Dick's Sporting Goods Inc

Q3 2021 Earnings Conference Call


spk_0: the day
spk_1: and welcome to the dutch sporting goods third quarter earnings law fall all participants are was lonely mode since you need assistance please ignore office specialist professor the start he followed by zero after today's presentation they'll be an opportunity to ask questions to ask a question the i'm interested in what only touchstone phone to recharge your question please first started and to
spk_2: please note today's event is being recorded
spk_1: i would knowledge to turn the conference over too late goats senior director of investor relations please go ahead sir
spk_3: morning everyone is thank you for joining us to discuss or third quarter two thousand and twenty one results and a call be tax or executive chairman lord hobart a president and chief executive officer not be good death or chief financial officer and playback of today's class will be archived and are better relations website located at investors tactics dot com for approximately twelve months as a reminder we'll be making for looking statements which are subject to various risks and uncertainties a car are actual results to differ materially from the statements any such payments to be considered in conjunction with cautionary statements now earnings release and risk factor discussions and our filings with the fcc including our last in order port on formed nk and cautionary statements made during this call we assume no obligation to update and he beats forward looking statements or information please refer to our that relations website find a reconciliation have any non gap financial measures referenced in today's call and finally a few admin items first a note on our same store sales reporting practices are consolidated same store sales activation includes stores that we temporarily closed last year as a result of coded nineteen the method of calculating time the dairy the cross the retail industry including the treatment of temporary store closures because the target nineteen accordingly our method of calculation my back in the same as other retailers next as a reminder due to the any the nature of two thousand and twenty we plan to thousand and twenty one october two thousand and nineteen baseline accordingly we will compare two thousand and twenty one sales and earnings results against both two thousand and nineteen and two thousand and twenty and lastly for your feature scheduling purposes we are technically planning to publish or for fourth quarter two thousand and twenty one earnings results you for the market opens on march eighth two thousand and twenty two with our subsequent earnings call at ten am eastern time with that are not turning oliver dead
spk_4: next expect good morning everyone
spk_3: we're extremely pleased to announce another very strong quarter in which we delivered significant sales and earnings growth over both last year and two thousand and nineteen i like to thank all of our teammates for their hard work and commitment to dick's sporting goods which helped make this perform as possible our strategies continue to work as we rematch in the athlete experience in our core business and with the new concepts we've driven strong profitable growth addicts and earlier this year we launched two dicks house the sports stores highly experience of destinations that are redefining sports retail the innovations we've made in our gulf galaxy business or perform extremely well and our second public land store recently opened focusing on the outdoor activity the outdoor activity has learned will discuss earlier we've joined forces with nike in a first of its kind partnership that will deepen our strategic relationship and further differentiate dicks in the marketplace looking ahead i couldn't be more excited about the future of dick's sporting goods we now expect to deliver camp sales of over twenty percent for twenty twenty one and remain very confident in long term prospects of our business
spk_4: and i'll turn the call of the life
spk_5: thank you add and good morning everyone
spk_6: as he announced earlier this morning we delivered another exceptionally struck quarter achieving record third quarter sales and earning that significantly defeated our expectation before diving into our qb results i think it's important to recognize that our client success is a result of a transformational journey that began in the back half of twenty seventeen on the started to make meaningful changes across our business we elevated the athlete experience that are stored in more differentiated and premium product and delivered stronger tonight presentation we also improved our service and selling culture made our stores more experiential and reallocated for states originally relevant and growing categories the changes build improve results and significantly improved our heartfelt trajectory well before the pandemic for years we've also invested in technology and data science to build our best and clap omni channel platform it's allowed us to quickly capitalize on athlete needs and strong consumer demand throughout two thousand and twenty and deliver oh yeah cop failed increase of nearly ten percent
spk_5: moving to twenty twenty one we announced today that we breathed are clear guidance for the third time this year and now expect our cop fail to increase between twenty four and twenty five percent
spk_6: during a time when consumers are making lasting lifestyle changes with an increased focus on health and fitness and greater participation in outdoor activities we believe that dick's sporting that has become synonymous with sport in the united states nearly our entire category portfolio has rebate blind meaningfully higher vs recovered sell level we'd capitalized on strong consumer demand and have gained considerable market share in key categories driven by enhanced product access service and only channel capabilities looking ahead we are well positioned to continue gaining share and we remain optimistic about the long term to demand trends in our most important categories like athletic apparel footwear team or and golf we also remain very optimistic about longer term abt margin driven by a number of permanent changes versus people that level the changes include a highly differentiated products assortment that is less susceptible to broader promotional pressure more granular management a promotion and significantly higher profitability of our ecommerce channel
spk_7: now getting back like you three results
spk_6: consolidating same for sales and creep twelve point two percent on top of a twenty three point two percent increase in the same period last year and a six percent increase in que three twenty nineteen given by are strong sales and gross margin right expansion on a non gaap bases or third quarter earnings per diluted share to read our and nineteenth an increased fifty nine percent over last year and five hundred and thirteen percent over cute three twenty nineteen i keep it off were supported by broad based grow across arbiter as are strong execution divert category portfolio and world class omnicom a platform help us continue to capitalize on and meet robust consumer demand despite a dynamic global supply chain we're continuing to be strong retention of the eight point five million new athletes we acquired last year and we added another one point seven million new athlete during this corner are active athlete database is that a record high
spk_5: i increasingly differentiated products what mean combined with our discipline promotional strategies kate it continuing to try significantly higher much date march and me
spk_6: during the quarter we expanded on a genetic margin made by three hundred and one basis points or with twenty twenty and by five hundred and seventy eight basis points vs twenty nineteen
spk_5: as we discussed previously we're focused on enhancing the athlete experience across our entire army channel system
spk_6: in our stores we continue to make that a great place to work as we know that are people are competitive differentiator and a great teammate experience tried to great athlete it's experience in fact we legally underplayed unfortunate list of best workplaces in retail for twenty twenty one well also engaging our athletes with new and elevated service standards and making our stores more experience so these strategies are working and continue to set us apart with in the marketplace during the quarter or brick and mortar stores contra approximately fifteen percent first and last year and delivered a thirty one percent sales increase when compared to twenty nineteen importantly our stores continue to be the hub of our army channel strategy enabling over ninety percent of our total fell and for telling approximately seventy percent of our online sales and que three moving like commerce business during the quarter we were pleased to deliver online sales growth of one percent which was on top of a ninety five percent increase in the same period last year our online sales remain substantially above pre coded levels increasing nearly one hundred percent when compared to the same period and twenty nineteen
spk_5: importantly we also continue to drive a significant improvement in the profitability of our ecommerce channel by leveraging fixed costs sustained athlete adoption of in store pick up a curbside as well as fewer and more targeted promotion
spk_6: beyond our army time a platform or portfolio of grams is a tremendous that that we continue to invest in the employee and are highly profitable and growing vertical brown key brands including dsg kalia and first are driving exclusivity within our assortment and gaining meaningful traction with our athletes at the same time while many national brand continue to narrow distribution and focus more on their most strategic partners get offered them something unique and valuable we are rooted in sport and can showcase and and firebrand portfolio including a pow but where and hardline across or over eight hundred stores and online or brown partners continue to make significant investment in our business every year and provide us with increasing allocation of exclusive and differentiated products these top of the line products are highly coveted and rarely promoted driving significant sales and margin momentum our strategic partnerships with key brown have never been stronger and were making big bets with important brown partners
spk_5: to that end we recently announced a groundbreaking new partnership with nike that wifi as truly transformative for the sports industry
spk_6: rudy collaboration deck for nike will create unmatched value for athlete their exclusive of products experiences content and other specialized offers together will embrace our collective and capability to beyond our reach connect with even more athletes and most importantly serve them better our companies have a long and successful history of working together and this demonstrate a deepening of the decks and like a relationship this partnership again to driving growth for both company or serving our customers and a personalized way i take part of our strategy to lead with mobile and works cited to launch with partnership to are connected marketplace exclusively and objects mobile app looking ahead we'll explore additional opportunity to work with nike and or other strategic partners across our expected physical and digital properties to further enhance convenient experiences and content properly now the by to provide a few updates on our new at concept first we remain very pleased with our first two deck houses or it's doors in rochester and knoxville as a sport is built around experience service community and product setting an unparalleled standard for sports retail an athlete engagement moving forward works by the to continue to are fine and grow health board or pulling key learning into the rest of the decks chain well those by by the early results of our first to golf galaxy performance center located outside of boston in minneapolis st paul golf galaxy performance center has been completely redesigned and equipped with fat man and bottleneck gop technologies we've also invested in talent to ensure our teammates become trusted advisers to golf and dubious of all levels in addition to innovating within our core business we also lost public lamb a new only channel specialty concept to better serve outdoor athletes our first our glam store recently opened here in pittsburgh and a second store opened in columbus just a few weeks ago we also lamps last public lands dot com a complete ecommerce experience for the outdoor enthusiast love still early public lands is off to a strong start and we are very enthusiastic about this growth opportunity and it's go to get more people outside exploring and protecting america's public lamb
spk_8: before concluding i want to spend a moment on the supply chain
spk_6: amidst a very dynamic environment or team has done an excellent job working with airbender partners and with our vertical brand manufacturers to ensure a robot well product to meet strong demand we ordered aggressively to get ahead of the disruption and are quarter ending inventory levels increase seven point three percent compared to the end of the same period last year well there will continue to be inventory challenges across the marketplace or fourth quarter is off to a strong start and we feel that we are well positioned within our industry this holiday season and clothing we have exciting opportunity the had about and as that said we are very competent and the longer term prospects of our business as we continue to execute against our strategic parodies and we imagine the athlete experience we believe the investment we've made to transform our business will strengthen our leadership position within the marketplace our teammates or at the center of the transformation and i would like to thank them all for their continued hard work and dedication to our athletes it's now my pleasure to turn the call over to our the fo not be cooped up to review our financial results and our outlook in more detail after joining the company and twenty seventeen as spp of finance and cheap accounting officer that deep was appointed to the see a proposition last month
spk_7: the big impact on our business have been phenomenal
spk_6: over the last four years he fled most of the finance function than the organization and he'd become a trusted partner to our entire executive team you the open and company wide productivity effort served on our long term strategic committee and he played a really critical role in securing financing at the outset of covert i did it not be spent eleven years in advance auto parts and various leadership roles most recently serving a right presented by man earlier in his career not people the variety of management role that sprint nextel and he served of lieutenant in the indian navy now did king financial acumen and strategic vision will be instrumental to the continued growth and success of deck and with that not deep it is my pleasure to handed over to you
spk_9: thank you long for that very kind introduction good morning everyone it's great to be here on today's call and i'm looking forward to continuing to work with each of you with three quarters of the year now behind us are consistent stronger those have demonstrated our ability to sober athlete in a very differentiated way while driving towards another record sales and owning here and twenty twenty one let's begin with a brief review of our third quarter results
spk_6: like lauren thread we're excited to report a consolidated sales increase of thirteen point nine but then to approximately two point seven five billion consolidated same store sales increased one point two percent on top of a twenty three point two percent increase in the same period last year and a six percent increase
spk_9: move into three of twenty nineteen a strong comps wonder than bar growth across each about three primary categories of hardline apparel and put were as well as an eight point five with an increase and transaction and a three point seven percent increase in average ticket when compared to twenty nine been consolidated sales increase forty percent a brick and mortar stores conduct approximately fifteen percent was was twenty twenty and delivered a thirty one percent sales increase when compared to twenty nineteen with roughly the same square footage our ecommerce sales increased one percent was the last year on top of and ninety five percent online sales increase in the third quarter of twenty twenty
spk_10: compared to three up twenty nine team or ecommerce sales increase ninety seven percent as a percent of total net sales are online business has grown from thirteen percent in thousand and nineteen two nineteen percent in the current quarter
spk_9: economists penetration was twenty one percent last year
spk_10: moving to gross profit gross profit in the third quarter was one point zero six billion or thirty eight point four five percent of net sales and improve three hundred and fifty four bases once compared to last year this improvement was driven by merchandise margin great expansion of three hundred and one basis point and leverage on fixed occupancy cost of hundred and love basis points from sales and greece
spk_9: the increase in merchandise margin was primarily driven by your promotion due to are increasingly differentiated assortment and disciplined promotional strategy a certain categories in the marketplace continue to be supplied constrained we also saw a favorable sales mix
spk_10: in addition we were able to pass through selective price increases to help cover merchandise cost increases from fired supply chain an input costs
spk_9: as expected be the improvements what partially offset by higher afraid cause resulting from global supply chain disruptions and are crowded a nation of inventory availability overpass
spk_10: compared to twenty nineteen gross profit or the percent of net sales improve eight hundred and eighty six bases one driven by merchandise margin great expansion of five hundred and seventy eight basis one utopia promotions as well as leverage on fixed occupancy cost a three hundred and seventy basis ones which again
spk_11: was partly offset by heartbreak costs
spk_9: as next month is what six hundred and thirty one point nine million or twenty three percent of nothing else however leverage hundred and fifty one basis points compared to last year due primarily to the increase in sales
spk_10: in a dollar increase forty point eight million due primarily to current year cost increases to support the growth and sales
spk_9: and the priory a quarter as your name included forty three million dollars of covert related cost i will that in the current year we transition are all of your teammates to compensation programs with a longer term focus including increasing an accelerating and what mattered and graders and higher wage minimums harsh really upsetting last year's covered related cost
spk_10: compared to twenty nineteen and non non non gaap paper as una expenses as a percentage of net sales leverage three hundred and twenty five basis points due primarily to the increase in sales as eight dollars and creates hundred and sixteen point eight million do to increase and store pedal and operating expenses to support the increase in sales as well as hourly wage rate investments
spk_6: driven by are strong sales and gross margin great expansion non got you between was four hundred and fifteen point six million or fifteen point one two percent of net sales and increased hundred and seventy one point eight million or five hundred and one basis ones from the same p
spk_12: neutered last year
spk_9: compared to twenty nineteen non gap you t increase three hundred and fifty five point six million at approximately twelve hundred basis points as a percentage of net sales
spk_10: in total we delivered a non gaap earnings per diluted share a three dollar than nineteenth and
spk_9: this compares to a non gaap earnings per diluted share of two dollars and once and last year a fifty nine percent year over year increase and or non gaap earnings but diluted share of fifty two cents and twenty nineteen or five hundred and thirteen percent increase on a gap basis or earnings per diluted share what two dollars and seventy eight cents this included seven point seven million in non cash interest expense as well as twelve point eight million additional on chairs that we have designed to be offset by a bond had a settlement but are required in the gap diluted share calculation both of these are related to our convertible notes to be issued and one of twenty twenty but additional details on this you can refer to the non gaap reconciliation tables about press release that be issued this morning now look into a balance sheet we in a strong financial position and and que three that approximately one point three seven billion of cash and cash equivalents and know borrowings on not one point eight five five billion dollar revolving credit facility
spk_10: or quarter an inventory levels increase seven point three percent compared to and of que three last year
spk_9: looking ahead we continue to aggressively taste product to meet demand and prototype as inventory availability overcast as part of this we expect elevated prayed expenses to continue at least in the fourth quarter and i've included the impact of this the they're not outlook
spk_10: to reiterate lawrence comment while they will continue to be supply chain challenges across the marketplace be feel that be a very well position that they're not industry the holiday season turn into a third quarter capital allocation during the quarter net capital expenditure work fifty or point one million be paid five hundred and three million and dividends which included especially given and five dollars and fifty cents per share that we announced last quarter we also repurchase two point one seven million
spk_9: chess about stock but approximately two hundred and seventy three million at an average price of hundred and twenty five dollars and eighty cents we have approximately six hundred and five million remaining under a chevy but as program yesterday we have returned nearly one billion dollars to shareholders to dividends and share repurchases looking ahead be will continue to invest in a profitable growth of our business while maintaining an appropriate level of cash on the balanchine
spk_10: returning capital to shareholders will also continue to be an important component of our capital allocation strategy
spk_9: now let me move on to our fiscal twenty twenty one outlook for sales and awnings while still early queue for is off to a strong start taking this into account along with are significant you three results and expectation of a continued strong consumer demand and are confidence in our ability to navigate the global supply chain challenges we are raising are consolidated same store sales guidance and knowledge expect the fully a calm fails to increase by twenty four percent to twenty percent compared to a pride expectation of up eighteen percent to twenty percent
spk_10: this is on top of nine point nine percent increase in consolidated same store sales last year
spk_9: and a three point seven percent increase and twenty nineteen at the midpoint are updated com sales guidance represent a thirty nine percent sales increased was twenty nineteen compared to a prior expectation of up thirty three percent on or non gaap you be t basis we expect the polio results to be in the range of one point eight nine billion to one point nine two billion compared to a prior art lot of one point six one to one point six seven billion which admit point and on a non get basis is up three
spk_10: hundred and thirty three percent
spk_9: what's is twenty nineteen and up hundred and sixty percent was this twenty twenty at the midpoint non gaap you be to margin is expected to be approximately fifteen point seven percent
spk_10: but then this gross margin is expected to increase was is both twenty nineteen and twenty twenty driven by leverage on fixed expenses and hired merchandise margins
spk_9: and five great past and feel promotions compatible twenty nineteen and twenty twenty four the fourth quarter as the on expenses is expected to leverage what's is both twenty nineteen and twenty twenty due to the significant projected increase in full year sales in total we're raising our earlier non gaap earnings been diluted shared outlook to arrange a fourteen dollars and sixty cents
spk_10: two fourteen dollars and eighty cents compared to a prior to outlook of twelve dollars and forty five cents to twelve dollars and ninety five cents at the midpoint and on non gaap basis are updated u p s guidance is up to one hundred and ninety eight percent was twenty nineteen and up hundred and forty percent was as twenty twenty
spk_9: updated earning guidance is based on ninety nine million average diluted shares outstanding and an effective tax rate up approximately twenty three point five percent in closing the work that we have done over the past several years to react attacked our strategy operations and financial success up well to deliver improve value to our shareholders over the long term
spk_10: this concludes are prepared remarks thank you once again for your interest in exploring the operator human now open the line for questions
spk_1: you will not become the question and answer session to ask a question for starve them around on part time around it's from we asked for supper
spk_13: the headset reform person with he's to recharge your question please post start them to today's for his huston consumption and gotten morgan stanley please go ahead i got a the morning everyone on my first question on gross margin
spk_6: visibility around maintaining somebody and on a cold related games he did improving you have a sense of that and and other any examples of categories for promotions may have come back and you're managing that margin that edited the structurally higher level thanks
spk_5: i and we have retail very i about are gross margin improvement because they are not just coming from very colgate related activity in one a result of a very differentiated merchandise assortment that we've put in place over the past several years so we have been like promotional but really
spk_14: the thing that's right in our merchandise margin increase it is our product assortment and the fact that be more desirable product don't go on sale for much and so we do feel lot on confident in our margin
spk_10: if i'm an older i love name on it
spk_13: on the promotions that are coming we are yet to see a change in promotional landscape especially as we look to que three we didn't see a significant change it's still early and cure for and we're we're playing a close attention to the landscape overall for our the holiday season here and thanks and have deep and maybe i'll let you the followed since you have such an easy comparison for your first years as the ago initial plan that one too
spk_9: and under top line i just i know you want to give us a framework but it it a year digestion reversion or do you think the business gets compounding in gross yes them and thanks for the comment on i think it's a little bit too early for us to guide as yet or twenty two as you gonna expect to be out in the process of creating our internal expectations on budgets for twenty two so we will share more in due course i love what i think so the common the i will definitely phase we feel really strongly about the games that we have seen
spk_13: all throughout this year especially in some of the key categories like apparel but their team sports and god for those are the court categories for us and be up be of definitely gain share that he had consistently i'm not gives us a lot of confident as good luck to twenty two
spk_15: okay thanks everyone happy holidays
spk_1: a gentleman
spk_16: next lesson for the cultural lines and with evercore i as i please go ahead
spk_6: a good morning i should have my question
spk_16: the place where you can help us think through the normalization kind of follow up to that question just a normal they shouldn't even margins on what looks to be over thousand basis points for street and then well with here so you talk a little bit about undifferentiated merchandise to swim in one of the other areas but you feel most confident or structural sustainable and
spk_9: and where can we see some normalization and twenty twenty two the mind wanders is not they please let me take that on the other areas where repeal really from is is actually is around a margin management we have talked about the digital capability love relevant on the analytics capability that be a built over the last couple of years on and the benefits of that around pricing optimized they a promotion optimization as well as clearance margin management and those are significantly on something that repeal will elevate are profitability when compared to twenty nineteen and the other aspect that i want to draw the attention to it is the profitability of the of ecommerce business
spk_16: with the curbside capability that was launched during call that and the strong adoption that we have seen from the athlete we're very confident that the overall profitability of the combat nurse which is unlikely that the overall company the be t right now will be a significant a permanent an uptick in our profitability as will look to the future
spk_6: thanks now the end i just had a follow on the partnership with nike i was curious if there's an element of dallas sharing that's gonna go into that relationship either on the customer data side or on a cell applied and are there are also other implications for inventory integration of for that partnership i y me out so we are really excited about the new partnership with my gate at which is for everyone's benefit this is that transformational moment in our partnership where we're taking a decade long partnership and really innovating and the way that we served our athletes the other scorecards users in our app can now connector scorecard she at nike membership and that unlock a tremendous amount of product and experiences are different clinton so there's a real it opens up a tremendous amount of access to our athletes out there is some data sharing the nike our database and addicts database have a significant amount of overlap like is going to get specific nike only
spk_17: information and with that data we plan to work together to truly create a much more posts lives and i'm an emerging experience for combined athletes i am i just want to point out okay i'm buried by the that that the only way to access this membership it through the decks that and that inherently is driving people to download and
spk_16: he gets app which is a key part of our strategy
spk_18: thanks walking the it and click in order
spk_1: thanks one
spk_16: i'm here with honors courses americans from our fans are bank of america please go ahead
spk_19: hey good morning everybody you know two questions for me you know first and you know maybe more could you are going to help us understand the supply chain the barman can you talk about the differences between what you've seen supply chain in your private label business purposes you know with you your brand partners
spk_13: and then my the question is i think i forgot to mention the favorable slots mix benefit for the quarter you know what what what was favorable
spk_6: you know to the gross margin from sales mix perspective and also price increases will mention can you talk a little bit about where you're taking price increases in you know where where how much information might have helped be same store sales a square thanks and sobbing i'll start up i'm sure enough people lay an armed but only for direction we had developed and really amazing la pol pot our supply chain organization both in terms of how we work with our brand partners said really at but getting product and and with our manufacturing about about a browns so we're we're it become honestly very creative in terms of how we been product and and we are doing we are prioritizing product over clock and we've got that are baked into our guidance but we want to make sure we keep that that flower product coming out why we're up seven point three percent an inventory going into this quarter i'm in terms of overtaking price increases i wanted to mention a couple things we're gaining share our and of ourselves we're getting share across the board in all of markey categories of footwear apparel team sports and golf and butler in particular and is really really strong and were buried by that about that when we look at our cock numbers for this quarter at twelve point two percent eight point five percent of that increase was due to an increase in transaction so two thirds of our up with coming from an additional transaction be billion us dollars or another ecommerce site for inflation was very a very minimal part of the story the remaining three point seven percent of our cop came from and production and promotions and rigid path along some left cost increases in our minds
spk_9: category but overall it is a inflation is not was not a big driver of our country's quarter
spk_10: your ability to be favorable fail to max price increases so like we said the the merchandise margin great expanded three hundred and one basis point out the bigger drivers of this much and margin great expansion was actually people promotions and the differentiator department there was a flight favorable next as well as you can imagine like launch
spk_9: on shared i'd be so great growth and are kiki categories like put their and apparel on that tend to have a higher margin and that was the favorable makes but the bigger story was much more about the full price calling from differentiator thought man and law a promotion
spk_19: in terms of for the price increases and the only price increases that we have seen hundreds it's been not material arm is in the hardline category and that's where we are selectively pricing are popping some other costing a price increases to our athletes but again really really small on factor in the overall story fuck you trade
spk_20: that's very helpful thank you very much
spk_21: and robbie
spk_22: was wrong are awesome awesome
spk_23: he was backwards
spk_6: what's your have good morning can grab on and other really and a quarter of lauren a with oh i get my you might have high level question that you're in a very rare as large as well above inflation to be able to embed than i t habits project marketing can you talk about where you're putting the dollars to stay ahead of the competition and then not be welcome get back here again
spk_24: can you talk about the age are the average hourly rate determine that you kind of just in that get in where are you now and maybe some stats on turnover employ have been et cetera
spk_6: and and that also damage again thank you adrian and did it could you talk to you we have been investing in our business for the long term for many many years now and that part of that overall transformation that we've been on since twenty seventeen we've invested in our store footprints we've made our source more story and shuttle with with elevated the footwear deck them the gop area than a huge be all attack team we're investing in technology to that when the pandemic happen for able to spin up curbside side and were were able to leverage our entire army channel ecosystem the we continue to invest in in all aspects of our entire army channel at some i'm i let people who speak to their hourly minimum however i do wanna say that we have become what i would say as an employer a joy and arbor intention is is lower and were really well stopped going into the holiday sell
spk_25: we feel really good about the way we are engaging with our teammates and an hour going to be stopped going forward
spk_9: they will do it hit upon the average wage rate minimum thought i would say two things one as you recall lady gave on what we call of heat pay last year and when we transition from away from the okay at the beginning of this year we give accelerating as well as an increasing on are married and green those two are only teammates we needed another a similar change yet and middle of the theater on and our intent he us to continue to provide a very competent of age with within the market that we operate and find the right holland that we need to be able to provide a differentiated experience to our athletes as they walk into the store to be we don't look at it necessarily to pay wanted the starting minute
spk_6: mom wage rates we pay more attention to finding the right talent and making sure we can provide provided differentiated experience to are athletes as they come into the store
spk_26: adrian i want to correct one thing i think i think i ended up saying that retention entire what i meant for retaining more people are so we are we are keeping more are employed as an our ecosystem
spk_1: and topic great job and that give up a holiday and i think them right
spk_27: mm across information from job we'll call him to his daughter that going to more do you think shake my question and that beep great to get started with you only got maybe if you could quantify the impact
spk_10: come on from supply chain to on for from a failed or caught respected any and bought them the free impact
spk_9: for marking perspective in in the back after this year and as we go into next year will what's your assumption in terms of going for a costs or can almost yeah john that i've been to i've thought about thanks for the for the common and the call out on in in terms of well in terms of the supply chain in fact we called it out that and you treat it was an unfavorable impact on not significant but it was included in the result of that we said fuck you three i think it's gonna be a little bit more pronounced as we look to cure for as as we are continuing to proud and has the availability over the supply chain expenses
spk_28: that includes has been again contemplated and our guide and and to look beyond up to the the the overall situation remains really fluid and will continue to monitor really largely on should make sure we're doing the food and and that when the supply chain expenses and the price increases however repeal that obvious that disruptive
spk_27: kind of the place will remain he added leads into the first top of twenty twenty two but will continue to play up close attention to it and instead
spk_29: follow up it go through the different direction different capital allocation of pre toby dick
spk_27: would an organization that route with really me levels of cash on the balance sheet with offered an epic intercept are returning cash to shareholders dude the evident by back in an author reinvesting the business it but yet to hear it
spk_11: it looks like he could have one point eight billion dollars in cash yeah one point four billion or so in that cast how should we think about
spk_10: share buyback complicated than that dividend as we go into next year that your you're drawn to develop their that you very very happy that the that we were able to retire nearly one billion dollars upshot of of atmospheric started the shareholder that the as just when the special dividend the normal dividend as well as the share buyback and actually called out up into one of the things that we have learned through pandemic us to make sure that we have more than profession
spk_9: level of cash on the voluntary police like like i said in my prepared calm and we will keep on appropriate level of cash on the balance sheet as you can give you a lot of the immediate future come in contact our of retaining the of cash with the shareholders will continue to do what we have done always bad luck to continue to grow out of it and and continued of opportunistically bar shared on i feel like you know when you look at the end of be kind of the elevated levels of cash but you may be team and the voluntary on vpn like be are working
spk_3: capital is it continuing to be an area where we need to invest and because the demand from the continues to remain strong and be outlined a product that is that is all from the supplies introspective our the and stock are potentially hurt them opportunity that actually i work includes of the the area of the been maximum for us would be on continuing to work
spk_30: on working capital and and like law called out and do news about them of the new differentiating capabilities that we have been investing in
spk_1: that's great thank you that the walking out it
spk_31: thank you washington a council michael bay davidson please go ahead
spk_32: i think guys are just a couple first
spk_6: not to be so short term focus but cause your fourth quarter all worked out of that compared to how you thought about the fourth quarter you know when you gave the back up our reply back up our three months we are you more confident left cops and equally confident in what you think the holidays
spk_33: hi michael yeah we are we are much more competent in fact that's why we've we've taken up our pull your guidance to that comp of up twenty four twenty five percent
spk_31: we feel actually gotten close time we were always concerned about supply chain and out that we can see how the corner is gonna shape up up a momentary standpoint we feel really good about a quarter and have taken the guidance up ah okay great that that
spk_6: that's helpful ah one more a bit more a bigger picture want to the south a short term question
spk_34: he talk about a qualifier in any way the percent a product today that you would consider to be differentiated either becomes a vertical brand already or or father's you know exclusive product that you get it for your vendors are compared to where was your honor pick year last year two thousand and three we started this transformation due to some waited for the conceptualized
spk_6: that would be great if possible yeah it's a great question i we we we are significantly more distinctive in our product assortment and we were a few years ago and vs twenty seventeen meaningfully more so if you think about the fact that before we even had put words act and we just did not get unallocated or high heat
spk_31: access to product at all
spk_6: and our vertical brand continue to grow up for and game share so we're not going to provide the number but it is a meaningful increase such that we feel like if the key driver of our margin rate expansion and go forward but for it up a walk report if i could just and a colorado team sports person's you also the calibers a really strong overcrowded like maybe kayaks by schools or how out don't we we we i magically for the much maryland where a year ago our summers other areas you know holding up i even as we're moving further away from that the the pop at the beginning of the the pandemic so she could sort of chocolate yeah with very young the it's a it's a really great question i think it's a really important question on when you look at the increase is that we had some what you would maybe take hold big category surging category you mentioned i invite you to
spk_35: as a fitness as well they buy everything or category has meaningfully rebate blind versus what the pre pandemic novels were that's true of both as well he was indicating that i has come back
spk_1: completing a long as possible come back really really strong on as that people are really value in their time outdoors and receiving sports across every single business really really pick up at the same time those other categories are holding their own and are significantly higher than they were two years ago that the the meaningful part of that
spk_36: dory
spk_37: yeah great pressure the collar thank you thank you
spk_36: are much some today comes from christopher homers with jp morgan please go ahead
spk_6: thanks and good morning so my first question is you know there are certain categories that are more exposed areas like vietnam can can you talk about what your expectations are around for wearing calls in terms of into the rest that you know you could see increase our stocks or as you proceed towards chris smith and then you know related to that just been a lot of media coverage around potential pull forward of demand how are you thinking about you know how that had a house holiday holiday season and fourth quarter might progress
spk_38: yeah so we've been managing supply chain challenges for the entire time of the pandemic and the more recent challenge that you refer to in vietnam in southeast asia we have been aware of managing meal without you blame partners and we you feel in a position to continue to gain share and and have
spk_36: great access to product so if you look at an out of stock for christmas not not a concern i'm related to those issues and we feel really good about the inventory levels that we have have to consumers coppola demand so darn cute we we we didn't think that was the case we don't think that's the case obviously we have thanksgiving this weekend anecdotally the needed is bugging about lot of products availability across every single retailers so i imagine there would be simple forward but but time the phone will look at how the core
spk_6: ships out got and then as you think about ah you know some other categories as you get into twenty two are are there any categories where you say you know what like you know the momentum in this category can can it can continue to accelerate for one reason or another maybe was in a covered beneficiary category maybe it's you know better allocations from vendors maybe it's you know more from sort of pricing and promotional management yeah yes i think adding this is another really important question but we believe that all of our party category be at fault were apparel team sports golf can continue to gain share and continue to accelerate we we have differentiated or assortment such that we do we have brought in eaten happened oh yeah and new customers last year and another one point seven million past year this past corner and were retaining those customers and at the same time the national brand partners have been very vocal about the fact that they're now and distribution and going to be focused on strategic partners and and we are unfortunate to be in a position where we are she's
spk_36: partners to the all the key bram to key the brands in that category so
spk_6: i believe we're going to be continued
spk_36: you don't mention key category than share games
spk_1: should i guess just then put a fine point i to do you expect that you could see growth from a topline perspective and twenty two
spk_23: the we're not going to guide to twenty two right now we do feel confident that we've meaningfully rebates line vs twenty nineteen and that are profitability have meaningfully expanded since that time but we're going have to wait to guide to twenty two
spk_13: thanks so much have a great holiday season yep
spk_6: thank you an honest person question today concern and problem pronunciation of our plan was right please go ahead
spk_9: hey that can thank god i'm curious are you seeing higher prices from vendors outside of the heart goods category like around that were as you look out for the first half of twenty two and much for plan for pricing in those categories specifically i can just curious to a level where you think your market share a is coming from and how that might differ on a category by category basis thanks
spk_19: yeah art strategy going into next year is gonna be to work with our bender partners and managed pricing keeping in mind the balance between what's right for the customer and and what's right for the business and so we will continue to manage that as we go forward and and that's where the pricing is coming in
spk_13: or market share game today as they just mentioned we believe are coming from multiple places it's coming from are differentiated assortment may be and perhaps categories like but footwear
spk_5: but if you look across other categories we are dating market share in virtually every category in in which we compete and we feel really really confident about that he pulled this is not they have let me out to quick comments on the on the share again so we have as you all a hard and be have experience with as while dated narrowing of distribution back you national brand
spk_6: which is also helping us gain some share as well as as woodlawn on talks about a lot and in terms of providing better assortment of the and experiences and our store as is actually helping us o'clock lot of new lot leads to a database as well as to what company and which is allowing us to game share some of the court
spk_5: categories like book their apparel team sports as well as golf
spk_6: god just to follow up on the new cross target again last year and
spk_17: share in terms of their shopping behavior and what they look like in name year to of being dicks cast member since you're one
spk_13: yeah so that we have been delighted with how many athletes we brought into the ecosystem and well i'm really happy about how many of them will retaining they are coming into every channel
spk_1: geared towards the curb side with any calm though each of the channel this is doing while and they are repeating a great race
spk_13: the one thing that that know it that we're very pleased with is that the demographic of the newer customers that we brought in give slightly more the now and you know we had a ton of a nuisance around women and girls teammate team sport athletes as well as athletics email and as a few a little bit younger with
spk_6: i think that's something to do with our expanded assortment of of a hot products and they stupid little bit more urban which we think has to do with the the urbanization that happened during the pandemic and people experiencing the brand for the first time so it's a it's a really good group of new customers were working incredibly hard and passionately don't retain them and keep them aside think you'd best luck
spk_27: thank you
spk_5: and on expression from a culture shock rom or going mascot please go ahead
spk_6: i thank you very much on vegas talk about the store or be more experimental experimental as part of the success of the or the of the story here monitor today that you're seeing early on and in the sports or public lands that you think you could roll over into the the typical bookstore performer
spk_39: yeah they shot and we are seeing a great react results from our approach with regard to experience the that real across our quartic torso are be all attack team a few years ago will but brought he dragged into the were enough gaining traction and we have experience in the cop department and drought deck
spk_1: and then if you look at how the sport we've elevated either experiences we have a rock climbing wall we have a track and field outside we've elevated the service model and the gop experience that store is top notch and and rivals and his specialty so all of the things are giving us ideas
spk_19: and left them to bring into the decks store one example is the service model and the fitting room experience and has the sport it's very different i'm very elevated them when you in in the past addicts them will be bringing things like that into the into the next door's okay but the problem is when they're talking about go to reconcile your comments a the fourth quarter of two great start with your i'm your the fourth quarter club guard which on the stack for click it's a pretty big the dollars in a blue much just started to be a conservative given that it's still early in the quarter but to smaller the city could squash that up worse
spk_40: yes some we had taken our or guidance up significantly as we get closer to the quarter and we have more confident in our inventory level i think one thing to note is that even at the midpoint of that in the sales are up twenty three percent a double wide and we are expecting this to be a much more non for emotional clutter than previous holidays so that probably from conservatism bacon on where you know we're still going up and down with the challenges to make sure we have read that are the product for everybody that comes then but we are really feel and good and and and increasing our guide and each quarter and
spk_10: good luck a lot and you
spk_9: average concentrations from michael answer yes please
spk_19: the morning a blocker tigger my question regular mean that the big screen were in two thousand and seven mean your field are going to be up by million third bad
spk_40: in your do
spk_6: only triple double or quadruple that
spk_9: time
spk_40: would you be really wouldn't bring the boom level recognizing their you a bird current giving a long term margin target is below minimum operating margin that you think is really think for the building the the a person operating margin the you give you twenty when you when you sort
spk_1: guernica
spk_19: the michael the data i think the to think that would say the that was about like you know we are working to rule on a long time guy than having said that what repeal internally very confident that our business has significantly baseline higher than were twenty nine teen was also if you think about the meet demand that capability that we have talked about as well as the profitability of the you combat and that is that a whole different level so that's where i feel very confident that the business significantly baseline much much much higher than that it was on back even and twenty nineteen a little will continue to provide more guidance but we feel very confident about that
spk_5: but form of question you can do for email enter into investing that you've been burned or i'm going to be going into investing in period from stored the labor market likely to remain high
spk_41: although people your build more why you think you could mean team is operating margin next year
spk_42: every i want i want to provide any further guidance on twenty two but the that long for your question that will vaguely investing i think of on a big idea of and much one will continue to be and not what they're offering them tell others what that expansion don't have done really well and will continue to invest in and similar experiences and
spk_40: bolton stored as well as building the capabilities of and then that economists on as well as on the technology side
spk_19: andrew mcmahon good holiday and ornaments washington i have some samples or was one i'm name please go ahead
spk_43: thank you for taking my questions i've got a handful the or and one what percent of your business jupiter is your lawyer the customer doing right now and have you seen the new are worthy go through the than fundamentally last year almost two years now be more active than the customers that had kind of previously
spk_44: yeah
spk_6: the percentage of our business businesses actually in scorecard database and percentage of our transaction is over seventy percent and continue to be growing and strong and we had been used for our customers be more active duty that in a result that we have and that you know the growing part though yet they are a are more active they mon army channel and more profitable
spk_5: and then that
spk_19: to barter again or nike good
spk_1: good partnership with nike i i'm someone that you are getting access to some product that isn't normally access as accessible in your channel so are you with the partnership are you going to be seeing you know a larger degree of how caught much much tied product and then second
spk_19: really
spk_9: given the supply chain constraints are disruptions on how it sounds to me like your your priority with your but you have a very very high priority when your vendors to be able to have the whereas you have a kill confident should we view that there's any change in during the type of them into a levels going into the beginning of next year because that appears to be when the
spk_27: we'll pack availability issues may you know
spk_6: may become a little more
spk_9: bigger happier from but yeah because without that it
spk_45: yeah okay into the most part of your question and you're correct we are going to be and we already are being a larger degree of launch kate product and in that connected membership experience and both are connected item enjoy across the board so we we should be seeing it benefits of that
spk_46: it will have been prioritized by vendors because she
spk_1: partners and so obviously she came for us to guide into the twenty twenty two and up some of the supply chain issues that have been going on but i have two years ago continue they continue to change but well well well well prepared to deliver good customer experience
spk_19: thanks very much either happy thanksgiving heavier college aged and on a question comes from such bassem with what was securities a spurs
spk_9: thanks a lot and not be too short term focus purchase thinking that then again for the fourth quarter or three implies that benadryl slow down and offline but also are much less margin expansion that other than lot more limited leverage it fixed cost and a little bit more for a pressure are there any other headwind a you're experiencing in the fourth quarter you i
spk_3: yeah this is not they are not an email that a lot of a good area as as you looked at the profitability of the bonus on the outside of those you feel really good that i will be able to continue to manage and potentially another area that you know we're looking into would be advertising considering that this is that when the this is a peak holiday see them and not advertising would be another area that i would i would briefly called
spk_6: that it helpful than i follow questions surrounds from a new concepts like how to sport in public land jonah confidence and how those new conference performing that you will accelerate store opening in two thousand point you and beyond we are really confident in both out of sport and public lands and we do have stores you don't being prepared to open next year for both concept so we will continue appropriately to grow the concepts while the optimized them and and expand them get about would that you know in addition to opening new stores we also
spk_19: somebody conversion opportunities are not existing sources that relocation conversion as well as new store opening opportunity when we look at the new concept
spk_47: understood thanks line and abbiati
spk_1: thank you
spk_7: where the gentleman from his father question functioning kinda sad moment trashy advisory group please go ahead
spk_1: the hey thanks guys to take my questions on have had a question about economy so that you made a comment that you're now at the same profitability as the overall business on an e b t basis and as just wondering

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.