Dick's Sporting Goods Inc

Welcome to the Q3 2023 Dick's Sporting Goods Earnings Conference Call. At this time, all participants are in a listen-only mode, and please be advised that this call is being recorded. After the speaker's prepared remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1 on your telephone keypad. And if you would like to withdraw your question, simply press star 1 again. We also ask that you please limit yourself to one question and one follow-up question. And now at this time, I would like to turn things over to Mr. Nate Gilch, Senior Director, Investor Relations. Please go ahead, sir.

Good morning, everyone. And thank you for joining us to discuss our third quarter 2023 results. On today's call will be Lauren Hobart, our President and Chief Executive Officer, and Navdeep Gupta, our Chief Financial Officer. 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 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 our most recent Form 10-Q filing, as well as 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 the reconciliation of our non-GAAP financial measures referenced in today's call. And finally, for your future scheduling purposes, we are tentatively planning to publish our fourth quarter 2023 earnings results on March 11, 2024. With that, I will now turn the call over to Lauren.

Thank you, Nate, and good morning, everyone. We are very pleased with our third quarter results, which demonstrate the ongoing strength of our business and the focused execution of our team. We had a very strong back to school season driven by our best in class athlete experience and differentiated assortment. And we continue to gain market share as consumers prioritized exporting goods to meet their needs. Our third quarter sales increased 2.8% to $3.04 billion And our comps increased 1.7%, driven by increases in both transactions and average ticket. This strong comp was on top of a 6.5% increase in the same period last year. And during the quarter, we saw more athletes purchase from us while spending more each trip. On a non-GAAP basis, our Q3 gross margin expanded by 88 basis points versus the prior year period. And looking to Q4, we expect to see continued year-over-year gross margin expansion. We achieved double-digit non-GAAP EBT margin of 10.6% and delivered non-GAAP EPS of $2.85, up 10% over Q3 last year. As a result of our strong Q3 performance, we are raising our full-year outlook. Our updated guidance balances the confidence we have in our key strategies with an acknowledgement of the uncertain macroeconomic environment. For the year, we now expect non-GAAP earnings per diluted share in the range of $12 to $12.60, compared to our prior expectation of $11.50 to $12.30. In addition, we now expect comparable store sales in the range of positive 0.5% to positive 2%. compared to our prior expectation of flat to positive 2%. At the midpoint, non-GAAP EBT margin is expected to be approximately 10.4%. We have a tremendous long-term growth opportunity ahead of us, and we're making strategic investments that position us well for growth and enable us to continue gaining share in a large, fragmented industry. These investments include accelerating innovation and our omnichannel athlete experience, and expanding our new concepts like House of Sport and our new 50,000 square foot prototype, which are resonating exceptionally well with our athletes. As we outlined on our last call, we've done extensive work to optimize our business so we can capture the opportunity ahead of us. This includes better aligning our talent, organizational design, and spending in support of our most significant growth opportunities. while also streamlining our overall cost structure. First, as we discussed last quarter, we are resourcing Dix for Growth and refocusing our team on our four key strategic pillars of differentiated product, athlete experience, teammate experience, and brand engagement. Second, we are optimizing our outdoor specialty business. This primarily includes integrating the operations of Moose Jaw and Public Lands, to enhance our ability to fulfill outdoor athlete demand more effectively. This new structure immediately improves operational efficiency and strategically positions this business for profitable growth within the $40 billion outdoor industry. Now, Deep will share more details about our business optimization plan, including the expected SBA benefits and the charges related to executing these plans. Innovating within the OmniChannel athlete experience is at the heart of our growth strategy. Our newest Dix concepts have proven to be tremendously successful and are a key part of our future as we continue to reimagine our store portfolio and footprint. First, we continue to be pleased with the results from our Dix House of Sport locations. We opened two new Houses of Sport at the beginning of Q3 and now have a total of 12 locations open, nine of which we opened this year. We're excited to open approximately 10 additional locations throughout 2024, including at the Prudential Center in Boston, as well as locations in Pittsburgh, Miami, and Tampa. We continue to expect that by 2027, we will have between 75 to 100 across the country. In addition to House of Sport, we're rolling out our next generation Dick store, which revolutionizes our most typical 50,000 square foot format. During Q3, we're excited to have opened another five locations, and earlier this month, we opened three more. With a total of 11 next-generation locations now open, we are pleased with the performance and confident in the long-term opportunity of this new 50,000-square-foot prototype. We're also growing our Golf Galaxy footprint through Golf Galaxy Performance Center, an immersive experience for golf enthusiasts of all levels. During Q3, we opened seven new Golf Galaxy performance centers, expanding our Golf Galaxy chain to 104 locations, including 13 performance centers. We believe there is a significant long-term growth opportunity in golf. Over the next four years, we expect to have as many as 40 to 50 Golf Galaxy performance centers across the U.S., including approximately 10 new locations in 2024. In combination with our stores, our digital experience remains an integral part of our success, and the investments we are making in technology are strengthening our athletes' omnichannel experience and driving increased engagement. This quarter, we added 1.6 million new athletes and are further growing our base of omnichannel athletes. Omnichannel athletes make up the majority of our sales, and they spend more and shop with us more frequently than single-channel athletes. As we invest in data science and personalization, we're excited to continue building one-to-one relationships and better serving these athletes. We remain focused on ensuring Dick's is a convenient, one-stop shop and have enhanced our multiple delivery and pickup options by expanding same-day delivery. In fact, athletes can now filter online for same-day delivery, and this holiday season, we will offer same-day delivery service up until 12 noon on Christmas Eve for last-minute gifting. In closing, we're very pleased with our strong third quarter results and remain enthusiastic about the future of our business. We're excited for the upcoming holiday season and the product, service, and experience we're providing to our athletes. I'd like to thank all of our teammates for their hard work and commitment to Dick's Sporting Goods and for their upcoming efforts during the fourth quarter. With that, I'll turn the call over to Navdeep to share our financial results in more detail.