Dick's Sporting Goods Inc

Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the Dix Sporting Goods Incorporated fourth quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. And if you would like to withdraw that question, again, press star one. Thank you. And I would now like to turn the conference over to Nate Gilch, Senior Director of Investor Relations. Nate, you may begin.

Good morning, everyone. And thank you for joining us to discuss our fourth quarter and full year 2024 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 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, 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, a few admin items. First, we previously expected our warehouse sales stores to be temporary in nature and therefore excluded revenue from these locations from our comparable sales calculations. With these stores now operating longer than originally planned, starting in fiscal 2025, we will include them as part of our comparable sales beginning in the store's 14th full month of operations, similar to our other store locations. These stores will also be included as part of our store counts and square footage. Next, at the end of today's prepared remarks, we have a short video to share with you. And finally, For future scheduling purposes, we are tentatively planning to publish our first quarter 2025 earnings results on May 28, 2025. With that, I will now turn the call over to Lauren.

Good morning, everyone. 2024 was another outstanding year for our company. Powered by our strategic pillars of compelling omni-channel athlete experience, differentiated product assortment, deep engagement with the DIX brand, and the strength of our culture and our 50,000 plus teammates, we achieved another year of growth and strong performance while continuing to extend our leadership position in the market. Our long-term strategies are clearly working. Before diving into our results, I want to take a moment to recognize the passion, hard work and dedication of our entire team. At DIX, it is our people who make us great and the strong performance we're discussing this morning is a direct result of their efforts. For the full year, we are very pleased to have delivered record sales of $13.4 billion. Our comps increased 5.2% driven by growth in average ticket and in transactions. and we continued to gain market share as consumers prioritized Dick's Sporting Goods for all their athletic needs. Through growth in sales and gross margin expansion, we achieved double-digit EBT margin above 11%, an EPS of $14.05, both well ahead of last year. Our fourth quarter was an exceptionally strong finish to another great year. Our Q4 comps increased 6.4%, driven by growth in average ticket and in transactions. To put this in context, this growth was on top of a 2.9% increase in 2023 and a 5.3% increase in 2022. During Q4, we drove continued gross margin expansion and delivered EBT margin of 10.2% and EPS of $3.62. Dix is the largest omnichannel sports retailer in the United States. now commanding just under 9% of the highly fragmented $140 billion industry. This represents an increase of approximately 50 basis points in our share over the prior year. We provide an unrivaled experience for our athletes and are an important US retail partner to the world's leading sport brands. Our disciplined execution of our four strategic pillars has driven strong, consistent performance. Over the past two years, we've delivered nearly an 8% stacked comp, gained approximately 100 basis points of market share, and expanded our gross margin by approximately 125 basis points on a non-GAAP basis. Our business has incredible momentum. We also see tremendous strength and momentum in the US sports industry, a trend we expect to continue through 2030 and beyond. With the continued excitement around women's sports, the enthusiasm surrounding next year's Soccer World Cup matches on U.S. soil, and the anticipation for the 2028 L.A. Olympics and the 2031 Rugby World Cup, which will be held in the U.S. for the first time, the convergence of sport and culture has never been stronger. And Dick sits squarely at the center of this exciting intersection. We're a nation obsessed with sport, and no one is better positioned to harness this opportunity than Dick's Sporting Goods. From this position of strength, we will make significant investments in digital and in-store opportunities to drive our business forward and further expand our market position. Leaning into our strategic pillars, our focus is on three exciting growth areas, each with significant potential. Repositioning our real estate and store portfolio, driving continued strong growth in footwear, and accelerating our e-commerce business. Our first key growth area is delivering an elevated omni-channel athlete experience through the ongoing work to reposition our real estate and store portfolio with House of Sport, Fieldhouse, and Golf Galaxy Performance Center. Since opening our first House of Sport location in 2021, our excitement and conviction in this innovative concept continues to build. Over the past four years, House of Sport has disrupted and redefined sports retail, And at approximately $35 million in year one omnichannel sales, this highly experiential destination is delivering powerful financial results, which Navdeep will speak to shortly. House of Sport has also driven strong engagement with our athletes, brand partners, and communities. In fact, we see our House of Sport locations attracting more athletes who not only spend more time in the store, but have a significantly higher spend than our typical Dick's athletes. Importantly, House of Sport is opening doors to new brand partnerships and strengthening existing relationships as this concept showcases our brand partners in a way no one else can. In addition to driving strong athlete excitement, House of Sport is drawing unprecedented landlord interest, which gives us the opportunity to join some of the best retail centers. After opening seven more House of Sport locations during 2024, we ended the year with 19 total locations, and we look forward to adding approximately 16 more in 2025. By the end of 2027, we expect to have between 75 to 100 House of Sport locations across the country. We've also completely revolutionized our most typical format, our 50,000 square foot Vick store, into our Fieldhouse concept. Fieldhouse is inspired by House of Sport and includes a similar elevated assortment and service model. premium experiences, and bold visual expressions. Like House of Sport, Fieldhouse is delivering incredibly strong results. After opening 15 additional Fieldhouse locations during 2024, we finished the year with a total of 26 locations and expect to add approximately 18 more this year. As we've said previously, this one-two punch of House of Sport and Fieldhouse is the future of our Dick's stores. Our second key growth area is driving continued strong growth in our footwear business. Footwear is the one product every athlete needs, and at Dick's, we say footwear is the engine that pulls the train. Over the past decade, we've transformed our footwear experience through our premium full-service footwear decks, which are now in approximately 90% of our Dick's locations. We provide our brand partners the ability to showcase their premium footwear for every sport, every athlete and every occasion. And key brands provide us with premium product access, driving sustained and robust sales growth. Even with this success, we have a great opportunity to gain share. With a strong product pipeline across performance and lifestyle, combined with the success of our footwear experience, we're targeting this opportunity through strategic investments in high impact marketing and a dedicated focus on footwear across our in-store and digital channels. We'll partner with key brands and the athletes and celebrities who resonate most with our customers to enhance our position as the destination for all the on-trend shoes, both on and off the field. We're kicking the year off by going big during Merch Madness with an exciting campaign that we can't wait for you to see. Our third key growth area is accelerating our multi-billion dollar, highly profitable e-commerce business through strategic investments designed to drive substantial long-term market share gains online. While we've seen strong e-commerce growth over the years, we see an opportunity to significantly expand our online presence and capture share, We are attacking this opportunity with aggressive investments in technology and marketing aimed at enhancing the omnichannel athlete experience and driving greater consideration for Dix.com. Our technology investments will lean into our speed and convenience and will include a focus on our Dix app, which attracts our most loyal athletes. We'll continue to leverage our 800 plus store network for online fulfillment, which positions us closer to our athletes for speedier and more efficient delivery. And to further dial up those benefits, we're expanding the use of RFID technology in-store, which enables our teammates to get products into our athletes' hands even faster. As part of our broader digital strategy, we're also enthusiastic about two long-term growth opportunities, Game Changer and the Dix Media Network. Game Changer provides an innovative platform to engage with our athletes in new and compelling ways. In 2024, approximately 9 million unique users were active on Game Changer, with an average of nearly 1.8 million daily active users. And we're proud to say that as a highly profitable recurring revenue SaaS platform, Game Changers surpassed $100 million in revenue in 2024. We've seen close to a 40% revenue CAGR since 2017, and we're bullish about Game Changers' long-term growth opportunity. In 2025, we expect Game Changer to reach approximately $150 million in revenue and also to continue positively impacting our gross margin. Dick's Media Network is our emerging retail media network that harnesses the unique power of our robust and growing scorecard loyalty program and database, which is the best data set in eSports. While it's in the early stages, we are very pleased with initial interest in the platform and believe Dick's Media Network will become a driver of long-term sales growth and an important driver of long-term gross margin expansion as we scale and optimize the network. With all of this in mind for 2025, we expect to drive continued comp growth, strategic expansion of our square footage, and improved gross margins. We anticipate our comp sales to be in the range of 1% to 3%, which at the midpoint represents nearly a 10% three-year comp stack. We expect our EPS to be in the range of $13.80 to $14.40. Our consistent execution and strong performance give us deep confidence in the growth opportunities we've identified. Great companies invest from a position of strength. And we are leaning into our momentum with strategic investments in the areas that matter most to our athletes and enable us to seize the significant market share opportunity ahead of us. With a clear strategy, a disciplined approach, and a commitment to innovation, we are well positioned to drive sustained sales and profitability growth over the long term. With that, I'll turn it over to Nadeep to share more detail on our financial results, 2025 outlook, and capital allocations. Navdeep, over to you.