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What changed in DICK'S SPORTING GOODS, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of DICK'S SPORTING GOODS, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+326 added−355 removedSource: 10-K (2023-03-23) vs 10-K (2022-03-23)

Top changes in DICK'S SPORTING GOODS, INC.'s 2023 10-K

326 paragraphs added · 355 removed · 240 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

77 edited+27 added−13 removed15 unchanged
Biggest changeInformation About Our Executive Officers The following table and accompanying narrative sets forth the name, age and business experience of our current Executive Officers as of March 1, 2022: Name Age Position Edward W. Stack 67 Executive Chairman Lauren R. Hobart 53 President and Chief Executive Officer Navdeep Gupta 49 Executive Vice President - Chief Financial Officer Donald J.
Biggest changeConsistent with this commitment, our Board of Directors includes women and people of color and reflects a diversity of background and experience in varying substantive areas relevant to our operations and industry. 9 Table of Contents Information About Our Executive Officers The following table and accompanying narrative sets forth the name, age and business experience of our current Executive Officers as of March 1, 2023: Name Age Position Edward W.
Currently, we have return-to-store capabilities for online orders, the ability to place online orders in our stores if we are out of stock in the retail store, buy-online, pick-up in store and curbside pickup capabilities.
Currently, we have return-to-store capabilities for online orders, the ability to place online orders in our stores if we are out of stock in the retail store, buy-online, pick-up in store, and curbside pickup and return capabilities.
Diversity, Equity and Inclusion We are committed to creating a workplace environment and culture that supports, celebrates and honors each individual and to promoting inclusion and diversity for all teammates. Doing so strengthens our ability to serve all of our athletes, drives innovation and growth, and enables us to attract and retain the best talent.
Diversity, Equity and Inclusion We are committed to creating a workplace environment and culture that supports, celebrates and honors each individual and to promoting inclusion for all teammates. Doing so strengthens our ability to serve all of our athletes, drives innovation and growth, and enables us to attract and retain the best talent.
We also have a number of registered domain names, including “dickssportinggoods.com”, “dicks.com”, “golfgalaxy.com”, “fieldandstreamshop.com”, “publiclands.com”, “goinggoinggone.com”, “calia.com”, “vrst.com”, and “gamechanger.com”. Our service marks, trademarks and other intellectual property are subject to risks and uncertainties that are discussed within Item 1A. “Risk Factors”.
We also have a number of registered domain names, including “dickssportinggoods.com”, “dicks.com”, “golfgalaxy.com”, “publiclands.com”, “goinggoinggone.com”, “calia.com”, “vrst.com”, and “gamechanger.com”. Our service marks, trademarks and other intellectual property are subject to risks and uncertainties that are discussed within Item 1A. “Risk Factors”.
We focus on those growth categories in which we believe an opportunity to gain market share exists. We support these growth categories, which have recently included the apparel, fitness, footwear, golf, and team sports categories, with greater quantities of enthusiast product and improved presentation and in-stock positions.
We focus on those growth categories in which we believe an opportunity to gain market share exists. We support these growth categories, which have recently included the apparel, footwear, golf, and team sports categories, with greater quantities of enthusiast product and improved presentation and in-stock positions.
We compete with many retailing formats, including large format sporting goods stores, traditional sporting goods stores, specialty stores, mass merchants and department stores, online retailers, and vendors selling directly to consumers through retail stores and online.
We compete with many retail formats, including large format sporting goods stores, traditional sporting goods stores, specialty stores, mass merchants and department stores, online retailers, and vendors selling directly to consumers through retail stores and online.
We deliver a differentiated multi-brand experience to our athletes through our offering of national and vertical brands. National brands We carry a wide variety of well-known brands, including but not limited to adidas, Asics, Brooks, Callaway Golf, Carhartt, Columbia, Easton, Hoka, Nike, Patagonia, TaylorMade, The North Face, Titleist, Under Armour and Yeti.
We deliver a differentiated multi-brand experience to our athletes through our offering of national and vertical brands. National brands We carry a wide variety of well-known brands, including but not limited to adidas, Asics, Brooks, Callaway Golf, Carhartt, Columbia, Easton, Hoka, Nike, On, Patagonia, Peloton, TaylorMade, The North Face, Titleist, Under Armour and Yeti.
No other vendor represented 10% or more of our fiscal 2021 merchandise purchases. We do not have long-term purchase contracts with any of our vendors; all of our purchases from vendors are made on a short-term purchase order basis. We currently operate five regional distribution centers which enable us to supply stores with merchandise.
No other vendor represented 10% or more of our fiscal 2022 merchandise purchases. We do not have long-term purchase contracts with any of our vendors; all of our purchases from vendors are made on a short-term purchase order basis. We currently operate five regional distribution centers which enable us to supply stores with merchandise.
Gupta most recently served as the Senior Vice President of Finance at Advance Auto Parts, Inc., where he held numerous leadership roles from 2006 to 2017, including Chief Audit Executive, Vice President of Finance and Treasurer, and Director of Finance. Previously, Mr. Gupta held management roles at Sprint Nextel Corporation (now part of T-Mobile US, Inc.). Donald J.
Gupta most recently served as the Senior Vice President of Finance at Advance Auto Parts, Inc., where he held numerous leadership roles from 2006 to 2017, including Chief Audit Executive, Vice President of Finance and Treasurer, and Director of Finance. Previously, Mr. Gupta held management roles at Sprint Nextel Corporation (now part of T-Mobile US, Inc.).
We believe our teammates’ dedication to creating a positive experience for our athletes is what drives our success as a company, and we’re committed to creating a great place to work for our teammates through competitive wages and benefits, promoting teammate safety, health and well-being, providing learning and career development opportunities and promoting diversity, equity and inclusion.
We believe our teammates’ dedication to creating a positive experience for our athletes is what drives our success as a company, and we are committed to creating a great place to work for our teammates through competitive wages and benefits, promoting teammate safety, health and well-being, providing learning and career development opportunities and promoting diversity, equity and inclusion.
Driven by this common purpose and our commitment to all athletes, our mission is to: • Create an inclusive environment where passionate, skilled and diverse teammates thrive; • Create and build leading brands that serve and inspire athletes; • Make a lasting impact on communities through sport; and, • Deliver shareholder value through growth and relentless improvement.
Driven by this common purpose and our commitment to all athletes, our mission is to: • Create an environment where passionate and skilled teammates thrive; • Create and build leading brands that serve and inspire athletes; • Make a lasting impact on communities through sport; and • Deliver shareholder value through growth and relentless improvement.
We monitor and evaluate store performance on an ongoing basis and reallocate space in our stores to categories and products that we believe can drive sales growth, including our recent removal of the hunt department from many of our stores, in which we reallocated product space to a localized assortment of categories in an effort to drive growth.
We monitor and evaluate store performance on an ongoing basis and reallocate space in our stores to categories and products that we believe can drive sales growth, including our removal of the hunt department from many of our stores, in which we reallocated product space to a localized assortment of categories.
We continually improve the functionality and performance of our eCommerce sites and mobile app, which has included building a faster and more convenient checkout process with new payment options, greater visibility and accuracy of delivery dates, improved pa ge responsiveness, enhancing integration of our ScoreCard loyalty program, new content development through our Pro Tips platform and localized website experiences.
We continually improve the functionality and performance of our eCommerce sites and mobile app, which has included a faster and more convenient checkout process with new payment options, greater visibility and accuracy of delivery dates, improved pa ge responsiveness, enhanced integration of our ScoreCard loyalty program, new content development through our Pro Tips platform and localized website experiences.
We seek to attract athletes by offering a wide range of products that enables us to address the needs of all athletes, from beginner to enthusiast, and by utilizing distinctive merchandise presentation in stores to create a unique shopping environment.
We seek to attract athletes by offering a wide range of products that enable us to address the needs of all athletes, from beginner to enthusiast, and by utilizing distinctive merchandise presentation in stores to create a unique shopping environment.
In fiscal 2021, a pproximately 70% of online sales were fulfilled directly by our stores, which serve as localized points of distribution, and they enabled 90% of total sales through online fulfillment and in-person sales.
In fiscal 2022, a pproximately 70% of online sales were fulfilled directly by our stores, which serve as localized points of distribution, and they enabled 90% of our total sales through online fulfillment and in-person sales.
We have also entered into licensing agreements for names that we do not own, which provide for exclusive and non-exclusive rights to use names such as “adidas” (baseball and football), “Prince” (tennis), and “Slazenger” (golf) for specified product categories or certain products and, in some cases, specified sales channels.
We have also entered into licensing agreements for brands that we do not own, which provide for exclusive and/or non-exclusive rights to use names such as “adidas” (baseball and football) and “Prince” (tennis) for specified product categories or certain products and, in some cases, specified sales channels.
We have created rotational development programs in various functional disciplines and offer various live and recorded training programs across the organization based on job role and function, including safety, compliance, leadership or other skills, as well as store manager onboarding programs.
We have created rotational development programs in various functional disciplines to develop leadership pipelines and offer various live and recorded training programs across the organization based on job role and function, including safety, compliance, leadership or other skills, as well as store manager onboarding programs.
With this belief as our foundation, our common purpose is to create confidence and excitement by personally equipping all athletes to achieve their dreams.
With this belief as our foundation, our common purpose is to create confidence and excitement by inspiring, supporting, and personally equipping all athletes to achieve their dreams.
From 1984 to January 2021, Mr. Stack served as our Chairman and Chief Executive Officer taking over operation of the Company after his father and our founder, Richard “Dick” Stack, retired from our then two-store chain. Mr. Stack has served us full-time since 1977 in a variety of positions, including President, Store Manager and Merchandise Manager. Lauren R.
Stack served as our Chairman and Chief Executive Officer taking over operation of the Company after his father and our founder, Richard “Dick” Stack, retired from our then two-store chain. Mr. Stack has served us full-time since 1977 in a variety of positions, including President, Store Manager and Merchandise Manager. Lauren R.
We offer a wide range of in-store support services and incorporate experiential elements and technology into our stores to better engage and serve our athletes, including our introduction of HitTrax® baseball simulators in nearly 200 stores and our recent investment in Trackman technology, which is used to enhance the fitting and lesson experience for our athletes in all of our Golf Galaxy stores.
We provide a wide range of in-store support services and incorporate experiential elements and technology into our stores to better engage and serve our athletes, including our HitTrax ® baseball simulators in nearly 200 stores and our investment in Trackman technology, which is used to enhance the fitting and lesson experience for our athletes in all of our Golf Galaxy stores.
During fiscal 2021, our stores received over 90% of their merchandise through our distribution network; the remaining merchandise was shipped directly to our stores from our vendors.
During fiscal 2022, our stores received over 90% of their merchandise through our distribution network; the remaining merchandise was shipped directly to our stores from our vendors.
Rak served as Senior Vice President & Chief Technology Officer at Merck from 2019 to 2020. Prior to that, Mr. Rak served as Vice President, Enterprise Architecture, Innovation, Platforms & Portfolio at Nike from 2016 to 2019. Previously, Mr. Rak also held senior technology leadership roles at The Walt Disney Company and Wyndham Worldwide. Lee J.
Rak served as Senior Vice President & Chief Technology Officer at Merck & Co., Inc. from 2019 to 2020. Prior to that, Mr. Rak served as Vice President, Enterprise Architecture, Innovation, Platforms & Portfolio at Nike, Inc. from 2016 to 2019. Previously, Mr. Rak also held senior technology leadership roles at The Walt Disney Company and Wyndham Worldwide Corp.
As of January 29, 2022, we operated 730 DICK’S Sporting Goods locations across the United States, serving and inspiring our customers, whom we refer to as athletes, to achieve their personal best through interactions with our dedicated employees, whom we refer to as our teammates, in-store experiences and unique specialty shop-in-shops.
As of January 28, 2023, we operated 728 DICK’S Sporting Goods locations across the United States, serving and inspiring our customers, whom we refer to as athletes, to achieve their personal best through interactions with our dedicated employees, whom we refer to as our teammates, in-store experiences and unique specialty shop-in-shops.
Over two-thirds of our DICK’S Sporting Goods stores will be up for lease renewal at our option over the next five years, which provides us with the opportunity to relocate, close, or renegotiate lease terms for these stores.
Approximately three-quarters of our DICK’S Sporting Goods stores will be up for lease renewal at our option over the next five years, which provides us with the opportunity to relocate, close, or renegotiate lease terms for these stores.
We include on our website, free of charge, copies of our Annual and Quarterly Reports on Forms 10-K and 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
We include on the investor relations portion of our website (dicks.com/investors), free of charge, copies of our Annual and Quarterly Reports on Forms 10-K and 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
We seek to proactively manage our in-stock merchandise positions in our diverse category portfolio and elevate our merchandise presentation to provide a clear point of view for in-demand items, such as our premium full-service footwear departments, which are offered in over half of our DICK’S Sporting Goods stores as of the end of fiscal 2021.
We seek to proactively manage our in-stock merchandise positions in our diverse category portfolio and elevate our merchandise presentation to provide a clear point of view for in-demand items, such as our premium full-service footwear departments, which are offered in nearly two-thirds of our DICK’S Sporting Goods stores as of the end of fiscal 2022.
We believe our store base gives us a competitive advantage over our online-only competitors, as our physical presence allows us to better serve our athletes by creating strong engagement through interactive in-store elements, offering the convenience of accepting in-store returns or exchanges and expediting fulfillment of eCommerce orders, the ability to place online orders in our stores if we are out of stock in the retail store, buy-online, pick-up in store or curbside capabilities, and giving direct, live access to well-trained and knowledgeable teammates.
We believe our store base gives us a competitive advantage over our online-only competitors, as our physical presence allows us to better serve our athletes by creating strong engagement through interactive in-store elements, offering the convenience of accepting in-store returns or exchanges and expediting fulfillment of eCommerce orders, the ability to place online orders in our stores if we are out of stock in the retail store, buy-online, pick-up in store, curbside pickup and return, and same-day delivery capabilities with Instacart or DoorDash, all while offering direct, live access to well-trained and knowledgeable teammates.
We believe that the breadth of our product selections in each category of sporting goods offers our athletes a wide range of good, better and best price points and enables us to address the needs of our athletes, from the beginner to the sports enthusiast, which distinguishes us from other large format sporting goods stores.
We believe our compelling industry-leading product assortment in each sporting goods category offers our athletes a wide range of good, better and best price points and enables us to address the needs of our athletes, from beginner to sports enthusiast, which distinguishes us from other large format sporting goods stores.
We provide support to our teammates to enable them to maintain and improve their professional and personal lives, which includes an employee assistance plan, and an onsite health and childcare facility at our Customer Support Center (“CSC”).
We provide support to our teammates to enable them to maintain and improve their professional and personal lives, which includes an employee assistance plan, an onsite health and fitness center, and a childcare facility at our corporate headquarters, which we refer to as our Customer Support Center (“CSC”).
In addition, in connection with the sale of firearms in our stores, we must comply with a number of federal and state laws and regulations, including the federal Brady Handgun Violence Prevention Act, related to the sale of firearms and ammunition.
In addition, in connection with the sale of firearms in our stores, we must comply with a number of federal and state laws and regulations related to the sale of firearms and ammunition.
Our vertical brands include brands that we own and are available exclusively in our stores and online such as Alpine Design, CALIA, DSG, ETHOS, Field & Stream, Fitness Gear, Lady Hagen, MAXFLI, Nishiki, Quest, Tommy Armour, Top-Flite and Walter Hagen, as well as brands that we license from third parties including adidas (baseball and football), Slazenger (golf) and Prince (tennis).
Vertical brands Our vertical brands include brands that we own across hardlines and softlines and are available exclusively in our stores and online such as Alpine Design, CALIA, DSG, ETHOS, Fitness Gear, MAXFLI, Nishiki, Quest, Top-Flite, VRST, and Walter Hagen, as well as brands that we license from third parties including adidas (baseball and football) and Prince (tennis).
Since the establishment of the Sports Matter initiative, the Company and The DICK’S Sporting Goods Foundation have committed over $150 million to keep kids playing sports, helping to save thousands of youth sports teams and giving more than one million young athletes across all 50 states the chance to play.
Since the establishment of the Sports Matter initiative, the Company and The DICK’S Sporting Goods Foundation have committed over $170 million to help save thousands of youth sports teams and give more than one million young athletes across all 50 states the chance to play.
Our Improving Omni-channel Platform and Fulfillment Capabilities We believe that when our athletes connect with the DICK’S Sporting Goods brand, they expect a seamless shopping experience, regardless of the manner in which they choose to shop with us. Like our athletes, we view retail as an omni-channel experience, that seamlessly integrates our stores and online channels.
Our Improving Omni-channel Platform and Fulfillment Capabilities We believe that when our athletes connect with the DICK’S Sporting Goods brand, they expect a seamless shopping experience, regardless of the manner in which they choose to shop with us.
We believe that through our mission and the following key elements of our business strategy, we can continue to build one of the best omni-channel experiences in retail. Reimagining the Athlete Experience We put our athletes at the center of everything we do, and we are committed to creating a unique and differentiated shopping experience for them.
We believe that through this mission and the following key elements of our business strategy, we can be the best sports company in the world. Reimagining the Athlete Experience We put our athletes at the center of everything we do, and we are committed to creating a unique and differentiated shopping experience for them.
In addition to DICK’S Sporting Goods stores, we own and operate Golf Galaxy, Field & Stream, Public Lands and Going Going Gone! stores, and sell our product both online and through our mobile apps.
In addition to DICK’S Sporting Goods stores, we own and operate Golf Galaxy, Public Lands and Going Going Gone! specialty concept stores and offer our products both online and through our mobile apps.
In 2019, we created the DICK’S Sporting Goods Inclusion and Diversity Council, which is comprised of a group of teammates from across our organization who represent diverse backgrounds, roles, experiences and communities, to help steer and support our inclusion and diversity efforts.
Our Diversity, Equity, and Inclusion Council, formed in 2019, is comprised of a group of teammates from across our organization who represent diverse backgrounds, roles, experiences and communities, and was formed to help steer and support our diversity, equity, and inclusion efforts.
During her career at PepsiCo, Ms. Hobart held several other significant marketing roles and also spent several years in strategic planning and finance. Prior to joining PepsiCo, Ms. Hobart worked in commercial banking for JP Morgan Chase and Wells Fargo Bank. In addition, Ms. Hobart serves as a member of the Board of Directors of YUM! Brands, Inc. (NYSE: YUM).
During her career at PepsiCo, Ms. Hobart held several other significant marketing roles and also spent several years in strategic planning and finance. Prior to joining PepsiCo, Ms. Hobart worked in commercial banking for JP Morgan Chase and Wells Fargo Bank. In addition, Ms. Hobart joined the Board of Directors of Marriott International, Inc. (NASDAQ: MAR) on March 15, 2023.
We also plan to invest in in-store technology to further improve fulfillment efficiency. 5 Table of Contents Merchandising The following table sets forth the approximate percentage of our sales attributable to the following categories for the fiscal years presented: Fiscal Year Category 2021 2020 2019 Hardlines (1) 44 % 46 % 42 % Apparel 34 % 33 % 35 % Footwear 21 % 19 % 21 % Other (2) 1 % 2 % 2 % Total 100 % 100 % 100 % (1) Includes items such as sporting goods equipment, fitness equipment, golf equipment and hunting and fishing gear.
Merchandising The following table sets forth the approximate percentage of our sales attributable to the following categories for the fiscal years presented: Fiscal Year Category 2022 2021 2020 Hardlines (1) 40 % 44 % 46 % Apparel 34 % 34 % 33 % Footwear (2) 24 % 21 % 19 % Other (3) 2 % 1 % 2 % Total 100 % 100 % 100 % (1) Includes items such as sporting goods equipment, fitness equipment, golf equipment and hunting and fishing gear.
We sponsor thousands of teams in various sports and support the philanthropic efforts of our private corporate foundation, The DICK’S Sporting Goods Foundation. In partnership with The DICK’S Sporting Goods Foundation, we launched our Sports Matter initiative, a philanthropic effort singularly focused on supporting youth sports, in 2014.
In partnership with The DICK’S Sporting Goods Foundation, in 2014 we launched our Sports Matter initiative, a philanthropic effort singularly focused on supporting youth sports.
(2) Includes our non-merchandise sales categories, including in-store services, shipping revenues, software subscription revenues and credit card processing revenues. Additional information about our sales categories is included within Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 1–Basis of Presentation and Summary of Significant Accounting Policies of this Annual Report on Form 10-K.
Additional information about our sales categories is included within Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 1–Basis of Presentation and Summary of Significant Accounting Policies of this Annual Report on Form 10-K.
Ms. Hobart formerly served as a member of the Board of Directors of Sonic Corp. (Nasdaq: SONC) from 2014 - 2018. Navdeep Gupta became our Executive Vice President, Chief Financial Officer effective October 1, 2021 and served as our Senior Vice President, Chief Accounting Officer from November 2017 through September 2021. Prior to joining the Company, Mr.
Navdeep Gupta became our Executive Vice President, Chief Financial Officer effective October 1, 2021 and served as our Senior Vice President, Chief Accounting Officer from November 2017 through September 2021. Prior to joining the Company, Mr.
Hayes also served as the Company’s interim Chief Financial Officer from November 2009 to April 2010 and as Senior Vice President, Human Resources from April 2010 to May 2013. Prior to joining Coldwater Creek, Mr.
Hayes served as Senior Vice President and General Counsel of Coldwater Creek Inc. from February 2009 to September 2014. During his tenure with Coldwater Creek, Mr. Hayes also served as the Company’s interim Chief Financial Officer from November 2009 to April 2010 and as Senior Vice President, Human Resources from April 2010 to May 2013.
We leverage our store and distribution center network, three eCommerce fulfillment centers (one owned and two operated by a third-party) and direct shipping capabilities from our vendors to ensure merchandise delivery speed to our athletes and to minimize shipping costs. Competition The competition among retailers that sell sporting goods is highly fragmented.
We leverage our store and distribution center network, two eCommerce fulfillment centers (one owned and one operated by a third-party, which we exited in February 2023) and direct shipping capabilities from our vendors to ensure merchandise delivery speed to our athletes and to minimize shipping costs.
Training and Development We empower our teammates to develop their careers and provide tools that are necessary for them to reach their personal and professional goals.
We also provide opportunities for volunteerism and launched our Teammate Relief Fund to offer additional support to our teammates experiencing hardship. Training and Development We empower our teammates to develop their careers and provide tools that are necessary for them to reach their personal and professional goals.
Proprietary Rights We have a number of service marks and trademarks registered with the United States Patent and Trademark Office, including various versions of the following: “Alpine Design”, “CALIA”, “DICK’S”, “DICK’S Sporting Goods”, “DSG”, “ETHOS”, “Field & Stream”, “Fitness Gear”, “Golf Galaxy”, “Golfsmith”, “Lady Hagen”, “MAXFLI”, “Nishiki”, “Primed”, “Public Lands”, “Quest”, “ScoreCard”, “ScoreRewards”, “Tommy Armour”, “Top-Flite”, “VRST” and “Walter Hagen”.
However, results for any quarter are not necessarily indicative of the results that may be achieved for the fiscal year. 7 Table of Contents Proprietary Rights We have a number of service marks and trademarks registered with the United States Patent and Trademark Office, including various versions of the following: “Alpine Design”, “CALIA”, “DICK’S”, “DICK’S Sporting Goods”, “DSG”, “ETHOS”, “Fitness Gear”, “GameChanger”, “Golf Galaxy”, “The GolfWorks”, “MAXFLI”, “Monarch”, “Nishiki”, “Primed”, “Public Lands”, “Quest”, “ScoreCard”, “ScoreRewards”, “Top-Flite”, “VRST” and “Walter Hagen”.
Our marketing program is focused on building loyalty to DICK’S Sporting Goods through brand-building campaigns and the expansion of our ScoreCard Rewards loyalty program. In fiscal 2019, we launched ScoreCard Gold, which provides our top-tier athletes with more ways to earn ScoreCard points and member-only benefits, including early access to sales and product launches.
In fiscal 2019, we launched ScoreCard Gold, which provides our top-tier athletes with more ways to earn ScoreCard points and member-only benefits, including early access to sales and product launches.
Our vertical brands are our second largest brand category, representing $1.7 billion, or approximately 14%, of consolidated net sales in fiscal 2021. We consider our vertical brand strategy to be a key area of opportunity to increase productivity in our stores and online, and we have invested in a research, development and procurement staff to support its growth.
We consider our vertical brand strategy to be a key area of opportunity to increase productivity in our stores and online, and we have invested in a research, development and procurement staff to support its growth.
Wages and Benefits In addition to offering our teammates competitive salaries and wages, we offer comprehensive health and retirement benefits to those eligible, which include all full-time hourly and salaried teammates. We are committed to equal pay for equal work independent of gender and race when establishing and maintaining wages.
Wages and Benefits In addition to offering our teammates competitive salaries and wages, we offer comprehensive health and retirement benefits to eligible teammates, which typically include all full-time hourly and salaried teammates.
We leverage the robust data in our database to enhance the athlete experience by engaging our athletes through digital marketing and providing them with personalized offers and communications.
We leverage the robust data in our database to enhance the athlete experience by engaging our athletes through digital marketing and providing them with personalized offers and communications. We also use data science to improve the speed at which we deliver products to our athletes through optimized order routing and to enhance our in-stock and merchandise availability positions.
We recently opened our first two DICK’S House of Sport stores, which are built around experience, service, community and product, as well as our first two redesigned Golf Galaxy Performance Centers, which are equipped with Trackman and Biomech golf technologies and include an elevated staffing and service model to ensure our teammates become trusted advisors to golf enthusiasts of all levels.
In fiscal 2021, we also launched our redesigned Golf Galaxy Performance Centers, which are equipped with Trackman and Biomech golf technologies and include an elevated staffing and service model to ensure our teammates become trusted advisors to golf enthusiasts of all levels.
We equip our teammates with current technology to improve their productivity and enhance the athlete experience, including providing real-time product information, detailed product descriptions, inventory availability and alternative product recommendations as well as other metrics and communications while on the sales floor.
We equip our teammates with current technology to improve their productivity and enhance the athlete experience, including providing real-time product information, detailed product descriptions, inventory availability and alternative product recommendations as well as other metrics and communications while on the sales floor. 4 Table of Contents Our marketing program is focused on inspiring athletes to participate in sports and building loyalty to DICK’S Sporting Goods through brand-building campaigns, including the expansion of our ScoreCard Rewards loyalty program.
Our websites also give us the ability to ship online orders from our retail locations, which reduces delivery times for online orders and improves inventory productivity and availability. eCommerce sales accelerated during the COVID-19 pandemic, increasing 81% since fiscal 2019, while eCommerce penetration has grown from 16% of total net sales in fiscal 2019 to 21% in fiscal 2021. 6 Table of Contents Purchasing, Distribution and Customer Fulfillment During fiscal 2021, we purchased merchandise from approximately 1,400 vendors, with Nike, our largest vendor, representing approximately 17% of our merchandise purchases.
Our websites also give us the ability to ship online orders from our retail locations, which reduces delivery times for online orders and improves inventory productivity and availability. Purchasing, Distribution and Customer Fulfillment During fiscal 2022, we purchased merchandise from approximately 1,500 vendors, with Nike, our largest vendor, representing approximately 23% of our merchandise purchases.
We seek to expand our presence through the opening of new stores and believe that growing our store network and eCommerce business simultaneously will enable us to profitably grow the business by delivering an omni-channel shopping experience for our athletes.
In addition, we operate Going Going Gone! and Warehouse Sale stores, through which we are able to improve our clearance optimization through the consolidation of clearance inventory for omni-channel selling opportunities to better serve our value athletes. 6 Table of Contents We seek to expand our presence through the opening of new stores and believe that growing our store network and eCommerce business simultaneously will enable us to profitably grow the business by delivering an omni-channel shopping experience for our athletes.
Hayes was engaged for seventeen years in private law practice, most recently as a partner with Hogan & Hartson, LLP, from March 2003 to February 2009. Prior to his legal career, Mr. Hayes practiced as a certified public accountant with KPMG LLP. Julie Lodge-Jarrett became our Chief People and Purpose Officer in April 2020.
Prior to joining Coldwater Creek, Mr. Hayes was engaged for seventeen years in private law practice, most recently as a partner with Hogan & Hartson, LLP, from March 2003 to February 2009. Prior to his legal career, Mr.
In fiscal 2021, we launched VRST, our premium and versatile brand that serves the modern athletic male. These brands offer high-quality, on-trend products to our athletes with compelling technical and performance attributes while providing differentiation in our merchandise assortment at higher gross margins as compared to sales of similar products from national brands.
These brands offer high-quality, on-trend products to our athletes with compelling technical and performance attributes while providing differentiation in our merchandise assortment at higher gross margins as compared to sales of similar products from national brands. Our vertical brands are our second largest brand category, representing $1.7 billion, or approximately 14%, of consolidated net sales in fiscal 2022.
When used in this Annual Report on Form 10-K, unless the context otherwise requires or unless otherwise specified, any reference to “year” is to the Company’s fiscal year. Business Strategy Our Company is built on the belief that sports make people better.
When used in this Annual Report on Form 10-K, unless the context otherwise requires or unless otherwise specified, any reference to “year” is to the Company’s fiscal year, which ends on the Saturday closest to the end of January each year.
We develop and test new store prototypes and concepts to grow our business, while incorporating key learnings into the rest of our chain.
We develop and test new store prototypes and concepts to grow our business, while incorporating key learnings into the rest of our chain. Since fiscal 2021, we have opened three DICK’S House of Sport stores, which are built around experience, service, community and product.
Additionally, we continue to leverage our omni-channel platform, fulfillment centers and our delivery partnership with FedEx, which have enabled us to provide our athletes with faster delivery times. In fiscal 2022, we plan to further improve our digital experience by expanding personalization and other features and enhancements to assist our athletes in finding the right product, at the right time.
Additionally, we continue to leverage our omni-channel platform, fulfillment centers and our delivery partnership with FedEx, which have enabled us to provide our athletes with faster delivery times.
Prior to joining DICK’S Sporting Goods, Ms. Lodge-Jarrett spent more than 21 years at Ford Motor Company, most recently serving as Chief Talent Officer. Ms.
Hayes practiced as a certified public accountant with KPMG LLP. 10 Table of Contents Julie Lodge-Jarrett became our Chief People and Purpose Officer in April 2020. Prior to joining DICK’S Sporting Goods, Ms. Lodge-Jarrett spent more than 21 years at Ford Motor Company, most recently serving as Chief Talent Officer. Ms.
Although our highest sales and operating income results have historically occurred in the second and fourth fiscal quarters, our business has increasingly been less affected by seasonal fluctuations in recent years. However, results for any quarter are not necessarily indicative of the results that may be achieved for the fiscal year.
Seasonality Our business is subject to seasonal influences, including the holiday selling season and the impact of unseasonable weather conditions. Although our highest sales and operating income results have historically occurred in the second and fourth fiscal quarters, our business has increasingly been less affected by seasonal fluctuations in recent years.
In addition to innovating within our core business, we recently launched Public Lands, a new omni-channel specialty concept for our outdoor athletes. We continue to improve our service and selling culture, and recently introduced new standards to better serve our athletes, which included robust training to increase our teammates’ product knowledge.
In addition to innovating within our core business, we launched Public Lands, an omni-channel specialty concept for our outdoor athletes, in fiscal 2021. We continue to improve our service and selling culture, with an emphasis on engaging and inspiring our athletes.
We also use data science to improve the speed at which we deliver products to our athletes through optimized order routing and to enhance our in-stock and merchandise availability positions. 4 Table of Contents Optimizing Our Assortment to Meet the Needs of All Athletes We carry a full range of products within each category, including premium items for the sports enthusiast.
Optimizing Our Assortment to Meet the Needs of All Athletes We carry a full range of products within each category, including premium items for the sports enthusiast.
Germano 58 Executive Vice President - Stores Vlad Rak 45 Executive Vice President - Chief Technology Officer Lee J. Belitsky 61 Executive Vice President John E. Hayes III 59 Senior Vice President - General Counsel and Secretary Julie Lodge-Jarrett 46 Senior Vice President - Chief People and Purpose Officer Edward W. Stack is our Executive Chairman.
Hayes III 60 Senior Vice President - General Counsel and Secretary Julie Lodge-Jarrett 47 Senior Vice President - Chief People and Purpose Officer Edward W. Stack is our Executive Chairman. From 1984 to January 2021, Mr.
The information on our website does not constitute a part of this Annual Report on Form 10-K.
Our executive office is located at 345 Court Street, Coraopolis, Pennsylvania 15108 and our phone number is (724) 273-3400. Our website is located at dicks.com. The information on our website does not constitute a part of this Annual Report on Form 10-K.
Total employment figures fluctuate throughout the year and typically peak during the fourth quarter in alignment with the holiday selling season. None of our teammates are covered by a collective bargaining agreement. As stated in our mission, we strive to create an environment where passionate and skilled teammates thrive.
None of our teammates are covered by a collective bargaining agreement. 8 Table of Contents As stated in our mission, we strive to create an environment where dedicated, optimistic, authentic and high-integrity teammates thrive.
Teammates with shared interests have come together in various resource groups to discuss shared issues, increase awareness and communicate with senior management.
Teammates with shared interests have come together in various resource groups to discuss shared experiences, increase awareness, offer mentorship to others and communicate with senior management. We use the feedback provided by our Diversity, Equity and Inclusion Council, various resource groups, and other surveys provided to our teammates to foster an inclusive workplace.
We achieved a 100% female-to-male unadjusted median pay ratio in fiscal 2021, which we intend to maintain going forward. From an average pay perspective, female pay was at 97% of males across our 50,800 teammates. Safety, Health and Well-Being We are committed to ensuring the safety, health and well-being of our teammates.
We are committed to equal pay for equal work independent of gender and race when establishing and maintaining wages. We achieved and maintained 100% female-to-male unadjusted median pay ratio in fiscal 2022 and fiscal 2021. Safety, Health and Well-Being We are committed to ensuring the safety, health and well-being of our teammates.
Stack, our Executive Chairman, opened his original bait and tackle store in Binghamton, New York. Edward W. Stack joined his father's business full-time in 1977 and in 1984 became President and Chief Executive Officer of the then two-store chain.
Stack joined his father's business full-time in 1977 and in 1984 became President and Chief Executive Officer of the then two-store chain. In November 1997, we reincorporated as a Delaware corporation, and in April 1999 we changed our name to DICK’S Sporting Goods, Inc.
Our key partners invest in our business to showcase their brands through brand shops and access to wider, deeper and exclusive product offerings that provide authenticity and credibility to our athletes and that further differentiate us from our competitors, including our recently announced partnership with Nike to provide a connected marketplace in our DICK’S mobile app which gives our athletes access to exclusive product, experiences and content.
Our ability to showcase an entire brand portfolio is valued by our strategic partners, and our relationships with key brands provide access to wider, deeper and exclusive product offerings that provide authenticity and credibility to our athletes and that further differentiate us from our competitors.
We plan to opportunistically open new stores in under-served and under-penetrated markets and leverage the significant flexibility within our existing real estate portfolio to capitalize on future real estate opportunities over the near and intermediate terms as these leases come up for renewal. eCommerce Through our websites, we seek to provide our athletes with in-depth product information and the ability to shop with us at any time.
In recent years, we have opportunistically opened new stores in under-penetrated markets and leveraged the significant flexibility within our existing real estate portfolio to capitalize on real estate opportunities as leases came up for renewal.
Ensuring our compliance with these various laws and regulations, and keeping abreast of changes to the legal and regulatory landscape present in our industry, may cause us to expend considerable resources. 7 Table of Contents Social Responsibility We are committed to supporting our teammates professionally and personally, readying our athletes to achieve their personal bests, and saving and rebuilding youth sports in local communities.
Ensuring our compliance with these various laws and regulations, and keeping abreast of changes to the legal and regulatory landscape present in our industry, may cause us to expend considerable resources. For additional information, see the risk factors herein in “Item IA.
We also own and operate DICK’S House of Sport and Golf Galaxy Performance Center, as well as GameChanger, a youth sports mobile app for video streaming, scorekeeping, scheduling and communications. We were founded and incorporated in 1948 in New York under the name Dick’s Clothing and Sporting Goods, Inc. when Richard “Dick” Stack, the father of Edward W.
We also own and operate DICK’S House of Sport and Golf Galaxy Performance Center, as well as GameChanger, a youth sports mobile app for scheduling, communications, live scorekeeping and video streaming. 3 Table of Contents We are celebrating our 75th anniversary as a Company in 2023 and are proud of our growth and accomplishments since our inception.
Hayes III became our Senior Vice President - General Counsel and Secretary in January 2015. Prior to joining DICK’S Sporting Goods, Mr. Hayes served as Senior Vice President and General Counsel of Coldwater Creek Inc. from February 2009 to September 2014. During his tenure with Coldwater Creek, Mr.
(now Travel & Leisure Co.). In April 2022, Mr. Rak joined the Board of Directors of Mastech Digital Inc (NYSEAMERICAN: MHH). John E. Hayes III became our Senior Vice President - General Counsel and Secretary in January 2015. Prior to joining DICK’S Sporting Goods, Mr.
We also offer superior service both in-store and via a seamless omni-channel experience which includes buy-online, pick-up in store and curbside pickup. Seasonality Our business is subject to seasonal influences, including the success of the holiday selling season and the impact of unseasonable weather conditions.
We believe our store base gives us a competitive advantage over our online-only competitors, as our physical presence allows us to better serve our athletes by creating strong engagement. We also offer superior service both in-store and via a seamless omni-channel experience which includes buy-online, pick-up in store and curbside pickup and return capabilities.
Our loyalty program has over 20 million active members that account for over 70% of total sales. Through this program, we have acquired over 140 million athletes in our database, including over 16 million new athletes in the past two years.
Our loyalty program has over 25 million active members who account for over 70% of total sales, which includes 7 million active Gold athletes who account for 40% of total sales.
We also provide opportunities for volunteerism and recently launched our Teammate Relief Fund, which provides monetary support for our teammates and their immediate families during times of unforeseen financial hardship and crises that are beyond their control.
We are also dedicated to supporting our teammates professionally and personally, as they are the core of our organization. In 2021, we established the Teammate Relief Fund, a public charity that provides financial support to teammates and their immediate families facing unexpected financial difficulty beyond their control.
Our stores remain at the core of our omni-channel platform.
Like our athletes, we view retail as an omni-channel experience that seamlessly integrates our stores and online channels. 5 Table of Contents Our stores remain at the core of our omni-channel platform.
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In November 1997, we reincorporated as a Delaware corporation, and in April 1999 we changed our name to DICK’S Sporting Goods, Inc. 3 Table of Contents Our executive office is located at 345 Court Street, Coraopolis, Pennsylvania 15108 and our phone number is (724) 273-3400. Our website is located at dicks.com.
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We were founded and incorporated in 1948 in New York under the name Dick’s Clothing and Sporting Goods, Inc. when Richard “Dick” Stack, the father of Edward W. Stack, our Executive Chairman, opened his original bait and tackle store in Binghamton, New York. Edward W.
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Vertical brands We also offer our athletes a wide variety of products that are not available from other retailers.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeUnexpected or increased costs or delays in development of the brand, excessive demands on management resources, legal or regulatory constraints, changes in consumer demands and shopping patterns regarding sporting goods, or a determination that consumer demand no longer supports the brand or retail concept could cause us to curtail or abandon any of our new brands or new store concepts or formats at any time which could result in asset impairments and inventory write-downs. 13 Table of Contents Additional risks relating to our vertical brand offerings include increased potential product liability and product recalls for which we do not have third-party indemnification and contractual rights or remedies; increased potential reputational risks related to the responsible sourcing of our vertical brand products; increased costs for labor or raw materials used to manufacture products; our ability to successfully protect our proprietary rights (e.g., defending against counterfeit or otherwise unauthorized goods); our ability to successfully navigate and avoid claims related to the proprietary rights of third parties; and our ability to successfully administer and comply with obligations under license agreements that we have with third-party licensors of certain brands.
Biggest changeUnexpected or increased costs or delays in development of the brand, excessive demands on management resources, legal or regulatory constraints, changes in consumer demands and shopping patterns regarding sporting goods, or a determination that consumer demand no longer supports the brand could cause us to curtail or abandon any of our new brands at any time which could result in asset impairments and inventory write-downs.
Fluctuations in product costs and availability due to inflationary pressures, fuel price uncertainty, supply chain constraints, increases in commodity prices, labor shortages and other factors could negatively impact our business and results of operations. Our product costs are affected, in part, by the costs of component materials.
Fluctuations in product costs and availability due to inflationary pressures, fuel price uncertainty, supply chain constraints, increases in commodity prices, labor shortages and other factors could negatively impact our business and results of operations. Our product costs are affected, in part, by the costs and availability of component materials.
Any material disruption, malfunction or other similar problems in or with our core information systems could negatively impact our financial results and materially adversely affect our business operations. We may be unable to attract, train, engage and retain key personnel and teammates.
Any material disruption, malfunction, or other similar problems in or with our core information systems could negatively impact our financial results and materially adversely affect our business operations. We may be unable to attract, train, engage and retain key teammates.
The loss of any one or more of our executive management, including our President & Chief Executive Officer, Lauren Hobart, or other key personnel could seriously harm our business. Additionally, effective succession planning for executive management and key personnel is vital to our long-term continued success.
The loss of any one our executive management, including our President & Chief Executive Officer, Lauren Hobart, or other key personnel could seriously harm our business. Additionally, effective succession planning for executive management and key personnel is vital to our long-term continued success.
In the event of our insolvency, liquidation, dissolution or reorganization, the lenders under our Revolving Credit Facility and the holders of our Notes would be entitled to payment in full from our assets before distributions, if any, were made to our stockholders.
In the event of our insolvency, liquidation, dissolution or reorganization, the lenders under our Revolving Credit Facility and the holders of our Senior Notes would be entitled to payment in full from our assets before distributions, if any, were made to our stockholders.
If we fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in default under that indebtedness, which could, in turn, result in that and our other indebtedness becoming immediately payable in full.
If we fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in default under that indebtedness, which could, in turn, result in our other indebtedness becoming immediately payable in full.
Although in fiscal 2021 purchases from no other vendor represented 10% or more of our total purchases, our dependence on suppliers involves risk. We might be unable to obtain merchandise that consumers demand in a timely manner if there are disruptions in our relationships with key suppliers, which could cause our revenue to materially decline.
Although in fiscal 2022 purchases from no other vendor represented 10% or more of our total purchases, our dependence on suppliers involves risk. We might be unable to obtain merchandise that consumers demand in a timely manner if there are disruptions in our relationships with key suppliers, which could cause our revenue to materially decline.
All of our vendors must comply with applicable product safety laws, and we are dependent on them to ensure that the products we buy comply with all safety standards.
Our vendors must comply with applicable product safety laws, and we are dependent on them to ensure that the products we buy comply with all safety standards.
Further, the data privacy and cyber-security regulatory environment is constantly changing, with new and increasingly rigorous and complex requirements. Maintaining our compliance with those requirements, including recently enacted state consumer privacy laws, may require significant effort and cost, require changes to our business practices, and limit our ability to obtain data used to provide a personalized customer experience.
Further, the data privacy and cyber-security regulatory environment is constantly changing, with new and increasingly rigorous and complex requirements. Maintaining our compliance with those requirements, including state consumer privacy laws, may require significant effort and cost, require changes to our business practices, and limit our ability to obtain data used to provide a personalized customer experience.
Many of our stores are located in geographic areas that experience seasonally cold weather, and we sell a significant amount of cold weather sporting goods and apparel.
Many of our stores are in geographic areas that experience seasonally cold weather, and we sell a significant amount of cold weather sporting goods and apparel.
Negative publicity or perceptions involving us or our brands, products, vendors, spokespersons, or marketing and other partners, or failure to detect, prevent, mitigate or address issues giving rise to reputational risk could adversely impact our reputation, business, results of operations, and financial condition, and may adversely impact our ability to attract and retain athletes and teammates.
Negative publicity or perceptions involving us or our brands, products, vendors, foreign manufacturers, spokespersons, or marketing and other partners, or failure to detect, prevent, mitigate or address issues giving rise to reputational risk could adversely impact our reputation, business, results of operations, and financial condition, and may adversely impact our ability to attract and retain athletes and teammates.
In either case, and in other cases, our obligations under the indenture governing the Convertible Senior Notes and the indenture governing the 2032 Notes and the 2052 Notes could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent management, including in a transaction that noteholders or holders of our common stock may view as favorable.
In either case, and in other cases, our obligations under the indenture governing the Convertible Senior Notes and the indenture governing the Notes could increase the cost of acquiring us or otherwise discourage a third party from acquiring us or removing incumbent management, including in a transaction that noteholders or holders of our common stock may view as favorable.
Unseasonable or extreme weather conditions and natural disasters caused by climate change or otherwise and other catastrophic events in the areas in which our stores and/or distribution centers are located could negatively impact consumer shopping patterns, consumer confidence and disposable income, or otherwise could have a negative effect on our financial performance.
Furthermore, extreme weather conditions and natural disasters caused by climate change or otherwise and other catastrophic events in the areas in which our stores and/or distribution centers are located could negatively impact consumer shopping patterns, consumer confidence and disposable income, or otherwise could have a negative effect on our financial performance.
Further, difficulties in moving products manufactured overseas and through the ports of North America, whether due to port congestion, government shutdowns, labor disputes, product regulations and/or inspections or other factors, including natural disasters or health pandemics, could negatively affect our business.
Further, difficulties in moving products manufactured overseas and through the ports of North America, whether due to port congestion, government shutdowns, labor disputes, product regulations and/or inspections or other factors, including natural disasters, health pandemics or other global conflicts, could negatively affect our business.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets or operations, seek additional capital or restructure or refinance our indebtedness, including the Convertible Senior Notes, the 2032 Notes, the 2052 Notes or the Revolving Credit Facility.
If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets or operations, seek additional capital or restructure or refinance our indebtedness, including the Convertible Senior Notes, the Notes or the Revolving Credit Facility.
A significant amount of our products are manufactured abroad, which subjects us to various international risks and costs, including foreign trade issues, currency exchange rate fluctuations, shipment delays and supply chain disruption and political instability, which could cause our sales and profitability to suffer.
A significant amount of our products are manufactured abroad, which subjects us to various international risks and costs, including foreign trade issues, currency exchange rate fluctuations, shipment delays and supply chain disruptions, and political instability, which could cause our sales and profitability to suffer.
The ability to optimize our distribution and fulfillment network, which includes our owned and leased distribution centers and eCommerce fulfillment center, and our stores that serve as forward distribution points, and avoid disruptions, depends on a variety of factors, some of which are beyond our control, including severe weather conditions, natural disasters, health pandemics or other catastrophic events, problems with our information technology systems, labor disagreements or other shipping problems, and general economic and real estate conditions.
The ability to optimize our distribution and fulfillment network, which includes our owned and leased distribution centers and eCommerce fulfillment center, and our stores that serve as forward distribution points, and avoid disruptions, depends on a variety of factors, some of which are beyond our control, including severe weather conditions, natural disasters, pandemics or other catastrophic events, problems with our information technology systems, labor or employee disagreements, supply chain disruptions or other shipping problems, and general economic and real estate conditions.
In addition, natural disasters such as hurricanes, tornadoes and earthquakes, or a combination of these or other factors, could damage or destroy our facilities or make it difficult for customers to travel to our stores.
Natural disasters such as hurricanes, tornadoes and earthquakes, or a combination of these or other factors, could damage or destroy our facilities or make it difficult for customers to travel to our stores.
In particular, our business is highly dependent on the shipping and trucking industry to deliver products to our distribution centers and our stores. Our results of operations may be adversely affected if we, or our vendors, are unable to secure adequate transportation resources at competitive prices to fulfill our delivery schedules to our distribution centers or our stores.
Our business also is highly dependent on the shipping and trucking industry to deliver products to our distribution centers and our stores. Our results of operations may be adversely affected if we, or our vendors, are unable to secure adequate transportation resources at competitive prices to fulfill our delivery schedules to our distribution centers or our stores.
We can provide no assurances as to the financial stability or viability of any hedge counterparty. 22 Table of Contents Conversion of the Convertible Senior Notes or exercise of the warrants evidenced by the warrant transactions may dilute the ownership interest of existing stockholders, including noteholders who have previously converted their notes.
We can provide no assurances as to the financial stability or viability of any hedge counterparty. Conversion of the Convertible Senior Notes or exercise of the warrants evidenced by the warrant transactions may dilute the ownership interest of existing stockholders, including noteholders who have previously converted their notes.
Unauthorized disclosure of sensitive or confidential athlete, teammate, vendor or Company information could result in substantial costs and reputational damage, harm our business and standing with our athletes and could subject us to litigation and enforcement actions. The protection of our data as well as athlete and teammate data is critical.
Unauthorized disclosure of sensitive or confidential athlete, teammate, vendor or Company information could result in substantial costs and reputational damage, harm our business and standing with our athletes and could subject us to litigation and enforcement actions. The protection of our data, including athlete and teammate data, is critical.
As with most retailers, we collect, receive, store, manage, transmit and delete confidential athlete data, including payment card and personally identifiable information, in the normal course of customer transactions, as well as other confidential and sensitive information, such as personal information about our teammates and our vendors, and confidential Company information.
We collect, receive, store, manage, transmit and delete confidential athlete data, including payment card and personally identifiable information, in the normal course of customer transactions, as well as other confidential and sensitive information, such as personal information about our teammates and our vendors, and confidential Company information.
Under the indenture governing the 2032 Notes and the 2052 Notes, if a takeover results in a change of control triggering event, then noteholders will have the right to require us to repurchase their 2032 Notes and 2052 Notes for cash equal to 101% of the aggregate principal amount of such notes.
Under the indenture governing the Notes, if a takeover results in a change of control triggering event, then noteholders will have the right to require us to repurchase their Notes for cash equal to 101% of the aggregate principal amount of such notes.
We continually assess shareholder value and f rom time-to-time, we may enter into strategic alliances or acquire or invest in complementary companies or businesses. The success of strategic alliances, acquisitions, and investments is based on our ability to make accurate assumptions regarding the valuation, operations, growth potential, integration and other factors relating to such businesses.
F rom time-to-time, we may enter into strategic alliances or acquire or invest in complementary companies or businesses. The success of strategic alliances, acquisitions, and investments is based on our ability to make accurate assumptions regarding the valuation, operations, growth potential, integration and other factors relating to such businesses.
For example, we must meet athletes’ expectations with respect to, among other things, creating appealing and consistent online experiences while also offering localized assortments of merchandise in our stores and online to appeal to local geographic and demographic tastes; offering differentiated and premium products and regionally relevant products; delivering elevated customer service; and providing desirable in-store experiences, fast and reliable delivery, and convenient return options.
For example, we must meet athletes’ expectations with respect to, among other things, creating appealing and consistent online experiences while also offering localized assortments of merchandise to appeal to local geographic and demographic tastes; offering differentiated and premium products and regionally relevant products; delivering elevated customer service; and providing desirable in-store experiences, fast, accurate and reliable delivery and pick-up, and convenient return options.
We may incur lease costs that are excessive and cause operating margins to be below acceptable levels if we are unable to negotiate appropriate terms. If an existing store is not profitable, we might be required to record an impairment charge and we may not be able to terminate the lease associated with the underperforming store.
We may incur costs that are excessive and cause operating margins to be below acceptable levels if we are unable to negotiate appropriate terms. If an existing store is not profitable, we might be required to record an impairment charge and we may not be able to terminate the lease or sell the real estate associated with the underperforming store.
Additionally, any new initiative is subject to certain risks, including athlete acceptance, competition, product differentiation, and the ability to attract and retain qualified personnel to support the initiative. An inability to execute our real estate strategy could affect our financial results.
Additionally, any new initiative is subject to certain risks, including athlete acceptance, competition, product differentiation, and the ability to attract and retain qualified personnel to support the initiative. 13 Table of Contents An inability to execute our real estate strategy could affect our financial results.
While we have taken significant steps to protect athlete and others’ confidential information, the intentional or negligent actions of third parties, business associates or teammates may undermine our existing security measures and allow unauthorized parties to obtain access to our data systems and misappropriate confidential data.
Although we have taken measures to protect athlete and others’ confidential information, the intentional or negligent actions of third parties, business associates or teammates may undermine our existing security measures and allow unauthorized parties to obtain access to our data systems and misappropriate confidential data.
If we are unable to provide an omni-channel shopping experience across all channels that aligns with our athletes’ expectations and preferences, it could have an adverse impact on our revenues, business and results of operations. We often make advance commitments to purchase products, which may make it more difficult for us to adapt to rapidly-evolving changes in consumer preferences.
If we are unable to provide an omni-channel shopping experience across all channels that aligns with our athletes’ expectations and preferences, it could have an adverse impact on the results of our operations. We often make advanced commitments to purchase products, which may make it more difficult for us to adapt to rapidly-evolving changes in consumer preferences and trends.
Our focus on long-term strategic investments, including investments in our digital capabilities, our eCommerce platform, improvements to the athlete experience in our stores and online, our supply chain, enhancements to our ScoreCard loyalty program, the continued development of our vertical brands and specialty concepts, and improving teammate productivity, may require significant capital investment and management attention at the expense of other business initiatives and may take longer than anticipated to achieve the desired return.
Our focus on long-term strategic investments, including investments in our digital capabilities, our eCommerce platform, improvements to the athlete experience in our stores and online, our supply chain, enhancements to our ScoreCard loyalty program, the continued development of our vertical brands and specialty concepts (including but not limited to store remodels, experiential concepts and relocations), and improving teammate productivity, may require significant capital investment and management attention at the expense of other business initiatives and may take longer than anticipated to achieve the desired return.
Some of the federal, state or local laws and regulations that affect us include those relating to consumer products, product liability and consumer protection; reducing the spread of COVID-19; eCommerce, data protection and privacy; advertisement and marketing; labor and employment; taxes, including changes to tax rates and new taxes, tariffs, and surcharges; firearms, ammunition, knives, food items or other regulated products; accounting, corporate governance and securities; custom or import; and intellectual property.
Some of the federal, state or local laws and regulations that affect us include those relating to consumer products, product liability and consumer protection; eCommerce, data protection and privacy; advertisement and marketing; labor and employment; taxes, including changes to tax rates and new taxes, tariffs, and surcharges; firearms, ammunition, knives, food items or other regulated products; accounting, corporate governance and securities; custom or import; intellectual property; and environmental and/or climate change.
We utilize a number of third-party information systems for core system needs of our business, including our use of an independent service provider for electronic payment processing.
We utilize several third-party information systems for core system needs of our business, including our use of an independent service provider for electronic payment processing.
Risks Related to Third Parties and Legal and Regulatory Requirements We depend on our suppliers, distributors and manufacturers to provide us with sufficient quantities of quality products in a timely fashion. In fiscal 2021, we purchased merchandise from approximately 1,400 vendors. Purchases from Nike represented approximately 17% of our total merchandise purchases.
Risks Related to Third Parties and Legal and Regulatory Requirements We depend on our suppliers, distributors and manufacturers to provide us with sufficient quantities of quality products in a timely fashion. In fiscal 2022, we purchased merchandise from approximately 1,500 vendors. Purchases from Nike represented approximately 23% of our total merchandise purchases.
Poor performance by the professional sports teams within our core regions of operations; league-wide lockouts or strikes; and disruptions to, cancellations of, or negative publicity regarding sports leagues and major sporting events due to the COVID-19 pandemic and related protocols, could cause our financial results to fluctuate year-over-year.
Poor performance by the professional sports teams within our core regions of operations; league-wide lockouts or strikes; and disruptions to, cancellations of, or negative publicity regarding sports leagues and major sporting events could cause our financial results to fluctuate year-over-year.
Additionally, our ability to negotiate favorable lease terms on a new store location or a relocation of an existing store, or in connection with an expiring lease, remodel, consolidation, or closing depends on conditions in the real estate market, competition for desirable properties, our relationships with current and prospective landlords, and other factors that are not within our control.
Additionally, our ability to negotiate favorable lease terms or purchase terms on a new store location or a relocation of an existing store, or in connection with an expiring lease, remodel, consolidation, or closing depends on conditions in the real estate market, competition for desirable properties, our relationships with current and prospective landlords and shopping center operators, construction costs, the availability of labor and materials, and other factors that are not within our control.
If the products that we offer, whether via national brands or our vertical brands, do not meet applicable safety standards or our athletes’ expectations regarding safety, we could experience decreased sales, increased costs, and/or be exposed to legal and reputational risk.
Our sales and operating results could be adversely affected by product safety concerns. If the products that we offer, whether via national brands or our vertical brands, do not meet applicable safety standards or our athletes’ expectations regarding safety, we could experience decreased sales, increased costs, and/or be exposed to legal and reputational risk.
From time-to-time the Company or its subsidiaries may be involved in lawsuits or other claims arising in the ordinary course of business, including those related to federal or state wage and hour laws, product liability, consumer protection, advertising, employment, intellectual property, tort, privacy and data protection, disputes with landlords and vendors due to the disruptions caused by the COVID-19 pandemic, claims from athletes or teammates alleging failure to maintain safe premises with respect to protocols relating to the COVID-19 pandemic, and other matters.
From time-to-time the Company or its subsidiaries may be involved in lawsuits or other claims arising in the ordinary course of business, including those related to federal or state wage and hour laws, product liability, consumer protection, advertising, employment, intellectual property, tort, privacy and data protection, disputes with landlords and vendors due to the disruptions caused by the COVID-19 pandemic, company policies, and other matters.
Our ability to make scheduled payments on or to refinance our debt obligations, including our $575 million of 3.25% convertible senior notes due 2025 (“Convertible Senior Notes”), $750 million of 2032 Notes and $750 million of 2052 Notes and our $1.6 billion Revolving Credit Facility, will depend on our financial and operating performance.
Our ability to make scheduled payments on or to refinance our debt obligations, including our $575 million of 3.25% convertible senior notes due 2025 (the “Convertible Senior Notes”), the Notes and our Revolving Credit Facility, will depend on our financial and operating performance.
Our ability to meet our labor needs while controlling labor costs is subject to numerous external factors, including market pressures with respect to prevailing wage rates, unemployment levels, and health and other insurance costs; the impact of legislation or regulations governing labor relations, immigration, minimum wage, and healthcare benefits; changing demographics; and our reputation within the labor market.
Our ability to meet our labor needs while controlling labor costs is subject to numerous external factors, including market pressures with respect to prevailing wage rates, equity compensation, unemployment levels, and health and other insurance costs; the impact of legislation or regulations governing labor and employee relations, immigration, federal and state minimum wage requirements, and benefit costs; changing demographics; and our reputation within the labor market.
Key vendors may fail to deliver on their commitments or fail to supply us with sufficient products that comply with our safety and quality standards, whether as a result of supply chain disruptions (for example, in connection with the COVID-19 pandemic) or other causes, or fail to continue to develop new products that create consumer demand.
Key vendors may fail to deliver on their commitments or fail to supply us with sufficient products that comply with our safety and quality standards, whether as a result of supply chain disruptions or other causes, or fail to continue to develop new products that create consumer demand.
Moreover, we may not be able to obtain terms as favorable as those received from the independent third-party transportation providers we currently use, which could have a material adverse impact on our business, operational results, financial position and cash flows.
Moreover, we may not be able to obtain terms as favorable as those received from the independent third-party transportation providers we currently use, which could have a material adverse impact on our business.
We may also experience shipment delays caused by shipping port constraints, labor strikes, work stoppages, acts of war, including the current conflict in Ukraine, and terrorism, or other supply chain disruptions, including those caused by extreme weather, natural disasters, and pandemics and other public health concerns.
We may also experience shipment delays caused by shipping port constraints, labor strikes, work stoppages, acts of war, and terrorism, or other supply chain disruptions, including those caused by extreme weather, natural disasters, and pandemics and other public health concerns, including ongoing supply chain and manufacturing issues whether caused by the COVID-19 pandemic, the conflict in Ukraine, or otherwise.
Our success depends in part on our ability to anticipate and respond in a timely manner to changing consumer demand, preferences, and shopping patterns, which cannot be predicted with certainty and are subject to continual change and evolution.
Our success depends in part on our ability to anticipate and respond in a timely manner to changing consumer demand, preferences and trends, and shopping patterns, which are subject to continual change and evolution.
In addition to an increase in eCommerce penetration, the COVID-19 pandemic has driven an increase in demand in certain categories due to the renewed interest and perceived importance of health and fitness, participation in socially-distant and outdoor activities, and a shift toward athletic apparel and active lifestyle products.
The COVID-19 pandemic created a shift in consumer demand, resulting in an increase in demand in certain categories due to the renewed interest and perceived importance of health and fitness, participation in socially-distant and outdoor activities, and a shift toward athletic apparel and active lifestyle products.
Our information systems, including our back-up systems, are subject to damage or interruption from power outages; computer and telecommunications failures; computer viruses, worms, ransomware, and other malicious computer programs; denial-of-service attacks; security breaches (through cyber-attacks from cyber-attackers or sophisticated organizations); catastrophic events such as fires, tornadoes, earthquakes and hurricanes; and usage errors by our teammates.
Our information systems, including our back-up systems, are subject to damage or interruption from power outages; computer and telecommunications failures; malicious computer programs; denial-of-service attacks; security breaches (through cyber-attacks from cyber-attackers or sophisticated organizations); catastrophic events; and usage errors by our teammates.
We have implemented and regularly review and update our systems, processes, and procedures to protect against unauthorized access to or use of data and to prevent data loss. 15 Table of Contents While we have no knowledge of any material data security breaches to date, any compromise of our data security could result in a violation of applicable privacy and other laws or standards, significant legal and financial exposure beyond the scope or limits of our insurance coverage, interruption of our operations, increased operating costs associated with remediation, equipment acquisitions or disposal, added personnel, and a loss of confidence in our security measures, which could harm our business, reputation or investor confidence.
While we have no knowledge of any material data security breaches to date, any compromise of our data security could result in a violation of applicable privacy and other laws or standards, significant legal and financial exposure beyond the scope or limits of our insurance coverage, interruption of our operations, increased operating costs associated with remediation, equipment acquisitions or disposal, added personnel, and a loss of confidence in our security measures, which could harm our business, reputation or investor confidence.
Changes in consumer shopping habits and patterns, reduced customer traffic in the shopping centers where our stores are located, financial difficulties of our landlords, anchor tenants or a significant number of other retailers, and shopping center vacancies or closures, all of which have been amplified as a result of the COVID-19 pandemic could impact the profitability of our stores and increase the likelihood that our landlords fail to fulfill their obligations and conditions under our lease agreements.
Changes in consumer shopping habits and patterns, reduced customer traffic in the shopping centers where our stores are located, financial difficulties of our landlords, or the shopping center operators, anchor tenants or a significant number of other retailers, and shopping center vacancies or closures, could impact the profitability of our stores and increase the likelihood that our landlords or the shopping centers operators fail to fulfill their obligations and conditions under our lease agreements or governing documents.
Certain provisions in the indenture governing the Convertible Senior Notes and the indenture governing the 2032 Notes and the 2052 Notes could make a third-party attempt to acquire us more difficult or expensive.
Provisions in the indenture governing the Convertible Senior Notes and the indenture governing the 2032 Notes and the 2052 Notes could delay or prevent an otherwise beneficial takeover of us. Certain provisions in the indenture governing the Convertible Senior Notes and the indenture governing the Notes could make a third-party attempt to acquire us more difficult or expensive.
Our effective income tax rates could be unfavorably impacted by a number of factors, including changes in the valuation of deferred tax assets and liabilities; other changes in applicable tax laws, regulations, treaties, interpretations, and other guidance; changes in transfer pricing rules; and the outcome of income tax audits in various jurisdictions.
Our effective income tax rates could be unfavorably impacted by several factors, including changes in the valuation of deferred tax assets and liabilities; other changes in applicable tax laws, regulations, treaties, interpretations, and other guidance, including but not limited to the Inflation Reduction Act; changes in transfer pricing rules; and the outcome of income tax audits in various jurisdictions.
Consumer spending may be affected by many factors outside of the Company’s control, including general economic conditions; consumer disposable income; consumer confidence and perception of economic conditions; the threat or outbreak of war, terrorism or public unrest (including, without limitation, the conflict in Ukraine) which may cause supply chain disruptions, increase fuel costs and the cost of materials, and create general economic instability; wage and unemployment levels; consumer debt and inflationary pressures; the costs of basic necessities and other goods; effects of weather and natural disasters caused by climate change or otherwise; and epidemics, contagious disease outbreaks, and other public health concerns including the ongoing COVID-19 pandemic.
Our business depends on consumer discretionary spending, which can be adversely affected by many factors outside of the Company’s control, including general economic conditions, such as inflation; recessionary pressures; changes in consumer disposable income; consumer confidence and perception of economic conditions, including the instability in the banking sector; the threat or outbreak of war, terrorism or public unrest (including, without limitation, the conflict in Ukraine) which may cause supply chain disruptions, increase fuel and transportation costs and the cost of materials, and create general economic instability; wage and unemployment levels; consumer debt and inflationary pressures; the costs of basic necessities and other goods; interest rates; effects of weather and natural disasters caused by climate change or otherwise; and epidemics, contagious disease outbreaks, and other public health concerns (including but not limited to the long-term impacts of the COVID-19 pandemic).
Our Revolving Credit Facility contains provisions that limit certain of our subsidiaries’ ability to incur additional unsecured indebtedness, and our Revolving Credit Facility and the indenture that governs our Notes contain provisions that limit the Company’s and certain of our subsidiaries’ ability to incur secured indebtedness and our ability to sell all or substantially all of our assets, in each case subject to a number of exceptions and qualifications, the proceeds of which might otherwise be used to finance our operations.
Our revolving credit facility (the “Revolving Credit Facility”) contains provisions that limit certain of our subsidiaries’ ability to incur additional unsecured indebtedness, and our Revolving Credit Facility and the indenture that governs our 3.15% senior notes due 2032 (the “2032 Notes”) and our 4.10% senior notes due 2052 (the “2052 Notes” and together with the 2032 Notes, the “Senior Notes”) contain provisions that limit the Company’s and certain of our subsidiaries’ ability to incur secured indebtedness and our ability to sell all or substantially all of our assets, in each case subject to a number of exceptions and qualifications, the proceeds of which might otherwise be used to finance our operations.
An inability to optimize our distribution and fulfillment network, including the expiration of a lease or an unexpected lease termination at one of our facilities (without timely replacement of the applicable facility) or serious disruptions (including natural disasters or closures of distribution and fulfillment centers due to COVID-19) at any of these facilities might impair our ability to adequately stock our stores, process returns of products to vendors and fulfill eCommerce orders at the speed expected by athletes, increase costs associated with shipping and delivery, damage a material portion of our inventory, and otherwise negatively affect our operations, sales, profitability, and reputation.
An inability to optimize our distribution and fulfillment network, including the expiration of a lease or an unexpected lease termination at one of our facilities (without timely replacement of the applicable facility) or serious disruptions (including natural disasters or closures of distribution and fulfillment centers) at any of these facilities might impair our ability to adequately stock our stores, process returns of products to vendors and fulfill eCommerce orders at the speed expected by athletes, increase costs associated with shipping and delivery, damage a material portion of our inventory, and otherwise negatively affect our operations, sales, profitability, and reputation. 14 Table of Contents In addition, we rely on independent third-party transportation providers for substantially all of our merchandise shipments, including shipments to our stores and directly to athletes through our eCommerce platform.
Furthermore, supply chain challenges due to the COVID-19 pandemic and other factors have made it more difficult to obtain certain in-demand products.
Furthermore, ongoing supply chain challenges as a result of the COVID-19 pandemic, the conflict in Ukraine, and other factors have made it more difficult to obtain certain in-demand products.
In the absence of sufficient operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations. We may not be able to consummate those dispositions or obtain sufficient proceeds from those dispositions to meet our debt service and other obligations then due.
In the absence of sufficient operating results and resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to meet our debt service and other obligations.
Furthermore, although our Board of Directors has recently authorized an additional five-year $2.0 billion share repurchase program, we are not obligated to make any purchases under the program and we may discontinue it at any time.
Furthermore, although our Board of Directors has authorized a share repurchase program, we are not obligated to make any purchases under the program, and the Board may discontinue the program at any time.
A significant portion of the products that we purchase as well as most of our vertical brand merchandise, is manufactured abroad.
Many of the products that we purchase as well as most of our vertical brand merchandise, are manufactured abroad.
Issues that might pose a reputational risk include: an inability to provide an omni-channel experience that meets the expectations of consumers; failure of our cyber-security measures to protect against data breaches; product liability, product recalls, and product boycotts; our handling of issues relating to environmental, social, and governance (“ESG”) matters, including inclusion and diversity, and the transparency of our progress toward ESG goals and initiatives; our response to the COVID-19 pandemic; our social media activity; failure to comply with applicable laws and regulations; our policies related to the sale of firearms and accessories; public stances on controversial social or political issues; product sponsorship relationships, including those with celebrity spokespersons, influencers or group affiliations; and any of the other risks enumerated in these risk factors.
Issues that might pose a reputational risk include: an inability to provide an omni-channel experience that meets the expectations of consumers; failure of our cyber-security measures to protect against data breaches; product liability, recalls, and boycotts; our handling of issues relating to environmental, social, and governance (“ESG”) matters, including our response to ESG matters and the transparency of our progress toward ESG goals and initiatives; our social media activity; failure to comply with applicable laws and regulations (including those in other countries where we manufacture goods); our policies related to the sale of firearms and accessories; public stances on controversial social or political issues; product sponsorship relationships, including those with celebrity spokespersons, influencers and other partnerships or group affiliations; our real estate strategy and selection of new store openings or relocations; concerns surrounding labor, environmental, workplace safety and other practices that may vary from U.S. standards in any of our foreign manufacturers, whether directly or indirectly; and any of the other risks enumerated in these risk factors.
Negative customer perceptions regarding the safety and sourcing of the products we sell, and events that give rise to actual, potential, or perceived product safety concerns could expose us to government enforcement action and/or private litigation. Furthermore, reputational damage caused by real or perceived product safety concerns could have a negative impact on our sales and operating results.
Negative customer perceptions regarding the safety and sourcing of the products we sell, and events that give rise to actual, potential, or perceived product safety concerns could expose us to government enforcement action and/or private litigation.
The operation and growth of our business, including opening new stores, expanding our eCommerce business, implementing long-term initiatives, pursuing strategic acquisitions or investments, and our ability to respond to changing business and economic conditions depend on the availability of adequate capital, which in turn depends on cash flow generated by our business and, if necessary, the availability of equity or debt capital.
The operation and growth of our business and our ability to respond to changing business and economic conditions depend on the availability of adequate capital, which in turn depends on cash flow generated by our business and, if necessary, the availability of equity or debt capital.
Extreme weather conditions and/or natural disasters, or other catastrophic events in areas where we or our vendors have operations, including our stores and our distribution and eCommerce fulfillment centers, could result in disruption or delay of production and delivery of merchandise and products in our supply chain and cause staffing shortages in our stores, negatively affecting our business and results of operations. 17 Table of Contents We cannot provide any guaranty of future dividend payments or that we will continue to repurchase our common stock pursuant to our stock repurchase program.
Extreme weather conditions and/or natural disasters, or other catastrophic events in areas where we or our vendors have operations, including our stores and our distribution and eCommerce fulfillment centers, could result in disruption or delay of production and delivery of merchandise and products in our supply chain and cause staffing shortages in our stores, negatively affecting our business and results of operations.
The issuance of Class B common stock and other anti-takeover mechanisms could prevent or delay a change in control of our Company, even if such change in control would be beneficial to our stockholders.
The interests of the holders of Class B common stock may differ from the interests of our other stockholders and they may take actions with which our other stockholders disagree. 16 Table of Contents The issuance of Class B common stock and other anti-takeover mechanisms could prevent or delay a change in control of our Company, even if such change in control would be beneficial to our stockholders.
We may incur losses due to lawsuits, including potential class actions, relating to our performance of background checks on firearms purchases and compliance with other sales laws and regulations as mandated by state and federal law and related to our policies on the sale of firearms and ammunition, or due to lawsuits relating to the improper use of firearms or ammunition sold by us, including lawsuits by municipalities or other organizations attempting to recover costs from manufacturers and retailers of firearms and ammunition. 19 Table of Contents Our inability or failure to protect our intellectual property rights or any third parties claiming that we have infringed on their intellectual property rights could negatively impact our brand or have a negative impact on our operating results.
We may incur losses due to lawsuits, including potential class actions, relating to our performance of background checks on firearms purchases and compliance with other sales laws and regulations as mandated by state and federal law and related to our policies on the sale of firearms and ammunition, or due to lawsuits relating to the improper use of firearms or ammunition sold by us, including lawsuits by municipalities or other organizations attempting to recover costs from manufacturers and retailers of firearms and ammunition.
Decreases in consumer discretionary spending may result in a decrease in comparable sales, and average value per transaction, which might cause us to increase promotional activities, which will have a negative impact on our gross margins, all of which could negatively affect the Company’s business, operations, liquidity, financial results and/or stock price, particularly if consumer spending levels are depressed for a prolonged period of time.
Decreases in consumer discretionary spending may result in a decrease in comparable sales, which might cause us to utilize pricing strategies that will have a negative impact on our gross margins, all of which could negatively affect our financial results, particularly if consumer spending levels are depressed for a prolonged period of time.
We may remain liable for certain lease obligations where we are able to assign a location if the assignee or sublessee does not perform. 14 Table of Contents Furthermore, the success of our stores depends on a number of factors including the sustained success of the shopping center where the store is located, consumer demographics, and consumer shopping habits and patterns.
We may remain liable for certain post-assignment or sublease obligations if the assignee, sublessee or tenant, as applicable, does not perform. Furthermore, the success of our stores depends on several factors including the sustained success of the shopping center where the store is located, consumer demographics, and consumer shopping habits and patterns.
The relative seasonality of our operations, along with the current geographic concentrations of our stores, exposes us to certain risks. Our business is subject to seasonal influences and certain holidays and sports seasons during the year.
The seasonality of our operations, along with the current geographic concentrations of our stores, exposes us to certain risks (including but not limited to extreme weather conditions and/or natural disasters and other catastrophic events). Our business is subject to seasonal influences and certain holidays and sports seasons during the year.
Our current and future indebtedness could have negative consequences for our business, results of operations and financial condition by, among other things: • increasing our vulnerability to adverse economic and industry conditions; • limiting our ability to obtain additional financing; • requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes; • limiting our flexibility to plan for, or react to, changes in our business; • diluting the interests of our existing stockholders as a result of issuing shares of our common stock upon conversion of the Convertible Senior Notes; and • placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital. 21 Table of Contents In addition, our Revolving Credit Facility contains certain restrictive covenants, including covenants that limit certain of our subsidiaries’ ability to incur additional unsecured indebtedness, and our Revolving Credit Facility and the indenture that governs our Notes contain provisions that limit the Company’s and certain of our subsidiaries’ ability to incur secured indebtedness and our ability to sell all or substantially all of our assets, in each case subject to a number of exceptions and qualifications, among other things.
We may not be able to consummate those dispositions or obtain sufficient proceeds from those dispositions to meet our debt service and other obligations then due. 19 Table of Contents Our current and future indebtedness could have negative consequences for our business, results of operations and financial condition by, among other things: • increasing our vulnerability to adverse economic and industry conditions; • limiting our ability to obtain additional financing; • requiring the dedication of a substantial portion of our cash flow from operations to service our indebtedness, which will reduce the amount of cash available for other purposes; • limiting our flexibility to plan for, or react to, changes in our business; • diluting the interests of our existing stockholders as a result of issuing shares of our common stock upon conversion of the Convertible Senior Notes; and • placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital.
The effect, if any, of these activities on the trading price of our common stock will depend on a variety of factors, including market conditions, and is uncertain at this time. Any of these activities could, however, adversely affect the trading price of our common stock. We are subject to counterparty risk with respect to the convertible note hedge transactions.
The effect, if any, of these activities on the trading price of our common stock will depend on a variety of factors, including market conditions, and is uncertain at this time.
Global economic conditions have from time-to-time resulted in the actual or perceived failure or financial difficulties of many financial institutions. If a hedge counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under our transactions with that hedge counterparty.
If a hedge counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under our transactions with that hedge counterparty.
Our long-term success and ability to implement our strategic and business planning processes depends in large part on our ability to continue to attract, retain, train and develop key personnel and qualified teammates in all areas of the organization.
Our long-term success and ability to implement our strategic and business planning processes depends on our ability to attract, retain, train and develop key and qualified teammates in all areas of the organization, including store managers and sales associates, teammates who staff our distribution centers, and professionals to implement our technology and other strategic initiatives.
Furthermore, acquisitions may result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses or write-offs of goodwill or other intangibles, any of which could harm our financial condition.
Furthermore, acquisitions may result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses or write-offs of goodwill or other intangibles, any of which could harm our financial condition. There can be no assurance that our strategic alliances, acquisitions, or investments will produce the anticipated results within the expected time frame or at all.
ITEM 1A. RISK FACTORS Risks Related to Our Industry and Macroeconomic Conditions Our business is dependent on macroeconomic conditions and consumer discretionary spending in the U.S., and reductions in such spending might adversely affect the Company’s business, operations, liquidity, financial results and stock price.
ITEM 1A. RISK FACTORS Risks Related to Our Industry and Macroeconomic Conditions Macroeconomic conditions may adversely affect consumer discretionary spending and our business, operations, liquidity, and financial results.
Also, the prices charged by foreign manufacturers may be affected by the fluctuation of their local currency against the U.S. dollar and the price of raw materials, which could cause the cost of our products to increase and negatively impact our sales or profitability. 12 Table of Contents Risks Related to Our Operations and Reputation If we are unable to predict or effectively react to changes in consumer demand or shopping patterns, we may lose athletes and our sales may decline.
Also, the prices charged by foreign manufacturers may be affected by the fluctuation of their local currency against the U.S. dollar and the price of raw materials, which could cause the cost of our products to increase and negatively impact our sales or profitability.
We also work with third-party vendors and service providers that provide technology, systems and services that we use in connection with the collection, storage and transmission of this information.
We also work with third-party vendors and service providers that provide technology, systems and services that we use in connection with the collection, storage and transmission of this information. We have implemented and regularly review and update our systems, processes, and procedures to protect against unauthorized access to or use of data and to prevent data loss.
Establishing the necessary internal infrastructure to allow for the monitoring and other compliance requirements required by these new laws and regulations and enforcement efforts requires expenditure of considerable Company resources. In addition, laws at the federal, state or local level may change, sometimes significantly and unexpectedly, as a result of political, economic or social events.
Establishing the necessary internal infrastructure to allow for the monitoring and other compliance requirements required by these new laws and regulations and enforcement efforts requires expenditure of considerable Company resources.
A decline or discontinuation of these incentives could reduce or eliminate our profit margins. 18 Table of Contents We are subject to costs and risks associated with a complex regulatory, compliance and legal environment, including increased or changing laws and regulations affecting our business.
A decline or discontinuation of these incentives could reduce or eliminate our profit margins. We are subject to costs and risks associated with laws and regulations affecting our business. We are subject to a wide array of laws and regulations that expose us to compliance and litigation risks that could negatively affect our operations and financial results.
In addition, to the extent we use individual athletes to market our products and advertise our stores or we sell merchandise branded by one or more athletes, the retirement or injury of such athletes or scandals in which they might be implicated could negatively impact our financial results.
In addition, to the extent we use individual athletes to market our products and advertise our stores or we sell merchandise branded by one or more athletes, the retirement or injury of such athletes or scandals in which they might be implicated could negatively impact our financial results. 18 Table of Contents Risks Related to Our Indebtedness and Strategic Transactions We may pursue strategic alliances, acquisitions or investments and the failure of an alliance, acquisition or investment to produce the anticipated results or the inability to successfully integrate the acquired companies could have an adverse impact on our business.
The hedge counterparties are financial institutions, and we will be subject to the risk that they might default under certain of the convertible note hedge transactions. Our exposure to the credit risk of the hedge counterparties will not be secured by any collateral.
Any of these activities could, however, adversely affect the trading price of our common stock. 20 Table of Contents We are subject to counterparty risk with respect to the convertible note hedge transactions. The hedge counterparties are financial institutions, and we will be subject to the risk that they might default under certain of the convertible note hedge transactions.
We also may not be able to successfully integrate operations that we acquire, including their personnel, financial systems, supply chain and other operations, which could adversely affect our business. 20 Table of Contents Our ability to operate and expand our business and to respond to changing business and economic conditions is dependent upon the availability of adequate capital.
Strategic alliances, acquisitions, and investments may result in the diversion of capital and our management's attention from other business issues and opportunities. We also may not be able to successfully integrate operations that we acquire, including their personnel, financial systems, supply chain and other operations, which could adversely affect our business.
Our sales could decline significantly if we misjudge the market for our new merchandise, which may result in significant merchandise markdowns and lower margins, missed opportunities for other products, or inventory write-downs, and could have a negative impact on our reputation, profitability and demand.
Our sales could decline significantly if we misjudge the market for our new merchandise, which may result in significant merchandise markdowns and lower margins, missed opportunities for other products, and inventory write-downs. 12 Table of Contents Our vertical brand offerings and new specialty concept stores expose us to potential increased costs and certain additional risks.
Our financial performance depends on our ability to optimize our store lease portfolio, including opening new stores and relocating existing stores in desirable locations, renewing leases for existing stores, restructuring leases for existing stores to obtain more favorable renewal terms, refreshing and remodeling existing stores, and, if necessary, closing underperforming stores.
Our financial performance depends on our ability to optimize our retail real estate portfolio, including opening new stores and relocating existing stores in desirable locations, and, where appropriate, consolidating the stores serving particular markets to maximize efficiencies; opportunistically purchasing real estate in compelling long-term or barrier-to-entry markets or assets; renewing leases for existing stores, restructuring leases for existing stores to obtain more favorable renewal terms; refreshing and remodeling existing stores; if necessary, closing underperforming and poorly located stores; and where appropriate, repurposing real estate holdings to provide specialty banner opportunities or ancillary retail support to the stores in the market.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table sets forth the number of stores by state: State DICK’S Sporting Goods (1) Specialty Concept Stores (2) Total Alabama 14 4 18 Arizona 9 3 12 Arkansas 4 — 4 California 58 7 65 Colorado 16 2 18 Connecticut 11 3 14 Delaware 3 1 4 District of Columbia 1 — 1 Florida 47 8 55 Georgia 24 2 26 Idaho 5 1 6 Illinois 32 6 38 Indiana 19 2 21 Iowa 7 3 10 Kansas 10 2 12 Kentucky 12 1 13 Louisiana 8 1 9 Maine 4 — 4 Maryland 17 2 19 Massachusetts 19 3 22 Michigan 22 4 26 Minnesota 10 4 14 Mississippi 7 — 7 Missouri 14 2 16 Nebraska 4 1 5 Nevada 4 2 6 New Hampshire 7 — 7 New Jersey 19 3 22 New Mexico 4 — 4 New York 43 4 47 North Carolina 32 8 40 North Dakota 1 — 1 Ohio 38 11 49 Oklahoma 8 2 10 Oregon 10 2 12 Pennsylvania 39 10 49 Rhode Island 2 1 3 South Carolina 12 2 14 South Dakota 1 — 1 Tennessee 17 2 19 Texas 46 13 59 Utah 5 1 6 Vermont 2 — 2 Virginia 27 4 31 Washington 16 — 16 West Virginia 6 1 7 Wisconsin 13 3 16 Wyoming 1 — 1 Total 730 131 861 (1) Includes two new DICK’S House of Sport store prototypes which were relocations of former DICK’S Sporting Goods stores.
Biggest changeThe following table sets forth the number of stores by state: State DICK’S Sporting Goods (1) Specialty Concept Stores (2) Total (3) Alabama 13 4 17 Arizona 9 3 12 Arkansas 4 — 4 California 58 7 65 Colorado 16 2 18 Connecticut 11 3 14 Delaware 3 1 4 District of Columbia 1 — 1 Florida 48 8 56 Georgia 23 3 26 Idaho 6 1 7 Illinois 32 5 37 Indiana 19 2 21 Iowa 7 2 9 Kansas 10 2 12 Kentucky 12 1 13 Louisiana 8 — 8 Maine 4 — 4 Maryland 17 2 19 Massachusetts 18 4 22 Michigan 22 4 26 Minnesota 10 4 14 Mississippi 7 — 7 Missouri 13 2 15 Nebraska 4 1 5 Nevada 4 2 6 New Hampshire 7 — 7 New Jersey 19 3 22 New Mexico 4 — 4 New York 43 3 46 North Carolina 32 8 40 North Dakota 1 — 1 Ohio 38 11 49 Oklahoma 7 2 9 Oregon 10 2 12 Pennsylvania 39 9 48 Rhode Island 2 1 3 South Carolina 11 2 13 South Dakota 1 — 1 Tennessee 17 3 20 Texas 48 9 57 Utah 5 1 6 Vermont 2 — 2 Virginia 27 5 32 Washington 16 — 16 West Virginia 6 — 6 Wisconsin 13 3 16 Wyoming 1 — 1 Total 728 125 853 (1) As of January 28, 2023, includes three DICK'S House of Sport stores.
ITEM 2. PROPERTIES We lease all of our stores, which generally have initial lease terms of 10 to 15 years and contain multiple five-year renewal options and rent escalation provisions. We believe that our leases, when entered into, are at market rate rents. We generally select a new store site 12 to 24 months before its opening.
ITEM 2. PROPERTIES We lease substantially all of our stores, which generally have initial lease terms of 10 to 15 years and contain multiple five-year renewal options and rent escalation provisions. We believe that our leases, when entered into, are at market rate rents. We generally select a new store site 12 to 24 months before its opening.
As of January 29, 2022, we operated 28 combo stores. 24 Table of Contents The following is a list of significant locations including the approximate square footage and whether the location is leased or owned: Facility Location Type Square Footage Ownership Conklin, New York Distribution 917,000 Owned Atlanta, Georgia Distribution 914,000 Leased Plainfield, Indiana Distribution 725,000 Leased Goodyear, Arizona Distribution 624,000 Owned Smithton, Pennsylvania Distribution 601,000 Leased Coraopolis, Pennsylvania Customer Support Center 670,000 Owned The land on which our CSC is built is subject to an underlying ground lease with Allegheny County Airport Authority, which expires in 2038.
(3) Excludes 43 and 14 temporary Warehouse Sale store locations as of January 28, 2023 and January 29, 2022, respectively. 22 Table of Contents The following is a list of significant locations including the approximate square footage and whether the location is leased or owned: Facility Location Type Square Footage Ownership Conklin, New York Distribution and Fulfillment 917,000 Owned Atlanta, Georgia Distribution 914,000 Leased Plainfield, Indiana Distribution 725,000 Leased Goodyear, Arizona Distribution 624,000 Owned Smithton, Pennsylvania Distribution 601,000 Leased Coraopolis, Pennsylvania Customer Support Center (CSC) 670,000 Owned The land on which our CSC is built is subject to an underlying ground lease with Allegheny County Airport Authority, which expires in 2038.
Our stores are primarily located in shopping centers in regional shopping areas, as well as in freestanding locations and malls. 23 Table of Contents As of January 29, 2022, we operated 861 stores in 47 states.
Our stores are primarily located in shopping centers in regional shopping areas, as well as in freestanding locations and malls. 21 Table of Contents As of January 28, 2023, we operated 853 stores in 47 states.
As of January 29, 2022, we operated 98 Golf Galaxy stores in 35 states, 20 Field & Stream stores in 13 states, 11 Going Going Gone! stores in nine states, and two Public Lands stores in two states.
(2) Includes our Golf Galaxy, Field & Stream, Public Lands and Going Going Gone! specialty concept stores. As of January 28, 2023, we operated 98 Golf Galaxy stores in 35 states, seven Public Lands stores in seven states, 15 Going Going Gone! stores in 13 states, and five Field & Stream stores in two states.
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(2) Includes our Golf Galaxy, Field & Stream and Public Lands stores, as well as the Company’s Going Going Gone! stores, and excludes temporary Warehouse Sale store locations.
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As of January 28, 2023, we operated 16 combo stores.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThese shares of our common stock were issued in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act, and were offset by the receipt of 65 shares of our common stock pursuant to the exercise of certain convertible note hedge transactions, as described in greater detail in Part IV. Item 15.
Biggest changeThe shares of common stock were delivered in reliance on an exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933. 24 Table of Contents A portion of the shares of common stock delivered pursuant to the exchanges described above were obtained by the Company from financial institutions (each, a “Hedge Counterparty”) as part of the early unwinds of the convertible note hedge transactions and related warrant transactions (collectively, the “Hedge Transactions”) entered into concurrently with the Convertible Senior Notes issuance.
The graph assumes that $100 was invested on January 27, 2017 in our common stock, the S&P 500 and the S&P Specialty Retail Index and that all dividends were reinvested.
The graph assumes that $100 was invested on February 2, 2018 in our common stock, the S&P 500 and the S&P Specialty Retail Index and that all dividends were reinvested.
(b) Shares repurchased under a five-year $1.0 billion share repurchase program authorized by the Board of Directors on June 12, 2019 and under an additional $2.0 billion five-year share repurchase program authorized by the Board of Directors on December 16, 2021. The information set forth under Part III, Item 12.
(b) Shares repurchased under our five-year $2.0 billion share repurchase program, which was authorized by the Board of Directors on December 16, 2021. The information set forth under Part III, Item 12. “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” is incorporated herein.
As of March 18, 2022, there were 245 and 16 registered shareholders of our common stock and Class B common stock, respectively.
As of March 17, 2023, there were 233 and 15 registered holders of our common stock and Class B common stock, respectively.
Exhibits and Financial Statement Schedules, Note 10–Convertible Senior Notes. 26 Table of Contents Issuer Purchases of Equity Securities The following table sets forth information with respect to common stock repurchases made during the three months ended January 29, 2022: Period Total Number of Shares Purchased (a) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b) Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs (b) October 31, 2021 to November 27, 2021 30,588 $ 117.72 9,572 $ 603,949,250 November 28, 2021 to January 1, 2022 4,008,983 $ 109.01 4,007,725 $ 2,167,067,080 January 2, 2022 to January 29, 2022 2,759,968 $ 113.17 2,758,911 $ 1,854,842,388 Total 6,799,539 $ 110.74 6,776,208 (a) Includes shares withheld from employees to satisfy minimum tax withholding obligations associated with the vesting of restricted stock during the period.
Issuer Purchases of Equity Securities The following table sets forth information with respect to common stock repurchases made during the three months ended January 28, 2023: Period Total Number of Shares Purchased (a) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b) Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs (b) October 30, 2022 to November 26, 2022 397,239 $ 102.34 396,547 $ 1,453,118,659 November 27, 2022 to December 31, 2022 217,307 $ 117.20 213,289 $ 1,428,118,972 January 1, 2023 to January 28, 2023 1,357 $ 120.57 — $ 1,428,118,972 Total 615,903 $ 107.62 609,836 (a) Includes shares withheld from employees to satisfy minimum tax withholding obligations associated with the vesting of restricted stock during the period.
Removed
Recent Sales of Unregistered Securities During the quarter ended January 29, 2022, we issued 66 shares of our unregistered common stock to holders of our convertible senior notes due 2025 (“Convertible Senior Notes”) upon settlement of conversion of an immaterial aggregate principal amount of such notes.
Added
Unregistered Sales of Equity Securities As previously disclosed, on December 7, 2022, the Company entered into exchange agreements (the “Exchange Agreements”) with certain holders of the Company’s Convertible Senior Notes due 2025 pursuant to which such holders exchanged, in the aggregate, $95.3 million aggregate principal amount of Convertible Senior Notes for cash, plus a number of shares of the Company’s common stock based upon the volume-weighted average price per share of the Company’s common stock during an averaging period that commenced on December 8, 2022.
Removed
This share amount represents the conversion value of the Convertible Senior Notes in excess of the principal amount converted.
Added
As a result of that valuation, the Company delivered to the exchanging holders an aggregate amount of 2,183,202 shares of its common stock plus an aggregate of $95.3 million in cash in exchange for an aggregate principal amount of $95.3 million of Convertible Senior Notes. These exchange transactions closed on December 16, 2022 and December 19, 2022.
Removed
“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” is incorporated herein.
Added
The early unwind agreements between the Company and each Hedge Counterparty (collectively, the “Hedge Early Termination Agreements”) related to a portion of the Hedge Transactions corresponding to the amount of Convertible Senior Notes exchanged by holders thereof pursuant to the Exchange Agreements. The Company received 221,215 shares as a result of the unwinds of the Hedge Transactions.
Added
The foregoing description is qualified by reference to the full text of the forms of the Exchange Agreements and the Hedge Early Termination Agreements, copies of which were filed with the Company’s Current Report on Form 8-K on December 8, 2022 as Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5 each of which is incorporated herein by reference.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

55 edited+43 added−44 removed25 unchanged
Biggest changeThe quarterly dividend of $0.4375 per share we paid in the third and fourth quarters represented a 21% increase over our previous quarterly dividend per share; ◦ Repurchased 10.79 million shares of common stock under our share repurchase program for a total cost of $1.18 billion; and ◦ Issued $1.5 billion of senior unsecured notes and concurrently replaced our revolving credit facility with a new unsecured $1.6 billion revolving credit facility (the “Credit Facility”) as part of our inaugural long-term investment grade debt issuance, ending fiscal 2021 with $2.6 billion of cash and cash equivalents and no borrowings under our Credit Facility. • The following table summarizes store openings and closings in fiscal 2021 and fiscal 2020: Fiscal 2021 Fiscal 2020 DICK’S Sporting Goods (2) Specialty Concept Stores (1) Total DICK’S Sporting Goods Specialty Concept Stores (1) Total Beginning stores 728 126 854 726 124 850 New stores 6 8 14 7 10 17 Closed stores (3) 4 3 7 5 8 13 Ending stores 730 131 861 728 126 854 Relocated stores 11 1 12 12 3 15 (1) Includes our Golf Galaxy, Field & Stream, Public Lands and Going Going Gone! stores, and excludes temporary Warehouse Sale store locations.
Biggest changeAdditionally, fiscal 2021 net income included $22.8 million of non-cash interest expense, net of tax, and earnings per diluted share included 11.3 million shares related to the Convertible Senior Notes that were designed to be offset at conversion by our bond hedge, which together decreased earnings per diluted share by $1.83 in the prior year. 27 Table of Contents • In addition, during fiscal 2022, we: ◦ Terminated the proportionate amount of warrants concurrent with our exchange of $515.9 million of our Convertible Senior Notes, resulting in the issuance of 9.8 million shares of our common stock; ◦ Declared and paid aggregate cash dividends on a quarterly basis for a total amount of $1.95 per share on our common stock and Class B common stock; and ◦ Repurchased 5.0 million shares of common stock under our share repurchase program for a total cost of $426.7 million. • The following table summarizes store openings and closings in fiscal 2022 and fiscal 2021: Fiscal 2022 Fiscal 2021 DICK’S Sporting Goods (1) Specialty Concept Stores (2) Total (3) DICK’S Sporting Goods Specialty Concept Stores (2) Total (3) Beginning stores 730 131 861 728 126 854 New stores 4 9 13 6 8 14 Closed stores 6 15 21 4 3 7 Ending stores 728 125 853 730 131 861 Relocated stores 3 1 4 11 1 12 (1) As of January 28, 2023, includes three DICK'S House of Sport stores.
The key drivers of earnings before taxes are same store sales, gross profit, and our ability to control selling, general and administrative expenses. • Cash flows from operating activities – Cash flow generation supports our general liquidity needs and funds capital expenditures for our omni-channel platform, which include investments in new and existing stores and our eCommerce channel, distribution and administrative facilities, continuous improvements to information technology tools, potential strategic acquisitions or investments that may arise from time-to-time and stockholder return initiatives, including cash dividends and share repurchases.
The key drivers of earnings before taxes are comparable store sales, gross profit, and our ability to control selling, general and administrative expenses. • Cash flows from operating activities – Cash flow generation supports our general liquidity needs and funds capital expenditures for our omni-channel platform, which include investments in new and existing stores and our eCommerce channel, distribution and administrative facilities, continuous improvements to information technology tools, potential strategic acquisitions or investments that may arise from time-to-time and stockholder return initiatives, including cash dividends and share repurchases.
We typically experience lower operating cash flows in our third fiscal quarter due to inventory purchases in advance of the holiday selling season, which normalizes in our fourth fiscal quarter.
We typically experience lower operating cash flows in our third fiscal quarter due to increased inventory purchases in advance of the holiday selling season, which typically normalizes in our fourth fiscal quarter.
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. See “Forward-Looking Statements” and Part I, Item 1A. “Risk Factors”. Business Overview We are a leading omni-channel sporting goods retailer offering an extensive assortment of authentic, high-quality sports equipment, apparel, footwear and accessories.
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Refer to “Forward-Looking Statements” and Part I, Item 1A. “Risk Factors”. Business Overview We are a leading omni-channel sporting goods retailer offering an extensive assortment of authentic, high-quality sports equipment, apparel, footwear and accessories.
We estimate the fair value of indefinite-lived intangible assets, which are comprised almost entirely of trademarks and trade names, based on an income approach using the relief-from-royalty method, which assumes that, in lieu of ownership, a third-party would be willing to pay a royalty in order to derive a benefit from these types of assets.
We estimate the fair value of indefinite-lived intangible assets, which are comprised primarily of trademarks and trade names, based on an income approach using the relief-from-royalty method, which assumes that, in lieu of ownership, a third-party would be willing to pay a royalty in order to derive a benefit from these types of assets.
Same store sales results are important to leverage our costs, which include occupancy costs, store payroll and other store expenses. Same store sales also have a direct impact on our total net sales, net income, cash and working capital.
Comparable store sales results are important to leverage our costs, which include occupancy costs, store payroll and other store expenses. Comparable store sales also have a direct impact on our total net sales, net income, cash and working capital.
We recognize an impairment charge when the estimated fair value of the intangible asset is less than its carrying value. We recorded no such impairments in fiscal 2021 or 2020.
We recognize an impairment charge when the estimated fair value of the intangible asset is less than its carrying value. We recorded no such impairments in fiscal 2022 or 2021.
Exhibits and Financial Statement Schedules of this Annual Report on Form 10-K. 32 Table of Contents A discussion regarding our financial condition and results of operations for the year ended January 29, 2022 (Fiscal 2021) compared to the year ended January 30, 2021 (Fiscal 2020) is presented below.
Exhibits and Financial Statement Schedules of this Annual Report on Form 10-K. 29 Table of Contents A discussion regarding our financial condition and results of operations for the year ended January 28, 2023 (Fiscal 2022) compared to the year ended January 29, 2022 (Fiscal 2021) is presented below.
In addition to DICK’S Sporting Goods stores, we own and operate Golf Galaxy, Field & Stream, Public Lands, and Going Going Gone! stores, and offer our products both online and through our mobile apps.
In addition to DICK’S Sporting Goods stores, we own and operate Golf Galaxy, Public Lands and Going Going Gone! specialty concept stores, and offer our products both online and through our mobile apps.
Cash interest accrues at a rate of 3.15% per year on the 2032 Notes and 4.10% per year on the 2052 Notes, each of which are payable semi-annually in arrears on January 15 and July 15. See Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 9–Senior Notes for additional details.
Cash interest accrues at a rate of 3.15% per year on the 2032 Notes and 4.10% per year on the 2052 Notes, each of which are payable semi-annually in arrears on January 15 and July 15. Refer to Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 9 – Senior Notes for further information.
A discussion regarding our financial condition and results of operations for the year ended January 30, 2021 (Fiscal 2020) compared to the year ended February 1, 2020 (Fiscal 2019) can be found under Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended January 30, 2021, filed with the SEC on March 24, 2021.
A discussion regarding our financial condition and results of operations for Fiscal 2021 compared to the year ended January 30, 2021 (Fiscal 2020) can be found under Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended January 29, 2022, filed with the SEC on March 23, 2022.
Cash flows used in financing activities for fiscal 2021 included over $1.1 billion in share repurchases and the payment of a special dividend of $5.50 per share, which was partially offset by our issuance of the Senior Notes that provided net proceeds of approximately $1.5 billion.
Fiscal 2021 included over $1.1 billion in share repurchases and the payment of a special dividend of $5.50 per share, which was partially offset by our issuance of the Senior Notes that provided net proceeds of approximately $1.5 billion.
A store is included in the same store sales calculation during the same fiscal period that it commences its 14th full month of operations. Stores that were permanently closed or relocated during the applicable period have been excluded from same store sales results.
A store is included in the comparable store sales calculation during the fiscal period that it commences its 14th full month of operations. Relocated stores are included in the comparable store sales calculation from the open date of the original location. Stores that were permanently closed during the applicable period have been excluded from comparable store sales results.
Exhibits and Financial Statement Schedules, Note 10–Convertible Senior Notes for additional details. Capital Expenditures Our capital expenditures are primarily allocated toward the development of our omni-channel platform, including investments in new and existing stores and eCommerce technology, while we have also invested in our supply chain and corporate technology capabilities.
Exhibits and Financial Statement Schedules, Note 16 – Subsequent Events for further information. Capital Expenditures Our capital expenditures are primarily allocated toward the development of our omni-channel platform, including investments in new and existing stores and eCommerce technology, while we have also invested in our supply chain and corporate technology capabilities.
See further discussion of our consolidated same store sales within the “Results of Operations” section herein. • Earnings before taxes and the related operating margin – Our management views operating margin and earnings before taxes as key indicators of our performance.
For further discussion of our comparable store sales refer to the “Results of Operations” section herein. • Earnings before taxes and the related operating margin – Our management views operating margin and earnings before taxes as key indicators of our performance.
See discussion of our fiscal 2021 cash flows compared to fiscal 2020 in the “Liquidity and Capital Resources” section herein. • Quality of merchandise offerings – To measure acceptance of our merchandise offerings, we monitor sell-throughs, inventory turns, gross margins and markdown rates at the department and style level.
For further discussion of our cash flows refer to the “Liquidity and Capital Resources” section herein. • Quality of merchandise offerings – To measure effectiveness of our merchandise offerings, we monitor sell-throughs, inventory turns, gross margins and markdown rates at the department and style level.
We believe that we have sufficient cash flows from operations and cash on hand to operate our business for at least the next 12 months, supplemented by funds available under our new unsecured $1.6 billion Credit Facility, if necessary.
Liquidity and Capital Resources Our cash on hand as of January 28, 2023 was $1.9 billion. We believe that we have sufficient cash flows from operations and cash on hand to operate our business for at least the next twelve months, supplemented by funds available under our unsecured $1.6 billion Credit Facility, if necessary.
Financing Activities Financing activities have historically consisted of capital return initiatives, including share repurchases and cash dividend payments, cash flows generated from stock option exercises and cash activity associated with our Credit Facility, or other financing sources.
Financing Activities Financing activities have historically consisted of capital return initiatives, including share repurchases and cash dividend payments, cash flows generated from stock option exercises and cash activity associated with our Credit Facility, or other financing sources. Cash used in financing activities increased $959.9 million during fiscal 2022 compared to fiscal 2021.
Over two-thirds of our DICK’S Sporting Goods stores will be up for lease renewal at our option over the next five years, and we plan to leverage the significant flexibility within our existing real estate portfolio to capitalize on future real estate opportunities. See Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 7–Leases for additional details.
Approximately three-quarters of our DICK’S Sporting Goods stores will be up for lease renewal at our option over the next five years, and we plan to leverage the significant flexibility within our existing real estate portfolio to capitalize on future real estate opportunities. Refer to Part IV. Item 15.
If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, an impairment charge is recorded to reduce the carrying value of the reporting unit to its fair value. As of January 29, 2022, we had no reporting units at risk of impairment.
If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, an impairment charge is recorded to reduce the carrying value of the reporting unit to its fair value.
On March 7, 2022, our Board of Directors declared an 11% increase in our quarterly cash dividend compared to the previous quarterly per share amount. The dividend of $0.4875 per share of common stock and Class B common stock is payable on March 25, 2022 to stockholders of record as of the close of business on March 18, 2022.
On March 6, 2023, our Board of Directors declared a 105% increase in our quarterly cash dividend compared to the previous quarterly per share amount. The dividend of $1.00 per share of common stock and Class B common stock is payable on March 31, 2023 to stockholders of record as of the close of business on March 17, 2023.
In fiscal 2021, capital expenditures totaled $308.3 million on a gross basis and $268.1 million on a net basis, which includes tenant allowances provided by landlords. We anticipate that fiscal 2022 capital expenditures will be in a range of $340 to $365 million, net of tenant allowances provided by landlords.
In fiscal 2022, capital expenditures totaled $364.1 million on a gross basis and $328.0 million on a net basis, which includes tenant allowances provided by landlords. 31 Table of Contents We anticipate that fiscal 2023 capital expenditures will be in a range of $550 to $600 million, net of tenant allowances provided by landlords.
(4) Pre-opening expenses, which consist primarily of rent, marketing, payroll and recruiting costs, are expensed as incurred. Rent is recognized within pre-opening expense from the date we take possession of a site through the date the store opens.
(4) Pre-opening expenses, which consist primarily of rent, marketing, payroll, recruiting and other store preparation costs are expensed as incurred. Rent is recognized within pre-opening expense from the date we take possession of a site through the date the store opens. (5) Beginning in fiscal 2022, we revised our method for calculating comparable store sales by including relocated store locations.
Any future share repurchase programs are subject to the authorization by our Board of Directors and will be dependent upon future earnings, cash flows, financial requirements and other factors. Dividends In fiscal 2021, we paid $603.0 million of dividends to our shareholders, which included a special dividend in the amount of $5.50 per share.
Any future share repurchase programs are subject to authorization by our Board of Directors and will be dependent upon future earnings, cash flows, financial requirements and other factors. Dividends In fiscal 2022, we paid $163.1 million of dividends to our stockholders.
Revolving Credit Facility We have available to us a $1.6 billion Credit Facility, which includes a maximum amount of $75 million to be issued in the form of letters of credit.
Exhibits and Financial Statement Schedules, Note 7 – Leases for further information. Revolving Credit Facility We have a $1.6 billion Credit Facility, which includes a maximum amount of $75 million to be issued in the form of letters of credit.
In fiscal 2021, we repurchased approximately 10.79 million shares of our common stock for $1.18 billion. We currently operate under a $2.0 billion share repurchase program that was authorized by the Board of Directors in December 2021. As of January 29, 2022, the available amount remaining under the December 2021 authorization was $1.85 billion.
We currently operate under a $2.0 billion share repurchase program that was authorized by the Board of Directors in December 2021. As of January 28, 2023, the available amount remaining under the December 2021 authorization was $1.4 billion.
We may require additional funding should we pursue strategic acquisitions, settle all or a portion of the Convertible Senior Notes, undertake share repurchases, pursue other investments or engage in store expansion rates in excess of historical levels. We had no revolving credit facility borrowings at any point during fiscal 2021.
We may require additional funding should we pursue strategic acquisitions, undertake share repurchases, pursue other investments or engage in store expansion rates in excess of historical levels. We had no revolving credit facility borrowings at any point during fiscal 2022. The following sections describe the potential short and long-term impacts to our liquidity and capital requirements.
(3) Includes our closure and sublease of four Field & Stream stores in fiscal 2020. 30 Table of Contents Results of Operations The following table presents, for the fiscal years indicated, selected items in the Consolidated Statements of Income as a percentage of our net sales, as well as the basis point change in percentage of net sales from fiscal 2021 to fiscal 2020 and 2019: Fiscal Year Basis Point Change in Percentage of Net Sales from Prior Year 2020 - 2021 (A) Basis Point Change in Percentage of Net Sales from Two Years Ago 2019 - 2021 (A) 2021 2020 (A) 2019 (A) Net sales (1) 100.00 % 100.00 % 100.00 % N/A N/A Cost of goods sold, including occupancy and distribution costs (2) 61.67 68.17 70.81 (650) (914) Gross profit 38.33 31.83 29.19 650 914 Selling, general and administrative expenses (3) 21.67 23.98 24.84 (231) (317) Pre-opening expenses (4) 0.11 0.11 0.06 — 5 Income from operations 16.55 7.74 4.29 881 1,226 (Gain) loss on sale of subsidiaries (5) — — (0.39) — 39 Interest expense 0.47 0.51 0.19 (4) 28 Other (income) expense (0.14) (0.20) (0.18) 6 4 Income before income taxes 16.22 7.43 4.66 879 1,156 Provision for income taxes 3.86 1.89 1.26 197 260 Net income 12.36 % 5.53 % 3.40 % 683 896 Other Data: Consolidated same store sales change (6) 26.5 % 9.9 % 3.7 % Number of stores at end of period (7) 861 854 850 Total square feet at end of period (in millions) (7) 42.4 42.0 41.8 (A) Column does not add due to rounding.
Results of Operations The following table presents, for the fiscal years indicated, selected items in the Consolidated Statements of Income as a percentage of our net sales, as well as the basis point change in percentage of net sales from fiscal 2022 to fiscal 2021: 28 Table of Contents Fiscal Year Basis Point Change in Percentage of Net Sales from Prior Year 2021 - 2022 (A) 2022 (A) 2021 Net sales (1) 100.00 % 100.00 % N/A Cost of goods sold, including occupancy and distribution costs (2) 65.36 61.67 369 Gross profit 34.64 38.33 (369) Selling, general and administrative expenses (3) 22.68 21.67 101 Pre-opening expenses (4) 0.13 0.11 2 Income from operations 11.83 16.55 (472) Interest expense 0.77 0.47 30 Other income (0.13) (0.14) 1 Income before income taxes 11.19 16.22 (503) Provision for income taxes 2.75 3.86 (111) Net income 8.43 % 12.36 % (393) Other Data: Comparable store sales (decrease) increase (5) (0.5) % 27.4 % Number of stores at end of period (6) 853 861 Total square feet at end of period (in millions) (6) 42.6 42.4 (A) Column does not add due to rounding.
Senior Notes As of January 29, 2022, we have $750 million principal amount of senior notes due 2032 (the “2032 Notes”) and $750 million of senior notes due 2052 outstanding (the “2052 Notes” and together with the 2032 Notes, the “Senior Notes”).
Exhibits and Financial Statement Schedules, Note 8 – Revolving Credit Facility for further information. Senior Notes As of January 28, 2023, we have $750 million principal amount of senior notes due 2032 (the “2032 Notes”) and $750 million principal amount of senior notes due 2052 outstanding (the “2052 Notes” and together with the 2032 Notes, the “Senior Notes”).
As of January 29, 2022, there were no borrowings outstanding under the Credit Facility, and we have total remaining borrowing capacity, after adjusting for $16.1 million of standby letters of credit, of $1.58 billion. See Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 8–Revolving Credit Facility for additional details.
As of January 28, 2023, there were no borrowings outstanding under the Credit Facility, and we have total remaining borrowing capacity, after adjusting for $16.1 million of standby letters of credit, of $1.58 billion. We were in compliance with all covenants under the Credit Facility agreement at January 28, 2023. Refer to Part IV. Item 15.
Our fiscal 2022 outlook contemplates this uncertainty, and we plan to continue to actively manage any impacts of COVID-19 on our business. 28 Table of Contents How We Evaluate Our Operations Senior management focuses on certain key indicators to monitor our performance including: • Consolidated same store sales performance – Our management considers same store sales, which consists of both brick and mortar and eCommerce sales, to be an important indicator of our current performance.
Our fiscal 2023 outlook contemplates this uncertainty. 26 Table of Contents How We Evaluate Our Operations Senior management focuses on certain key indicators to monitor our performance including: • Comparable store sales performance – Our management considers comparable store sales, which includes online sales, to be an important indicator of our current performance.
The following sections describe the potential short and long term impacts to our liquidity and capital requirements. Leases We lease all of our stores, three of our distribution centers and certain equipment under non-cancellable operating leases that expire at various dates through 2033.
Leases We lease substantially all of our stores, three of our distribution centers, and certain equipment and storage under non-cancellable operating leases that expire at various dates through 2035.
Our occupancy costs increased $14.2 million compared to fiscal 2020, but increased gross profit as a percentage of net sales by approximately 223 basis points due to the increase in net sales.
Our occupancy costs increased $44.1 million compared to fiscal 2021 and decreased gross profit as a percentage of net sales by 30 basis points.
As of January 29, 2022, the Senior Notes were assigned long-term credit ratings by Moody’s and Standard & Poor’s rating agencies of Baa3 and BBB, respectively. 34 Table of Contents Convertible Senior Notes As of January 29, 2022, we have $575 million principal amount of Convertible Senior Notes outstanding.
As of January 28, 2023, our Senior Notes have long-term credit ratings by Moody’s and Standard & Poor’s rating agencies of Baa3 and BBB, respectively.
We also own and operate DICK’S House of Sport and Golf Galaxy Performance Center, as well as GameChanger, a youth sports mobile app for video streaming, scorekeeping, scheduling and communications. When used in this Annual Report on Form 10-K, unless the context otherwise requires or specifies, any reference to “year” is to our fiscal year.
We also own and operate DICK’S House of Sport and Golf Galaxy Performance Center, as well as GameChanger, a youth sports mobile app for scheduling, communications, live scorekeeping and video streaming.
We perform physical inventories at our stores and distribution centers throughout the year. The shrink reserve represents the cumulative loss estimate for each of our locations since the last physical inventory date through the reporting date. Estimates by location and in the aggregate are impacted by internal and external factors and may vary significantly from actual results.
Shrink expense is accrued as a percentage of merchandise sales based on historical shrink trends. We perform physical inventories at our stores and distribution centers throughout the year. The shrink reserve represents the cumulative loss estimate for each of our locations since the last physical inventory date through the reporting date.
Changes in customer merchandise preference, current and anticipated demand, consumer spending, weather patterns, economic conditions, business trends or merchandising strategies could cause our inventory to be exposed to obsolescence or slow-moving merchandise. 36 Table of Contents Shrink expense is accrued as a percentage of merchandise sales based on historical shrink trends.
Changes in customer merchandise preference, current and anticipated demand, consumer spending, weather patterns, economic conditions, business trends or merchandising strategies could cause our inventory to be exposed to obsolescence or slow-moving merchandise. A 10% change in our obsolete inventory reserves as of January 28, 2023, would have affected income before income taxes by approximately $5.1 million in fiscal 2022.
The remaining increase in gross profit as a percentage of net sales included lower eCommerce shipping expense due primarily to a lower penetration of eCommerce sales compared to the prior year, partially offset by increased freight expenses due to continuing global supply chain disruptions following the start of the COVID-19 pandemic .
The remaining decrease in gross profit as a percentage of net sales was driven by an increase in eCommerce shipping expense due primarily to higher shipping rates and penetration of eCommerce sales compared to the prior year.
Fiscal 2019 consolidated same store sales increased 3.7%. ◦ eCommerce sales increased 81% in the current year compared to fiscal 2019, a 9% decrease compared to fiscal 2020. • We reported net income of $1.52 billion, or $13.87 per diluted share in fiscal 2021, compared to $530.3 million, or $5.72 per diluted share, during fiscal 2020.
When compared to fiscal 2019, net sales increased 41.3%. • We reported net income of $1.0 billion, or $10.78 per diluted share, in fiscal 2022, compared to $1.52 billion, or $13.87 per diluted share, during fiscal 2021. ◦ Fiscal 2022 net income includes charges of $22.3 million, net of tax, or $0.25 per diluted share, related to the Field & Stream Exit.
The increase was primarily due to higher earnings, partially offset by higher cash payments for inventory and accounts payable to replenish inventory following a 11.3% inventory decrease in fiscal 2020, which included precautionary reductions in inventory receipts in response to the COVID-19 pandemic, supply chain constraints and a 9.5% sales increase in fiscal 2020 compared to fiscal 2019.
The decrease was primarily due to a $476.7 million decrease in earnings and a $213.1 million increase in cash payments for inventory and accounts payable to replenish inventory levels after a 28.3% sales increase in fiscal 2021 and supply chain disruptions following the emergence of COVID-19, which resulted in inventory growth to support our 41.3% sales growth in fiscal 2022 when compared to fiscal 2019.
Gross profit increased 54.5% to $4,711.9 million in fiscal 2021 from $3,050.7 million in fiscal 2020 and increased as a percentage of net sales by 650 basis points due primarily to higher merchandise margin and occupancy leverage.
Income from Operations Income from operations decreased to $1,463.0 million in fiscal 2022 from $2,034.5 million in fiscal 2021. Gross profit decreased to $4,284.6 million in fiscal 2022 from $4,711.9 million in fiscal 2021 and decreased as a percentage of net sales by 369 basis points.
Cash used in investing activities in fiscal 2021 also reflected $45.4 million of deposits and other investing activities, which included progress payments for the purchase of corporate aircraft.
Cash used in investing activities also included progress payments for the purchase of corporate aircraft and investments in organizations that focus on innovation and improving local communities through sport.
These improvements were partially offset by higher freight costs due to the aforementioned global supply chain disruptions. Selling, general and administrative expenses increased 15.9% to $2,664.1 million in the current year from $2,298.5 million in fiscal 2020, but decreased as a percentage of net sales by 231 basis points due primarily to leverage from the increase in sales.
Selling, general and administrative expenses increased to $2,805.5 million in the current year from $2,664.1 million in fiscal 2021, and increased as a percentage of net sales by 101 basis points. Fiscal 2022 included Field & Stream Exit charges of $29.3 million, and fiscal 2021 included approximately $15.0 million of COVID-related costs.
We record estimates of earned allowances based on the latest projected purchase volumes and advertising forecasts. Goodwill and Intangible Assets Goodwill, indefinite-lived and other finite-lived intangible assets are reviewed for impairment on an annual basis, or whenever circumstances indicate that a decline in value may have occurred.
A 10% change in our shrink reserve as of January 28, 2023, would have affected income before income taxes by approximately $1.8 million in fiscal 2022. 33 Table of Contents Goodwill and Intangible Assets Goodwill, indefinite-lived and other finite-lived intangible assets are reviewed for impairment on an annual basis, or whenever circumstances indicate that a decline in value may have occurred.
Exhibits and Financial Statement Schedules, Note 1–Basis of Presentation and Summary of Significant Accounting Policies.
Item 15. Exhibits and Financial Statement Schedules, Note 1 – Basis of Presentation and Summary of Significant Accounting Policies for additional information. Other Income Other income decreased to $15.9 million in fiscal 2022 compared to $17.8 million in fiscal 2021.
Our profitability is primarily influenced by the growth in consolidated same store sales, the strength of our gross margins derived from our omni-channel platform and our ability to manage expenses. We have grown from 676 DICK'S Sporting Goods stores at the end of fiscal 2016 to 730 DICK’S Sporting Goods stores at the end of fiscal 2021.
Our profitability is primarily influenced by growth in comparable store sales, the strength of our merchandise margins and ability to manage operating expenses.
Our liability associated with the funded participation in the arrangements, which is presented within accounts payable on the Consolidated Balance Sheet, was $76.0 million and $67.5 million as of January 29, 2022 and January 30, 2021, respectively. 35 Table of Contents Cash Flows Changes in cash and cash equivalents for the last three fiscal years are as follows (in millions): Fiscal Year Ended January 29, 2022 January 30, 2021 February 1, 2020 Net cash provided by operating activities $ 1,616.9 $ 1,552.8 $ 404.6 Net cash used in investing activities (344.0) (224.2) (129.3) Net cash (used in) provided by financing activities (287.7) 260.0 (319.6) Effect of exchange rate changes on cash and cash equivalents (0.1) 0.1 — Net increase (decrease) in cash and cash equivalents $ 985.1 $ 1,588.7 $ (44.3) Operating Activities Cash flows provided by operating activities increased $64.1 million in fiscal 2021 compared to fiscal 2020.
Cash Flows Changes in cash and cash equivalents for the last three fiscal years are as follows (in thousands): Fiscal Year Ended January 28, 2023 January 29, 2022 January 30, 2021 Net cash provided by operating activities $ 921,881 $ 1,616,872 $ 1,552,769 Net cash used in investing activities (392,894) (343,979) (224,164) Net cash (used in) provided by financing activities (1,247,636) (287,722) 260,057 Effect of exchange rate changes on cash and cash equivalents (170) (33) 71 Net (decrease) increase in cash and cash equivalents $ (718,819) $ 985,138 $ 1,588,733 Operating Activities Cash flows provided by operating activities decreased $695.0 million in fiscal 2022 compared to fiscal 2021.
An impairment loss is recognized when the carrying amount of the store location is not recoverable and exceeds its fair value. Self-Insurance We are self-insured for certain losses related to health, workers' compensation and general liability insurance, although we maintain stop-loss coverage with third-party insurers to limit our liability exposure.
An impairment loss is recognized when the carrying amount of the store location is not recoverable and exceeds its fair value.
Executive Summary • Net sales increased 28.3% to $12.29 billion in fiscal 2021 from $9.58 billion in fiscal 2020 and increased 40.5% from $8.75 billion in fiscal 2019. ◦ Consolidated same store sales increased 26.5% from fiscal 2020 , which was on top of a 9.9% consolidated same store sales increase last year .
Executive Summary • Net sales increased 0.6% to $12.37 billion in fiscal 2022 from $12.29 billion in fiscal 2021, which included a decrease in comparable store sales of 0.5% following a 27.4% increase in 2021.
Net income was $297.5 million, or $3.34 per diluted share, in fiscal 2019. ◦ Net income in the current year included $22.8 million of non-cash interest expense, net of tax, related to our convertible senior notes due 2025 (the “Convertible Senior Notes”) and earnings per diluted share included 11.3 million shares from these notes that are designed to be offset at conversion by our bond hedge, which together decreased earnings per diluted share by $1.83. ◦ Net income in fiscal 2020 included $16.0 million of non-cash interest expense, net of tax, related to our Convertible Senior Notes and earnings per diluted share included 3.5 million shares from these notes that are designed to be offset at conversion by our bond hedge, which together decreased earnings per diluted share by $0.40. 29 Table of Contents ◦ In fiscal 2021 and fiscal 2020, net income included approximately $15 million and $175 million of pre-tax expenses, or $0.10 and $1.40 per diluted share, net of tax, respectively, of teammate compensation and safety costs resulting from the COVID-19 pandemic. • In addition, during fiscal 2021, we: ◦ Declared and paid $603.0 million in dividends, including quarterly dividends and a special dividend in the amount of $5.50 per share, on our common stock and Class B common stock.
During fiscal 2022, we settled $515.9 million of our Convertible Senior Notes without dilutive effect, as the related principal was settled in cash and due to the shares received from its convertible bond hedge. ◦ Fiscal 2021 net income included approximately $15.0 million of pre-tax expenses, or $0.10 per diluted share net of tax, of teammate compensation and safety costs resulting from the COVID-19 pandemic.
We expect our expenditures to be concentrated on improvements within our existing stores and new store development, as well as on continued investments in technology to enhance our store fulfillment and in-store pickup capabilities. Share Repurchases From time-to-time, we may opportunistically repurchase shares of our common stock under favorable market conditions.
We expect our capital expenditures to be concentrated on new store development, relocations and remodels, including nine DICK’S House of Sport stores and eleven Golf Galaxy Performance Centers, improvements within our existing stores including converting over 100 stores to premium full-service footwear decks, and continued investments in technology to enhance our store fulfillment, in-store pickup and other foundational capabilities.
(7) Includes our DICK’S Sporting Goods, Golf Galaxy, Field & Stream, Public Lands and Going Going Gone! stores. Excludes temporary locations.
(2) Includes our Golf Galaxy, Field & Stream, Public Lands and Going Going Gone! stores. As of January 28, 2023, we operated 98 Golf Galaxy stores, seven Public Lands stores, 15 Going Going Gone! stores, and five Field & Stream stores.
Other income primarily relates to changes in our deferred compensation plan investment values, which we account for by recognizing investment income or expense and recording a corresponding charge or reduction to selling, general and administrative costs. Income Taxes Our effective tax rate decreased to 23.8% in the current year from 25.5% in fiscal 2020.
The Company recognizes investment income or investment expense to reflect changes in deferred compensation plan investment values with an offsetting charge or reduction to selling, general and administrative costs for the same amount.
Investing Activities Cash used in investing activities for fiscal 2021 was $344.0 million, an increase of $119.8 million compared to the prior year. Gross capital expenditures increased $84.2 million, which included investments to enhance the athlete experience in our existing stores, including merchandise presentation, improving the fitting and lesson experience in our golf business, and store remodel and facility investments.
Gross capital expenditures for fiscal 2022 included higher investments in our stores and technology, offset by last year’s investments in merchandise presentation and improving the fitting and lesson experience in our golf business .
Interest Expense Interest expense increased to $57.8 million in fiscal 2021 compared to $48.8 million in fiscal 2020, due primarily to a full year of interest expense on our Convertible Senior Notes, which were issued in April 2020.
Interest Expense Interest expense increased to $95.2 million in fiscal 2022 compared to $57.8 million in fiscal 2021.
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Our current real estate strategy has resulted in a reduction in the rate at which we open new DICK’S Sporting Goods stores in recent years.
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When used in this Annual Report on Form 10-K, unless the context otherwise requires or specifies, any reference to “year” is to our fiscal year, which ends on the Saturday closest to the end of January each year. Since 2017, we have transformed our business to drive sustainable growth in sales and profitability.
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We intend to continue this strategy over the next few years, which will allow us to continue to leverage the significant flexibility within our existing real estate portfolio to capitalize on future real estate opportunities as leases come up for renewal. We expect that our future real estate strategy will include growth in new retail concepts and experiential store prototypes.
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During this time, we meaningfully improved our merchandise assortment through strong relationships with our key brand partners, which provided access to highly differentiated product and our vertical brands. We also enhanced our store selling culture and service model and incorporated additional experiential elements and technology into our stores to engage our athletes.
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We deploy an in-house eCommerce platform, which allows for continued innovation and enhancements to our eCommerce websites and applications, new releases of our mobile and tablet apps, and the development of omni-channel capabilities that further integrate our online presence with our brick and mortar stores to increase athlete engagement, including ship-from-store, buy-online, pick-up in store or curbside and multi-channel marketing campaigns.
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Finally, we invested in technology and data science to improve our pricing strategy, digital marketing and personalization capabilities. Consumers have also made lasting lifestyle changes in recent years, increasing their focus on health and fitness, sports and outdoor activities which has increased demand for our products.
Removed
Our eCommerce sales penetration to total net sales increased from approximately 12% in fiscal 2016 to approximately 16% in fiscal 2019. Our eCommerce sales growth further accelerated during the COVID-19 pandemic. Compared to fiscal 2019, eCommerce sales increased 81% in fiscal 2021, and eCommerce penetration grew to 21% of total net sales.
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As a result of our core strategies, foundational improvements and these strong secular consumer trends, net sales increased 41.3% in fiscal 2022 compared to fiscal 2019, and reflects growth in our key priority categories including footwear, athletic apparel, team sports and golf.
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Approximately 70% of online sales during fiscal 2021 were fulfilled directly by our stores, which serve as localized points of distribution, and our stores enabled over 90% o f fiscal 2021 sales through online fulfillment and in-person sales.
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In addition to the structurally higher sales compared to pre-COVID levels, our merchandise margins increased over 300 basis points as a percentage of net sales in fiscal 2022 as compared to fiscal 2019, as we’ve maintained the majority of the merchandise expansion that we drove over the prior two years with our differentiated product assortment, combined with our disciplined pricing strategy and favorable sales mix.
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COVID-19 Update Following temporary store closures in the spring of fiscal 2020 due to the COVID-19 pandemic, our differentiated product assortment, supply chain, technological capabilities and omni-channel platform enabled us to capitalize on strong consumer demand as net sales increased 40.5% in fiscal 2021 compared to fiscal 2019.
Added
We’ve also experienced meaningful leverage on fixed occupancy costs and selling, general and administrative costs, due to the significant sales increase.
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In response to the pandemic, we implemented additional safety and cleaning protocols at our stores, distribution centers and corporate offices, as well as provided a temporary 15% pay premium program to our store and distribution center teammates through the end of fiscal 2020, resulting in $175 million in COVID-related costs.
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With our structurally higher sales, expanded merchandise margins, and operating expense leverage, our pre-tax income as a percentage of net sales grew from 4.7% in fiscal 2019 to 11.2% in fiscal 2022 and our earnings per diluted share grew from $3.34 in fiscal 2019 to $10.78 in fiscal 2022.
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Following the conclusion of our temporary 15% pay premium program, in fiscal 2021 we transitioned these teammates to compensation programs with a longer-term focus, including accelerated annual merit increases and higher wages.
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Field & Stream Exit During the fourth quarter of 2022, we decided to exit the Field & Stream brand (the “Field & Stream Exit”).
Removed
Other COVID-related costs decreased significantly beginning in the second quarter of 2021 in consideration of guidance from the Centers for Disease Control and Prevention, resulting in total COVID-related costs of $15 million in fiscal 2021.
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We plan to convert the existing 17 Field & Stream stores, the majority of which are part of a DICK’S and Field & Stream combo store, to DICK’S House of Sport stores, expanded DICK’S Sporting Goods stores, or other specialty concept stores.
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The effect that the COVID-19 pandemic may have on our future business remains uncertain, including the long-term economic outlook, inflation and its impact on consumer discretionary spending behavior when the pandemic ends.
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We closed twelve of these stores for conversion during the fourth quarter of 2022 and incurred pre-tax charges totaling $30.1 million, which included $28.5 million of non-cash impairment of store assets, $0.8 million of severance and a $0.7 million inventory write-down.
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Additionally, COVID-19 has disrupted global supply chains, including factory closures and port congestion that have resulted in longer transit times and rising container and transportation costs, which we expect will continue to remain elevated in the near term.
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Additionally, we sold the Field & Stream trademark in fiscal 2023 for proceeds near its carrying value and plan to convert the remaining Field & Stream stores by fiscal 2024. Macroeconomic Outlook The macroeconomic environment in which we operate remains uncertain as a result of numerous factors, including inflationary pressures and the potential impact of rising interest rates.
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Although we have successfully managed these challenges thus far, our ability to continue to replenish our inventory to meet current levels of consumer demand could be impacted by further delays or disruptions to the flow of products from our key vendor partners and our vertical brand sources.
Added
In addition, disruption of supply chains, including factory closures and port congestion, has resulted in apparel overages from late arriving inventory and elevated container and transportation costs which began to moderate during the second half of fiscal 2022.
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Each relocated store is returned to the same store sales base during the fiscal period that it commences its 14th full month of operations at the new location.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe cash coupons on our Senior Notes and Convertible Senior Notes are fixed. Accordingly interest expense related to these instruments is not affected by interest rate fluctuations. However, the fair value of our fixed rate debt will generally fluctuate with movements of interest rates. The fair value of our debt instruments with fixed interest rates is disclosed in Part IV.
Biggest changeAccordingly, a hypothetical 100 basis point increase or decrease in interest rates would not have materially affected our financial condition, results of operations or cash flows. The cash coupons on our Senior Notes and Convertible Senior Notes are fixed. Accordingly, interest expense related to these instruments is not affected by interest rate fluctuations.
However, results for any quarter are not necessarily indicative of the results that may be achieved for the fiscal year. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements required to be filed hereunder are set forth on pages 47 through 71 of this Annual Report on Form 10-K.
However, results for any quarter are not necessarily indicative of the results that may be achieved for the fiscal year. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The financial statements required to be filed hereunder are set forth on pages 44 through 69 of this Annual Report on Form 10-K.
Impact of Inflation Inflationary factors such as increases in the cost of our products, overhead costs or wage rates may adversely affect our operating results.
Refer to Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 16 – Subsequent Events for further information. Impact of Inflation Inflationary factors such as increases in the cost of our products, overhead costs or wage rates may adversely affect our operating results.
As of January 29, 2022, there were no outstanding borrowings under the Credit Facility, and we did not draw on our current or former Credit Facility during fiscal 2021. Accordingly, a hypothetical 100 basis point increase or decrease in interest rates would not have materially affected our financial condition, results of operations or cash flows.
As of January 28, 2023 and January 29, 2022, there were no outstanding borrowings under the Credit Facility, and we did not draw on our current or former Credit Facility during fiscal 2022 or fiscal 2021.
Based on our review of the possible settlements and the credit strength of the counterparties and their affiliates, we believe that we do not have a material exposure to credit risk as a result of these transactions.
Based on our review of the possible settlements and the credit strength of the counterparties and their affiliates, along with our recent notice as announced on February 9, 2023 to call the $59.1 million remaining aggregate principal for redemption on April 18, 2023, we do not believe there is a material exposure to credit risk as a result of these transactions.
Subject to the movement in our common stock price, we could be exposed to credit risk arising out of settling the convertible bond hedges.
In connection with the issuance of the Convertible Senior Notes, we also entered into five-year convertible bond hedges with several parties (“the counterparties”) and/or certain of their affiliates. Subject to the movement in our common stock price, we could be exposed to credit risk arising out of settling the convertible bond hedges.
Item 15. Exhibits and Financial Statement Schedules, Note 11–Fair Value Measurements. Credit Risk In April 2020, we issued the Convertible Senior Notes. In connection with the issuance of the Convertible Senior Notes, we also entered into five-year convertible bond hedges with several parties (“the counterparties”) and/or certain of their affiliates.
However, the fair value of our fixed rate debt will generally fluctuate with movements of interest rates. The fair value of our debt instruments with fixed interest rates is disclosed in Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 11 – Fair Value Measurements. Credit Risk In April 2020, we issued the Convertible Senior Notes.

Other DKS 10-K year-over-year comparisons