 |
|
|
|
|
Dick's Net Income Increased 25% In 4Q
MARCH 07, 2006 --
Dick's Sporting Goods' (DKS) 4Q net income increased 25% to $54.0 million and EPS increased 23% to $1.00, as compared to prior year net income of $43.3 million and EPS of 81¢, excluding merger integration and store closing costs, and gain on sale of investment. On a GAAP basis, net income increased 28% and EPS increased 27%, as compared to the prior year net income of $42.3 million and EPS of 79¢. (coverage of conference call below)
Net sales for the quarter increased 8%, to $849.5 million. Comp-store sales increased 4.1%. The former Galyan's stores will be included in the comp-store base beginning in 2Q06. No new stores were opened during 4Q. During the year, DKS opened 26 stores, relocated four stores and closed five stores in connection with the Galyan's acquisition. As of January 28, DKS operated 255 stores, with approximately 14.7 million square feet, in 34 states.
FY net income, excluding merger integration and store closing costs, and gain on sale of investment, increased 52% to $94.5 million, and EPS increased 50% to $1.75, as compared to prior year pro forma, combined company net income of $62.1 million, and EPS of $1.17, excluding merger integration and store closing costs and gain on sale of investment.
Net income, including merger integration and store closing costs, and gain on sale of investment, increased 29% to $73.0 million, and EPS increased 26% to $1.35 as compared to prior year pro forma, combined company net income of $56.5 million, and EPS of $1.07. On a GAAP basis, net income increased 6% to $73.0 million, and EPS increased 4% to $1.35, as compared to the prior year net income of $68.9 million and EPS of $1.30. The current year included higher merger integration and store closing costs and lower gains on sale of investment than the prior year.
Net sales increased 24% to $2,625 million as compared to prior year GAAP net sales of $2,109 million. Comp-store sales increased 2.6%.
"2005 completes the most active 18 month period in our history. I could not be more proud of the effort extended by thousands of associates in completing the conversion of 44 former Galyan's stores while opening up 45 new stores in 18 months and, more importantly, executing within our existing store base. Meaningful comp-store sales gains and earnings improvement signify that the Galyan's conversion is completed. We are well positioned to enter 2006, executing a plan of strong organic growth," said Ed Stack, COB/CEO.
DKS' current outlook for FY06 (53 weeks) anticipates reporting EPS of approximately $1.77-$1.81 (which includes 27¢ of stock option expense per share). This represents an approximate 20% increase over 2005's of $1.50 (which includes 25¢ of stock option expense per share as if the Company expensed stock options, and excludes merger integration and store closing costs, and gain on sale of investment). The EPS outlook includes the effect of the adoption of SFAS 123R as of January 29, 2006. During 2006, DKS expects to incur approximately $25 million of stock option expense.
Comp-store sales are expected to increase approximately 3% on a 52-week to 52-week comparative will be included in the comp-store base beginning in 2Q06. DKS expects to open 40 new stores and relocate two stores in 2006.
As for 1Q06, DKS anticipates reporting EPS of 15¢-17¢ (which includes 7¢ of stock option expense per share and 4¢ of store relocation DKS had expensed stock options, and excludes merger integration and store closing costs). Comp-store sales are expected to increase approximately 3%-5%. DKS expects to open seven new stores and relocate two stores in 1Q.
CONFERENCE CALL HIGHLIGHTS: Management was excited that for two consecutive quarters, outdoor business comped positively. This is especially important in 4Q as the outdoor big boxes rely on the period for positive comps. Stack was concerned about the outdoor big boxes becoming very promotional to bring comps up to flat at least. DKS benefited from new high-ticket firearms the company was offered in 2H. DKS remains very positive about outdoor. While, going forward, DKS will invest more in footwear and apparel, this investment will not be made at the expense of outdoor, management stated.
DKS also befitted this past FY by the sale of The North Face apparel. Going forward, more TNF styles will be introduced into a larger store count.
DKS said it was seeing a trend among consumers for better quality gear. It was true this past FY in firearms, as well as fitness equipment and footwear. The company admitted it under-forecast demand for the higher ticket merchandise and was out of stock sooner than it expected. Fitness did very well, especially in cardio equipment (treadmills and ellipticals). In footwear, the Nike 360 sold through very well. The chain's results were helped by the success of the Pittsburgh Steelers. Apparel average unit retail was strengthened by Under Armour. Women's performance apparel impressed management last year.
In 4Q, private label grew from 9.1% to 11.7%. In FY05, it was 11.9% of sales vs 8.6%. These numbers incorporate both banners. Private label will be expanded in hard line with more offerings in fishing, camping and fitness. The private label target remains 15% of sales.
The conversion of Galyan's into the Dick's banner is complete. The marketing of the total chain is now consistent. Management expects the old Galyan's doors to have very good comps when they enter the comp base. Last year, DKS was forced to liquidate Galyan's inventory. This comp improvement could be offset by the effect of cannibalization.
DKS added 44 new doors in 2005 and upgraded its two DCs to the point they can service 460 doors. Of the 40 new doors planned for this year, a quarter of them will be in new markets. Stack said he still envisions DKS as coast-to-coast chain, but expansion be methodical. It is now the largest sporting goods retailer in the US based on sales. Stack said DKS intends to widen the difference between it and The Sports Authority in 2006, based on DKS' developmental plans
| | | | | REPRINTS
|
|
|
Quick links:
One-click access to topics in this article.
|
|
|
|
|
|
| Breaking Headlines |
 | PETA To Address Columbia Annual Meeting
MAY 19, 2006
|
| True Temper Sports Shifts To Quarterly Loss
MAY 19, 2006
|
| SGMA Show Has Commitments From 80+ Brands
MAY 19, 2006
|
| Hibbett Comps Fall Slightly
MAY 19, 2006
|
| Boardsports Village Again A Central Platform In board_ispo
MAY 19, 2006
|
| Finish Line Revises Guidance Downward
MAY 19, 2006
|
| FL North America Improves; Europe Remains Soft
MAY 18, 2006
|
| Umbro US Biz Will Slow
MAY 18, 2006
|
| Shoe Carnival 1Q Comps Rose 4.1%
MAY 18, 2006
|
| Décathlon Opens Megastore In Moscow
MAY 18, 2006
|
|
|
|
|
