PITTSBURGH, Aug. 21 // — Dick’s Sporting Goods, Inc. (NYSE:DKS) today reported sales and earnings results for the second quarter ended August 2, 2003.
Net income for the second quarter ended August 2, 2003 increased 32% to $15.5 million, or $0.62 per diluted share, compared to $11.7 million or $0.61 per diluted share, respectively for the quarter ended August 3, 2002. Earnings per share increased at a lower rate than net income due to an increase in shares resulting from the Company’s IPO. Total sales for the quarter increased 14% to $353.5 million. Comparable store sales increased 1.5%.
Net income increased 31% and earnings per share increased 17% compared to pro-forma net income of $11.9 million or $0.53 per diluted share in the second quarter of last year. Prior period pro-forma results include a reduction of interest expense and an increase in diluted shares as if the Company had consummated its initial public offering at the beginning of the second quarter last year rather than on the October 15, 2002 effective date.
The Company noted that the following were included in the second quarter results:
– Net income included $0.4 million of after-tax expense relating to additional employer payroll taxes required as a result of the exercise of employee stock options.
– Net income also included an after-tax gain of $0.7 million resulting from the sale of a portion of the Company’s non-cash investment in its third party internet commerce provider.
– Fully-diluted shares outstanding increased to 25.1 million, exceeding the previous guidance of 24.6 million, as a result of a higher stock price and the exercise of stock options.
Excluding these items, net income for the second quarter would have been $15.2 million or $0.60 per share, using 25.1 million fully-diluted shares outstanding.
Income from operations increased 23% to $25.1 million as compared to GAAP and pro-forma income from operations in the comparable period last year.
“While the environment for sales in the second quarter was impacted by poor weather throughout the majority of our markets, we were pleased to have been able to drive comp sales higher while increasing our gross margin rate, which drove a 23% increase in operating income,” said Edward W. Stack, Chairman and CEO. “Additionally, our inventory is in good shape with inventory per square foot equal to last year after factoring in higher levels of in transit private label inventory and inventory for stores opening in the third quarter.”
Second Quarter Store Openings
During the second quarter, the Company opened 2 new stores, one opening earlier than had been anticipated. The new stores are located in East Hanover, NJ (the fourth store in Northern New Jersey) and Portland, ME (the first store in Maine). As of August 2, 2003, the Company operated 151 stores in 27 states.
Net income for the 26 weeks ended August 2, 2003 increased 34% to $22.1 million, or 6% to $0.90 per diluted share, compared to $16.4 million or $0.85 per diluted share, respectively for the 26 weeks ended August 3, 2002. Total sales for the 26 weeks ended August 2, 2003 increased 12% to $658.2 million. Comparable store sales increased 0.4%.
Net income increased 32% and earnings per share increased 20% compared to pro-forma net income of $16.7 million or $0.75 per diluted share for the 26 weeks ended August 3, 2002. Prior period pro-forma results include a reduction of interest expense and an increase in diluted shares as if the Company had consummated its initial public offering at the beginning of the first quarter last year rather than on the October 15, 2002 effective date.
Third Quarter and Full Year Outlook
The Company’s current outlook for the full year and third quarter of 2003 is based on current expectations and includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act as described later in this release. Although the Company believes that comments reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct.
Third Quarter 2003
– Based on an estimated 25.5 million fully-diluted shares outstanding, EPS for the third quarter is expected to be $0.15 – 0.17 per diluted share, a 15 – 31% increase over the prior year’s third quarter pro-forma EPS of $0.13 (or an increase of 7 – 21% versus $0.14 per share on a GAAP basis).
– Net income is expected to be $3.8 – 4.3 million, compared to last year’s pro-forma net income of $2.9 million (or $2.8 million on a GAAP basis) in the third quarter, an increase of 31 – 48% (or an increase of 36 – 54% on a GAAP basis).
– The Company expects to open ten stores during the third quarter, bringing the year to date total to 20 stores.
Full Year 2003
The Company updated the outlook for the full year as provided previously.
– Based on an estimated 25.1 million fully-diluted shares outstanding, the Company reaffirmed it expects to report EPS for the full year of $1.95 per diluted share, compared to pro-forma EPS of $1.72 in the prior year (or $1.87 on a GAAP basis). This updated guidance represents a 0.5 million increase in fully-diluted outstanding shares and no change in EPS for the full year, as compared to earlier guidance.
– Net income is expected to be $49.0 million, compared to last year’s pro-forma net income of $38.6 million (or $38.3 million on a GAAP basis), an increase of 27% (or an increase of 28% on a GAAP basis). This represents a $1 million increase in net income as compared to prior guidance with no change to EPS guidance due to the increased share count.
– Comparable sales are expected to increase approximately 1-2%, based on actual results through the second quarter.
– The Company expects to open 22 stores during the year, an increase of 2 stores over previous guidance.
About Dick’s Sporting Goods, Inc.
Pittsburgh-based Dick’s Sporting Goods, Inc. is an authentic full-line sporting goods retailer offering a broad assortment of brand name sporting goods equipment, apparel, and footwear in a specialty store environment. As of August 2, 2003, the Company operated 151 stores in 27 states throughout the Eastern half of the U.S.