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 you to the Dick's Sporting Goods fourth quarter and full year 2025 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 at that time, simply press star then the number one on your telephone keypad. And if you'd like to withdraw your question, again, press star one. Thank you. I would now like to turn the conference over to Nate Gilch, Vice President of Investor Relations. Nate, the floor is yours.

Good morning, everyone, and thank you for joining us to discuss our fourth quarter and full year 2025 results. On today's call will be Ed Stack, our Executive Chairman, Lauren Hobart, our President and Chief Executive Officer, and Navdeep Gupta, our Chief Financial Officer. 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 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 couple of admin items. First, a quick reminder on our comparable sales reporting. Foot Locker will be included in our comp calculations beginning in Q4, 2026, which will mark the start of their 14th full month of operations post-acquisition. And second, for future scheduling purposes, we are tentatively planning to publish our first quarter 2026 earnings results on May 27th, 2026. With that, I'm going to turn the call over to Ed.

Thanks, Nate. Good morning, everyone. As we shared this morning, we closed the year with another strong quarter for the Dick's business, delivering comps over 3% and double-digit non-gap EPS growth. Our team's execution and our ability to consistently deliver a differentiated on-trend product assortment and best-in-class omni-channel athlete experience continue to produce strong results and market share gains. We believe these fundamentals position the Dix business for long-term profitable growth. Now I'd like to turn to the transformational opportunity we have with Foot Locker. where we continue to make significant progress in strengthening the business. We've now owned Foot Locker for about six months, and I'll tell you, our excitement and our conviction and the long-term opportunity here continue to grow. We've moved quickly to test and learn in North America through what we call our Fast Break Initiative. This is the evolution of the 11-store pilot we discussed last quarter. While it's still early, we're very encouraged by what we're seeing, During Q4, our fast-break stores drove very strong positive comps, actually meaningfully exceeding the Dick's business, while also delivering strong gross margin improvement. The improvement is coming from the basics, clearer storytelling, better presentation, and a more focused assortment where we removed roughly 30% of the styles on the shoe wall that were unproductive and eliminated the run-on sentence that we've been talking about. that was not showing the customer what product was important. Based on the strength of the pilot results, we've already expanded fast break to an additional 10 stores in LA before the NBA all-star game. And we're very pleased with the strong early performance. Now looking ahead, we're excited to rapidly scale fast break by back to school 2026. As discussed last quarter, our first priority was to clean out the garage. starting with addressing unproductive inventory. The team moved quickly and decisively to get this done, and we're pleased to report that the inventory cleanup is now essentially complete. That work drove the fourth quarter profitability results we told you to expect. As part of this process, we also leveraged Dick's value chain to efficiently clear product. We're also pleased that Q4 sales came in better than expected. We believe that Foot Locker's inventory is now well positioned. With this heavy lift behind us, we're set up to play offense and deliver the inflection point we expect to see in this business, starting with back to school. Another key part of cleaning out the garage is our review of the global Foot Locker business store fleet. We continue to assess underperforming locations, but we anticipate our closure list is now much smaller than we initially estimated. We've identified opportunities to reposition and improve profitability in a meaningful number of stores, informed in large part by the success we're seeing in our fast break locations. Importantly, one of the many things that gives us great confidence in the future of the Foot Locker business is what we're seeing from our brand partners. They're leaning in, aligned with our vision, and eager to support a thriving, growing Foot Locker. You can see that already in moments like our NBA All-Star activation with Nike, Jordan, Adidas, and others, where we partnered closely to bring a series of sought-after launches that drove exceptional sell-throughs. We also had NBA talent appearances and community experiences for the Foot Locker consumer throughout LA. Our team executed exceptionally well, and together with the support of our brand partners, we drove sales that meaningfully eclipsed last year's event. At Dick's, we've built an industry-leading business by focusing on product, performance, innovation, and customer loyalty, always with a long-term view. We're applying that same proven playbook to the Foot Locker business and making the choices we believe will create the most long-term value for our shareholders. For 2026, we expect Foot Locker to deliver growth and count sales of between 1% to 3%, and operating income in the range of $100 to $150 million. We continue to anticipate an inflection point for both sales and profitability, beginning with the back to school season. Navdeep will share more details on our 26 expectations in his remarks. In closing, we remain very confident that Dick's and Foot Locker are stronger together. This combination gives us more scale, deeper relationships with the most important brands in our industry, access to consumers we didn't reach before, and a global footprint. For Foot Locker, the benefits of our combination come through in very real ways. Brands matter, product matters, execution matters, and people matter. When those things come together, we believe Foot Locker will be restored to its rightful place in the industry. Before I turn it over to Lauren, I want to thank our more than 100,000 teammates across the globe for their commitment and their execution every day. With that, Lauren will walk you through the continued momentum across the Dick's business. Lauren, I'll turn it over to you.