DICKS SPORTING GOODS INC

Previous wording

We caution that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this Quarterly Report on Form 10-Q or made by our management involve risks and uncertainties and are subject to change based on various important factors, many of which may be beyond our control. Accordingly, our future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. Investors should not place undue reliance on forward-looking statements as a prediction of actual results. These statements can be identified as those that may predict, forecast, indicate or imply future results, performance or advancements and by forward-looking words such as“believe”, “anticipate”, “expect”, “estimate”, “predict”, “intend”, “plan”, “project”, “goal”, “will”, “will be”, “will continue”, “will result”, “could”, “may”, “might”or any variations of such words or other words with similar meanings. Forward-looking statements address, among other things, our expectations regarding our future comparable sales and earnings per share; our belief that many consumers have made lasting lifestyle changes with an increased focus on health and fitness, sports, and outdoor activities, leading to structurally higher sales; current macroeconomic conditions, including the uncertain impact of inflationary pressures, geopolitical conflicts, the end of student loan payment deferments, and elevated interest rates; supply chain disruptions, including factory closures and port congestion; changes in consumer demand for products in certain categories, including fitness and outdoor equipment; the adequacy of our cash flow; our ability to control expenses and manage inventory shrink; the impact of our business optimization efforts completed in 2023; plans to opportunistically open new stores in under-penetrated markets and leverage our real estate portfolio to capitalize on future opportunities in the near and intermediate term as our existing leases come up for renewal; the repositioning of our real estate portfolio, including plans to open additional DICK’S House of Sport stores, next generation 50,000 square foot DICK’S stores, or other specialty concept stores, including Golf Galaxy Performance Center; plans to provide our vertical brands with improved space in-store, increased marketing and expansion into additional product categories; our diversity and sustainability goals; the belief that our inventory is healthy and well-positioned to meet the demands of our athletes in 2024; our belief that the Inflation Reduction Act will not materially impact our financial results, including our estimated effective tax rate and liquidity; projections of our future profitability; projected range of capital expenditures which we expect will be concentrated on new store development, relocations and remodels, improvements within our existing stores, including converting approximately 45…

Excerpt shortened here; the source contains the full paragraph.

Current wording

We caution that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this Quarterly Report on Form 10-Q or made by our management involve risks and uncertainties and are subject to change based on various important factors, many of which may be beyond our control. Accordingly, our future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. Investors should not place undue reliance on forward-looking statements as a prediction of actual results. These statements can be identified as those that may predict, forecast, indicate or imply future results, performance or advancements and by forward-looking words such as“believe”, “anticipate”, “expect”, “estimate”, “predict”, “intend”, “plan”, “project”, “goal”, “will”, “will be”, “will continue”, “will result”, “could”, “may”, “might”or any variations of such words or other words with similar meanings. Forward-looking statements address, among other things, our expectations regarding our future comparable sales and earnings per share; our belief that many consumers have made lasting lifestyle changes with an increased focus on health and fitness, sports, and outdoor activities, leading to structurally higher sales; current macroeconomic conditions, including the uncertain impact of inflationary pressures, foreign trade, geopolitical conflicts, and elevated interest rates; supply chain disruptions, including factory closures and port congestion; changes in consumer demand for products in certain categories, including fitness and outdoor equipment; the adequacy of our cash flow; our ability to control expenses and manage inventory shrink; the impact of our business optimization efforts completed in 2023; plans to opportunistically open new stores in under-penetrated markets and leverage our real estate portfolio to capitalize on future opportunities in the near and intermediate term as our existing leases come up for renewal; the repositioning of our real estate portfolio, including plans to open additional DICK’S House of Sport stores, next generation 50,000 square foot DICK’S stores, which we refer to internally as “DICK’S Field House”, or other specialty concept stores, including Golf Galaxy Performance Center; plans to provide our vertical brands with improved space in-store, increased marketing and expansion into additional product categories; our diversity and sustainability goals; the belief that our inventory is healthy and well-positioned to meet the demands of our athletes in 2024; our belief that the Inflation Reduction Act will not materially impact our financial results, including our estimated effective tax rate and liquidity; projections of our future profitability; projected range of capital expenditures which we expect will be concentrated on new store development, relocations and remodels, improvements within our existing stores, including co…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

▪Macroeconomic conditions, including inflation, elevated interest rates and recessionary pressures, adverse changes in consumer disposable income, the reinstatement of student loan payments, consumer confidence and perception of economic conditions, geopolitical conflicts, terrorism or public unrest; wage and unemployment levels; consumer debt and the cost of basic necessities and other goods; pandemics, epidemics, contagious disease outbreaks and other public health concerns and the effectiveness of measures to mitigate such impact;

Current wording

▪Macroeconomic conditions, including inflation, ongoing elevated interest rates and recessionary pressures, adverse changes in consumer disposable income, consumer confidence and perception of economic conditions, geopolitical conflicts, terrorism or public unrest; wage and unemployment levels; consumer debt and the cost of basic necessities and other goods; pandemics, epidemics, contagious disease outbreaks and other public health concerns and the effectiveness of measures to mitigate such impact;

Previous wording

▪Our ability to grow our DICK’S House of Sport, next generation DICK’S and Golf Galaxy Performance Center Stores and execute our overall real estate strategy;

Current wording

▪Our ability to grow our DICK’S House of Sport, DICK’S Field House and Golf Galaxy Performance Center Stores and execute our overall real estate strategy;

Previous wording

▪Risks associated with our brick-and-mortar retail store model, including our ability to optimize our store lease portfolio and our distribution and fulfillment network;

Current wording

▪Risks associated with our brick-and-mortar retail store model, including our ability to optimize our store portfolio and our distribution and fulfillment network;

Previous wording

▪Risks and costs relating to changing laws and regulations affecting our business, including consumer products; firearms and ammunition; tax; foreign trade; labor; data protection; privacy; eCommerce (including AI and machine learning); and environmental, social, and governance issues;

Current wording

▪Risks and costs relating to changing laws and regulations affecting our business, including consumer products; firearms and ammunition; tax; foreign trade and tariff structures; labor; data protection; privacy; eCommerce (including AI and machine learning); and environmental, social, and governance issues;

Previous wording

▪Our current anti-takeover provisions, which could prevent or delay a change in control of the Company; and

Current wording

▪Our charter’s current anti-takeover provisions, which could prevent or delay a change in control of the Company; and

Previous wording

Through our strategic pillars of athlete experience, teammate experience, differentiated product and brand engagement, we have transformed our business to drive sustained profitable growth. As part of our strategy, we have meaningfully improved our merchandise assortment through our vertical brands and strong relationships with our key brand partners, which provide access to highly differentiated products. We have also enhanced our store selling culture and service model and incorporated additional experiential elements and technology into our stores to further engage our athletes. Lastly, we continue to innovate our omni-channel athlete experience through our DICK’S House of Sport stores, Golf Galaxy Performance Centers and our next generation 50,000 square foot DICK’S store, and believe that a key driver of our future omni-channel growth will include repositioning our store portfolio to grow these stores. In addition to these strategies and foundational improvements, consumers have also made what we believe will be lasting lifestyle changes in recent years, prioritizing sport and maintaining healthy, active lifestyles, which has increased demand for our products.

Current wording

Through our strategic pillars of athlete experience, teammate experience, differentiated product and brand engagement, we have transformed our business to drive sustained profitable growth. As part of our strategy, we have meaningfully improved our merchandise assortment through our vertical brands and strong relationships with our key brand partners, which provide access to highly differentiated products. We have also enhanced our store selling culture and service model and incorporated additional experiential elements and technology into our stores to further engage our athletes. Lastly, we continue to innovate our omni-channel athlete experience through our DICK’S House of Sport stores, Golf Galaxy Performance Centers and our DICK’S Field House stores, and believe that a key driver of our future omni-channel growth will include repositioning our store portfolio to grow these stores. In addition to these strategies and foundational improvements, consumers have also made what we believe will be lasting lifestyle changes in recent years, prioritizing sport and maintaining healthy, active lifestyles, which has increased demand for our products.

Previous wording

The macroeconomic environment in which we operate remains dynamic as a result of numerous factors, including inflationary pressures, the expiration of student loan payment deferments, and the potential impact from continued elevated interest rates, which could impact consumer discretionary spending behavior and the promotional landscape in which we operate, as well as higher inventory shrink, which has been noted throughout the retail industry. In addition, we completed a business optimization during 2023 to better align our talent, organizational design and spending in support of our most critical strategies while also streamlining our overall cost structure.

Current wording

The macroeconomic environment in which we operate remains dynamic as a result of numerous factors, including ongoing elevated interest rates and inflationary pressures, which could impact consumer discretionary spending behavior and the promotional landscape in which we operate, as well as higher levels of inventory shrink, which has been noted throughout the retail industry. In addition, we completed a business optimization during 2023 to better align our talent, organizational design and spending in support of our most critical strategies.

Previous wording

Despite the dynamic macroeconomic environment, we continue to experience robust demand from our athletes. As a result of our strong performance during fiscal 2024 and our confidence about our strategic initiatives and operational strength, we have raised our full year outlook. We now expect comparable sales growth for the year to be in the range of 2.5% to 3.5% and earnings per diluted share to be in the range of $13.55 to 13.90.

Current wording

Despite the dynamic macroeconomic environment, we continue to drive comparable sales growth through execution of our core strategies. As a result of our strong performance, confidence in our strategic initiatives and operational strength, balanced against the macroeconomic environment and a shorter traditional holiday shopping season, we have raised our full year outlook for 2024 and now expect comparable sales growth for the year to be in the range of 3.6% to 4.2% and earnings per diluted share to be in the range of $13.65 to $13.95.

Previous wording

•Due to the 53 rd week in fiscal 2023, there is a one-week shift in the current year fiscal calendar compared to the prior year, which favorably impacted net sales comparisons for the first half of the fiscal year by approximately $140 million, or $0.45 per diluted share. We expect an offset to this favorability in the second half of the fiscal year, including an unfavorable impact to net sales comparisons for the third quarter of approximately $105 million, or $0.35 per diluted share, resulting from the calendar shift during a key back-to-school week. Apart from the extra week of operations last year, which added $170.2 million of net sales, or $0.19 per diluted share to our full year results, the calendar shift will not impact total net sales or earnings per diluted share comparisons to the prior year.

Current wording

•Due to the 53rd week in fiscal 2023, there is a one-week shift in the current year fiscal calendar compared to the prior year, which favorably impacted net sales comparisons for the first half of the fiscal year by approximately $140 million, or $0.45 per diluted share. We expect an offset to this favorability in the second half of the fiscal year, including the unfavorable impact to net sales comparisons for the third quarter of approximately $105 million, or $0.35 per diluted share, resulting from the calendar shift during a key back-to-school week. Apart from the extra week of operations last year, which added $170.2 million of net sales, or $0.19 per diluted share to our full year results, the calendar shift will not impact total net sales or earnings per diluted share comparisons to the prior year.

Previous wording

•While inventory shrink remains elevated compared to historical levels, inventory shrink as a percentage of net sales decreased 83 basis points during the second quarter as compared to 2023, as the prior year period included the cumulative impact of shrink identified from our physical inventories. For the remainder of the year, we expect inventory shrink as a percent of net sales to remain relatively flat compared to the prior year period.

Current wording

•While inventory shrink remains elevated compared to historical levels, inventory shrink as a percentage of net sales decreased 27 basis points during the year-to-date period compared to 2023, as the prior year-to-date period included the cumulative impact of shrink identified from our physical inventories. For the remainder of the year, we expect inventory shrink as a percent of net sales to remain relatively flat compared to the prior year period.

Previous wording

•During 2024, we expect gross margin to expand year-over-year. Additionally, we expect selling, general and administrative expenses to leverage as a percentage of net sales due to last year’s business optimization, which resulted in $72.8 million of charges within selling, general and administrative expenses, partially offset by current year investments to drive long-term growth following the strength of our business.

Current wording

•During 2024, we expect gross margin to expand year-over-year. Additionally, we expect selling, general and administrative expenses to leverage as a percentage of net sales due to last year’s business optimization, which resulted in $72.8 million of charges within selling, general and administrative expenses, partially offset by strategic investments we are making to drive long-term growth, based upon the strength of our business.

Previous wording

▪Store productivity – To assess store-level performance, we monitor various indicators, including new store productivity, sales per square foot, store operating contribution margin and store cash flow.

Current wording

▪Store productivity – To assess store-level performance, we monitor various indicators, including sales per square foot, store operating contribution margin and store cash flow.

Previous wording

As discussed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s 2023 Annual Report, we consider our policies on inventory obsolescence, inventory shrink, goodwill and intangible assets, and impairment of long-lived assets to be the most critical in understanding the judgments that are involved in preparing our consolidated financial statements. There have been no significant changes to the Company’s critical accounting policies from those disclosed in the Company’s 2023 Annual Report.

Current wording

As discussed in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s 2023 Annual Report, we consider our policies on inventory obsolescence, inventory shrink, goodwill and intangible assets, and impairment of long-lived assets to be the most critical in understanding the judgments that are involved in preparing our consolidated financial statements. There have been no significant changes to the Company’s critical accounting policies and estimates from those disclosed in the Company’s 2023 Annual Report.

Previous wording

▪Net sales increased 7.8% to $3.47 billion in the current quarter from $3.22 billion during the second quarter of 2023, which includes a shift in the Company’s fiscal calendar due to the 53 rd week in fiscal 2023 that favorably impacted current period net sales comparisons by approximately $95 million. Adjusted for the calendar shift, comparable sales increased 4.5%, following a 2.0% increase in the same period last year.

Current wording

▪Net sales increased 0.5% to $3.06 billion in the current quarter from $3.04 billion during the third quarter of 2023, which includes a shift in the Company’s fiscal calendar due to the 53 rd week in fiscal 2023 that unfavorably impacted current period net sales comparisons by approximately $105 million. Adjusted for the calendar shift, comparable sales increased 4.2%, following a 1.9% increase in the same period last year.

Previous wording

▪In the current quarter, we reported net income of $362.2 million, or $4.37 per diluted share, compared to $244.3 million, or $2.82 per diluted share, during the second quarter of 2023. The year-over-year increase was favorably impacted by the calendar shift by approximately $0.30 per diluted share.

Current wording

▪In the current quarter, we reported net income of $227.8 million, or $2.75 per diluted share, compared to $201.1 million, or $2.39 per diluted share, during the third quarter of 2023.

Previous wording

(1)Includes our Golf Galaxy, Public Lands, Going Going Gone! and other specialty concept stores. As of August 3, 2024, we operated 108 Golf Galaxy stores, eight Public Lands stores and 20 Going Going Gone! stores. As of July 29, 2023, we operated 97 Golf Galaxy stores, seven Public Lands stores, 16 Going Going Gone! stores and other specialty concept stores. In some markets, we operate DICK’S Sporting Goods stores adjacent to our specialty concept stores on the same property with a pass-through for our athletes. We refer to this format as a “combo store” and include combo store openings within both the DICK’S Sporting Goods and specialty concept store reconciliations, as applicable. As of August 3, 2024, the Company operated 19 combo stores.

Current wording

(1)Includes our Golf Galaxy, Public Lands, Going Going Gone! and other specialty concept stores. As of November 2, 2024, we operated 109 Golf Galaxy stores, eight Public Lands stores and 20 Going Going Gone! stores. As of October 28, 2023, we operated 104 Golf Galaxy stores, seven Public Lands stores, 17 Going Going Gone! stores and other specialty concept stores. In some markets, we operate DICK’S Sporting Goods stores adjacent to our specialty concept stores on the same property with a pass-through for our athletes. We refer to this format as a “combo store” and include combo store openings within both the DICK’S Sporting Goods and specialty concept store reconciliations, as applicable. As of November 2, 2024, the Company operated 19 combo stores.

Previous wording

(2)Excludes temporary value chain locations, of which the Company operated 32 and 38 as of August 3, 2024 and July 29, 2023, respectively.

Current wording

(2)Excludes temporary value chain locations, of which the Company operated 30 and 41 as of November 2, 2024 and October 28, 2023, respectively.

Previous wording

(3)Represents Moosejaw store locations acquired by the Company during the first quarter of fiscal 2023. The Company closed 10 of the previously acquired Moosejaw store locations during fiscal 2023 and the remaining locations during fiscal 2024.

Current wording

(3)Represents Moosejaw store locations acquired by the Company during the first quarter of fiscal 2023. The Company closed ten of the previously acquired Moosejaw store locations during fiscal 2023 and the remaining locations during fiscal 2024.

Previous wording

(5)Due to the 53 rd week in fiscal 2023, there is a one-week shift in the fiscal 2024 calendar compared to the prior year, which favorably impacted the 13 and 26 weeks ended August 3, 2024 net sales comparisons by approximately $95 million and $140 million, respectively. Comparable sales for fiscal 2024 are calculated by shifting the prior year period by one week to compare similar calendar weeks.

Current wording

(5)Due to the 53 rd week in fiscal 2023, there is a one-week shift in the fiscal 2024 calendar compared to the prior year, which unfavorably impacted the 13 weeks ended November 2, 2024 net sales comparisons by approximately $105 million and favorably impacted the 39 weeks ended November 2, 2024 net sales comparisons by approximately $35 million. Comparable sales for fiscal 2024 are calculated by shifting the prior year period by one week to compare similar calendar weeks.

Previous wording

Net sales increased 7.8% to $3,473.6 million in the current quarter from $3,223.6 million for the quarter ended July 29, 2023. Due to the 53 rd week in fiscal 2023, there is a one-week shift in the fiscal 2024 calendar compared to the prior year, which favorably impacted current period net sales comparisons by approximately $95 million. Comparable sales, as adjusted for the shifted retail calendar, increased 4.5%, or $143.4 million. The remaining increase in net sales was primarily attributable to new stores, including DICK’S House of Sport and Golf Galaxy Performance Center locations, partially offset by Moosejaw and other store closures.

Current wording

Net sales increased 0.5% to $3,057.2 million in the current quarter from $3,042.4 million for the quarter ended October 28, 2023. Due to the 53 rd week in fiscal 2023, there is a one-week shift in the fiscal 2024 calendar compared to the prior year, which unfavorably impacted current quarter net sales comparisons by approximately $105 million. Comparable sales, as adjusted for the shifted retail calendar, increased 4.2%, or $118.2 million. The remaining increase in net sales was primarily attributable to new stores, including DICK’S House of Sport and Golf Galaxy Performance Center locations, partially offset by Moosejaw and other store closures.

Previous wording

The increase in comparable sales included a 3.5% increase in sales per transaction and a 1.0% increase in transactions, and reflects growth in footwear, athletic apparel and hydration, offset by declines in outdoor-related categories including equipment and hunt.

Current wording

The increase in comparable sales included a 4.8% increase in sales per transaction and a 0.6% decrease in transactions, and reflects growth in certain back-to-school categories including footwear, athletic apparel, and team sports, offset by declines in outdoor-related categories including hunt, apparel and equipment, and fitness.

Previous wording

Income from operations increased to $470.1 million in the current quarter compared to $311.8 million for the quarter ended July 29, 2023.

Current wording

Income from operations increased to $286.0 million in the current quarter compared to $272.9 million for the quarter ended October 28, 2023.

Previous wording

Gross profit increased to $1,275.7 million in the current quarter from $1,109.5 million for the quarter ended July 29, 2023 and increased as a percentage of net sales by 231 basis points. Merchandise margins as a percentage of net sales increased 169 basis points as a result of a favorable sales mix and the quality of our assortment and an 83 basis point decrease in inventory shrink from the prior year quarter, which included the cumulative impact of shrink identified from our physical inventories compared to our estimates. Occupancy costs, which after the cost of merchandise represents the largest item within our cost of goods sold, are generally fixed on a per store basis and fluctuate based on the number of stores that we operate, increased $13.6 million and leveraged 24 basis points as a percentage of net sales. The remaining increase in gross profit as a percentage of net sales was driven by lower eCommerce shipping and fulfillment, and supply chain costs.

Current wording

Gross profit increased to $1,093.4 million in the current quarter from $1,061.5 million for the quarter ended October 28, 2023 and increased as a percentage of net sales by 88 basis points primarily due to higher merchandise margins, partially offset by occupancy deleverage. Merchandise margins as a percentage of net sales increased 104 basis points as a result of a favorable sales mix and the quality of our assortment. Additionally, merchandise margins for the prior year quarter included a $6.3 million write-down of inventory related to the Company’s business optimization. Occupancy costs, which after the cost of merchandise represents the largest item within our cost of goods sold, are generally fixed on a per store basis and fluctuate based on the number of stores that we operate, increased $13.4 million and deleveraged 39 basis points as a percentage of net sales primarily driven by the unfavorable impact of the calendar shift. The remaining increase in gross profit as a percentage of net sales was driven by lower eCommerce shipping and fulfillment costs.

Previous wording

Selling, general and administrative expenses increased 4.2% to $796.7 million in the current quarter from $764.8 million for the quarter ended July 29, 2023, but decreased as a percentage of net sales by 79 basis points due to the current quarter increase in net sales. The $31.9 million increase includes higher incentive compensation, increases in brand-building marketing expenses and other costs in support of our sales growth. The current quarter also includes a $0.7 million expense increase related to changes in the investment values of our deferred compensation plans, which is fully offset in Other Income.

Current wording

Selling, general and administrative expenses increased 2.9% to $790.6 million in the current quarter from $768.2 million for the quarter ended October 28, 2023, and increased as a percentage of net sales by 61 basis points, which includes the unfavorable impact on net sales resulting from the calendar shift of approximately 65 basis points. The $22.4 million increase in current quarter expense is primarily due to strategic investments across marketing, technology and talent, and higher incentive compensation, partially offset by business optimization charges of $46.2 million incurred in the prior year quarter. The current quarter also includes a $15.5 million expense increase related to changes in the investment values of our deferred compensation plans, which is fully offset in Other Income.

Previous wording

Pre-opening expenses decreased to $8.9 million in the current quarter from $32.9 million for the quarter ended July 29, 2023. Pre-opening expenses in any period fluctuate depending on the timing and number of new store openings and relocations. The prior year quarter included pre-opening expenses to support the opening of seven DICK’S House of Sport stores.

Current wording

Pre-opening expenses decreased to $16.8 million in the current quarter from $20.3 million for the quarter ended October 28, 2023. Pre-opening expenses in any period fluctuate depending on the timing and number of new store openings and relocations.

Previous wording

Other income totaled $25.8 million in the current quarter compared to $28.5 million for the prior year quarter, and includes a $0.7 million expense decrease compared to the prior year from changes in our deferred compensation plan investment values driven by performance in equity markets. The Company recognizes investment income or investment expense to reflect changes in deferred compensation plan investment values with an offsetting charge or reduction to selling, general and administrative costs for the same amount.

Current wording

Other income totaled $24.0 million in the current quarter compared to $10.1 million for the prior year quarter, and includes a $15.5 million expense decrease compared to the prior year from changes in our deferred compensation plan investment values driven by performance in equity markets. The Company recognizes investment income or investment expense to reflect changes in deferred compensation plan investment values with an offsetting charge or reduction to selling, general and administrative costs for the same amount.

Previous wording

Net sales increased 7.0% to $6,492.0 million in the current period from $6,065.8 million for the prior year period. Due to the 53 rd week in fiscal 2023, there is a one-week shift in the fiscal 2024 calendar compared to the prior year, which favorably impacted current period net sales comparisons by approximately $140 million. Comparable sales, as adjusted for the shifted retail calendar, increased 4.9%, or $294.0 million. The remaining decrease in net sales was primarily attributable to Moosejaw and other store closures, partially offset by new stores, including DICK’S House of Sport and Golf Galaxy Performance Center locations.

Current wording

Net sales increased 4.8% to $9,549.2 million in the current period from $9,108.2 million for the prior year period. Due to the 53 rd week in fiscal 2023, there is a one-week shift in the fiscal 2024 calendar compared to the prior year, which favorably impacted current period net sales comparisons by approximately $35 million. Comparable sales, as adjusted for the shifted retail calendar, increased 4.7%, or $412.2 million. The remaining decrease in net sales was primarily attributable to Moosejaw and other store closures, partially offset by new stores, including DICK’S House of Sport and Golf Galaxy Performance Center locations.

Previous wording

The increase in comparable sales included a 3.1% increase in sales per transaction and a 1.8% increase in transactions, and reflects growth in footwear, hydration and athletic apparel, offset by declines in fitness and outdoor-related categories including apparel, equipment and hunt.

Current wording

The increase in comparable sales included a 3.7% increase in sales per transaction and a 1.0% increase in transactions, and reflects growth in footwear, athletic apparel, hydration and accessories, offset by declines in outdoor-related categories including hunt, equipment and apparel, and fitness.

Previous wording

Income from operations increased to $800.9 million in the current period, compared to $637.4 million for the prior year period.

Current wording

Income from operations increased to $1,086.9 million in the current period, compared to $910.3 million for the prior year period.

Previous wording

Gross profit increased to $2,371.0 million in the current period from $2,138.1 million for the prior year period and increased as a percentage of net sales by 127 basis points. Merchandise margins as a percentage of net sales increased 69 basis points as a result of a favorable sales mix and a 34 basis point decrease in inventory shrink from the prior year, which included the cumulative impact of shrink identified from our physical inventories. Our occupancy costs increased $23.5 million and leveraged 23 basis points compared to fiscal 2023 as a percentage of net sales. The remaining increase in gross profit as a percentage of net sales was driven by lower eCommerce shipping and fulfillment, and supply chain costs.

Current wording

Gross profit increased to $3,464.4 million in the current period from $3,199.6 million for the prior year period and increased as a percentage of net sales by 115 basis points. Merchandise margins as a percentage of net sales increased 80 basis points as a result of a favorable sales mix and the quality of our assortment, along with a 27 basis point decrease in inventory shrink from the prior year, which included the cumulative impact of shrink identified from our physical inventories. Additionally, merchandise margins for the prior year period included a $6.3 million write-down of inventory related to the Company’s business optimization. Our occupancy costs increased $36.9 million and leveraged 4 basis points compared to fiscal 2023 as a percentage of net sales. The remaining increase in gross profit as a percentage of net sales was driven by lower eCommerce shipping and fulfillment, and supply chain costs.

Previous wording

Selling, general and administrative expenses increased 5.6% to $1,540.1 million in the current period from $1,458.6 million for the prior year period, but decreased as a percentage of net sales by 33 basis points due to the current period increase in net sales. The $81.4 million increase includes higher incentive compensation, increases in brand-building marketing expenses and other costs in support of our sales growth. The current year period also includes a $4.2 million expense increase related to changes in the investment values of our deferred compensation plans, which is fully offset in Other Income.

Current wording

Selling, general and administrative expenses increased 4.7% to $2,330.7 million in the current period from $2,226.8 million for the prior year period, but decreased as a percentage of net sales by 4 basis points due to the current period increase in net sales. The $103.9 million increase includes strategic investments across technology, marketing and talent, and higher incentive compensation, partially offset by business optimization charges of $46.2 million incurred in the prior year period. The current year period also includes a $19.8 million expense increase related to changes in the investment values of our deferred compensation plans, which is fully offset in Other Income.

Previous wording

Pre-opening expenses decreased to $30.0 million in the current period from $42.1 million for the prior year period. Pre-opening expenses in any period fluctuate depending on the timing and number of new store openings and relocations. The current year period includes pre-opening expenses to support the opening of two DICK’S House of Sport stores, compared to seven in the prior year period.

Current wording

Pre-opening expenses decreased to $46.8 million in the current period from $62.4 million for the prior year period. Pre-opening expenses in any period fluctuate depending on the timing and number of new store openings and relocations. The current year period includes pre-opening expenses to support the opening of five DICK’S House of Sport stores, compared to nine in the prior year period.

Previous wording

Other income totaled $51.1 million in the current period compared to $46.2 million for the period ended July 29, 2023, and includes a $4.2 million expense decrease compared to the prior year period from changes in our deferred compensation plan investment values driven by performance in equity markets. The Company recognizes investment income or investment expense to reflect changes in deferred compensation plan investment values with an offsetting charge or reduction to selling, general and administrative costs for the same amount.

Current wording

Other income totaled $75.1 million in the current period compared to $56.3 million for the period ended October 28, 2023, and includes a $19.8 million expense decrease compared to the prior year period from changes in our deferred compensation plan investment values driven by performance in equity markets. The Company recognizes investment income or investment expense to reflect changes in deferred compensation plan investment values with an offsetting charge or reduction to selling, general and administrative costs for the same amount.

Previous wording

Our effective tax rate increased to 22.7% in the current period from 16.1% for the same period last year. The effective tax rate for the prior year period was favorably impacted by a $39.7 million increase in excess tax benefits, resulting from a higher number of employee equity awards vesting and exercised in the prior year compared to the current year period.

Current wording

Our effective tax rate increased to 22.9% in the current period from 18.7% for the same period last year. The effective tax rate for the prior year period was favorably impacted by a $36.2 million increase in excess tax benefits, resulting from a higher number of employee equity awards vesting and exercised in the prior year compared to the current year period.

Previous wording

Our cash on hand as of August 3, 2024 was $1.69 billion. We believe that we have sufficient cash flows from operations and cash on hand to operate our business for at least the next twelve months, supplemented by funds available under our unsecured $1.6 billion credit facility (the “Credit Facility”), if necessary. We may require additional funding should we pursue strategic acquisitions, undertake share repurchases, pursue other investments or engage in store expansion rates in excess of historical levels. We had no revolving credit facility borrowings at any point during 2024.

Current wording

Our cash on hand as of November 2, 2024 was $1.46 billion. We believe that we have sufficient cash flows from operations and cash on hand to operate our business for at least the next twelve months, supplemented by funds available under our unsecured $1.6 billion credit facility (the “Credit Facility”), if necessary. We may require additional funding should we pursue strategic acquisitions, undertake share repurchases, pursue other investments or engage in store expansion rates in excess of historical levels. We had no revolving credit facility borrowings at any point during 2024.

Previous wording

We lease substantially all of our stores, three of our distribution centers, and certain equipment under non-cancellable operating leases that expire at various dates through 2041. Approximately three-quarters of our DICK’S Sporting Goods stores will be up for lease renewal at our option over the next five years, and we plan to leverage the significant flexibility within our existing real estate portfolio to capitalize on future real estate opportunities.

Current wording

We lease substantially all of our stores, three of our distribution centers, and certain equipment under non-cancellable operating leases that expire at various dates through 2042. Approximately three-quarters of our DICK’S Sporting Goods stores will be up for lease renewal at our option over the next five years, and we plan to leverage the significant flexibility within our existing real estate portfolio to capitalize on future real estate opportunities. Refer to Part I. Item 1. Financial Statements, Note 4 – Leases for further information.

Previous wording

As of August 3, 2024, our Senior Notes have long-term credit ratings by Moody’s and Standard & Poor’s rating agencies of Baa3 and BBB, respectively. As of August 9, 2024, Moody’s upgraded the credit rating for our Senior Notes to Baa2.

Current wording

As of November 2, 2024, our Senior Notes have long-term credit ratings by Moody’s and Standard & Poor’s rating agencies of Baa2 and BBB, respectively.

Previous wording

Our capital expenditures are primarily allocated toward the development of our omni-channel platform, including investments in new and existing stores and eCommerce technology, while we have also invested in our supply chain and corporate technology capabilities. Capital expenditures for the 26 weeks ended August 3, 2024 totaled $372.1 million on a gross basis and $325.5 million on a net basis, inclusive of construction allowances provided by landlords.

Current wording

Our capital expenditures are primarily allocated toward the development of our omni-channel platform, including investments in new and existing stores and eCommerce technology, while we have also invested in our supply chain and corporate technology capabilities. Capital expenditures for the 39 weeks ended November 2, 2024 totaled $565.6 million on a gross basis and $511.1 million on a net basis, inclusive of construction allowances provided by landlords.

Previous wording

We anticipate fiscal 2024 capital expenditures of approximately $800 million, net of construction allowances provided by landlords. As we continue to reposition our store portfolio, these investments will be concentrated in planned new store development, relocations and remodels that will include eight DICK’S House of Sport stores, ten Golf Galaxy Performance Centers and 15 next generation 50,000 square foot DICK’S stores that are currently scheduled to open in 2024, as well as improvements within our existing stores including converting approximately 45 stores to premium full-service footwear decks. Additionally, we expect to begin construction on approximately 15 DICK’S House of Sport stores that are scheduled to open throughout 2025 and a new regional distribution center in Texas that we plan to open in 2026, while continuing to invest in technology to enhance our store fulfillment, in-store pickup and other foundational capabilities. Our 2024 capital expenditures plan also includes the purchase of certain real estate assets primarily related to DICK’S House of Sport stores, for which we are evaluating potential sale-leaseback opportunities.

Current wording

We anticipate fiscal 2024 capital expenditures of approximately $800 million, net of construction allowances provided by landlords. As we continue to reposition our store portfolio, these investments will be concentrated in planned new store development, relocations and remodels that will include eight DICK’S House of Sport stores, ten Golf Galaxy Performance Centers and 15 DICK’S Field House stores scheduled to open in 2024, as well as improvements within our existing stores including converting approximately 45 stores to premium full-service footwear decks. Additionally, we expect to begin construction in 2024 on approximately 15 DICK’S House of Sport stores and approximately ten DICK’S Field House stores that are scheduled to open throughout 2025, and began construction on a new regional distribution center in Texas that we plan to open in 2026, while continuing to invest in technology to enhance our store fulfillment, in-store pickup and other foundational capabilities. Our 2024 capital expenditures plan also includes the purchase of certain real estate assets primarily related to DICK’S House of Sport stores, for which we are evaluating potential sale-leaseback opportunities.