Q1 2026 Dick's Sporting Goods Inc Earnings Call

May 27, 2026

Speaker #1: Hello everyone, thank you for joining us, and welcome to the DICK'S SPORTING GOODS Q1 2026 earnings conference call. After today's prepared remarks, we will host a question-and-answer session.

Operator: Hello, everyone. Thank you for joining us, and welcome to the DICK'S Sporting Goods Q1 2026 Earnings Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Nate Guggia, VP of Investor Relations. Nate, please go ahead.

Speaker #1: If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Nate Gilch, VP of Investor Relations.

Speaker #1: Nate, please go ahead.

Speaker #2: Good morning, everyone, and thank you for joining us to discuss our first quarter 2026 results. 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.

Nate Guggia: Good morning, everyone, and thank you for joining us to discuss our Q1 2026 results. 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. A playback of today's call will be archived on our investor relations website, located at investors.dicks.com, for approximately 12 months. As a reminder, we will be making forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Any such statements should be considered in conjunction with cautionary statements in our earnings release 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. We assume no obligation to update any of these forward-looking statements or information.

Nate Gilch: Good morning, everyone, and thank you for joining us to discuss our Q1 2026 results. 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. A playback of today's call will be archived on our investor relations website, located at investors.dicks.com, for approximately 12 months. As a reminder, we will be making forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Any such statements should be considered in conjunction with cautionary statements in our earnings release 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. We assume no obligation to update any of these forward-looking statements or information.

Speaker #2: A playback of today's call will be archived on our investor relations website, located at investors.dicks.com, for approximately 12 months. As a reminder, we will be making forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements.

Speaker #2: 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.

Speaker #2: Including our last annual report on Form 10-K, as well as cautionary statements made during this call. We assume no obligation to update any of these forward-looking statements or information.

Speaker #2: Please refer to our investor relations website to find the reconciliation of our non-GAAP financial measures referenced in today's call. And finally, a couple of admin items.

Nate Guggia: Please refer to our investor relations website to find the reconciliation of our non-GAAP financial measures referenced in today's call. Finally, a couple of admin items. First, a quick reminder on our comparable sales reporting. Foot Locker will be included in our quarterly comp calculations beginning in Q4 of 2026, which will mark the start of their 14th full month of operations post-acquisition. Finally, for future scheduling purposes, we are tentatively planning to publish our Q2 2026 earnings results on 25 August 2026. With that, I'll now turn the call over to Ed.

Nate Gilch: Please refer to our investor relations website to find the reconciliation of our non-GAAP financial measures referenced in today's call. Finally, a couple of admin items. First, a quick reminder on our comparable sales reporting. Foot Locker will be included in our quarterly comp calculations beginning in Q4 of 2026, which will mark the start of their 14th full month of operations post-acquisition. Finally, for future scheduling purposes, we are tentatively planning to publish our Q2 2026 earnings results on 25 August 2026. With that, I'll now turn the call over to Ed.

Speaker #2: First, a quick reminder on our comparable sales reporting. Foot Locker will be included in our quarterly comp calculations beginning in Q4 of 2026, which will mark the start of their 14th full month of operations post-acquisition.

Speaker #2: And finally, for future scheduling purposes, we are tentatively planning to publish our second quarter 2026 earnings results on August 25, 2026. And with that, I'm going to turn the call over to Ed.

Speaker #3: Thanks, Nate. Good morning, everyone. We delivered a very strong first quarter and want to thank our more than 100,000 teammates around the globe for their commitment and execution.

Ed Stack: Thanks, Nate. Good morning, everyone. We delivered a very strong Q1 and want to thank our more than 100,000 teammates around the globe for their commitment and execution. Sport is one of the hottest categories in the country today. We're in the middle of a real sports moment, and the intersection of sport and culture has never been stronger. You see it everywhere, from rising valuations of professional sports teams, to the level of investment from streaming platforms and networks, and the strong demand from advertisers to be a part of live sports. Looking ahead, with major global events like the 2026 World Cup and the 2028 Summer Olympics in LA, we're entering one of the most exciting multi-year periods for sport in this country's history, making it an incredibly powerful and compelling platform for consumer engagement today.

Speaker #3: SPORT is one of the hottest categories in the country today. We're in the middle of a real sports moment, and the intersection of sport and culture has never been stronger.

Speaker #3: You see it everywhere—from rising valuations of professional sports teams to the level of investment from streaming platforms and networks, and the strong demand from advertisers to be a part of live sports.

Speaker #3: Looking ahead, with major global events like the 2026 World Cup and the 2028 Summer Olympics in LA, we're entering one of the most exciting multi-year periods for sport in this country's history.

Speaker #3: Making it an incredibly powerful and compelling platform for consumer engagement today. This environment plays directly to our strengths. And DICK'S is leading from the front.

Ed Stack: This environment plays directly to our strengths, and DICK'S is leading from the front. Across our stores, our digital capabilities, and our now expanded global reach, we are connecting with athletes in more ways and with more relevance than at any point in our history. What sets us apart is our ability to create and maintain that connection across performance, lifestyle, and culture throughout the DICK'S ecosystem. House of Sport and Field House are reshaping what retail can be and redefining how brands come to life. GameChanger keeps us deeply embedded in youth sports, unlocking new levels of opportunity and partnership. Golf Galaxy reinforces our leadership in a category with strong participation and rising cultural relevance.

Speaker #3: Across our stores, our digital capabilities, and our now expanded global reach, we are connecting with athletes in more ways and with more relevance than at any point in our history.

Speaker #3: What sets us apart is our ability to create and maintain that connection across performance, lifestyle, and culture throughout the DICK'S ecosystem. House of Sport and Field House are reshaping what retail can be and redefining how brands come to life.

Speaker #3: Game changer keeps us deeply embedded in youth sports, unlocking new levels of opportunity and partnership. Golf Galaxy reinforces our leadership in a category with strong participation and rising cultural relevance.

Speaker #3: And with Foot Locker, we reach a different consumer connected deeply with sneaker culture, basketball, and lifestyle, and extend our influence even further. That's why the best, the most exciting sports brands in the world want to partner with us.

Ed Stack: With Foot Locker, we reach a different consumer, connected deeply with sneaker culture, basketball, and lifestyle, and extend our influence even further. That's why the best and most exciting sports brands in the world want to partner with us. Not just to sell product, but to launch ideas, tell stories, and scale concepts globally during the most important moments in sports. That's why athlete engagement with us continues to grow. We're investing in our business from a position of strength. We're playing offense for the long term, and it's widening the gap between us and the rest of the industry. Our vision is to build the best sports company in the world, and we're just getting started. Our leadership showed up clearly with an exceptionally strong performance in our DICK'S business this quarter with comps of 6%.

Speaker #3: Not just to sell product, but to launch ideas, tell stories, and scale concepts globally during the most important moments in sports. And that's why athlete engagement with us continues to grow.

Speaker #3: We're investing in our business from a position of strength. We're playing offense for the long term. And it's widening the gap between us and the rest of the industry.

Speaker #3: Our vision is to build the best sports company in the world, and we're just getting started. Our leadership showed up clearly with an exceptionally strong performance in our DICK'S business this quarter, with comps of 6%.

Speaker #3: Our team executed at a very high level, and we're all proud of their contributions. Now, turning to Foot Locker. We remain highly focused on the transformational opportunity ahead and on delivering an inflection point in sales and profitability, starting with back to school.

Ed Stack: Our team executed at a very high level, and we're all proud of their contributions. Turning to Foot Locker. We remain highly focused on the transformational opportunity ahead and on delivering an inflection point in sales and profitability, starting with back to school. Our excitement and confidence continue to build as we execute our plan, and in Q1, we saw encouraging proof points. For the global Foot Locker business, we delivered slightly positive comps and operating income with merch margin improvement. This marks the first quarter of positive comps for the Foot Locker business since Q4 of 2024. North America performed even better with a 1.4% comp growth, and within this, the U.S. Foot Locker banner comped up 6.4%.

Speaker #3: Our excitement and confidence continue to build as we execute our plan. And in Q1, we saw encouraging proof points. For the global Foot Locker business, we delivered slightly positive comps and operating income.

Speaker #3: With merch margin improvement, this marks the first quarter of positive comps for the Foot Locker business since Q4 of 2024. North America performed even better.

Speaker #3: With a 1.4% comp growth. And within this, the US Foot Locker banner comped up 6.4%. The Foot Locker banner is our largest and most critical part of the Foot Locker business.

Ed Stack: The Foot Locker banner is our largest and most critical part of the Foot Locker business, so it's where we focus first, and the results we're seeing reinforce our turnaround approach. We have a clear plan, and it's working. We're raising the low end of our full-year comp sales expectations for the Foot Locker business. We now expect comp sales growth of 1.5% to 3%, up from 1% to 3% previously. A major driver of this strong execution is our store teammates. Our stripers and blue shirts are energized by the renewed momentum in investment in our stores. They are deeply embedded in their communities. They're the closest to the consumer because they are the consumer. Wearing the stripes in their own backyard is a badge of honor, and that authenticity shows up every day in how they tell the sneaker story.

Speaker #3: So it's where we focused first. And the results we're seeing reinforce our turnaround approach. We have a clear plan and it's working. We're raising the low end of our full-year comp sales expectations for the Foot Locker business.

Speaker #3: We now expect comp sales growth of 1.5% to 3%, up from 1% to 3% previously. A major driver of this strong execution is our store teammates.

Speaker #3: Our stripers and blue shirts are energized by the renewed momentum in investment in our stores. They are deeply embedded in their communities. They're the closest to the consumer because they are the consumer.

Speaker #3: Wearing the stripes in their own backyard is a badge of honor, and that authenticity shows up every day in how they tell the sneaker story.

Speaker #3: Our fast break stores are performing exceptionally well. Reinforcing our conviction in this capital light remodel initiative. During the first quarter, we expanded fast break by approximately 90 stores.

Ed Stack: Our FastBreak stores are performing exceptionally well, reinforcing our conviction in this capital-light remodel initiative. During Q1, we expanded FastBreak by approximately 90 stores, bringing the total to approximately 100. Across that expanded footprint, our FastBreak stores delivered double-digit comps in Q1 and meaningful merchandise margin improvement. By back to school, we plan to have approximately 250 FastBreak stores across Foot Locker, Kids Foot Locker, and Champs globally, with further expansion ahead of the holiday season. Our FastBreak initiative is built on retail fundamentals, a more focused shoe wall, improved storytelling, and the reintroduction of apparel with curated and complimentary offerings. These updates are fast to implement, typically completed in a few days, and require limited capital. At its core, it's Retail 101. When you execute it with discipline, it works.

Speaker #3: Bringing the total to approximately 100. Across that expanded footprint, our fast break stores delivered double-digit comps in Q1 and meaningful merchandise margin improvement. By back to school, we plan to have approximately 250 fast break stores across Foot Locker, Kids Foot Locker, and Champs globally.

Speaker #3: With further expansion ahead of the holiday season, our Fast Break initiative is built on retail fundamentals: a more focused shoe wall, improved storytelling, and the reintroduction of apparel with curated and complementary offerings.

Speaker #3: These updates are fast to implement. Typically completed in a few days. And require limited capital. At its core, it's retail 101. And when you execute it with discipline, it works.

Speaker #3: Looking across the entire Foot Locker business, we are very excited about our assortment heading into back to school. This marks the first season where our team had full control over the buys and we feel great about the product that will be in the stores.

Ed Stack: Looking across the entire Foot Locker business, we are very excited about our assortment heading into back to school. This marks the first season where our team had full control over the buys, and we feel great about the product that will be in the stores. This will be supported by a bold brand relaunch designed to bring consumers back to the Foot Locker brand in a meaningful way. Behind the scenes, we are strengthening the fundamentals of the Foot Locker business. With improvements in our supply chain, we're moving product faster and getting it to the right stores. We're playing greater discipline around pricing and using real-time data to drive better decisions and sharper execution. Finally, our brand partners remain fully engaged. They want a strong, growing Foot Locker, and they are leaning in with us as their largest global partner.

Speaker #3: This will be supported by a bold brand relaunch designed to bring consumers back to the Foot Locker brand in a meaningful way. Behind the scenes, we are strengthening the fundamentals of the Foot Locker business.

Speaker #3: With improvements in our supply chain, we are moving product faster and getting it to the right stores. We are playing greater discipline around pricing, and using real-time data to drive better decisions and sharper execution.

Speaker #3: Finally, our brand partners remain fully engaged. They want a strong, growing Foot Locker, and they are leaning in with us as their largest global partner.

Speaker #3: In closing, the early results we're seeing reinforce our conviction in both the opportunity and our approach. We have the right plan, the right team, and the right partnerships in place to unlock the full potential of the Foot Locker business.

Ed Stack: In closing, the early results we're seeing reinforce our conviction in both the opportunity and our approach. We have the right plan, the right team, and the right partnerships in place to unlock the full potential of the Foot Locker business. With that, Lauren will walk you through the continued momentum across the DICK'S business. Lauren, I'll turn it over to you.

Speaker #3: With that, Lauren, I'll walk you through the continued momentum across the DICKS business. Lauren, I'll turn it over to you.

Speaker #4: Thank you, Ed, and good morning, everyone. Building on Ed's comments, it's exciting to see sport driving sustained energy and engagement across the consumer landscape.

Lauren Hobart: Thank you, Ed, good morning, everyone. Building on Ed's comments, it's exciting to see sport driving sustained energy and engagement across the consumer landscape. I am so proud of how our team has turned that athlete demand into a very strong quarter of execution for the company. At DICK'S, the team continues to excel at bringing our four strategic pillars to life. A compelling omnichannel athlete experience, a differentiated on-trend product assortment, a deep engagement with the DICK'S brand, and the strength of our teammates and culture. In Q1, we delivered comp sales growth of 6% in the DICK'S business, with growth in average ticket and transactions. These strong comps were on top of a 4.5% increase last year and a 5.3% increase in 2024 as we continue to gain market share. One thing that remains notable is the consistency in athlete behavior.

Speaker #4: I am so proud of how our team has turned that athlete demand into a very strong quarter of execution for the company. At DICKS, the team continues to excel at bringing our four strategic pillars to life.

Speaker #4: A compelling omnichannel athlete experience, a differentiated on-trend product assortment, a deep engagement with the DICKS brand, and the strength of our teammates and culture.

Speaker #4: In Q1, we delivered comp sales growth of 6% in the DICKS business. With growth in average ticket and transactions. These strong comps were on top of a 4.5% increase last year and a 5.3% increase in 2024 as we continue to gain market share.

Speaker #4: One thing that remains notable is the consistency in athlete behavior. We saw more athletes purchase from us with more frequent purchases and they spent more each trip compared to the prior year.

Lauren Hobart: We saw more athletes purchase from us with more frequent purchases, and they spent more each trip compared to the prior year. We continue to see a healthy consumer across income demographics with no signs of trading down, alongside particularly strong engagement from our younger athletes. Our consumer is really responding to newness and innovation, which is showing up throughout the DICK'S business, with broad-based growth across footwear, apparel, and hard lines. Given our continued confidence in the DICK'S business, we are raising the low end of our expectations for comparable sales and now expect growth of 2.5% to 4%, up from 2% to 4% previously. At the high end of our expectations for the DICK'S business, we now expect to drive approximately 30 basis points of operating margin expansion on a non-GAAP basis.

Speaker #4: We continue to see a healthy consumer across income demographics with no signs of trading down, alongside particularly strong engagement from our younger athletes. Our consumer is really responding to newness and innovation, which is showing up throughout the DICK'S business.

Speaker #4: With broad-based growth across footwear, apparel, and hardlines. Given our continued confidence in the DICKS business, we are raising the low end of our expectations for comparable sales and now expect growth of 2.5% to 4%, up from 2% to 4% previously.

Speaker #4: At the high end of our expectations for the DICKS business, we now expect to drive approximately 30 basis points of operating margin expansion on a non-gap basis.

Speaker #4: At the consolidated company level, we continue to expect full-year non-gap earnings per diluted share in the range of $13.50 to $14.50. This continued strength reflects the progress we're making across our strategic priorities.

Lauren Hobart: At the consolidated company level, we continue to expect full-year non-GAAP earnings per diluted share in the range of $13.50 to $14.50. This continued strength reflects the progress we're making across our strategic priorities. First, we continue to drive growth in our key categories, supported by national brand partners, new and emerging brands, and our own vertical brands. One of our biggest advantages is the depth of our brand relationships. We are a critical partner to the most important brands in our industry, and that shows up in the access, allocation, and marketing support we receive. Our partnerships span leading global brands like Nike, Adidas, and Fanatics, as well as fast-growing emerging brands such as Vuori and Gymshark. These relationships are deeply collaborative, and they continue to bring the best products and innovation to our athletes.

Speaker #4: First, we continue to drive growth in our key categories. Supported by national brand partners, new and emerging brands, and our own vertical brands. One of our biggest advantages is the depth of our brand relationships.

Speaker #4: We are a critical partner to the most important brands in our industry, and that shows up in the access, allocation, and marketing support we receive.

Speaker #4: Our partnerships span leading global brands like Nike, Adidas, and Fanatics, as well as fast-growing emerging brands such as Dior and Gymshark. These relationships are deeply collaborative, and they continue to bring the best product and innovation to our athletes.

Speaker #4: Second, we're continuing to reposition and elevate our real estate and store portfolio through House of Sport and Fieldhouse. These concepts are redefining the athlete experience in physical retail and strengthening how our brand partners show up in our stores.

Lauren Hobart: Second, we're continuing to reposition and elevate our real estate and store portfolio through House of Sport and Field House. These concepts are redefining the athlete experience in physical retail and strengthening how our brand partners show up in our stores. In Q1, we opened one House of Sport location and two Field House locations. Our plans are on track to open approximately 13 and 20 more, respectively, for this year. We also continue to see extremely strong interest from landlords, giving us access to some truly iconic retail locations, including Palm Beach Gardens, Cerritos, and Tysons Corner. Given these new opportunities, we can be selective in the locations we choose, which will drive greater long-term shareholder value. Third, we are continuing to enhance how we serve athletes seamlessly across channels.

Speaker #4: In Q1, we opened one House of Sport location and two Fieldhouse locations. Our plans are on track to open approximately 13 and 20 more, respectively, this year.

Speaker #4: We also continue to see extremely strong interest from landlords, giving us access to some truly iconic retail locations, including Palm Beach Gardens, Cerritos, and Tysons Corner.

Speaker #4: Given these new opportunities, we can be selective in the locations we choose, which will drive greater long-term shareholder value. Third, we are continuing to enhance how we serve athletes seamlessly across channels.

Speaker #4: In our stores, we're evolving the experience with a greater focus on elevated service and selling, rooted in deep sport and product expertise. At the same time, we are investing in our digital experience, enhancing our site and our app.

Lauren Hobart: In our stores, we're evolving the experience with a greater focus on elevated service and selling rooted in deep sport and product expertise. At the same time, we are investing in our digital experience, enhancing our site and our app. We recently announced the upcoming summer launch of Coach by DICK'S, our AI-powered digital agent, representing a significant step forward in how we innovate for the athlete. Coach extends the expertise of our teammates into a personalized conversational experience, helping athletes make more confident decisions across product, training, and services. We also remain very excited about our DICK'S Media Network, a high-growth asset that allows our partners to reach athletes in very relevant ways across our House of Sport locations and digital channels. We're thrilled to have recently opened our Fort Worth distribution center, enhancing our ability to serve athletes in the fast-growing Texas market and surrounding areas.

Speaker #4: We recently announced the upcoming summer launch of Coach by DICK'S, our AI-powered digital agent, representing a significant step forward in how we innovate for the athlete.

Speaker #4: Coach extends the expertise of our teammates into a personalized conversational experience helping athletes make more confident decisions across product, training, and services. We also remain very excited about our DICKS media network, a high-growth asset that allows our partners to reach athletes in very relevant ways across our House of Sport locations and digital channels.

Speaker #4: And we're thrilled to have recently opened our Fort Worth distribution center, enhancing our ability to serve athletes in the fast-growing Texas market and surrounding areas.

Speaker #4: Finally, we continue to scale GameChanger as a key driver of engagement and innovation within the DICK'S ecosystem. Earlier this year, GameChanger launched the most comprehensive product update in its history, introducing 1080p live streaming, automated game highlight reels, and a new suite of AI-powered coaching tools designed to help coaches coach smarter.

Lauren Hobart: Finally, we continue to scale GameChanger as a key driver of engagement and innovation within the DICK'S ecosystem. Earlier this year, GameChanger launched the most comprehensive product update in its history, introducing 1080p live streaming, automated game highlight reels, and a new suite of AI-powered coaching tools designed to help coaches coach smarter. The impact has been immediate and measurable. In Q1, approximately 50% of all games covered on the platform were streamed live, a record for the business. At scale, the reach is significant. In the last month alone, more games were streamed on GameChanger than have been played in the entire history of Major League Baseball. In closing, the consistency that we're seeing across the DICK'S business validates our strategies and the discipline of our execution.

Speaker #4: The impact has been immediate and measurable. In Q1, approximately 50% of all games covered on the platform were streamed live, a record for the business.

Speaker #4: At scale, the reach is significant. In the last month alone, more games were streamed on Game Changer than have been played in the entire history of major league baseball.

Speaker #4: In closing, the consistency that we're seeing across the DICK'S business validates our strategies and the discipline of our execution. We are operating from a position of strength, and we remain confident in our ability to drive sustained growth while investing for the future.

Lauren Hobart: We are operating from a position of strength, and we remain confident in our ability to drive sustained growth while investing for the future. With that, I'll turn it over to Navdeep to share more detail on our financial results and our 2026 outlook. Navdeep, over to you.

Speaker #4: With that, I'll turn it over to Navdeep to share more detail on our financial results and our 2026 outlook. Navdeep, over to you.

Speaker #5: Thank you, Lauren, and good morning, everyone. Let's begin with a brief review of our first quarter results. Consolidated net sales increased 62.7% to $5.16 billion, driven by a 1.79 billion contribution from Foot Locker Business and a 6% comp increase for the DICKS business as we continue to gain market share.

Navdeep Gupta: Thank you, Lauren, and good morning, everyone. Let's begin with a brief review of our Q1 results. Consolidated net sales increased 62.7% to $5.16 billion, driven by a $1.79 billion contribution from Foot Locker business and a 6% comp increase for the DICK'S business as we continue to gain market share. DICK'S business comp reflects a 5.5% increase in average ticket and a 0.5% increase in transactions, with a broad-based trend across footwear, apparel, and hard lines. On a two-year and a three-year basis, DICK'S business comp increased 10.5% and 15.8%, respectively. Pro forma comps for the Foot Locker business accelerated, increasing 0.6% for the Q1, driven by a 1.4% increase in North America. Notably, as Ed highlighted, the US Foot Locker banner delivered a 6.4% comp growth, reflecting strong underlying performance as we focus on driving improvements in this important part of the Foot Locker business.

Speaker #5: DICK'S business comp reflects a 5.5% increase in average ticket and a 0.5% increase in transactions, with broad-based strength across footwear, apparel, and hardlines.

Speaker #5: On a two-year and a three-year basis, DICKS business comp increased 10.5% and 15.8% respectively. Proforma comps for the Foot Locker business accelerated, increasing 0.6% for the quarter driven by a 1.4% increase in North America.

Speaker #5: Notably, as Ed highlighted, the US Foot Locker banner delivered a 6.4% comp growth, reflecting strong underlying performance as we focus on driving improvements in this important part of the Foot Locker business.

Speaker #5: From a margin perspective, consolidated non-gap gross profit was 1.73 billion, or 33.42% of net sales, down 328 basis points from last year. The year-over-year decline was primarily driven by mixed impact from the Foot Locker business.

Navdeep Gupta: From a margin perspective, consolidated non-GAAP gross profit was $1.73 billion or 33.42% of net sales, down 328 basis points from last year. The year-over-year decline was primarily driven by mix impact from the Foot Locker business. Turning to our expenses. On a non-GAAP basis, consolidated SG&A expenses increased 68.4%, or $541 million to $1.33 billion, and deleveraged 88 basis points compared to last year's non-GAAP results. $480 million of this consolidated increase was driven by Foot Locker business. As expected, for the DICK'S business, SG&A deleveraged 31 basis points, driven by investments digitally and in store. Consolidated non-GAAP operating income was $378.4 million or 7.33% of net sales, compared to $360.4 million or 11.35% of net sales last year. For the DICK'S business, operating income was $361 million or 10.69% of net sales.

Speaker #5: Turning to our expenses, on a non-gap basis, consolidated SG&A expenses increased 68.4%, or $541 million, to $1.33 billion, and deleveraged 88 basis points compared to last year's non-gap results.

Speaker #5: $480 million of this consolidated increase was driven by the Foot Locker business. As expected, for the DICK'S business, SG&A deleveraged 31 basis points, driven by investments digitally and in-store.

Speaker #5: Consolidated non-GAAP operating income was $378.4 million, or 7.33% of net sales, compared to $360.4 million, or 11.35% of net sales last year. For the DICK'S business, operating income was $361 million, or 10.69% of net sales.

Speaker #5: And for the Foot Locker business, we delivered operating income of $17.5 million, or 0.98% of net sales. Moving down the P&L, consolidated non-gap income tax expense was $106.2 million, or a rate of 28.8%.

Navdeep Gupta: For the Foot Locker business, we delivered operating income of $17.5 million or 0.98% of net sales. Moving down the P&L, consolidated non-GAAP income tax expense was $106.2 million, or a rate of 28.8%. Our effective tax rate for the quarter was shaped by mix of our earnings in foreign jurisdictions, including the effect of purchase accounting adjustments, particularly in Europe, where losses do not currently generate a tax benefit due to valuation allowances. In total, we delivered consolidated non-GAAP earnings per diluted share of $2.90 for the quarter, which includes the dilutive impact of the 9.6 million shares issued in connection with the Foot Locker acquisition. This compares to our non-GAAP earnings per diluted share of $3.37 last year. On a GAAP basis, our earnings per diluted shares were $3.54.

Speaker #5: Our effective tax rate for the quarter was shaped by a mix of our earnings in foreign jurisdictions, including the effect of purchase accounting adjustments, particularly in Europe, where losses do not currently generate a tax benefit due to valuation allowances.

Speaker #5: In total, we delivered consolidated non-gap earnings per diluted share of $2.90 for the quarter, which includes the dilutive impact of the 9.6 million shares issued in connection with the Foot Locker acquisition.

Speaker #5: This compares to our non-GAAP earnings per diluted share of $3.37 last year. On a GAAP basis, our earnings per diluted share were $3.54. This includes $174 million of pre-tax litigation and other settlements, partially offset by $97 million of pre-tax Foot Locker acquisition-related costs.

Navdeep Gupta: This includes $174 million of pre-tax litigation and other settlements, partially offset by $97 million of pre-tax Foot Locker acquisition related costs. For additional details, you can refer to the non-GAAP reconciliation tables of our press release that we issued this morning. Now, looking to our balance sheet. We ended the quarter with approximately $1 billion of cash and cash equivalents and no borrowings on our $2 billion unsecured credit facility. Inventory was $5.42 billion, reflecting the addition of the Foot Locker business, while the DICK'S business inventory was up just 3%. Importantly, we believe in our inventory remains well positioned to support our growth plans across both DICK'S and Foot Locker businesses. Turning to capital allocation. Net capital expenditures were $289 million, and we paid $114 million in quarterly dividends. We also repurchased 719,000 shares of our stock for $141 million at an average price of $196.38.

Speaker #5: For additional details, you can refer to the non-GAAP reconciliation tables of our press release that we issued this morning. Now, looking to our balance sheet, we ended the quarter with approximately $1 billion of cash and cash equivalents, and no borrowings on our $2 billion unsecured credit facility.

Speaker #5: Inventory was 5.42 billion, reflecting the addition of the Foot Locker business, while the DICKS business inventory was up just 3%. Importantly, we believe in our inventory remains well-positioned to support our growth plans across both DICKS and Foot Locker businesses.

Speaker #5: Turning to capital allocation, net capital expenditures were $289 million, and we paid $114 million in quarterly dividends. We also repurchased 719,000 shares of our stock for $141 million, at an average price of $196.38.

Speaker #5: Before I move to our outlook, I would like to provide a brief update on the expectations surrounding the Foot Locker acquisition. First, as part of a clean-out of the garage actions and broader merger and integration work, we previously estimated and continue to expect total pre-tax charges of between $500 million and $750 million.

Navdeep Gupta: Before I move to our outlook, I would like to provide a brief update on the expectations surrounding the Foot Locker acquisition. First, as part of our clean out of the garage actions and broader merger and integration work, we previously estimated and continue to expect total pre-tax charges of between $500 million and $750 million. During 2025, we recognized $390 million of these charges. The remaining pre-tax charges will be incurred over 2026 and the medium term as we complete this work. We now expect approximately $200 million of these remaining charges in 2026, compared to our original expectation of $150 million. These charges have been excluded from today's non-GAAP EPS outlook. Second, we remain confident in achieving previously announced $100 to $125 million of cost synergies over the medium term, primarily from procurement and direct sourcing efficiencies.

Speaker #5: During 2025, we recognized $390 million of these charges. The remaining pre-tax charges will be incurred over 2026, and the medium term, as we complete this work.

Speaker #5: We now expect approximately $200 million of these remaining charges in 2026, compared to our original expectation of $150 million. These charges have been excluded from today's non-gap EPS outlook.

Speaker #5: Second, we remain confident in achieving the previously announced $100 to $125 million of cost synergies over the medium term, primarily from procurement and direct sourcing efficiencies.

Speaker #5: A portion of these synergy benefits are expected in 2026, which have been reflected in our outlook. Now, moving to our outlook for full year 2026.

Navdeep Gupta: A portion of these synergy benefits are expected in 2026, which have been reflected in our outlook. Moving to our outlook for full year 2026. Our guidance continues to reflect the strength of the DICK'S business and the turnaround efforts underway at Foot Locker, all within the context of the dynamic geopolitical and macroeconomic environment. Based on our confidence in DICK'S and Foot Locker, we are raising the low end of our comp sales guidance for both businesses. Beginning with the DICK'S business, we now expect full year comp sales growth in the range of 2.5% to 4%, compared to our prior growth expectation of 2% to 4%. From a pacing standpoint, we continue to expect higher comps in H1, driven in large part by the timing of the World Cup.

Speaker #5: Our guidance continues to reflect the strength of the DICKS business and the turnaround efforts underway at Foot Locker. All within the context of the dynamic geopolitical and macroeconomic environment.

Speaker #5: Based on our confidence in DICKS and Foot Locker, we are raising the low end of our comp sales guidance for both businesses. Beginning with the DICKS business, we now expect full year comp sales growth in the range of 2.5% to 4%, compared to our prior growth expectation of 2% to 4%.

Speaker #5: From a pacing standpoint, we continue to expect higher comps in the first half, driven in large part by the timing of the World Cup.

Speaker #5: We continue to expect pre-opening expenses to be approximately $90 million for the full year for the DICK'S business. From an operating margin standpoint, we now expect the high end of our expectation for the DICK'S business to be approximately 11.4%.

Navdeep Gupta: We continue to expect pre-opening expenses to be approximately $90 million for the full year for the DICK'S business. From an operating margin, we now expect the high end of our expectation for the DICK'S business to be approximately 11.4%, which is above our prior expectation of approximately 11.2%. From a pacing standpoint, we continue to expect operating margins for the DICK'S business to decline in H1 and expand in H2 due to the timing of the planned investments and synergy savings. The most significant pressure is expected in Q2, driven primarily by the timing of planned SG&A investments, including marketing tied to the World Cup and the timing of pre-opening expenses to support a higher number of House of Sport openings in this year's Q2 compared to last year. Now turning to Foot Locker business.

Speaker #5: Which is above our prior expectation of approximately $11.2%. From a pacing standpoint, we continue to expect operating margins for the DICKS business to decline in the first half, and expand in the second half, due to the timing of the planned investments and synergy savings.

Speaker #5: The most significant pressure is expected in Q2, driven primarily by the timing of planned SG&A investments, including marketing tied to the World Cup and the timing of pre-opening expenses to support a higher number of House of Sport openings in this year's second quarter compared to last year.

Speaker #5: Now, turning to Foot Locker business, we now expect full year proforma comp sales growth in the range of 1.5% to 3%, compared to our prior growth expectation of 1% to 3%.

Navdeep Gupta: We now expect full-year pro forma comp sales growth in the range of 1.5% to 3%, compared to our prior growth expectation of 1% to 3%. We now expect operating income for the Foot Locker business to be in the range of $110 million to $150 million, compared to our prior expectation of $100 million to $150 million. From a pacing standpoint, we continue to expect comp sales and operating income performance to be back half-weighted. At the consolidated company level, we continue to expect full-year non-GAAP earnings per diluted share in the range of $13.50 to $14.50. Our earnings guidance is now based on approximately 90.5 million average diluted shares outstanding, which includes the dilutive impact of 9.6 million shares issued in connection with the Foot Locker acquisition. We now anticipate a consolidated company effective tax rate of approximately 27% for the full year.

Speaker #5: We now expect operating income for the Foot Locker business to be in the range of $110 million, to $150 million, compared to our prior expectation of $100 million, to $150 million.

Speaker #5: From a pacing standpoint, we continue to expect comp sales and operating income performance to be back half-weighted. At the consolidated company level, we continue to expect full year non-gap earnings per diluted share in the range of $13.50, to $14.50.

Speaker #5: Our earnings guidance is now based on approximately 90.5 million average diluted shares outstanding, which includes the dilutive impact of 9.6 million shares issued in connection with the Foot Locker acquisition.

Speaker #5: We now anticipate a consolidate company effective tax rate of approximately 27% for the full year. This is approximately 150 basis points higher than our original expectation, as the dynamics we saw in Q1 are expected to persist albeit to a lesser degree.

Navdeep Gupta: This is approximately 150 basis points higher than our original expectation, as the dynamics we saw in Q1 are expected to persist, albeit to a lesser degree. This increase in tax rate unfavorably impacts our non-GAAP EPS guidance by approximately $0.25 for the full year and is included in our updated outlook. Finally, from a capital allocation standpoint, investing in our business to grow our leadership position and drive profitable organic growth across both DICK'S and Foot Locker business remains our top priority. We now expect net capital expenditures of approximately $1.4 billion for the full year, split roughly 70/30 across DICK'S and Foot Locker businesses. For the DICK'S business, our investment will be focused on store growth, relocations, and improvement in our existing stores, as well as ongoing investments in technology and supply chain.

Speaker #5: This increase in tax rate unfavorably impacts our non-GAAP EPS guidance by approximately $0.25 for the full year and outlook. Finally, from a capital allocation standpoint, investing in our business to grow our leadership position and drive profitable organic growth across both DICK'S and Foot Locker businesses remains our top priority.

Speaker #5: We now expect net capital expenditures of approximately $1.4 billion for the full year, split roughly 70/30 across DICK'S and Foot Locker businesses. For the DICK'S business, our investment will be focused on store growth, relocations, and improvement in our existing stores, as well as ongoing investments in technology and supply chain.

Speaker #5: For the Foot Locker business, our investments will be focused on re-energizing our store fleet, including our Past Break initiative. In closing, we are pleased with the strength in the DICK'S business and confident in the path to improved performance at the Foot Locker business.

Navdeep Gupta: For the Foot Locker business, our investments will be focused on re-energizing our store fleet, including our Fast Break initiative. In closing, we are pleased with the strength in the DICK'S business and confident in the path to improved performance at the Foot Locker business. This concludes our prepared remarks. Thank you for your interest in DICK'S Sporting Goods. Operator, you may now open the line for questions.

Speaker #5: This concludes our prepared remark. Thank you for your interest in DICKS Sporting Goods, Operator Yuminao opened the line for questions.

Speaker #1: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 to raise your hand.

Operator: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Our first question comes from the line of Simeon Gutman with Morgan Stanley. Your line is open. Please go ahead.

Speaker #1: To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #1: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Our first question comes from the line of Simeon Goutman with Morgan Stanley.

Speaker #1: Your line is open. Please go ahead.

Speaker #2: Hi. Good morning, everyone. A good quarter. So I know we're going to spend some time on Foot Locker this morning, but I want to start with the DICKS business.

Simeon Gutman: Hi, good morning, everyone. A good quarter. I know we're going to spend some time on Foot Locker this morning, but I want to start with the DICK'S business. A 6% comp is a very strong start to the year. Can you talk about the key drivers of the performance, how much reflects underlying momentum versus any one-time benefits in the quarter, and then how you're thinking about comps from here?

Speaker #2: A 6% comp is a very strong start to the year. Can you talk about the key drivers of the performance? How much reflects underlying momentum versus any one-time benefits in the quarter?

Speaker #2: And then how you're thinking about comps from here?

Speaker #3: Thanks, Simeon. Yes, we are really proud of the quarter and the results we just put out. The DICKS comp increased 6%. This was definitely not a result of a one-time factor.

Lauren Hobart: Thanks, Simeon. Yes, we are really proud of the quarter and the results we just put up. The DICK'S comps increased 6%, which is definitely not a result of a one-time factor. We saw broad-based strength across the entire portfolio. We saw strength in footwear and apparel and hardlines, within hardlines feeling really terrific about team sports and licensed and trading cards and golf. There was tremendous growth across the whole portfolio. Really, this is due to the fact that our long-term strategies are working. We've been leaning into differentiated products, elevated products. We're finding that consumers are really resonating with newness, with technical innovation. At the same time, we've repositioned our portfolio with House of Sport and Field House, and the best expression of retail is cascading through our entire business.

Speaker #3: We saw broad-based strength across the entire portfolio. We saw strength in footwear, apparel, and hardlines. Within hardlines, feeling really terrific about team sports, licensed and trading cards, and golf.

Speaker #3: There was tremendous growth across the whole portfolio, and really, this is due to the fact that our long-term strategies are working. We've been leaning into differentiated products, elevated product.

Speaker #3: We're finding that consumers are really resonating with newness, with technical innovation, and at the same time, we've repositioned our portfolio with house of sport and field house and the best expression of retail is cascading through our entire business.

Speaker #3: Our entire team is completely focused on elevating the athlete experience in our stores and throughout our digital ecosystem, and that is a big factor in our results.

Navdeep Gupta: Our entire team is completely focused on elevating the athlete experience in our stores and throughout our digital ecosystem, That is a big factor of our results. The other thing I would point to is, as Ed mentioned in his prepared remarks, sport is one of the hottest categories in the country today, and we sit right at the intersection of sport and culture. We're feeling that excitement in North America going into the World Cup. It's going to continue for many years going into LA '28, We happen to just be in a fantastic lane. For many quarters now, we have seen our consumer hold up really, really well. We haven't seen trade down again this quarter. We didn't see trade down from best to better or better to good.

Lauren Hobart: Our entire team is completely focused on elevating the athlete experience in our stores and throughout our digital ecosystem, That is a big factor of our results. The other thing I would point to is, as Ed mentioned in his prepared remarks, sport is one of the hottest categories in the country today, and we sit right at the intersection of sport and culture. We're feeling that excitement in North America going into the World Cup. It's going to continue for many years going into LA '28, We happen to just be in a fantastic lane. For many quarters now, we have seen our consumer hold up really, really well. We haven't seen trade down again this quarter. We didn't see trade down from best to better or better to good.

Speaker #3: The other thing I would point to is, as Ed mentioned in his prepared remarks, sport is one of the hottest categories in the country today.

Speaker #3: And we sit right at the intersection of sport and culture. We're feeling that excitement in North America going into the World Cup. It's going to continue for many years, going into LA28.

Speaker #3: And we happen to just be in a fantastic lane for many quarters now. We have seen our consumer hold up really, really well. We haven't seen trade down.

Speaker #3: Again, this quarter, we didn't see trade down from best to better or better to good. We saw growth again this quarter, all income demographics.

Lauren Hobart: We saw growth again this quarter through all income demographics. We added 1.5 million new athletes to our database. Really, really pleased with the quarter that we just had and the momentum that it signals in our business.

Speaker #3: And we added 1.5 million new athletes to our database. So, really, really pleased with the quarter that we just had and the momentum that it signals in our business.

Speaker #2: And my follow-up is on profit and flow-through. So the 6% comps, we would have expected a little stronger flow-through. For us, strong comps typically means more full price selling.

Simeon Gutman: My follow-up is on profit and flow-through. The 6% comps, we would have expected a little stronger flow-through. For us, strong comps typically means more full price selling, so good for gross and then nice SG&A leverage. Can you talk about what's unique either to Q1, it may be unique to 2026 given World Cup and the timing of House of Sport. Is it more or less a whole year where we don't get what operating leverage the business throws off and we'll see more strength as we go into next year? Thank you.

Speaker #2: So, good for gross, and then nice SG&A leverage. So can you talk about what's unique either to Q1? It may be unique to 2026, given World Cup and the timing of House of Sport.

Speaker #2: And is it more of or less a whole year where we don't get what the operating leverage the business throws off? And we'll see more strength as we go into next year.

Speaker #2: Thank you.

Speaker #3: Okay. Simeon, this is really, really good question. I'm glad you asked it. Our business is performing exactly as we had expected it to and as we guide it.

Navdeep Gupta: Okay. Simeon, it's a really, really good question. I'm glad you asked it.

Lauren Hobart: Okay. Simeon, it's a really, really good question. I'm glad you asked it. Our business is performing exactly as we had expected it to and as we guided. In H1, we said we were going to have higher comps than H2, and we also were going and making significant investments in our business, which we did. We invested in World Cup and we'll continue to do that in Q2. For H1, we did expect stronger comps, lower flow-through. When we look at the full year guidance, we just took our high end of our guidance up 20 basis points. We guided to 10, we're now guiding to 30 basis points of improvement at the high end of the range, 11.4%. We're absolutely expecting leverage for the full year. Just as we've been planning, it's going to come in H2, and that's just due to the timing of investments.

Lauren Hobart: Our business is performing exactly as we had expected it to and as we guided. In H1, we said we were going to have higher comps than H2, and we also were going and making significant investments in our business, which we did. We invested in World Cup and we'll continue to do that in Q2. For H1, we did expect stronger comps, lower flow-through. When we look at the full year guidance, we just took our high end of our guidance up 20 basis points. We guided to 10, we're now guiding to 30 basis points of improvement at the high end of the range, 11.4%. We're absolutely expecting leverage for the full year. Just as we've been planning, it's going to come in H2, and that's just due to the timing of investments.

Speaker #3: So in the first half, we said we were going to have higher comps. Then the second half, and we also were going and making significant investments in our business, which we did.

Speaker #3: We invested in World Cup and will continue to do that in Q2. So for the first half, we did expect stronger comps. Lower flow-through.

Speaker #3: But when we look at the full-year guidance, we just took our high-end of our guidance up 20 basis points. So we guided to 10.

Speaker #3: We're now guiding to 30 basis points of improvement at the high end of the range, 11.4%. We're absolutely expecting leverage for the full year.

Speaker #3: Just as we've been planning, it's going to come in the second half. And that's just due to the timing of investments. So again, we feel terrific about the business and really good about the leverage for this year and the operating profit flow-through.

Lauren Hobart: Again, we feel terrific about the business and really good about the leverage for this year and the operating profit flow-through.

Speaker #2: Okay. Thanks. Good luck.

Simeon Gutman: Okay, thanks. Good luck.

Speaker #3: Thanks, Simeon.

Lauren Hobart: Thanks.

Speaker #1: Our next question comes from the line of Brian Nagel with Oppenheimer. Your line is open. Please go ahead.

Operator: Our next question comes from the line of Brian Nagel with Oppenheimer. Your line is open. Please go ahead.

Speaker #4: Hey, good morning. Sorry, do you want to add my congratulations? Nice quarter. So my first question, I do want to focus on Foot Locker.

Brian Nagel: Hey, good morning. Sorry, I do want to add my congratulations. Nice quarter. My first question, I do want to focus on Foot Locker. In your commentary and lately, you've expressed a lot of confidence in the turnaround, clearly we saw some encouraging signs here in Q1, particularly in the United States. Can you just maybe talk more about where the turnaround is today, focus again on the progress you're seeing with the Fast Break refresh and just your overall positioning and health of that inventory within the Foot Locker channel?

Speaker #4: So in your commentary lately, you've expressed a lot of confidence in the turnaround. Clearly, we saw some encouraging signs here in the first quarter.

Speaker #4: Particularly in the United States. So, can you just kind of maybe talk more about where the turnaround is today? A focus again on the progress you're seeing with the Fast Break refresh and just your overall positioning and health of that inventory within the Foot Locker channel?

Speaker #5: Sure. Thanks, Brian. We're right on schedule with what we plan to do with Foot Locker. We've been through last year and we've cleaned out the garage from an inventory standpoint.

Ed Stack: Sure. Thanks, Brian. We're right on schedule with what we plan to do with Foot Locker. All through last year, we cleaned out the garage from an inventory standpoint, so our inventory is in terrific shape. We've repaired vendor relationships with key brands that were somewhat disenchanted with Foot Locker. We've repaired those vendor relationships, and they're now fully supportive of Foot Locker and really want and need Foot Locker to be a stable, growing retailer as part of their portfolio. We've repaired those relationships. We've rebuilt the management teams, and we've remerchandised the stores with what we're doing with Fast Break. From a Fast Break standpoint, which are those early stores that we reconceptualized what the wall would look like, as you've heard me say before, the Foot Locker footwear wall was really a run-on sentence.

Speaker #5: So our inventory has been in terrific shape. We've repaired vendor relationships with key brands that were somewhat disenchanted with Foot Locker. We've repaired those vendor relationships.

Speaker #5: And they're now fully supportive of Foot Locker and really want Foot Locker and need Foot Locker to be a stable, growing retailer as part of their portfolio.

Speaker #5: So we've repaired those relationships. We've rebuilt the management teams and we've remerchandised the stores of what we're doing with fast break. From a fast break standpoint, which are those early stores that we preconceptualised what the wall would look like as you've heard me say before, the Foot Locker footwear wall was really a run-on sentence.

Speaker #5: It was just filled with a bunch of shoes. And there was nothing important. What we did is we took all those shoes off the wall.

Ed Stack: It was just filled with a bunch of shoes, and there was nothing important. What we did is we took all those shoes off the wall. We reduced roughly 30% of the SKU choices and focused on key styles, key colors, and key stories so that when the consumer came in, they knew what was important. Those Fast Break stores, as we've talked about, have done extremely well. They comped double digits in the Q1. We're really excited about that. As I said, the inventory's in good shape. We've augmented some of the assortment that was in the Q1. That helped the business. Remember, we've always said that the inflection point here was going to begin in back to school, which is the first time that the team bought the entire assortment.

Speaker #5: We reduced roughly 30% of the SKU choices and focused on key styles, key colors, and key stories, so that when the consumer came in, they knew what was important.

Speaker #5: In those fast break stores, as we've talked about, have been extremely well. They constantly double digits. In the first quarter. So we're really excited about that.

Speaker #5: As I said, the inventory is in good shape. We've augmented some of the assortment with in the first quarter. That helped the business. And remember, we've always said that the inflection point here was going to begin in back to school, which is the first time that the team bought the entire assortment.

Speaker #5: So we're we feel that inflection point in back to school is going to happen. And we will have bought the product. And that's the first time we'll be back marketing and doing a relaunch of the Foot Locker brand in a big marketing effort, which we are really pretty excited about.

Ed Stack: We feel that inflection point in back to school is going to happen, and we bought the product. That's the first time we'll be back marketing and doing a relaunch of the Foot Locker brand and a big marketing effort, which we are really pretty excited about. As you said, we did focus our attention on the biggest part of the business, which is the US Foot Locker locations, and those stores comped at over a 6% comp in Q1. We're right on schedule with our plan. Our plan is working, and we continue to be really excited about the Foot Locker business going forward.

Speaker #5: And as you said, we did focus our attention on the biggest part of the business, which is the US Foot Locker locations. And those stores comped at over a 6% comp in the first quarter.

Speaker #5: So our plan, we're right on schedule with our plan. Our plan is working. And we continue to be really excited about the Foot Locker business going forward.

Speaker #4: Well, thanks, Ed. I appreciate all that. So I guess as my follow-up, I just want to follow up on the fast break. So I've spent my associates and I've spent a lot of time looking at the Foot Locker stores that you've refreshed, the fast break stores.

Brian Nagel: Thanks, Ed. I appreciate all that. This is my follow-up. I just want to follow up on the Fast Break. My associates and I have spent a lot of time looking at the Foot Locker stores that you've refreshed, the Fast Break stores. We want to make sure I understand this. They do look much cleaner and much better organized.

Speaker #4: And what makes you understand this? So, they do look much cleaner, much better organized. But there's no new product. I mean, the product we're seeing in those stores is still legacy products, so to say.

Ed Stack: Yep.

Brian Nagel: There's no new product. I mean, the product we're seeing in those stores is still legacy products, so to say. You haven't introduced new product. What's driving those sales is just having a much cleaner, better organized existing product?

Speaker #4: You haven't introduced new product. So what's driving those sales is just having a much cleaner, better organised existing product.

Speaker #5: For right now, yes. And when you've been into the fast break stores, you've seen although it's not perfect yet, you've seen an increase in the apparel business in the apparel presentation that we've got there.

Ed Stack: Right now, yes. When you've been into the Fast Break stores, you've seen, although it's not perfect yet, you've seen an increase in the apparel business, in the apparel presentation that we've got there. Foot Locker previously, I won't say they exited the apparel business, but they significantly scaled back the apparel business. We've brought apparel back in, and we've done the best we could cobbling together because we didn't buy this assortment. We did talk to brands, and they got us some additional allocation of product so that we'd be in better stock. As I've said, the first time that we were able to buy the product and build that assortment is for the back to school season. That's where you'll see that inflection point.

Speaker #5: Foot Locker had previously—I won't say they exited the apparel business, but they significantly scaled back the apparel business. So we've brought the apparel back in.

Speaker #5: And we've done the best we could cobbling together because we didn't buy this assortment. We did talk to brands and they got us some additional allocation of product that so that we'd be in better stock.

Speaker #5: But as I've said, the first time that we were able to buy the product and build that assortment is for the back to school season.

Speaker #5: And that's where you'll see that inflection point.

Speaker #4: Got it. I appreciate it. Congrats again.

Brian Nagel: Got it. Appreciate it. Congrats again.

Ed Stack: Sure. Thanks.

Speaker #5: Thanks.

Speaker #1: As a reminder, if you would like to ask a question, please press star one to raise your hand. Our next question comes from the line of Kate McShane with Goldman Sachs.

Operator: Our next question comes from the line of Kate McShane with Goldman Sachs. Your line is open. Please go ahead.

Speaker #1: Your line is open. Please go ahead.

Speaker #6: Hi, good morning. Thanks for taking our question. It looks like your capital expenditure outlook came down a little bit for fiscal year '26, and we wondered if you could explain what the change was there?

Kate McShane: Hi. Good morning. Thanks for taking our question. It looks like your capital expenditure outlook came down a little bit for fiscal year 2026. We wondered if you could explain what the change was there. Is there any breakdown you can give between Foot Locker and DICK'S? Is there a way to think about CapEx from the Fast Break investment, but also by banner for Foot Locker?

Speaker #6: Is there any breakdown you can give between Foot Locker and Dicks? And is there a way to think about CapEx x from the fast break investment, but also by banner for Foot Locker?

Speaker #7: Good morning, Ed. This is Nathaniel. So, two-part question there. Let me start with the outlook that we have provided for the CapEx. We actually gave a little bit of a detailed outlook on the CapEx that went to the banners.

Navdeep Gupta: Good morning, guys. This is Navdeep. Two-part question there. Let me start with the outlook that we have provided for the CapEx. We actually gave a little bit of a detailed outlook on the CapEx between the banners, and right now we expect net CapEx for the DICK'S banner to be about $1 billion for 2026, and for Foot Locker to be about $400 million. As you can imagine, the vast majority of that $400 million of the capital investment in Foot Locker will be associated with the investments that we are making in our stores, including the Fast Break stores.

Speaker #7: And right now, we expect net CapEx for the DICK'S banner to be about $1 billion for 2026, and for Foot Locker to be about $400 million.

Speaker #7: As you can imagine, the vast majority of that 400 million dollars of the capital investment in Foot Locker will be associated with the investments that we are making in our stores, including the fast break stores.

Speaker #7: But as Ed called out, the fast break stores are capitalized. But at the same time, when you think about the magnitude of investment in terms of the number of stores we'll be investing in, that is a significant portion of the CapEx investment for Foot Locker for '26.

Navdeep Gupta: As Ed called out, the Fast Break stores are capitalized. At the same time, when you think about the magnitude of investment in terms of the number of stores we'll be investing in, that is a significant portion of the CapEx investment for Foot Locker for 2026. In terms of where the efficiencies came, the efficiency or the decrease in our CapEx outlook by about $100 million came predominantly in the DICK'S business. It's part of what Lauren talked about, the confidence that we have on our operating margin expansion on a full-year basis.

Speaker #7: In terms of where the efficiencies came, the efficiency or the decrease in our CapEx outlook by about 100 million dollars came predominantly in the Dicks business.

Speaker #7: It's part of what Lauren talked about, like the confidence that we have on our operating margin expansion, on a full-year basis. The team has been working on productivity initiatives for the last several years.

Navdeep Gupta: The team has been working on productivity initiatives for the last several years, and what you're seeing is the manifestation of that work showing up both in the operating margin leverage expectation on a full year as well as the capital efficiency of $100 million of reduction in CapEx outlook for DICK'S for full year.

Speaker #7: And it's what you're seeing is the manifestation of that work showing up both in the operating margin leverage expectation on a full year, as well as the capital efficiency of 100 million dollars of reduction in CapEx outlook for Dicks for full year.

Speaker #6: Okay. Thank you. And just as a follow-up question, with the strength in the Foot Locker US business, can you maybe talk through what you're seeing with the Foot Locker Europe stores currently?

Kate McShane: Okay, thank you. Just as a follow-up question, with the strength in the Foot Locker US business, can you maybe talk through what you're seeing with the Foot Locker Europe stores currently?

Speaker #7: Yeah. Europe, the European business is, as we expected, is a little bit behind where the US business is. We are just in the process of implementing the fast break strategy into Europe.

Ed Stack: Yeah. The European business, as we expected, is a little bit behind where the US business is. We are just in the process of implementing the Fast Break strategy into Europe. We've got a couple stores done there, and the results are pretty promising. We're making some other changes there from a management standpoint. All in all, the European business is about where we anticipated it to be, but it's definitely a bit behind the US business. We expect that to be that way through the end of the year. We do expect it will catch up.

Speaker #7: We've gotten a couple of stores done there, and the results are pretty promising. We're making some other changes there from a management standpoint, but all in all, the European business is about where we anticipated it to be. But it's definitely a bit behind the U.S. business.

Speaker #7: And we expect that to be that way through the end of the year. But we do expect that we'll catch up.

Speaker #1: Our next question comes from the line of Adrian Yee with Barclays. Your line is open. Please go ahead.

Operator: Our next question comes from the line of Adrienne Yih with Barclays. Your line is open. Please go ahead.

Speaker #8: Great. Thank you for taking my question. Good morning and well done. Ed and Lauren, I guess my question starts with kind of what macro backdrop do you kind of envision for the rest of the year and the guidance?

Adrienne Yih: Great, thank you for taking my question, and good morning, and well done. Ed and Lauren, I guess my question starts with what macro backdrop do you envision for the rest of the year and the guidance? Secondarily, Lauren, I really liked the comment on the intersection of sport and culture. Sport and lifestyle, and you have the two brands to go after both of those. Can you talk about level of innovation, competition, and maybe focus on some of the footwear fashion trends? Performance versus lifestyle versus maybe non-athletic, just the ebbs and flows of those subsector trends. Thank you so much.

Speaker #8: And then secondarily, Lauren, I really like the comment on the intersection of sport and culture. Right? So sport and lifestyle. And you have the two brands to go after both of those.

Speaker #8: So can you talk about kind of the level of innovation, competition, and maybe kind of focus on some of the footwear fashion trends? So performance versus lifestyle versus maybe non-athletic.

Speaker #8: Just the ebbs and flows of kind of those subsector trends. Thank you so much.

Speaker #9: Great, thanks, Adrian. As we've looked at the guidance, the macro, we've balanced all of the confidence that we have in our business and the momentum that I talked about in my first answer with an appropriate level of caution about the macroeconomic environment and geopolitical environment.

Lauren Hobart: Great. Thanks, Adrienne. As we've looked at the guidance, the macro, we balanced all of the confidence that we have in our business and the momentum that I talked about in my first answer with some caution, appropriate level of caution about the macroeconomic environment, geopolitical environment. That is why we've left the top end of our comp range the same both at both DICK'S and Foot Locker. Overall, our strategies are working. The things that we can control are working, and we're feeling really good about them. In terms of the intersection of sports and culture, we see a lot of innovation, and within footwear in particular, we're really pleased with things like performance running, which is doing really well. Even basketball, women's basketball is doing really well.

Speaker #9: And that is why we've left the top end of our comp range staying both Dicks and Foot Locker. But overall, our strategies are working.

Speaker #9: The things that we can control are working. And we're feeling really good about them. In terms of the intersection of sports and culture, we see a lot of innovation.

Speaker #9: And within footwear in particular, we're really pleased with things like performance running, which is doing really, really well. Even basketball—women's basketball is doing really well.

Speaker #9: Some of the lifestyle footwear is doing very well. It's 0.2 Retro Run in particular. And some of the other brands are doing really terrific.

Lauren Hobart: Some of the lifestyle footwear is doing very well, with Point Two Retro Run in particular, and some of the other brands are doing really terrific, and training and recovery. Footwear is a very strong business for us. We drove growth in the past quarter, we'll continue to drive growth into the future, and we're feeling very bullish.

Speaker #9: And training and recovery. So we're seeing footwear is a very strong business for us. We drove growth in the past quarter. We'll continue to drive growth into the future.

Speaker #9: And we're feeling very bullish.

Speaker #8: Great. And my follow-up, Ed, you mentioned the brand relationships—kind of porting over that strength to Foot Locker. Can you kind of give us specific examples of what that means?

Adrienne Yih: Great, my follow-up. Ed, you mentioned the brand relationships porting over that strength to Foot Locker. Can you give us specific examples of what that means? Is it faster turns? Obviously access to exclusives. Really what are the muscle that you're porting over from DICK'S to Foot Locker? Thank you so much.

Speaker #8: Is it faster turns, obviously access to exclusives? Really kind of what are the muscle that you're porting over from Dicks to Foot Locker? Thank you so much.

Speaker #7: Sure. I think there's a number of things. The fact that Foot Locker will now have a different allocation of product that they didn't have before.

Ed Stack: Sure. I think there's a number of things. The fact that Foot Locker will now have a different allocation of product that they didn't have before, access to certain products that they didn't have before, and the confidence of these brands that Foot Locker is a viable go-forward business that can help them grow. Which a number of them had lost, and we've talked about this, and they've talked to me about this, that they had really lost confidence in Foot Locker, that they didn't think Foot Locker was really going to be able to present their product in the way that they wanted it presented to protect their brands and with the relationship that we have between DICK'S and Foot Locker. All these relationships have been repaired.

Speaker #7: Access to certain products that they didn't have before, and the confidence of these brands that Foot Locker is a viable go-forward business that can help them grow.

Speaker #7: Which a number of them had kind of lost, and we've talked about this. And they talked to me about this, that they had really lost confidence in Foot Locker.

Speaker #7: That they didn't think Foot Locker was really going to be able to kind of present their product in the way that they wanted it presented.

Speaker #7: Protect their brands and with the relationship that they have we have with between Dicks and Foot Locker these brands all these relationships have been repaired.

Speaker #7: And what we've got from allocation standpoint, what we've got from an exclusive standpoint on either styles and/or colors going forward, stories that we'll be able to tell around different athletes and around different aspects of what's going on in sport or sneaker culture is very different.

Ed Stack: What we've got from an allocation standpoint, what we've got from an exclusive standpoint on either styles and or colors going forward, stories that we'll be able to tell around different athletes and around different aspects of what's going on in sport or sneaker culture is very different. You'll see a lot of that start to come to light to an even greater degree in Q1 of next year as we're beginning to build those assortments now. It's an entirely different relationship with the brands, and if you talk to the group at Foot Locker, the buyers, the stripers, et cetera, they'll see a very different brand relationships in the past and in going forward.

Speaker #7: And you'll see a lot of that start to come to light to an even greater degree in Q1 of next year, as we're bidding to begin to build those assortments now.

Speaker #7: But it's an entirely different relationship with the brands, and if you talk to the group in Foot Locker—the buyers, the stripers, etc.—they'll see very different brand relationships going forward.

Speaker #7: In the past and then going forward.

Speaker #8: Fantastic. Thank you very much. Best of luck.

Adrienne Yih: Fantastic. Thank you very much. Best of luck.

Speaker #7: Thank you.

Ed Stack: Thank you.

Speaker #1: Our next question comes from the line of Bob Durble with BTIG. Your line is open. Please go ahead.

Operator: Our next question comes from the line of Bob Drbul with BTIG. Your line is open. Please go ahead.

Bob Drbul: Hi. Good morning. Thanks for taking the question. I was wondering if you could expand a bit more on the core DICK'S Sporting Goods segment, the gross margin performance, and the decline that we saw this quarter.

Speaker #10: Hi. Good morning. Thanks for taking the question. I was wondering if you could expand a bit more on the core DICK'S Sporting Goods segment.

Speaker #10: The gross margin performance and the decline that we saw this quarter.

Navdeep Gupta: Hey, Bob. On the DICK'S gross margin decline of about 35 basis points on a year-over-year basis, two big drivers of that, and both in line with our expectation. The first is the headwind that we saw on supply chain expenses. One, as you can anticipate with the higher fuel costs, that was a headwind on a year-over-year basis, as well as we opened our sixth distribution center in Q1, and it was in the tail end of Q1. Really excited to have had that new infrastructure available to be able to service the athletes in a much more efficient way, as well as to serve our stores. However, that did end with a little bit of a headwind on a year-over-year basis when you open that fixed infrastructure.

Speaker #11: And Bob, the Dicks gross margin decline about 35 basis points on a year-over-year basis. Two big drivers on that. And both in line with our expectation.

Speaker #11: The first is the headwind that we saw in supply chain expenses. One, as you can anticipate, with the higher fuel costs. That was a headwind on a year-over-year basis.

Speaker #11: As well as, we opened our sixth distribution center in Q1, and it was in the tail end of Q1. Really excited to have that new infrastructure available to be able to service the athletes in a much more efficient way.

Speaker #11: As well as to serve our stores. However, that did end with a little bit of a headwind on a year-over-year basis when you opened that fixed infrastructure.

Speaker #11: Outside of that, we saw a little bit of a mixed headwind. Driven by the fact like Lauren talked about the exciting new business and a tremendous amount of growth opportunity we see in the credit card business.

Navdeep Gupta: Outside of that, we saw a little bit of a mixed headwind, driven by the fact, like Lauren talked about, the exciting new business and the tremendous amount of growth opportunity we see in the trading card business. It's bringing in new customers. It's allowing us to go and kind of tap the market around the collectibles as well as trading cards. However, that does come with a slightly lower gross margin, and that was a mixed impact that we saw in Q1. I'll finish by saying, if you look at our outlook that we have shared for the full year, we expect our gross margin to expand now with the updated outlook that we have provided.

Speaker #11: It's bringing in new customers. It's allowing us to go and kind of tap the market around the collectibles as well as trading cards. However, that does come with a slightly gross lower gross margin.

Speaker #11: And that was a mixed impact that we saw in Q1. I'll finish by saying, if you look at our outlook that we have shared for the full year, we expect our gross margin to expand now with the updated outlook that we have provided.

Speaker #10: Great, thank you. And then if I could just ask one more question. On the basketball business, can you talk about maybe what you're seeing at the Dick's segment versus what you're seeing at the Foot Locker stores in basketball?

Bob Drbul: Great. Thank you. If I could just ask one more question. On the basketball business, can you talk about maybe what you're seeing at the DICK'S segment versus what you're seeing at the Foot Locker stores in basketball?

Speaker #7: Sure. Basketball business is coming back. Basketball had slowed down a little bit. The basketball business is coming back in really big fashion and really built around the women's basketball business.

Ed Stack: Sure. Basketball business, it is coming back. Basketball had slowed down a little bit. The basketball business is coming back in a really big fashion and really built around the women's basketball business. Whether that's Sabrina, A'ja Wilson, that group of athletes have had a real impact, and boys and girls, young men and women, are buying that product. We're pretty excited about it around the DICK'S business. We're very excited about it around the Foot Locker business. Basketball is going to be quite good, and we're pretty excited about it across both banners.

Speaker #7: Whether that's Sabrina, Asia, that group of athletes have had a real impact. And boys and girls, young men and women are buying that product.

Speaker #7: And we're pretty excited about it around the DICK'S business. We're very excited about it around the Foot Locker business. So basketball is really been— is going to be quite good.

Speaker #7: And we're pretty excited about it across both banners.

Speaker #10: Great. Thank you very much.

Bob Drbul: Great. Thank you very much.

Speaker #1: Our next question comes from the line of Michael Lasser with UBS. Your line is open. Please go ahead.

Operator: Our next question comes from the line of Michael Lasser with UBS. Your line is open. Please go ahead.

Speaker #12: Good morning. Thank you so much for taking my question. On the outlook for the core Dick's business, you mentioned that you expect the gross margin to improve over the course of the year.

Michael Lasser: Good morning. Thank you so much for taking my question. On the outlook for the core DICK'S business, you mentioned that you expect the gross margin to improve over the course of the year. Presumably, collectibles will remain a source of pressure. What do you expect outside of the supply chain drag becoming less of an impact? What do you expect the offset will be from this collectibles pressure and any other driver that you're considering over the course of the next few quarters? Thank you.

Speaker #12: Presumably, collectibles will remain a source of pressure. So what do you expect outside of the supply chain drag becoming less of an impact? What do you expect the offset will be from this collectibles pressure in any other driver that you're considering over the course of the next few quarters?

Speaker #12: Thank you.

Speaker #11: Good morning, Michael. I would say that our percentage with the gross margin outlook and like you called out, like fuel pressure, we are contemplating at least that pressure persisting into the near future.

Navdeep Gupta: Good morning, Michael. I would say that there are puts in place with the gross margin outlook. I'd like to call out fuel pressure. We have contemplated, at least, that pressure persisting into the near future. We have talked about the sixth DC opening for this year, as well as the occupancy headwind as we look to continue to invest in repositioning our portfolio. The mixed trade headwind that you called out from trading cards is also contemplated. However, the offsetting factors continue to be pretty consistent with what has been driving our gross margin expansion. The first and foremost, the access and allocation that Ed just talked about. That continues to be the key driver of us continuing to have confidence in the gross margin and the merch margin expansion. The work that our pricing team is doing, the work that our vertical brand teams are doing.

Speaker #11: We have talked about the six DC opening for this year as well as the occupancy headwind as we look to continue to invest in repositioning our portfolio.

Speaker #11: And the mixed trade headwind that you called out from trading cards is also contemplated. However, the offsetting factors continue to be pretty consistent with what has been driving our gross margin expansion.

Speaker #11: The first and foremost, the access and allocation that Ed just talked about. That continues to be the key driver of us continuing to have confidence in the gross margin and the merch margin expansion.

Speaker #11: The work that our pricing team is doing, the work that our vertical brand teams are doing, and again, vertical brands carry 7 to 9 hundred basis points of higher margin rate.

Navdeep Gupta: Again, vertical brands carry 700 to 900 basis points of higher margin rate. As we penetrate more there and those brands are doing fantastic for us, that's the driver. Then outside of that, like Lauren talked this morning about our excitement for the DICK'S Media Network, which is continuing to have a strong growth, as well as the growth that we are seeing in our GameChanger business. Those will be the drivers that will be offsetting some of the headwinds that I just mentioned.

Speaker #11: So as we penetrate more there and those brands are doing fantastic for us, that's the driver. And then outside of that, like Lauren talked this morning about our excitement for the Dicks media network, which is continuing to have a strong growth, as well as the growth that we are seeing in our game changer business.

Speaker #11: Those will be the drivers. That will be offsetting some of the headwinds that I just mentioned.

Speaker #12: Okay, Michael, if I can just add to that. I wanted to say the collectibles business, the trading card business, are such exciting incremental opportunities.

Lauren Hobart: Michael, if I can just add to that. I wanted to say the collectibles business, the trading card business, are such exciting incremental opportunities. While they do have a lower margin than our overall mix, I think thinking of them as a pressure or any sort of negative thing is the wrong way to look at it. It's incremental gross margin dollars, bringing people in more frequently, appealing to a younger audience, totally incremental from the rest of our store and driving trips. We're thrilled about that business, and at this point, the math will work so that we can grow gross margins for the full year.

Speaker #12: So while they do have a lower margin than our overall mix, I think thinking of them as a pressure or any sort of negative thing is the wrong way to look at it.

Speaker #12: It's incremental. Gross margin dollars bringing people in more frequently. Appealing to a younger audience. Totally incremental for the rest of our store and driving trips.

Speaker #12: So, we're thrilled about that business. And to Navdeep's point, the math will work, so that we can grow the gross margin for the full year.

Speaker #10: Lauren, I'd be remiss if I didn't ask you if you wanted to quantify the contribution from collectibles and trading cards in the first quarter.

Michael Lasser: Lauren, obviously, I'd be remiss if I didn't ask you if you wanted to quantify the contribution from collectibles and trading cards in Q1, but I assume.

Speaker #10: But I assume you probably won't. Okay. Okay. Well, in that case, my follow-up question is on the economics of the House of Sports location. This is now more in focus over time as you add more of these flagship stores.

Lauren Hobart: Do not.

Michael Lasser: you probably won't.

Lauren Hobart: We do not.

Michael Lasser: Okay. Well, in that case, my follow-up question is on the economics of the House of Sport location. This is now more in focus over time as you add more of these flagship stores, how have the economics changed? Are you continuing to see the same store sales growth in the second, third, and fourth year of these locations consistent with the overall chain average? Do you think the return on investment, both tangible and maybe intangible, because you do get some intangible benefits from your key stakeholders like landlords and vendors, will the tangible benefits or the tangible returns be sustained as you scale this concept to what could be 75 or more locations over time? Thank you.

Speaker #10: How have the economics changed? Are you continuing to see the same-store sales growth in the second, third, and fourth year of these locations consistent with the overall chain average?

Speaker #10: And do you think the return on investment, both tangible and maybe intangible because you do get some intangible benefits from your key stakeholders like landlords and vendors, will the tangible benefits or the tangible returns be sustained as you scale this concept to what could be 75 or more locations over time?

Speaker #10: Thank you.

Lauren Hobart: That's a great question. House of Sport is everything you just said. It has a tangible benefit, it has an intangible benefit. From a financial standpoint, we're thrilled with the results, and we do see comp store growth in years 3 and years 4 even. We've been able to confirm that. They open fully and then continue to grow, and they're driving strong sales, profitability, and ROI. Really terrific financial results. Some of the intangibles that you mentioned are really important, and that's everything from the consumer, the athlete who is coming and spending more time in our stores, significantly spending significantly higher than an average, a typical DICK'S athlete, our national brand partners. You heard us say this quarter, we've just added Vuori to our mix of brands, last quarter Gymshark.

Speaker #12: That's a great question. House of Sports is everything you just said. It has a tangible benefit. It has an intangible benefit. From a financial standpoint, we're thrilled with the results.

Speaker #12: And we do see comp store growth in years three and years four even. So we've been able to confirm that. So they opened fully.

Speaker #12: And then continue to grow. And they're driving strong sales and profitability and ROI. So really terrific financial results. But some of the intangibles that you mentioned are really important.

Speaker #12: And that's everything from the consumer, the athletes who is coming and spending more time in our stores, significantly spending significantly higher than an average atypical Dicks athlete.

Speaker #12: Our national brand partners. So this has been an incredible on-ramp for new and emerging brands. You heard us say this quarter we just added Viori to our mix of brands last quarter.

Speaker #12: Gymshark—that's all been enabled because of the House of Sport, where people can really bring a brand to life, head to toe, tell their story, and it's a fantastic way for us all to get to know each other.

Lauren Hobart: That's all been enabled because of the House of Sport, where people can really bring a brand to life head to toe, tell their story, and it's a fantastic way for us all to get to know each other. That's going to have tangible returns in the future that will impact the whole business. Lastly, you mentioned the landlord community. Every time we open one of these House of Sports, we're seeing incredible impact in the center or the mall. We're driving traffic, we're revitalizing different areas of communities throughout the country. That's giving us access to bigger and better, really more premium locations, which we are working really closely to curate and move forward. I think it's a win-win-win.

Speaker #12: So that's going to have tangible returns in the future that will impact the whole business. And then lastly, you mentioned the landlord community. Every time we open one of these House of Sports, we're seeing incredible impact in the center or the mall.

Speaker #12: We're driving traffic. We're revitalizing different areas of real estate throughout the country, and so that's giving us access to bigger and better—really more premium—locations, which we are working really closely to curate and move forward.

Speaker #12: So I think it's a win-win. The last thing I'll say is, House of Sport is translating not just to the House of Sport, but our Field House concept, which is our 50K prototype. It is really a mini version of a House of Sport.

Lauren Hobart: The last thing I'll say is House of Sport is translating not just to the House of Sport, but our Field House concept, which is our 50,000 prototype. It's really a mini version of a House of Sport. It's got many of the same elements, just sort of a little smaller. That's a very tangible return as well. As we look to the rest of the portfolio, the whole chain is benefiting from things like product access, experiential selling, and elevated, curated experience across the board. Really, really strong House of Sport overall.

Speaker #12: It's got many of the same elements, just a little smaller. And so that's a very tangible return as well. And as we look to the rest of the portfolio, the whole chain is benefiting from things like product access, experiential selling, and an elevated, curated experience across the board.

Speaker #12: So, really, really strong House of Sport overall.

Speaker #11: Yeah. Michael, I'll just build on what Lauren said. This was a pretty comprehensive response to the another opportunity that we are now investing into in House of Sports is the Dicks Media Network.

Navdeep Gupta: Yeah, Michael, I'll just build on what Lauren said, which was a pretty comprehensive response. Another opportunity that we are now investing into in House of Sport is the DICK'S Media Network. The way we can bring a brand to life and through the DICK'S Media Network and have that curated experience and engagement with the athlete is what the brands are really excited about. Our visual team, our marketing team have done a fantastic job not just creating that moment or to create that interaction, but be able to create that in a way that is measurable and quantifiable, that we can report the metrics back to the brands. That's what the brands are really excited about as they think about the DICK'S Media Network.

Speaker #11: So, the way we can bring a brand to life—and through the DICK'S Media Network—and have that curated experience and engagement with the athlete is what the brands are really excited about.

Speaker #11: Our visual team, our marketing team, have done a fantastic job, not just creating that moment to create that interaction, but be able to create that in a way that it's measurable and quantifiable that we can report the metrics back to the brands.

Speaker #11: And that's what the brands are really excited about as they think about the DICK'S Media Network.

Speaker #10: Understood. Thank you so much, and good luck.

Michael Lasser: Understood. Thank you so much, and good luck.

Speaker #12: Thank you.

Lauren Hobart: Thank you.

Speaker #11: Thank you.

Navdeep Gupta: Thank you.

Speaker #10: Our next question comes from the line of Paul Lejue t with Citi. Your line is open. Please go ahead.

Operator: Our next question comes from the line of Paul Lejuez with Citi. Your line is open. Please go ahead.

Speaker #13: Hey, thanks, guys. Lauren, I think you said you didn't see a trade-down between good, better, and best. Can you talk about the performance of those three—good, better, best—in terms of what is driving the comp from each of those different segments?

Paul Lejuez: Hey, thanks, guys. Lauren, I think you said you didn't see a trade-down between good, better, and best. Can you talk about the performance of those three, good, better, and best, in terms of what is driving the comp from each of those different segments? Might be as to how each of your customer segments are holding up. Second, curious to get your updated thoughts on putting some leverage on the balance sheet, maybe aggressive, more aggressive with share repurchase. Thanks.

Speaker #13: It might be through as to how each of your customer segments are holding up. And then second, curious to get your updated thoughts on putting some leverage on the balance sheet, maybe aggressive, more aggressive with share refunds.

Speaker #13: Thanks.

Speaker #12: Great. Well, I'll start with your first question. I did say we did not see a trade down between good, better, and best. And I won't get into specifics about all of the three, but I do think it's important to know that we are serving different occasions and different athletes.

Lauren Hobart: Great. Well, I'll start with your first question. I did say we did not see a trade-down between good, better, and best. I won't get into specifics about all the three, but I do think it's important to know that we are serving different occasions and different athletes. Within our portfolio, we have everything from opening price points, say our DSG brand, which is really tremendously attractive pricing, but high function, high fashion, all the way up to, if you look at technical apparel or on the equipment side, really performance driving equipment, cleats, everything. Every single one of those categories is doing well, and they all play a role in a balanced portfolio, and they're all being reacted to by different consumer groups, and that's what's driving the comp in each of those segments. I'll turn it to Navdeep to talk about the balance sheet.

Speaker #12: And within our portfolio, we have everything from opening price point, say, our DSG brand, which is really tremendously attractive pricing, but high function, high fashion, all the way up to if you look at technical apparel or on the equipment side, really performance-driving equipment, cleats, everything.

Speaker #12: So every single one of those categories is doing well. And they all play a role in a balanced portfolio. And they're all being reacted to by different consumer groups.

Speaker #12: And that's what's driving the comp in each of those segments. I'll turn this to Navdeep to talk about the balance sheet.

Speaker #11: Yeah. Apologies to build on your question on the balance sheet itself. We continue to have a very strong balance sheet, as you saw in Q1.

Navdeep Gupta: Yeah. Paul, just to build on your question on the balance sheet itself, we continue to have a very strong balance sheet. As you saw in Q1, we bought $140 million of shares already in Q1 and still finished Q1 with $1 billion of cash on the balance sheet. We have plenty of flexibility, and from a share repurchase perspective, I would say we'll continue to be opportunistic. That's the approach that we have taken, and we'll continue to take that approach into the balance of this year.

Speaker #11: We bought 140 million of shares already in Q1 and still finished the quarter one with a billion dollars of cash on the balance sheet.

Speaker #11: So we have plenty of flexibility. And from a share repurchase perspective, I would say we'll continue to be opportunistic, and that's the approach that we have taken.

Speaker #11: And we'll continue to take that approach into the balance of this year.

Speaker #13: And just one quick follow-up. The private label business—you mentioned Jaylor, and you talked about how private label generally performed versus the rest of the chain.

Paul Lejuez: Great. Just one quick follow-up. The private label business, you mentioned JB, Lauren. Can you talk about how private label generally performed versus the rest of the chain?

Speaker #12: Yeah. We're thrilled with our vertical brand business. We're thrilled with the DSG brand. The cleat brand versus brand. MaxPly is doing amazingly well. The brands are doing very well versus the rest of the chain.

Lauren Hobart: Yeah. We're thrilled with our vertical brand business. We're thrilled with the DSG brand, the CALIA brand, the VRST brand. The Maxfly is doing amazingly well. The brands are doing very well versus the rest of the chain and also continuing to expand gross margin. A vertical brand on average is 700 to 900 basis points higher in gross margin than the average DICK'S margin, and that continues. The team is doing a fantastic job continuing to leverage that. Overall, our vertical brands are a key mix. They also fill in white space opportunities in the portfolio, and we're thrilled with how they're doing.

Speaker #12: And also continuing to expand gross margin. So, a vertical brand on average is 700 to 900 basis points higher in gross margin than the average DICK'S margin.

Speaker #12: And that continues as the team is doing a fantastic job, continuing to leverage that. So overall, our vertical brands are a key mix. They're also filling white space opportunities in the portfolio.

Speaker #12: And we're thrilled with how they're doing.

Speaker #13: Hey, good luck.

Navdeep Gupta: Good luck.

Paul Lejuez: Good luck.

Speaker #12: Thanks.

Lauren Hobart: Thanks.

Speaker #10: Our next question comes from the line of Christopher Horvers with JPMorgan. Your line is open. Please go ahead.

Operator: Our next question comes from the line of Christopher Horvers with J.P. Morgan. Your line is open. Please go ahead.

Speaker #14: Thanks, and good morning. And thanks for taking my question. So, my first question is—you've been very optimistic about the DICK'S business, but we're also coming off a period where there was plenty of tax stimulus that affected all levels of the consumer income spectrum.

Christopher Horvers: Thanks, good morning, and thanks for taking my question. My first question is, you've been very optimistic about the DICK'S business, but we're also coming off a period where there was plenty of tax stimulus that affected all levels of the consumer income spectrum. My question is, I was curious if you thought the Q1 benefited from tax stimulus such that two, three-year trend that you referenced is not sustainable as we look forward outside of just being prudent?

Speaker #14: So my question is, I was curious if you thought the first quarter benefited from tax stimulus, such that that two-, three-year trend that you referenced is not sustainable as we look forward, outside of just being prudent.

Speaker #11: Yeah, of course. I would say we were very happy with the overall performance that we saw across both the balance, not just DICK'S and the Foot Locker business as well. If you look at it, the outlook that we have provided continues to kind of indicate that level of confidence around the core strategies.

Navdeep Gupta: Yeah, Chris, I would say we were very happy with the overall performance that we saw across both the banners, not just DICK'S and the Foot Locker business as well. If you look at it, the outlook that we have provided continues to kind of indicate that level of confidence around the core strategies, and we are balancing that against the macroeconomic and geopolitical landscape. I don't know if I would call out that we saw any significant benefit from the stimulus checks as they were put in place. Even if you look at it within Q1 with the stimulus checks and higher gas prices, and even in those economic conditions, we delivered what we consider the really strong results across both the banners.

Speaker #11: And we are balancing that against the macroeconomic and the geopolitical landscape. I don't know if I would call out that we saw any significant benefit from the stimulus checks as they were put to date, even if you look at it within Q1 with the stimulus check and higher gas prices.

Speaker #11: And even in those economic conditions, we delivered what we consider really strong results across both the balance.

Speaker #14: Understood. And then on the footlocker side of the business, a two-part question. Can you talk about same-store sales from an AUR and transaction perspective?

Christopher Horvers: Understood. On the Foot Locker side of the business, a two-part question. Can you talk about same-store sales from an AUR and transaction perspective? One would think that it was basically AUR, but you also have all the clearance that you took in the H2, and you're going to be re-merchandising and getting better just overall in-stocks in the stores such that transactions could also accelerate. On the gross margin side of it, in the Foot Locker gross margin, was there any remnant clearance in there? Presumably, we didn't have any of the buy-in synergies in there yet. Thanks so much.

Speaker #14: One would think that it was basically AUR, but you also have all the clearance that you took in the back half. And you're going to be remerchandising and getting better just overall in stocks in the stores.

Speaker #14: Such that transactions could also accelerate. And then, on the gross margin side of it, in the Foot Locker gross margin, was there any remnant clearance in there?

Speaker #14: And presumably, we didn't have any of the buy-in synergies in there yet. Thanks so much.

Speaker #11: Yeah. I think on the gross margin piece, there was certainly still some clearance. There's always going to be clearance in the retail business. There's products that you think you're going to sell don't sell.

Ed Stack: I think on the gross margin piece, there was certainly still some clearance. There's always going to be clearance in a retail business. There's products that you think you're going to sell, don't sell. It's all part of the normal aspect of the business. We were very pleased with what we did with Foot Locker. We haven't guided right now, we're not going to report this until it becomes comp, in the Q4, the transactions and the traffic piece of this. We are right on schedule with what we're doing with Foot Locker. We're really excited about it, and we're looking forward to that back to school time period, when we have that inflection point where we've then had the ability to buy the product and also lay out the relaunch marketing campaign that we've got with Foot Locker that we're pretty excited about.

Speaker #11: It's all part of the normal aspect of the business. So we were very pleased with what we did with Foot Locker. From a—we haven't guided right now.

Speaker #11: We're not going to report this until it becomes comp. In the fourth quarter, the transactions and the traffic piece of this, but we are right on schedule with what we're doing with Foot Locker.

Speaker #11: We're really excited about it. And we're looking forward to that back-to-school time period when we have that inflection point where we've been had the ability to buy the product and also lay out the relaunch marketing campaign that we've got with footlocker that we're pretty excited about.

Speaker #14: And then there's no buy-in synergies in that gross margin yet.

Christopher Horvers: There's no buy-in synergies in that gross margin yet?

Speaker #11: No. No.

Ed Stack: No.

Speaker #14: Got it. Thanks so much. Have a great summer.

Christopher Horvers: Got it. Thanks so much. Have a great summer.

Speaker #11: Thanks.

Ed Stack: Thanks.

Speaker #10: Our next question comes from the line of Christina Fernandez with Tulsi Advisory Group. Your line is open. Please go ahead.

Operator: Our next question comes from the line of Cristina Fernandez with Telsey Advisory Group. Your line is open. Please go ahead.

Speaker #15: Thank you. Good morning. I have two questions on Foot Locker. Ed, you mentioned earlier that you were planning on doing more than 250 stores on the fast break conversions after back-to-school.

Cristina Fernández: Thank you. Good morning. I have two questions on Foot Locker. Ed, you mentioned earlier that you were planning on doing more than 250 stores on the Fast Break conversions after back to school. How many can you think you can do for the year, and with the double-digit comps, would you look to accelerate that? The second question is on the changes on the merchandising plan for back to school on the H2, can you talk about what categories the changes will be more pronounced for the consumer, whether it's basketball, casual, running, or any more details you can share? Thanks.

Speaker #15: How many can you think you can do for the year with the double-digit comps? Would you look to accelerate that in the second question is on the changes on the merchandising plan for back-to-school and the half on the back half.

Speaker #15: Can you talk about which categories will see the most pronounced changes for the consumer, whether that's basketball, casual running, or any more details you can share?

Speaker #15: Thanks.

Speaker #11: Sure. So the fast break stores will have 250 of them for back-to-school. We will continue that program through holiday. We'll have more done for holiday.

Ed Stack: Sure. The Fast Break stores, we'll have 250 of them for back to school. We will continue that program through holiday. We'll have more done for holiday. We're not going to guide to those right now. We're trying to decide how much we want to disrupt the holiday business with this. There will be more of those that will be done at the end of Q3 and the beginning of Q4. We will continue with this. We're very pleased with how the Fast Break stores are doing. As it relates to the merchandising plans for back to school season, the categories that we're focusing on, you'll see a better assortment of women's product.

Speaker #11: We're not going to guide to those right now. We're trying to decide how much we want to disrupt the holiday business with this. But there will be more of those that will be done at the end of the third quarter and the beginning of the fourth quarter.

Speaker #11: So we will continue with this. We're very pleased with how the fast break stores are doing. As it relates to the merchandising plans for back-to-school season, the categories that we're focusing on, you'll see a better assortment of women's product.

Speaker #11: You'll see a better assortment of what's going on from a basketball standpoint. And not only performance run, but also the retro run category—you'll see better product and more storytelling around that.

Ed Stack: You'll see a better assortment of what's going on from a basketball standpoint, not only performance run, but also the retro run category, you'll see better product and more storytelling around that. One of the things you'll see is you'll see better apparel product in there and a better apparel assortment around stories associated with tying back to the shoes. It'll be around footwear, apparel, and some around some key accessory items that Foot Locker had run out of in the past that we will be in stock in, and we think will certainly help the business going forward as we look at this inflection point in back to school.

Speaker #11: And then one of the things you'll see is you'll see better apparel product in there and a better apparel assortment around stories, back to the shoes.

Speaker #11: So it'll be around footwear, apparel, and some key accessory items that Foot Locker had run out of in the past that we will be in stock on. We think this will certainly help this business going forward as we look at this inflection point in back-to-school.

Speaker #10: Our final question comes from the line of Joseph Civillo with Truist Securities. Your line is open. Please go ahead.

Operator: Our final question comes from the line of Joseph Civello with Truist Securities. Your line is open. Please go ahead.

Speaker #16: Hey, guys. Thanks so much for taking my question. I was wondering, is there anything you could suss out in your data that suggests that you might be getting incremental comp lifts from the usage of GLP-1s?

Joseph Civello: Hey, guys. Thanks so much for taking my questions. I was wondering, is there anything you could suss out in your data that suggests that you might be getting incremental comp lift from the usage of GLP-1s, anything in the categories or the sizing or something like that?

Speaker #16: Anything in the categories, or the sizing, or something like that?

Speaker #17: Yeah. We don't have specific data on that. But for the long try now, we've been seeing people leaning in, and this goes back many years, even post-COVID, leaning into healthier active lifestyle, outdoor living, team general, our consumer is doing really well and leaning into these.

Lauren Hobart: Joe, we don't have specific data on that, but for the long time trying now, we've been seeing people leaning in, and this goes back many years, even post-COVID, leaning into a healthier, active lifestyle, outdoor living, team sports, golf. In general, our consumer is doing really well and leaning into these, but we don't have any specific correlation to GLP-1s.

Speaker #17: But we don't have any specific correlation to GLP-1s.

Speaker #16: Got it. And then maybe just one follow-up. Can you give any color on the promotional environment and maybe how it impacts both the DICS and the footlocker side of the business?

Joseph Civello: Got it. Maybe just one follow-up. Can you give any color on the promotional environment and maybe how it impacts both the DICK'S and the Foot Locker side of the business?

Speaker #17: Yeah. In Q1, we didn't—that wasn't a major factor. We always, on both the DICK'S and the Foot Locker side, will manage through any promotional environment.

Lauren Hobart: In Q1, that wasn't a major factor. We always, on both the DICK'S and the Foot Locker side, will manage through any promotional environment. We do what's best for the consumer and best for our business, and we're very surgical about it. We've got advanced pricing capabilities where we can really be curated in how we lean into the promotional environment. Nothing on the horizon that we're particularly concerned about.

Speaker #17: We do what's best for the consumer and best for our business. And we're very surgical about it. We've got advanced pricing capabilities where we can really be curated in how we lean into a promotional environment.

Speaker #17: But nothing on the horizon that we're particularly concerned about.

Speaker #16: Got it. Thanks so much.

Joseph Civello: Got it. Thanks so much.

Speaker #17: Thank you.

Lauren Hobart: Thank you.

Speaker #10: We have reached the end of the Q&A session. I will now turn the call back to Lauren Hobart, president and CEO for closing remarks.

Operator: We have reached the end of the Q&A session. I will now turn the call back to Lauren Hobart, President and CEO, for closing remarks.

Speaker #17: Thank you, everybody, for your interest in DICS. And thank you to our 100,000 teammates and associates around the country and around the world. We have the best team in sports, and we're very grateful for everything you do.

Lauren Hobart: Thank you, everybody, for your interest in DICK'S, and thank you to our 100,000 teammates and associates around the country and around the world. We are the best team in sports, and we're very grateful for everything you do. Thank you all.

Speaker #17: Thank you all.

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