Dick's Sporting Goods Inc

Hello, everyone, and welcome to the Q3 2022 Dick's Sporting Goods Incorporated Earnings Conference Call. My name is Emily, and I'll be your operator for today's call. At the end of the presentation, you will have the opportunity to ask a question by pressing start, followed by the number one on your telephone keypads. I will now turn the call over to our host, Nate Gilch, Senior Director of Investor Relations. Please go ahead, Nate.

Good morning, everyone. Thank you for joining us to discuss our third quarter 2022 results. On today's call will be Lauren Hobart, our President and Chief Executive Officer, and Navdeep Gupta, our Chief Financial Officer. A playback of today's call will be archived in our investor relations website located at investors.dix.com for approximately 12 months. As a reminder, we will be making forward-looking statements if you're 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. During this morning's call, we will discuss earnings-prediluted share on a non-GAAP basis, which eliminates the impact of certain items related to our convertible senior notes issued in Q1 2020. For additional details on this or to find the reconciliation of any non-GAAP financial measure referenced on today's call, please refer to our investor relations website. And finally, for your future scheduling purposes, we are tentatively planning to publish our fourth quarter 2022 earnings results on March 7th, 2023. With that, I'm going to turn the call over to Lauren.

Thank you, Nate, and good morning, everyone. As we announced earlier this morning, we delivered an exceptionally strong quarter. Our Q3 results demonstrate the continued success and strength of our business based on our transformational journey and the foundational improvements we've made over the past five years. Our strategies are working and are clearly resonating with our athletes. While consumers continue to face macroeconomic uncertainties, our athletes have held up very well as we continue to offer them a compelling and differentiated assortment as well as a best-in-class omni-channel experience. In fact, during the quarter, we saw three important consumer trends. More athletes purchased from us, they purchased more frequently, and they spent more each trip compared to the same period last year. Our industry has strong momentum given a lasting shift in consumer behavior, and our differentiated assortment, elevated service standards, and best-in-class omni-channel athlete experience are setting us apart in the marketplace. This Q3, we achieved record sales of $2.96 billion, and our comps increased 6.5%, driven by increases in both transactions and average tickets. This strong comp was on top of a 13% comp last year, a 23% comp in 2020, and a 6% comp in 2019. As you've heard us say many times, Dick's is a growth company. and our Q3 results are powerful evidence of our sustainable growth story. As we indicated on our last call, at the end of Q2, our inventory position was strong and we were back in stock in key items. This enabled us to deliver a very strong back-to-school season and meet robust consumer demand. Additionally, we also mentioned that we had pockets of apparel inventory to address, and we have addressed much of that over this quarter. As a result, and as expected, we saw a merchandise margin decline of 438 basis points versus last year. Importantly, our merchandise margin remained elevated compared to 2019, and looking ahead, we continue to be very confident that our merchandise margin will remain meaningfully higher than pre-COVID levels on an annual basis. we achieved double digit EBT margin of 10.3% in the quarter, over three times our 2019 rate on a non-GAAP basis. This was driven by our structurally higher sales, expanded merchandise margin, and greater operating efficiency. In total, we delivered non-GAAP earnings per diluted share of $2.60, significantly ahead of any pre-COVID third quarter in our history. Looking ahead, Our inventory is healthy and well positioned, and we're excited about the assortment that we have in place for the holiday season. Because of our continued strong performance, quality of inventory, and the confidence we have in our business, we're raising our full year outlook. We now expect comparable store sales for the year to be in the range of negative 3% to negative 1.5% and non-GAAP earnings per diluted share to be in the range of $11.50 to $12.10. In closing, I'm very pleased with our strong third quarter results and remain enthusiastic about the future of our business. I'd like to thank all of our teammates for their hard work and commitment to Dick's Sporting Goods, which helped make this performance possible, and for their upcoming efforts during the holiday season. I'll now turn the call over to Nadib to review our financial outlook and results in more detail.