Dick's Sporting Goods Inc

Good day and welcome to the Dick's Sporting Goods first quarter 2020 earnings conference call and webcast. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Nate Gilch, Senior Director of Investor Relations. Please go ahead, sir.

Good morning, everyone. Thank you for joining us to discuss our first quarter 2020 results. On today's call will be Ed Stack, our Chairman and Chief Executive Officer, Lauren Hobart, our President, and Lee Balitsky, our Chief Financial Officer. A playback of today's call will be archived on our Investor Relations website, located at investors.dix.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 and cautionary statements made during this call. We assume no obligation to update any of these forward-looking statements or information. Please refer to our investor relations website to find a reconciliation of any non-GAAP financial measures referenced in today's call. And finally, a couple of admin items. First, a note on our same-store sales reporting practices. Recall last quarter, we announced our intent to move away from providing e-commerce sales growth and e-commerce penetration metrics beginning in Q1. Given the circumstances surrounding our temporary store closures, we are continuing to provide these metrics this quarter and will revisit this decision for Q2. And second, for your future scheduling purposes, we are tentatively planning to publish our second quarter 2020 earnings release before the market opens on August 26, 2020, with our subsequent earnings call at 10 a.m. Eastern Time. And with that, I will now turn the call over to Ed.

Thanks, Nate. Good morning, everyone. Let me start by saying on behalf of all of us here at Dick's Sporting Goods, we hope each of you and your families are safe and healthy. We would all agree that this has been a difficult year so far for our country. Our hearts go out to all of those impacted by COVID-19 and the civil unrest going on across America. These events have shined a spotlight on the deep rooted and long standing issues around racial injustice and inequality in the country. All of this is happening while our world is still grappling with the dramatic and continuous change as a result of the coronavirus pandemic. Virtually every business segment, including the retail industry and Dick's Sporting Goods, has been affected. Organized sports at all levels have come to a standstill. Gyms and fitness centers were closed across the country, forcing everyone to build new fitness habits and routines. Throughout this evolving landscape, we anchor to our corporate values on the premise that doing the right thing is the ultimate path to success. Our company has a long tradition of promoting the safety and welfare of our teammates, athletes, and communities, and our response to the current health crisis was no exception. This is why on March 18th, we supported the nationwide efforts to minimize the spread of the virus and temporarily close our stores to the public. To take care of our teammates, we invested $34 million in the first quarter across a number of compensation and safety measures. Beginning in mid-March, through the balance of the first quarter, from a business standpoint, we focused nearly exclusively on managing for liquidity to ensure we came through this crisis in a strong financial position. We acted quickly and decisively to reduce, defer, and eliminate cash outflows, and we maximized cash inflows through our e-commerce business. To fortify our balance sheet and provide maximum financial flexibility, We exercised the accordion feature on a revolving credit facility to increase our borrowing capacity to $1.855 billion, and we issued convertible senior notes that added over $500 million of net proceeds to our cash position. As a result of these actions, I'm pleased to report at the end of the first quarter with cash and cash equivalents of approximately $1.5 billion, and we feel very good about our liquidity. Throughout the store closures, we continued to serve our athletes online and through our mobile apps. Our e-commerce sales were tremendous, increasing more than 200% since we closed our stores through the end of the first quarter, and notably contributing to our strong liquidity position. Importantly, these strong online results have continued into the second quarter, even in those markets where our stores have reopened. A key part of this success online is our new curbside pickup service. Under Lauren's leadership, our stores, e-commerce, and technology teams came together and launched this new initiative across most of the country within a matter of days. Lauren will cover this in greater detail during her remarks. As for our stores, beginning in mid-April, we started to reopen where permitted in accordance with federal, state, and local guidelines. As at the end of May, approximately 80% of our stores have reopened to the public, and we've been pleased with the early results. Although the business environment of 2020 remains uncertain, Dick's Sporting Goods is in a position of strength. We believe coming out of this crisis, health and fitness will become even more important to the customer. As the leader in sporting goods retail sector, our relationships with our key brands have never been stronger. and we are in a great place to support this demand. Our experienced management team has a history of successfully navigating difficult market cycles and remains fully committed to managing our business with a long-term view. Perhaps most importantly, our balance sheet is strong, and due to the actions we've taken when the pandemic first hit, we have enhanced liquidity to emerge from this crisis in even a stronger competitive position. Now with the confidence in our liquidity and our stores reopening, we can turn our attention to gaining market share for the remainder of 2020 and positioning our business for profitable growth in 2021. Finally, I would like to thank our teammates. Through these difficult times, I'm especially proud of how they came through and came together to support one another and the company as a whole. I would now like to turn the call over to Lauren.