Dick’s SG’s Q4 Sales Surge 19.6 Percent

Article From：SGB Media

 

 

Dick’s Sporting Goods, Inc. reported fourth-quarter earnings nearly doubled year-over-year on an adjusted basis as sales ran up 19.6 percent.  At the mid-point of its expected range, Dick’s sees sales in 2021 climbing 2 percent from 2020 and 11 percent versus 2019.

 

Fourth Quarter Results

Net sales for the fourth quarter of 2020 were $3.13 billion, an increase of 19.8 percent compared to the fourth quarter of 2019. Results topped Wall Street’s consensus estimate of $3.07 billion. The increase was driven by a 19.3 percent increase in consolidated same-store sales, which included an increase in e-commerce sales of 57 percent. E-commerce penetration for the fourth quarter of 2020 was approximately 32 percent of total net sales, compared to approximately 25 percent during the fourth quarter of 2019. Fourth-quarter 2019 consolidated same-store sales increased 5.3 percent.

 

The company reported consolidated net income for the fourth quarter ended January 30, 2021 of $219.6 million, or $2.21 per diluted share. As a result of actions taken to prioritize the health and well-being of its teammates and athletes, the company incurred approximately $51 million of pre-tax incremental teammate compensation and safety costs in response to COVID-19, or 38 cents per diluted share, net of tax, during the 13 weeks ended January 30, 2021. The company reported consolidated net income for the fourth quarter ended February 1, 2020 of $69.8 million, or $0.81 per diluted share.

 

On a non-GAAP basis excluding non-recurring items, earnings rose 98.6 percent to $225.0 million, or $2.43 per share, from $113.3 million, or $1.32, a year ago. Non-GAAP consolidated net income for the fourth quarter ended January 30, 2021 excluded non-cash amortization of the debt discount associated with the company’s convertible senior notes and included the share impact of the convertible note hedge purchased by the company, which is anti-dilutive for GAAP purposes. Non-GAAP consolidated net income for the fourth quarter ended February 1, 2020 excluded hunt restructuring charges.

 

Adjusted EPS at $2.43 came in well ahead of Wall Street’s consensus estimate of $2.21.

 

“We’ve never had a year quite like 2020. We were challenged in numerous ways, as were so many others, but as an organization, we not only survived – we thrived, delivering record-setting sales and earnings,” said Ed Stack, executive chairman and chief merchandising officer. “Most importantly, we cared for each other and our communities every step of the way. We prioritized the health and safety of our teammates and athletes and invested in our frontline hourly store and distribution center teammates through our premium pay program. Additionally, to help kids get back on the field, we donated $30 million to our Foundation to support Sports Matter and other charitable programs within the communities we serve.”

 

“We are very pleased with our strong fourth-quarter sales and earnings results,” said Lauren Hobart, president and chief executive officer. “The strength of our diverse category portfolio, technology capabilities and advanced omnichannel execution once again helped us capitalize on the favorable shifts in consumer demand across golf, outdoor activities, home fitness and active lifestyle. Our performance is a testament to the strong execution from our 50,000 dedicated teammates who continued to safely serve our athletes and communities.”

 

Hobart continued, “It’s clear that our strategies over the past several years are working and have set us up for long-term success. As we enter 2021, our business has so much momentum, and we have been pleased with our start to the year. Our focus in 2021 will center around enhancing our existing strategies to accelerate our core and enable long-term growth.”

 

Balance Sheet

The company ended the fourth quarter of 2020 with approximately $1.7 billion in cash and cash equivalents and no outstanding borrowings under its $1.855 billion revolving credit facility. In April, the company issued a $575 million aggregate principal amount of 3.25 percent Convertible Senior Notes, which added over $500 million of net proceeds to its cash position.

 

Total inventory decreased 11.3 percent at the end of the fourth quarter of 2020 as compared to the end of the fourth quarter of 2019.

 

Full Year Results

Net sales for the 52 weeks ended January 30, 2021 increased 9.5 percent to approximately $9.58 billion. Consolidated same-store sales increased a record-setting 9.9 percent despite temporary store closures during March, April and May to help prevent the spread of COVID-19. eCommerce sales increased 100 percent. eCommerce penetration for the 52 weeks ended January 30, 2021 was approximately 30 percent of total net sales, compared to approximately 16 percent during the 52 weeks ended February 1, 2020. Consolidated same-store sales increased 3.7 percent for the 52 weeks ended February 1, 2020.

 

The company reported consolidated net income for the 52 weeks ended January 30, 2021 of $530.3 million, or $5.72 per diluted share. As a result of actions taken to prioritize the health and well-being of its teammates and athletes in response to COVID-19, the company incurred approximately $175 million of pre-tax incremental teammate compensation and safety costs, or $1.40 per diluted share, net of tax, during the 52 weeks ended January 30, 2021. For the 52 weeks ended February 1, 2020, the company reported a consolidated net income of $297.5 million, or $3.34 per diluted share.

 

On a non-GAAP basis, the company reported consolidated net income for the 52 weeks ended January 30, 2021, of $546.2 million, or $6.12 per diluted share, which excluded non-cash amortization of the debt discount associated with the company’s convertible senior notes and included the share impact of the convertible note hedge purchased by the company, which is anti-dilutive for GAAP purposes. For the 52 weeks ended February 1, 2020, the company reported consolidated net income on a non-GAAP basis of $329.1 million, or $3.69 per diluted share, which excluded hunt restructuring charges, a gain on the sale of subsidiaries, non-cash asset impairments and the favorable settlement of a litigation contingency. The GAAP to non-GAAP reconciliations are included in a table later in the release under the heading “GAAP to Non-GAAP Reconciliations.”

 

Capital Allocation

On March 5, 2021, the company’s Board of Directors authorized and declared a quarterly dividend in the amount of $0.3625 per share on the company’s Common Stock and Class B Common Stock. The dividend is payable in cash on March 26, 2021 to stockholders of record at the close of business on March 19, 2021. This dividend represents an increase of 16 percent over the company’s previous quarterly per-share amount and is equivalent to an annualized dividend of $1.45 per share.

 

For the 52 weeks ended January 30, 2021, capital expenditures totaled $224.0 million on a gross basis, or $167.3 million net of construction allowances provided by landlords. For the 52 weeks ended February 1, 2020, capital expenditures totaled $217.5 million on a gross basis, or $179.5 million net of construction allowances provided by landlords.

 

2021 Outlook

Dick’s said due to the uneven nature of sales and earnings in 2020, the company planned 2021 off of a 2019 baseline and for the same reason believes it is important to compare 2021 against both 2019 and 2020.

 

Guidance Includes:

 

Sales in 2021 in the range of $9,544 to $9,935 million, up by 11 percent at the midpoint versus sales of $8,751 million in 2019 and ahead 2 percent at the midpoint against sales of $9,584 million in 2020.

Same-store sales in 2021 in the range of negative 2.0 and positive 2.0 percent compared to gains of 3.7 percent in 2019 and 9.9 percent in 2020.

Income before income taxes in 2021 in the range of $520 and $620 million, up 40 percent at the midpoint versus $408 million in 2019 and down 20 percent at the midpoint against $712 million in 2020.

Income before income taxes on a non-GAAP basis in the range of $550 to $650 million, up 36 percent at the midpoint from $440 million in 2019 and down 18 at the midpoint versus $733 million in 2020.

EPS in 2021 in the range of $3.81 to $4.55, up 25 at the midpoint from $3.34 in 2019 and down 27 percent at the midpoint from $5.72 in 2020.

EPS in 2021 on a non-GAAP basis in the range of $4.40 to $5.20, up 30 percent at the midpoint versus $3.69 in 2019 and down $22 percent at the midpoint versus 6.12 in 2020.

Assumptions In The Guidance Include:

 

The company’s non-GAAP outlook for 2021 and its non-GAAP results for 2020 exclude amortization of the non-cash debt discount on the company’s convertible senior notes and diluted shares that will be offset at settlement by shares delivered from the convertible note hedge purchased by the company. Non-GAAP results for 2019 exclude hunt restructuring charges, a gain on the sale of subsidiaries, non-cash asset impairments and the favorable settlement of a litigation contingency.

 The company expects to open six new Dick’s Sporting Goods stores and six specialty concept stores in 2021. The company also expects to relocate 11 Dick’s Sporting Goods stores and convert two former Field & Stream stores into Public Lands stores in 2021.

 The company plans to repurchase a minimum of $200 million of its common shares in 2021.