DICK'S Sporting Goods, Inc. Q2 FY2025 earnings call

• Ed Stack noted a strong second quarter with 5% comps, momentum building due to long-term strategies, and the pending acquisition of Foot Locker, which has shareholder approval and regulatory approvals, with closing expected on September 8.
• Lauren Hobart highlighted strong Q2 results, raised full-year outlook with comp sales growth range 2%-3.5% and EPS $13.90-$14.50. Progress in real estate and store portfolio with House of Sport and Fieldhouse openings. Growth in key categories driven by differentiated product assortment. E-commerce as a growth driver with the app instrumental in driving sales. Enthusiasm about the future of DICK'S, Golf Galaxy, and the Foot Locker acquisition.
• Navdeep Gupta reviewed Q2 financials, balance sheet with $1.2 billion cash and no borrowings, capital allocation with $213 million net capital expenditures and $96 million dividends. Updated 2025 outlook including consolidated sales range $13.075B-$13.95B, expected gross margin expansion, SG&A deleverage, and preopening expenses $65M-$75M.

In the second quarter, DICK'S Sporting Goods achieved a 5% comp sales increase. Consolidated sales for the quarter were $3.65 billion. Gross margin expanded over 30 basis points, and non-GAAP EPS was $4.38. In terms of store portfolio, one additional House of Sport location was opened in Q2, with 13 more expected in Q3 and a total of approximately 16 planned for the year, bringing year-end total to ~35. Four new Fieldhouse locations were added in Q2, with six more expected in Q3 and ~15 total planned for the year, taking year-end total to ~42. Revenue contribution from various segments was not explicitly broken down by percentage in the provided transcript but focused on overall comp growth and store investment impacts.

• Raised full-year comp sales growth expectation to 2%-3.5% from prior 1%-3%.
• EPS outlook revised to $13.90-$14.50 from prior $13.80-$14.40.
• Consolidated sales expected in range $13.075 billion to $13.95 billion.
• Anticipate gross margin expansion for the full year, with SG&A deleverage due to strategic investments in digital, in-store, and marketing.
• Full-year preopening expenses expected $65 million to $75 million, with most concentrated in Q3 to support House of Sport and Fieldhouse openings.

• Macro-economic uncertainties that could impact consumer spending.
• Tariff impacts that may affect cost of goods sold and pricing.
• Integration risks associated with the pending acquisition of Foot Locker, including revitalizing the Foot Locker business and managing synergies.

Q: Brian Nagel asked about revitalizing the Foot Locker business under DICK'S ownership and timing of initiatives.

A: Lauren Hobart said they see a great opportunity with Foot Locker, plan to invest in stores, marketing, and merchandising, and will provide more details in Q3.

Q: Brian Nagel asked about tariffs' impact on DICK'S business.

A: Lauren Hobart said they are navigating well, saw 5% comps, gross margin expanded, and consumer is responding well despite tariffs.

Q: Simeon Gutman asked about second half comp assumptions and margin leverage.

A: Lauren Hobart said no signs of consumer slowdown, Navdeep Gupta discussed drivers of merch margin expansion and SG&A leverage expectations.

Q: Adrienne Yih asked about industry balance of power and tariff impact on prices.

A: Lauren Hobart said strong strategic relationship with brand partners, Navdeep Gupta discussed comp drivers and spring season pricing outlook.

Q: Robbie Ohmes asked about customer behavior and back to school.

A: Lauren Hobart said consumer strength across all channels, strong back to school assortment, and no heavy promotion.

Q: Michael Lasser asked about gross margin outlook.

A: Navdeep Gupta said gross margin expected to expand, balancing tariffs, inventory, and pricing dynamics.

Q: Mike Baker asked about Game Changer and Foot Locker synergies.

A: Lauren Hobart said Game Changer is doing well, Navdeep Gupta discussed Game Changer results, and Lauren Hobart said no change to Foot Locker synergy numbers yet.

Q: Chris Horvers asked about share count impact on Foot Locker deal accretion.

A: Navdeep Gupta said more work needed on consideration mix to determine accretion, will share details in Q3.

Q: Joe Feldman asked about new technologies and vertical brands.

A: Lauren Hobart discussed AI investments and vertical brands' strong performance.

Q: John Kernan asked about footwear price increases and tariff impacts.

A: Lauren Hobart said footwear strong with selective price increases, Navdeep Gupta discussed tariff impacts on COGS and margin.

Q: Joseph Civello asked about Fieldhouse vs House of Sport traffic and vertical brands in Foot Locker.

A: Navdeep Gupta said no detailed traffic breakdown, Lauren Hobart said too soon to talk about vertical brands in Foot Locker stores.

Q: Justin Kleber asked about comp sales guide and Foot Locker vertical brands.

A: Lauren Hobart said second half assumptions were raised, and too soon to talk about vertical brands in Foot Locker.

Q: Eric Cohen asked about footwear category risk and House of Sport productivity.

A: Lauren Hobart said confident in footwear category, Navdeep Gupta said pleased with House of Sport performance.