why would this be different if you see do you have any insight as to what your competitors are doing differently. This time versus when they first tried that that partnership.

Speaker Change: Yeah.

Speaker Change: We don't speak on behalf of Nike. They they are I know having.

Speaker Change: Have an effort to clean up the marketplace and that's a driver of what Theyre doing al I'll, let them speak to what their motives are.

Michael Baker: Okay, fair enough. Thank you.

Speaker Change: Okay fair enough. Thank you. Thank you.

Kate Mcshane: Your next question comes from the line of Kate McShane with Goldman Sachs. Please go ahead. Hi, good morning. Thanks for taking our question.

Speaker Change: Your 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, we just wanted to hear a little bit more about the category performance in the quarter, how footwear apparel and hard goods performed relative to each other and the overall comp and if there was any cadence difference between the months. Thanks.

Kate Mcshane: We just wanted to hear a little bit more about the category performance in the quarter, how footwear, apparel, and hard goods perform relative to each other, and the overall comp, and if there was any cadence difference between the months. Kate, we were with a four and a half percent comp. We saw growth across so many areas of our business. So we saw growth in footwear. We saw growth in apparel. We saw growth in team sports.

Speaker Change: Thanks Kate.

Speaker Change: The four 5% comp we saw growth across so many areas of our business. So we saw growth in footwear, we saw growth in apparel, we saw growth in team sports.

Lauren Hobart: And from a cadence standpoint, like the rest of the world, the beginning of the month was a little cold and wet. February was, but it continued to improve. And we had strength across the quarter.

Speaker Change: From a cadence standpoint like the rest of the world. The the beginning of the month was a little colder and.

Speaker Change: Wet.

Speaker Change: It was but it continued to improve and we had strength across the across the quarter and each month.

Speaker Change: Thank you.

Speaker Change: Yep.

Christopher Horvers: Your next question comes from the line of Christopher Horvers with JP Morgan. Please go ahead. Thanks. Good morning everybody.

Speaker Change: Your next question comes from the line of Christopher <unk> with Jpmorgan. Please go ahead.

Christopher: Thanks, Good morning, everybody.

Christopher Horvers: So I just want to pull up on the tariff question. Have you actually received any tariff items into inventory? Have you taken any prices yet on that product? And if not, when would you expect to start to turn that inventory of tariffed items? Christopher, we have no impact from tariffs in Q1. And we are working very closely with each of the brand partners on the right cadence and how best do we flow it. So we'll share much more as these things start to actualize. As we called out in our guidance, we have contemplated some of the timings associated with it in our guidance.

Speaker Change: I just wanted to follow up on the on the tariff question have you actually received any tariff items into inventory.

Speaker Change: Have you taken any any prices yet on that product and if not when would you expect to start to turn that inventory of tariff items.

Speaker Change: Chris while we have no impact from tariffs in Q1, and we are working very closely with each of our brand partners on the right cadence and how best do we flow. It. So we will share much more on.

Christopher: These things start to actualize as we called out in our guidance, we have contemplated some of the timings associated with it and our guidance and we still feel great about the 75 basis points of the margin expansion that we guided for the full year.

Navdeep Gupta: And we still feel great about the 75 basis points of the margin expansion that we guided for the future.

Christopher Horvers: Understood.

Christopher Horvers: And I had a question on the Foot Locker deal as well. Looking at the documents, it seems like it's a pretty low divestiture threshold. I think it's $100 million in terms of, you know, if you were forced to divest more than that, that you could potentially walk away from the deal.

Christopher: Understood.

Speaker Change: A question on the on the foot locker deal as well at looking at the documents. It seems like it's a pretty low divestiture threshold I think it's a $100 million in terms of if you're forced to divest more than that that you could you could potentially walk away from the deal can you talk about why that level that doesn't that doesn't seem like that's a whole lot.

Navdeep Gupta: Can you talk about why that level? That doesn't seem like that's a whole lot of Foot Locker stores in terms of, you know, potential divestiture. So, and any comments on that would be helpful. Thank you.

Christopher: Foot locker stores in terms of.

Christopher: Potential divestiture, so and any comments on that would be helpful. Thank you.

Navdeep Gupta: Sure, we think that, uh, um... We talked about one of the main reasons for this is to serve a consumer that we're not able to. serve today. If we have to divest a lot, then it kind of makes it not consistent with what our strategy and the tactics are that we want to employ. That's why we've got that $100 million number there. We really want to service the consumer that we don't... Got it. Very helpful.

Christopher: Sure we think that.

Christopher: Because we talked about one of the main reasons for this is to serve a consumer that we're not able to serve today.

Christopher: <unk>.

Christopher: If we have to divest a lot then it kind of makes it not.

Christopher: Consistent with what our strategy and the tactics are that we want to employ so that's why we've got that $100 million number there we really want to service the consumer so we don't service today.

Speaker Change: Got it very helpful.

Joe Feldman: Your next question comes from the line of Joe Feldman with Telsey Advisory Group. Please go ahead. Thanks for taking the question guys. I have two quick ones.

Speaker Change: Your next question comes from the line of Joe Feldman with Telsey Advisory Group. Please go ahead.

Joe Feldman: Thanks for taking the question guys.

Joe Feldman: Two quick ones on golf Galaxy can you maybe share some color on the business and how it trended through the quarter and maybe even more broadly to the to the dicks business, how golf is continuing to do.

Joe Feldman: On Golf Galaxy, can you maybe share some color on the business and how it trended through the quarter and maybe even more broadly to the Dick's business, how golf is continuing to do? Sure, Joe. Yeah, golf, golf remains a very important category for us. We think there is a compelling long term growth opportunity. And as you know, in twenty twenty four rounds played, what we're at an all time high. I think for us, we're looking at reinventing the business with Golf Galaxy Performance Center, which is an immersive, experiential place for golfers to come and have lessons and fittings and really immerse themselves into the game of golf.

Speaker Change: Sure Joe Yeah Golf Golf remains a very important category for US. We think there is a compelling long term growth opportunity and as you know in 2024 rounds played were at an all time high I think for US we're looking at reinventing the business with golf Galaxy performance Center, which is an immersive experience.

Joe Feldman: And so.

Joe Feldman: Place for golfers to common.

Joe Feldman: And fittings and really immerse themselves into the game of golf and we've got 27 GGP sees golf Galaxy performance centers that are going to 35. This year. So we're really excited about it one thing I'm also very excited about from a golf standpoint is how well our vertical brands do across our golf business and we are.

Joe Feldman: And we've got twenty seven. These are the golf galaxy performance centers that are going to 35 this year, so we're really excited about it. One thing I'm also very excited about from a golf standpoint is how well our vertical brands do across our golf business. And we are our own number one vendor partner in golf with vertical brands. And I just have to say, shout out to our team and to Ben Griffin, who's been playing the Max Flyball and is so, just won two PGA Tour events and is doing so incredibly well. So we have so much excitement around the golf business and with Golf Galaxy and Dick's Golf, we think that.

Speaker Change: One number one vendor partner in golf with vertical brands and I just have to say a shout out to our team and she's been Griffin, who has been flying the Max five mall and its so and then just one peachy to PGA tour events and is doing so incredibly well we have so much excitement around the golf business and with golf Galaxy and Dicks golf.

Joe Feldman: There's a tremendous potential here.

Joe Feldman: That's great. Thank you.

Joe Feldman: That's great. Thank you.

Joe Feldman: And then just, I wanted to follow up on GameChanger. Can you share a little more color on the crossover between the GameChanger users and Dick's shoppers and how you drive that crossover to get them to sort of come to Dick's and spend at the stores? Yeah. That's a great question. We do find that the people who do crossover, so our GameChanger users and our Dick's shoppers are some of our absolute best shoppers. They're highly engaged, they are gold members through and through.

Speaker Change: And then just I wanted to follow up on game changer can you share a little more color on the crossover.

Speaker Change: Between the game changer users and their shoppers and how you drive that crossover to get them to sort of come to Dick's and spend at the stores. Yeah. That's a great question and we do find that are the people who do crossover. So are a game changer users Antarctic shoppers are some of our absolute best.

Speaker Change: Shoppers.

Speaker Change: Our highly engaged they are gold members through and through and we are doing increasingly every year, we're doing more to drive both sign ups or game changer, among <expletive> shoppers, so, making a making game changer now known and available to shoppers and then similarly, presenting different options to game changing use.

Lauren Hobart: And we're doing increasingly every year, we're doing more to drive both sign up for GameChanger among Dick's shoppers, so making GameChanger known and available to Dick's shoppers. And then similarly, presenting different options to GameChanger users to purchase at Dick's. One of the big capabilities in the Dick's media network is that there is an opportunity for in-game advertising. Again, it's a live sport platform that we're using. And that's people focused, watching at the point of sport, watching their kids, their grandkids, or their own stats and scoring history. And we are able to be highly targeted in terms of how we present products and items to them at Dick's.

Joe Feldman: There's two purchase index, one of the capabilities and the Dick's Media network is that there are there is an opportunity for in game advertising again, it's a long it's a lifestyle platform that we're using and thats people focused watching.

Joe Feldman: The point of sport watching their kids or grandkids are their own stats and scoring history and they are able we are able to be highly targeted in terms of how we present products and items that analytics. So that we are in early innings of that but it's incredibly important future growth area for both game changer.

Navdeep Gupta: So we are in early innings of that, but it's an incredibly important future growth area for both GameChanger and Dick's.

Joe Feldman: <unk>.

Navdeep Gupta: Yeah, Joe, let me build on what Lauren said. Another thing that we did here in Q1 was we introduced the Bat Lab initiative, which is basically bringing the content series to help parents and the youth athletes be able to find the right bat for their game, especially the baseball bat. So we invited 20 high school and collegiate players. They tested 12 different BB code bats using the GameChanger app and the platform. And the coding was done both on a qualitative basis and a quantitative basis. And this data was all made available to the Dick's Sporting Goods athletes on our website.

Joe Feldman: Yes, Joe let me build on what alongside another thing that we did here in Q1 was we introduced the backlog initiative.

Joe Feldman: Basically, bringing the content series health, Terence and the youth athletes be able to find the right back for that game, especially the baseball bat. So we invited 20 high school and and collegiate players. They tested all the different bebe called bots, using the game changer and the platform and the scoring was done both.

Joe Feldman: On a qualitative basis and the quantitative basis under the data was all made available to the Dick's sporting goods at least on our web site and this is the intersection opportunity that we see that we can leverage our core capabilities of the game changer platform and bring that as an opportunity to showcase the differentiated opportunity still out athletes on the deck slide.

Navdeep Gupta: And this is the intersection opportunity that we see where we can leverage the core capabilities of the GameChanger platform and bring that as an opportunity to showcase differentiated opportunities to our athletes on the Dick's platform.

Joe Feldman: Paul.

Joe Feldman: Thanks, guys. Good luck with this quarter. Thank you.

Speaker Change: That's great. Thanks, guys. Good luck with this quarter.

Joe Feldman: Thank you.

Michael Lasser: Your next question comes from the line of Michael Lasser with UBS. Please go ahead. Good morning. Thank you so much for taking my question. There's still a perception by some that Dick's comp over the last several quarters has been driven by unique and temporary factors, such as the contribution from the House of Sports or a unique allocation of footwear to the stores. Is there anything different from this quarter to suggest that these unique factors are really just not driving the business? It's more broad-based than that, and it's more sustainable, such that you're still being quite conservative as you look out over the next couple of quarters.

Speaker Change: Your next question comes from the line of Michael Lasser with UBS. Please go ahead.

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

Speaker Change: Perception by some that big comp over the last several quarters has been driven by unique and temporary factors such as the contribution from the house's sports or a unique allocation of footwear.

Speaker Change: To the stores.

Speaker Change: Is there anything different from this quarter to suggest that these unique factors are really just not driving the business. It's more broad based than that and it's more sustainable such that you're still being quite conservative as you look out over the next couple of quarters. Thank you.

Michael Lasser: Thank you.

Lauren Hobart: Yes, thanks, Michael, for the question. I can't emphasize enough that our growth has been ongoing for many, many quarters in a row, and it is due to the fact that our long-term strategies are working. And we have four core strategies. The first that we've leaned into across the board, not just temporary in one category, but across the board, is access to differentiated product. And we continue to build those relationships with brand partners, get increasing access, and House of Sports and Fieldhouse enable us to bring in even newer products, more emerging brands, and also tell our partner brands' story to life in powerful ways.

Speaker Change: Yes, Thanks, Michael for the question I can't emphasize enough that our growth has been ongoing for many many quarters in a row and it is due to the fact that our long term strategies are working and we have four core strategies first that we've leaned into across the board not just temporary and one category.

Speaker Change: But across the board its access to differentiated product and we continue to build out those relationships with brand partners get increasing access in house to support and field house enable us to bring in even new newer products more in emerging brands and also tell our our partner brand story to life in powerful ways at the same time.

Lauren Hobart: At the same time, elevating the athlete experience is a second core strategy of ours, and that is everything from our teammates working incredibly hard in the store to provide confidence to athletes that they are stepping into the right product for them that's going to help them improve their game, all the way to reinventing our entire concepts with House of Sports and Foot Locker. The other thing I will say is one of our biggest assets is our team and the culture that we have at Dix. We have an incredible group of people. We say it's the best team in sports, and it is.

Speaker Change: Elevating the athlete experience is our second core strategy of ours and that is everything from our teammates working incredibly hard and the store to provide confidence to athletes that they are stepping into the right product for them, that's going to help them improve their game all the way to reinventing our.

Speaker Change: Entire concepts with houses for foot locker and the other thing I will say is one of our biggest assets is our team and the culture that we have it checks there and we have an incredible group of people. We say, it's the best team in sports and it is and I can't emphasize enough how powerful that team has been in terms of driving our growth.

Lauren Hobart: And I can't emphasize enough how powerful that team has been in terms of driving our growth. And the last thing, our fourth core strategy, is just our investment in our brand and our sports matter program and the fact that our brand... I don't at all think that our growth has been driven by unique and temporary factors.

Speaker Change: And the last thing our fourth core strategy is just our investment in our brand and our sports matter program and the fact that our brand belief is is really powerful so I don't at all think that our growth has been driven by unique and temporary factors. I mean this has been a core strategic plan that's been executed over the course of many many years.

Lauren Hobart: I mean, this has been a core strategic plan that's been executed over the course of many, Thank you very much for that, Lauren. And my follow-up question is... Dick's is already getting pretty remarkable allocations from its key vendor partners, especially in the footwear categories. How much better can it get? Oh, Michael, it can always get better. We can always have more. We're putting more premium full service footwear decks in where 90% now will continue to go. And we know this is a key part of our core strength is that we will continue to get fantastic allocation footwear is a very Michael, just let me build because the opportunity is beyond here, we see the opportunity to be able to, you know, provide the head to toe, look for the athlete and be able to service their team sports needs and the accessory business.

Speaker Change: Ours.

Speaker Change: Okay. Thank you very much for that morning, and my follow up question.

Speaker Change: This is already getting pretty remarkable allocations from our key vendor partners, especially in the footwear category how.

Speaker Change: How much better can it get.

Speaker Change: Michael It can always get better we can always have more we're putting more premium full service footwear decks in we're at 90% now will continue to go.

Speaker Change: And we know that that's a key part of our core strengths is that we will continue to get fantastic allocation footwear is a very strong business.

Speaker Change: Michael just let me bill because the opportunity is beyond Europe, you see the opportunity to be able to.

Speaker Change: Provided the head to toe look for the athlete and be able to solve is that team sports needs and the accessory business. That's the differentiation that we bring not only to our athletes, but quite frankly, we bring that differentiation to our brand partners as well that is what is driving this differentiator and allocation work that we're doing in house for the wells that IP.

Navdeep Gupta: That's the differentiation that we bring, not only to our athletes, but quite frankly, we bring that differentiation to our brand partners as well. That is what is driving this differentiated allocation, the work that we are doing in house of sport, the work that our field team is doing in servicing those athletes and bringing that excitement to the store is the differentiating capability that is allowing us to deliver these really strong. Yeah, I'm sorry, I'm going to build one more time. I just want to say that we mentioned it in our prepared remarks. But the fact that there is growth and excitement, and newness and launches in all aspects of our business is an increasingly important phenomenon.

Speaker Change: <unk> team is doing and servicing those athletes and bringing that excitement at the store is the differentiated capability that is allowing us to deliver these really strong results, yes, im sorry, im going to build one hour.

Speaker Change: I just wanted to say that we mentioned it in our prepared remarks, but the fact that there is growth and excitement and newness and launches in all aspects of our business is an increasingly important phenomenon. So even in our diamonds port business trading cards. I mean, we are having there's pockets of really excite us incredible excitement.

Navdeep Gupta: So even in our diamond sport business, trading cards, I mean, we are having, there's pockets of really exciting, incredible excitement across all aspects of our I should have phrased my question better.

Speaker Change: Across all aspects of our business.

Speaker Change: Please my question better.

Lauren Hobart: It was more so in relation to the Foot Locker acquisition. That's all very helpful information. But, you know, like I said, Dick's is already getting as good, if not better, than any other player allocations out there. So the contribution from Foot Locker, can it get that much better? I think one of the important parts of the strategy in terms of a central acquisition of Foot Locker is that we partner with our brands in an incredibly strong strategic way. And that's all of our partner brands. As we as we now would become a global business, we will now be partnering.

Speaker Change: More so in relation to the Walker acquisition, that's all very helpful information, but.

Speaker Change: Yeah.

Speaker Change: Like I said it started getting as good if not better than any other player allocations out there. So the contribution from foot locker can you can you get that much better.

Speaker Change: I think one of the important parts of the strategy in terms of us.

Speaker Change: Our acquisition of foot locker is that we partner with our brands in an incredibly strong strategic way and that's all of our partner brands.

Speaker Change: As we now would become a global business. We will now be partnering these are all global brands will be partnering with them on even longer term global product innovation. So yes, I do expect that this is a win win for our relationships with our brand partners and we will continue to drive our product assortment.

Lauren Hobart: These are all global brands. We'll be partnering with them on even longer term global product innovation. And so, yes, I do expect that this is a real win for our relationships with our brand partners and we will continue to drive our product. Understood. Thank you so much and good luck. Thank you.

Speaker Change: Understood. Thank you so much and good luck. Thank you.

John Kernan: Your next question comes from the line of John Kernan with P.D. Cowan. Please go ahead. Good morning, thanks for taking my question. So Lauren, maybe ask a different way, operationally, what do you see as the biggest opportunity within the Foot Locker banner? And when you think about that financially, what's the biggest opportunity?

Speaker Change: Your next question comes from the line of John Kernan with TD Cowen. Please go ahead.

John Kernan: Good morning, Thanks for taking my question.

John Kernan: So hard maybe asked a different way operationally what do you see as the biggest opportunity within the foot locker banner and when you think about that financially what's the biggest opportunity in their operating margin obviously is <unk>.

Lauren Hobart: Their operating margin obviously is to press versus history, what do you what do you see as the biggest line items for improvement in their in their operating margin in their financial? Yeah, John, we are we're obviously in the early stages of the acquisition, but we've done an extensive amount of due diligence, and we see a lot of opportunities. Their original strategies, the lace-up plan, has some very strong aspects to it that to drive growth from, including reinventing the stores and leaning into the digital experience and marketing and all of that.

John Kernan: Perhaps versus history or what do you what do you see as the biggest line items for improvement in there and their operating margin and our financial returns.

John Kernan: Jon We're obviously in the early stages of the acquisition, but we've done an extensive amount of due diligence and we see a lot of opportunities there.

John Kernan: Original strategies the lease up plan has some very strong aspects to it that we believe we can continue to.

John Kernan: To drive growth from including reinventing their stores and leaning into the digital experience.

John Kernan: And marketing and all of all of that but.

Lauren Hobart: But I also wanna say why I personally am so excited. I mean, we have the Dick's business that has so much momentum and we are going to keep our Dick's team fully focused on the momentum that we have in the Dick's business. And at the same time, we are going to put a small group of people working for Ed to work with the Foot Locker team to really unlock all of that, the gross margin improvement that we know is available. And with Ed, obviously, he's an incredibly incredible retail expert. He's got operational excellence, incredibly strong brand relationships, real estate development relationships.

John Kernan: But I also want to say why I personally I'm. So excited I mean, we have we have the Dick's business that has so much momentum.

John Kernan: And we are going to keep our Dick's team fully focused on the momentum that we have an index business and at the same time, we are going to put a small group of people working for Ed to work with the foot locker team to really unlock all of that the gross margin improvement that we know is available and with Ed obviously he is in <unk>.

John Kernan: Credibly incredible retail expert he's got operational excellence are incredibly strong brand relationships real estate development relationships I mean, it's such a wonderful.

Lauren Hobart: I mean, it's such a wonderful thing that he's going to be able to bring all that It's going to be a great project. partner with the Foot Locker League. to drive both. We are confident that we'll be able to execute the heck out of this and really drive that growth margin improvement that will drive. Got it.

John Kernan: Thing that he is going to be able to bring all of that expertise and partner with the foot locker leadership team.

John Kernan: Drive both businesses, we are confident that we'll be able to execute.

John Kernan: The heck out of this and really drive that gross margin improvement that will drive profitability.

John Kernan: And maybe just a quick follow up on House of Sport and the field house. You'll have roughly low 40s number of field house doors by the end of the year, mid 30s house of sport. How should we think about the overall square footage growth of the total business this year? It looks like it was up about 5% year over year in Q1. John, we continue to expect the House of Sport to be in the range of 75 to 100 as we look to the near future. And like you said, there will be about 35 House of Sport locations by the end of this year, just over 40 fieldhouse locations.

John Kernan: Got it and maybe just a quick follow up on how to support in the field House I think.

John Kernan: I mean, you'll have roughly low forty's number of field all stores by the end of the year mid Thirty's passive sport, how should we think about the overall square footage growth of the total business. This year. It looks like it was up about 5% year over year in Q1.

John Kernan: Yes, John.

John Kernan: We continue to expect the houses or to be in the range of 75 to 100 as we look to the near future and like you said 30, there'll be about 35 households, spud locations by the end of this year at just over 40 Fieldhouse locations.

John Kernan: The way I would characterize the squad footage growth would be in that same 2% or slightly north of that, depending on the number of new store openings. As we have alluded to, we anticipate opening about 20 House of Sport locations in 2026, which will be the continued driver of the business as we look to the future. In terms of the field house, this is our way of reimagining what a Dick's 50K would look like. And so as we open new stores, as we relocate Dick's locations in future, those will all open.

John Kernan: The way I would characterize the square footage growth is would be in that same 2% or slightly north of that depending on the number of new store openings as we have alluded to we anticipate opening about 20 households port locations in 2026, which will be the continued drive of the business as we look to the future in terms of the field House. This is al.

John Kernan: Our way of re imagining what <unk> would look like and so as we open new stores that we relocated.

John Kernan: Occasions in future those will all open SP allows location.

John Kernan: Got it. So low single digits, actual square footage growth as we as we model that.

John Kernan: Got it so low single digits actual square footage growth.

John Kernan: As we model that.

John Kernan: The stores that as you can imagine.

John Kernan: That will vary depending on the number of new store openings, but generally in that range.

Operator: Please see the complete disclaimer at https://sites.google.com Okay, thank you.

Speaker Change: Okay. Thank you.

Paul Lejeuz: Your next question comes from the line of Paul Lejeuz with Citigroup. Please go ahead. Hey, thanks, there's a couple questions related to the overlap with Foot Locker. Curious if you can talk about what percent of your stores overlap in the same centers? And if you can remind us what percent of your stores are mall versus off? Second, just customer overlap, what you think it is with Foot Locker? And then third, specifically on Nike, what percent of your Nike skis are also sold at Foot Locker as you might estimate it?

Speaker Change: Your next question comes from the line of Polish Us with Citigroup. Please go ahead.

Speaker Change: Hey, thanks.

Speaker Change: Couple of questions related to overlap with foot locker curious if you could talk about what percent of your stores overlap in the same centers and if you can remind us what percent of your stores are mall versus off second customer overlap. When you think it is with foot locker than third specifically on Nike what percent of year Nike.

Speaker Change: Hughes are also sold for lockers.

Speaker Change: Estimate it.

Navdeep Gupta: Paul, we are still very early in the stages of the acquisition process. I'm not going to speak to most of those questions, but when we close the deal, we will come out and share all of this. Just to answer your specific questions about Dick's, about 30% of our stores are in malls, and we do believe one of the strong tenets of this acquisition is that we will be acquiring a different customer. We'll have access, even within the U.S., to urban locations that we don't have access to before with the large format stores. And we are hoping that this will be incremental to our customers.

Speaker Change: Well, we are still very early in the stages of the acquisition process I'm not going to speak to most of those questions, but when we closed the deal we will come out and share all of this just to answer your specific questions about <unk> or 30 about 30% of our stores are in malls and we do believe one of the strong tenants of this.

Speaker Change: <unk> acquisition is that we will be acquiring a different customer well have access even within the U S to urban locations that we don't have access to before with a large format stores and we were hoping that this will be incremental to our customer base.

Navdeep Gupta: So anything you could add maybe on potential revenue synergies between the two organizations?

Speaker Change: Got it and anything you could add maybe on potential revenue synergies between the two.

Navdeep Gupta: Paul will share much more detailed points when the transaction is closed. Thank you. Good luck.

Speaker Change: Paul will share much more detailed funds when the transaction is closed.

Speaker Change: Thank you good luck.

Justin Kleber: Your next question comes from the line of Justin Kleber with Baird, please go ahead. Good morning, everyone. Thanks for taking the question.

Justin: Your next question comes from the line of Justin <unk> with Baird. Please go ahead.

Speaker Change: Good morning, everyone. Thanks for taking the question just wanted to ask about gross margin and what drives the acceleration.

Justin Kleber: Just wanted to ask about gross margin and what drives the acceleration from the 40 basis points here in 1Q to 75 for the full year, particularly as I would think occupancy is going to de-lever across the balance of the year, just based on the moderation and comps, your projection. Justin, let's start with the Q1 performance. In Q1, we delivered a 41 basis points of gross margin expansion, which was driven by the Merge Margin Expansion. And as we have said, the gross margin and the Merge Margin Expansion continues to come from the differentiated products, the work that our team has been doing on the pricing and promotion optimization, as well as the strong performance that we saw in our vertical branch, which carried a 700 to 900 basis points of higher margin.

Speaker Change: 40 basis points here in <unk> to 275.

Speaker Change: Our full year, particularly as I would think occupancy is going to de lever.

Speaker Change: Across the balance of the year, just based on the moderation in comps youre projecting yes.

Speaker Change: Yeah, Justin just let's start with the Q1 performance and Q1, we delivered a 41 basis points of gross margin expansion, which was driven by the merch margin expansion and as we have said the gross margin in the much margin expansion continues to come from the differentiated products. The work that our team has been doing on the pricing and promotion optimization as well.

Speaker Change: As the strong performance that we saw in our vertical brands. The study the seven to 900 basis points of higher margin and we as we look to the future and the balance of this year. Our expectation is it will be the same three three drivers of the gross margin expansion. In addition to the two new drivers, which we believe will continue to drive.

Navdeep Gupta: And as we look to the future and the balance of this year, our expectation is these will be the same three drivers of the gross margin expansion, in addition to the two new drivers, which we believe will continue to drive higher levels of margin improvement as we go into the balance of year between Game Changer, as well as the Dick's.

Speaker Change: Higher levels of margin improvement as we go into the balance of year Beckman game changer as well as the <unk> book.

Navdeep Gupta: Okay, thank you for that Navdeep.

Speaker Change: Okay. Thank you for that.

Navdeep Gupta: Just one quick follow up on buybacks. Nearly $300 million in the first quarter. Should we expect buybacks to be on hold as you work to close the acquisition? Yeah, we'll continue to be, be, you know, nimble and flexible about it. As you can imagine, there are certain restrictions as we are in the phase of the S4 filing, you know, so we'll evaluate that appropriately for the balance.

Speaker Change: One quick follow up on buybacks.

Speaker Change: Nearly $300 million in the first quarter should we expect buybacks to be on hold as you work to close the acquisition.

Speaker Change: Yes, we will continue to be.

Speaker Change: Be nimble and flexible about it as you can imagine there are certain restrictions as we are in the phase of the S. Four filing.

Speaker Change: So we'll evaluate that appropriately for the balance of the year.

Navdeep Gupta: All right, thank you so much. Best of luck. Thank you.

Speaker Change: Alright. Thank you so much best of luck.

Speaker Change: Thank you.

Jonathan Matuszewski: We have time for one more question and that question comes from the line of Jonathan Matuszewski with Jefferies. Please go ahead. Great, good morning. And thanks for taking my question. The first one was on the assortment. We're hearing of some retailers plans to trim their product assortment as one method of neutralizing tariff cost headwinds. And just curious if that was part of your approach. And if so, if you could elaborate.

Speaker Change: And we have time for one more question and that question comes from the line of Jonathan <unk> with Jefferies. Please go ahead.

Jonathan <unk>: Great. Good morning, and thanks for taking my questions. The first one was on the assortment. We're hearing of some retailers plans to trim their product assortment as one method of neutralizing tariff cost headwinds and just curious if that was part of your approach and if so if you could elaborate.

Lauren Hobart: John, no, we are managing our business in terms of what's right for the consumer, making sure that we have the best product, everything from opening price point to the best performance, gear and equipment. And so no, that is not a stated strategy of ours. It's we are going to optimize our inventory for what the asset Understood.

John Kernan: John No.

John Kernan: We are managing our business in terms of what's right for the consumer making sure that we have the best product everything from opening price point.

Speaker Change: Performance here.

John Kernan: And equipment and so now that is not a stated strategy of ours, it's we're going to optimize our inventory for what the athlete needs.

Jonathan Matuszewski: And just a quick follow up on GameChanger, if you could talk about just the mix of the the active user base in terms of maybe what percentage of those GameChanger users are utilizing it from a free version versus, you know, a paid subscription and how you see that evolving. Thanks. Yeah, John, in terms of what we are seeing is one, we are seeing a strong level of engagement across both our free model that we have, as well as the paid model that we have. Keep in mind, the opportunity that Lauren talked about, the Dick's Media Network gives us an opportunity to engage, even if somebody is using the app on a free basis, to be able to engage with those set of athletes in a differentiated way.

Speaker Change: Understood and just a quick follow up on game changer, if he could talk about just the mix of the active user base in terms of maybe what percentage of those game changer users are utilizing it from a free version versus.

Speaker Change: A paid subscription.

Speaker Change: Subscription and how you see that evolving thanks.

Speaker Change: Yes.

Speaker Change: John in terms of the what we are seeing is one we are seeing a strong level of engagement across both our free model that we have as well as the paid model that we have keep in mind the opportunity that Lon talked about the Dick's media network gives us an opportunity to engage even if somebody is using the app the app or on a free basis to be able to engage with those.

Speaker Change: Set up athletes and a differentiator for it and we definitely see an opportunity in and quite frankly, the team does a fantastic job of Upselling and cross selling the application across the active database. So.

Navdeep Gupta: And we definitely see an opportunity, and quite frankly, the team does a fantastic job of upselling and cross-selling the application across the active database. So, great opportunity, and that's the reason we feel confident in being able to drive the 40 to 50% growth that we have been driving on a top-line basis on the Game Changer platform. Thank you.

Speaker Change: Great opportunity and that's that's the reason, we feel confident in being able to drive a 40% to 50% drop that we have been driving on a topline basis on the game changing platform.

Speaker Change: Thank you.

Operator: And that concludes our question and answer session, and I will now turn the conference back over to Lauren Hobart, President and CEO, for closing comments. Thank you all for your interest in Dick's Sporting Goods, and we're excited to see you next quarter. Thank you. This concludes today's conference call. Thank you for your participation and you may now disconnect.

Speaker Change: And that concludes our question and answer session and I will now turn the conference back over to Lauren Hobart, President and CEO for closing comments.

Speaker Change: Thank you all for your interest in Dick's Sporting goods and we're excited to see you next quarter. Thank you.

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

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Yeah.