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What changed in DICK'S SPORTING GOODS, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of DICK'S SPORTING GOODS, INC.'s 2023 and 2024 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 2024 report.

+297 added−298 removedSource: 10-K (2024-03-28) vs 10-K (2023-03-23)

Top changes in DICK'S SPORTING GOODS, INC.'s 2024 10-K

297 paragraphs added · 298 removed · 223 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

65 edited+16 added−17 removed37 unchanged
Biggest changeHobart was promoted to Executive Vice President and Chief Marketing Officer and in April 2017 to Executive Vice President - Chief Customer & Digital Officer. Prior to joining DICK’S Sporting Goods, Ms. Hobart spent 14 years with PepsiCo, Inc., most recently serving as Chief Marketing Officer for its carbonated soft drink portfolio in the United States.
Biggest changeHobart spent 14 years with PepsiCo, Inc., most recently serving as Chief Marketing Officer for its carbonated soft drink portfolio in the United States. 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.
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 include on the investor relations portion of our website (investors.dicks.com), 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 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 research, development and procurement staff to support its growth.
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.
Seasonality Our business is subject to seasonal influences, including the success of 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.
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.
We also provide opportunities for volunteerism and launched the 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.
Vendors ship floor-ready merchandise to our distribution centers, where it is processed and allocated directly to our stores or stored temporarily. Our distribution centers are responsible for consolidating damaged or defective merchandise from our stores that is being returned to vendors.
Vendors ship floor-ready merchandise to our distribution centers, where it is processed and allocated directly to our stores or stored temporarily. Our distribution centers are also responsible for consolidating damaged or defective merchandise from our stores that is being returned to vendors.
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 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 described within Item 1A. “Risk Factors”.
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 addition to DICK’S Sporting Goods stores, we own and operate Golf Galaxy, Public Lands, Moosejaw and Going Going Gone! specialty concept stores and also offer our products online and through our mobile apps.
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 also launched our redesigned Golf Galaxy Performance Centers in 2021, which are equipped with Trackman golf technology and include an elevated staffing and service model to ensure our teammates become trusted advisors to golf enthusiasts of all levels.
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.
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 celebrated our 75th anniversary as a Company in 2023 and are proud of our growth and accomplishments since our inception.
Business Strategy Since 1948, our Company has believed in the power of sports to change lives, and we are committed to bringing this belief to life through our athlete experience, brand engagement, differentiated product, and most importantly, our teammates.
Business Strategy Since 1948, our Company has believed that sports have the power to change lives, and we are committed to bringing this belief to life through our athlete experience, brand engagement, differentiated product, and most importantly, our 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. 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.
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, curbside pickup and return, and same-day delivery capabilities with Instacart or DoorDash.
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.
During 2023, our stores received over 90% of their merchandise through our distribution network; the remaining merchandise was shipped directly to our stores from our vendors.
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.
We believe our teammates’ dedication to creating a positive experience for our athletes is part of 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, and providing learning and career development opportunities for all teammates.
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.
The following table sets forth the approximate percentage of our sales attributable to the following categories for the fiscal years presented: Fiscal Year Category 2023 2022 2021 Hardlines (1) 38 % 40 % 44 % Apparel 33 % 34 % 34 % Footwear (2) 26 % 24 % 21 % Other (3) 3 % 2 % 1 % Total 100 % 100 % 100 % (1) Includes items such as sporting goods equipment, fitness equipment, golf equipment and fishing gear.
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.
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. Collectively, our vertical brands are our second largest brand, representing $1.6 billion, or approximately 13%, of consolidated net sales in fiscal 2023.
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.
We are committed to equal pay for equal work independent of gender and race when establishing and maintaining wages. We achieved 100% female-to-male unadjusted median pay ratio in 2021 and have maintained that ratio through 2023. Safety, Health and Well-Being We are committed to ensuring the safety, health and well-being of our teammates.
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).
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 (football), Cobra (golf), Marucci (baseball), Lotto (soccer equipment, footwear, socks), and Prince (tennis).
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.
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. Merchandising and Purchasing During fiscal 2023, we purchased merchandise from approximately 1,500 vendors, with Nike, our largest vendor, representing approximately 24% of our merchandise purchases.
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 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” (football), “Cobra” (golf), “Lotto” (soccer equipment, footwear, socks), “Marucci” (baseball) and “Prince” (tennis) for specified product categories or certain products and, in some cases, specified sales channels.
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.
As of February 3, 2024, we operated 724 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.
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.
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, refer to risk factors within Item IA. “Risk Factors”.
The Teammate Relief Fund is available to all DICK’S teammates and is funded by DICK’S Sporting Goods and teammate donations. Human Capital Management As of January 28, 2023, we employed approximately 18,800 full-time and 34,000 part-time teammates. Total employment figures fluctuate throughout the year and typically peak during the fourth quarter in alignment with the holiday selling season.
The Teammate Relief Fund is available to all DICK’S teammates and is funded by DICK’S Sporting Goods and teammate donations. Human Capital Management As of February 3, 2024, we employed approximately 18,900 full-time and 36,600 part-time teammates. Total employment figures fluctuate throughout the year and typically peak during the fourth quarter in alignment with the holiday selling season.
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.).
Prior to joining the Company, Mr. 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.
(2) Includes athletic shoes for running, walking, tennis, fitness and cross training, basketball and hiking. In addition, this category also includes specialty footwear, including casual footwear and a complete line of cleats for team sports. (3) Includes our non-merchandise sales categories, including in-store services, shipping revenues, software subscription revenues and credit card processing revenues.
(2) Includes athletic shoes for running, walking, tennis, fitness and cross training, basketball and hiking. In addition, this category also includes specialty footwear, including casual footwear and a complete line of cleats for team sports. (3) Includes our non-merchandise sales categories, including in-store services, shipping and GameChanger revenues. Additional information about our sales categories is included within Part IV.
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.
None of our teammates are covered by a collective bargaining agreement. 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 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.
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, Jordan, New Balance, Nike, On, Patagonia, Peloton, PING, Stanley, TaylorMade, The North Face, Titleist, Under Armour and Yeti.
Risk Factors.” Social Responsibility In addition to our mission of supporting our athletes to achieve their dreams, we are committed to supporting youth sports in local communities. We sponsor thousands of teams in various sports and support the philanthropic efforts of our private corporate foundation, The DICK’S Sporting Goods Foundation.
Social Responsibility In addition to our common purpose of creating confidence and excitement by inspiring, supporting and personally equipping all athletes to achieve their dreams, we are committed to supporting youth sports in local communities. We sponsor thousands of teams in various sports and support the philanthropic efforts of our private corporate foundation, The DICK’S Sporting Goods Foundation.
We provide our teammates with robust training to increase knowledge about our products, which builds confidence for our athletes through the power of our opinion and expertise.
We continue to improve our service and selling culture, with an emphasis on engaging and inspiring our athletes. We provide our teammates with robust training to increase knowledge about our products, which builds confidence for our athletes through the power of our opinion and expertise.
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.
No other vendor represented 10% or more of our fiscal 2023 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.
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”.
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 House of Sport”, “DICK’S Sporting Goods”, “DSG”, “ETHOS”, “Fitness Gear”, “GameChanger”, “Going Going Gone!”, “Golf Galaxy”, “The GolfWorks”, “MAXFLI”, “Monarch”, “Nishiki”, “Primed”, “Public Lands”, “Quest”, “ScoreCard”, “ScoreRewards”, “Top-Flite”, “VRST” and “Walter Hagen”.
Ray Sliva became our Executive Vice President, Stores, in January 2023. Prior to joining DICK’S Sporting Goods, Mr. Sliva spent 23 years at Best Buy Co., Inc., where he most recently served as Chief People Officer and was responsible for leading a broad range of employee engagement initiatives. During his tenure at Best Buy, Mr.
Sliva spent 23 years at Best Buy Co., Inc., where he most recently served as Chief People Officer and was responsible for leading a broad range of employee engagement initiatives. During his tenure at Best Buy, Mr.
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.
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 over 45% of total sales. Over the past three years, we’ve acquired over 20 million new athletes.
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.
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.
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.
In fiscal 2023, a pproximately 80% of online sales were fulfilled directly by our stores, which serve as localized points of distribution, and they enabled over 90% of our total sales through online fulfillment and in-person sales. 5 Table of Contents 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.
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.
World-Class Omni-Channel Operating Model 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.
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.
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. We plan to continue investing in our athlete’s omni-channel experience to best serve the athlete whenever, wherever and however they want.
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 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.
We also offer soccer shops in nearly 200 stores, which feature enhanced in-store elements including an elevated cleat shop, an expanded selection of licensed jerseys and soccer trial cages in select locations, which are all supported by especially trained in-store soccer experts to help better serve our athletes.
We also provide our athletes with compelling visual presentation of our differentiated assortment by showcasing our key partners’ brands through branded shops, our House of Cleats footwear presentation and our soccer shops, which feature enhanced in-store elements including an elevated cleat shop, an expanded selection of licensed jerseys and soccer trial cages in select locations, which are all supported by specially trained in-store soccer experts to help better serve our athletes.
In fiscal 2023, we plan to open nine additional DICK’S House of Sport stores, which will provide experiential destinations for our athletes, drive strong engagement with our key brand partners, and continue to set us apart as a clear market leader of the sporting goods industry.
We believe we are creating the future of retail through our DICK’S House of Sport stores, which are built around experience, service, community and product. These stores provide experiential destinations for our athletes, drive strong engagement with our key brand partners, and continue to set us apart as a clear market leader within the sporting goods industry.
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.
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.
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.
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.
(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.
(now Travel & Leisure Co.). In April 2022, Mr. Rak joined the Board of Directors of Mastech Digital Inc (NYSEAMERICAN: MHH). 10 Table of Contents Elizabeth H. Baran became our Senior Vice President - General Counsel and Corporate Secretary in January 2024. Ms.
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.
Since the establishment of the Sports Matter initiative, the Company and The DICK’S Sporting Goods Foundation have committed over $190 million to help thousands of youth sports teams and give more than two million young athletes across all 50 states the chance to play. 8 Table of Contents We also support The DICK’S Sporting Goods Foundation in expanding economic opportunities in local communities through programs established for education and the outdoors.
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 believe 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, such as our transformed footwear assortment offered through premium full-service footwear decks, which we have in over 80% of our DICK’S locations as of the end of 2023.
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.
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.
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.
Culture and Common Purpose As stated in our mission, we strive to create an environment where dedicated, optimistic, authentic and high-integrity teammates thrive.
Over the long-term, our DICK’S House of Sport stores will be the primary driver of this growth. 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.
Over the long-term, we plan to reposition our chain and grow our DICK’S House of Sport stores, Golf Galaxy Performance Centers and next generation 50,000 square foot DICK’S stores. 6 Table of Contents 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.
Hobart became our President and Chief Executive Officer effective February 1, 2021 and has served as our President since May 2017. Ms. Hobart was appointed to the Company’s Board of Directors in January 2018. Ms. Hobart joined DICK’S Sporting Goods in February 2011 as our Senior Vice President and Chief Marketing Officer. In September 2015, Ms.
Stack has served us full-time since 1977 in a variety of positions, including President, Store Manager and Merchandise Manager. Lauren R. Hobart became our President and Chief Executive Officer effective February 1, 2021 and has served as our President since May 2017. Ms. Hobart was appointed to the Company’s Board of Directors in January 2018. Ms.
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.
(NYSE: YUM) from 2020 - 2022 and 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.
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.
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.
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.
Deepening Brand Relationships and Differentiated Product We carry a full range of products within each category, including premium items for the sports enthusiast.
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.
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. Ms. Hobart also served as a member of the Board of Directors of YUM! Brands, Inc.
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 focus on those growth categories in which we believe an opportunity to gain market share exists. We support these growth categories with greater quantities of enthusiast product and improved presentation and in-stock positions. We deliver a multi-brand experience to our athletes through our strong partnerships with industry leading national brands and our vertical brand assortment.
Consistent 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.
Consistent 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.
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.
Data-Powered Technology Company We have an expansive dataset of over 160 million athletes who account for over 80% of total sales. This includes active members from our ScoreCard Rewards loyalty program. In 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.
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.
Baran 45 Senior Vice President - General Counsel and Corporate Secretary Edward W. Stack is our Executive Chairman. 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.
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.
The information on our website does not constitute a part of this Annual Report on Form 10-K.
Stack 68 Executive Chairman Lauren R. Hobart 54 President and Chief Executive Officer Navdeep Gupta 50 Executive Vice President - Chief Financial Officer Ray Sliva 49 Executive Vice President - Stores Vlad Rak 46 Executive Vice President - Chief Technology Officer John E.
Hobart 55 President and Chief Executive Officer Navdeep Gupta 51 Executive Vice President - Chief Financial Officer Julie Lodge-Jarrett 48 Executive Vice President - Chief People and Purpose Officer Ray Sliva 50 Executive Vice President - Stores Vlad Rak 47 Executive Vice President - Chief Technology Officer Elizabeth H.
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.
We believe that through this mission and our four key strategic pillars of athlete experience, teammate experience, differentiated product and brand engagement, we can be the best sports company in the world.
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.
To date, we have opened 14 Golf Galaxy Performance Centers and we plan to have approximately 40 to 50 of these stores by 2027, including ten additional stores in 2024. We continue to develop and test new store prototypes and concepts to grow our business, while incorporating key learnings into the rest of our chain.
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.
We leverage our store and distribution center network, our dedicated eCommerce fulfillment center and direct shipping capabilities from our vendors to ensure merchandise delivery speed to our athletes and to minimize shipping costs. 7 Table of Contents Competition The competition among retailers that sell sporting goods is highly fragmented, intensely competitive, and continually evolving.
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.
Our stores remain at the core of our omni-channel platform.
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.
Lodge-Jarrett spent more than 21 years at Ford Motor Company where she held roles that included Chief Talent Officer; Chief Learning Officer; and HR VP, Greater China. Ray Sliva became our Executive Vice President - Stores, in January 2023. Prior to joining DICK’S Sporting Goods, Mr.
We have committed to increasing diversity at all levels of our organization.
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. 9 Table of Contents We have committed to increasing diversity at all levels of our organization.
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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.
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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 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.
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Strengthening and Evolving our Base At DICK’s, we are reimagining the athlete experience and believe that innovation in our omni-channel athlete experience is at the heart of our growth strategies. We provide a wide range of in-store support services and have incorporated experiential in-store elements, powered by technology, to provide what we believe is an elevated athlete experience.
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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.
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Experiential in-store elements such as HitTrax ® batting cages, Trackman ® golf simulators and our premium full-service footwear decks inspire confidence in our athletes and reinforce the power of our expertise.
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As of the end of fiscal 2022, we had over 150 million athletes in our database, including over 20 million new athletes in the past three years who skewed younger and more female.
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Since 2021, we have opened twelve DICK’S House of Sport stores, with plans to open eight additional stores in 2024. By the end of 2027, we plan to have 75 to 100 DICK’S House of Sport stores nationwide.
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Our GameChanger mobile app has also provided an opportunity for us to innovate within youth sports technology and connect with athletes and their communities by offering video streaming, highlights and scorekeeping for youth sports programs.
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For example, our next generation 50,000 square foot DICK’S store incorporates key athlete insights that we’ve gained from our DICK’S House of Sport stores, including premium experiences, an elevated service model and enhanced visual expressions. 4 Table of Contents Incubating and Growing New Concepts In addition to innovating within our core business, we also incubate and grow new concepts.
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During fiscal 2021, we also partnered with Nike to provide a connected marketplace in our DICK’S mobile app which gives our athletes access to exclusive product, experiences and content.
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In 2021, we launched Public Lands, an omni-channel specialty concept for our outdoor athletes and in 2023, we acquired Moosejaw, a leading outdoor retailer, which we integrated with Public Lands to better serve the outdoor athlete in areas like bike, hike, paddle sports and camp.
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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.
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In addition to retail, we are building the first and best place to experience youth sports with GameChanger, a premier live streaming, scoring and statistics mobile app for youth sports, offered through a software-as-a-service platform on a subscription basis.
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In fiscal 2022, we invested in our digital experience by expanding our personalization capabilities and other features, and we plan to continue building enhancements on those features to assist our athletes in finding the right product, at the right time.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur 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).
Biggest changeOur 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; elevated interest rates and recessionary pressures; adverse changes in consumer disposable income; the reinstatement of student loan payments; consumer confidence and perception of economic conditions, including the instability in the banking sector; geopolitical conflicts (including the conflicts in the Ukraine and the Middle East) and the threat or outbreak of further conflicts, terrorism or public unrest; wage and unemployment levels; consumer debt and the costs of basic necessities and other goods; pandemics, epidemics, contagious disease outbreaks and other public health concerns, which may result in a d ecrease in athlete traffic, comparable store sales, and average value per transaction and might cause us to utilize pricing strategies that will have a negative impact on our gross margins, all of which could negatively affect the Company’s business, operations, liquidity, and financial results, particularly if consumer spending levels are depressed for a prolonged period of time.
Further, the ability of consumers to compare prices in real-time puts additional pressure on us to maintain competitive pricing. If we are unsuccessful in our varied marketing and advertising strategies, especially via online and social media platforms, we could lose athletes and sales could decline.
Further, the ability of consumers to compare prices in real-time puts additional pressure on us to maintain competitive pricing. If we are unsuccessful in our varied marketing and advertising strategies, especially via online and social media platforms, we could lose athletes and our sales could decline.
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.
The loss of any one 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.
To the extent that another pandemic or similar public health event occurs, we could be subject to another period of store closures or other potential governmental regulations, whether at the local, state, or federal level(s) (including requiring a reduction in work force), which would likely have a significant adverse effect on our financial condition and results of operations.
Further, to the extent that another pandemic or similar public health event occurs, we could be subject to another period of store closures or other potential governmental regulations, whether at the local, state, or federal level(s) (including requiring a reduction in work force), which would likely have a significant adverse effect on our financial condition and results of operations.
Poor performance during a quarter because of slow holiday seasons or unseasonable weather conditions, including unusually warm weather in the winter months or abnormally wet or cold weather in the spring or summer months, whether due to climate change or otherwise, could have a material adverse effect on our business, financial condition, and operating results for the entire fiscal year.
However, poor performance during a quarter because of slow holiday seasons or unseasonable weather conditions, including unusually warm weather in the winter months or abnormally wet or cold weather in the spring or summer months, whether due to climate change or otherwise, could have a material adverse effect on our business, financial condition, and operating results for the entire fiscal year.
Foreign imports subject us to risk relating to changes in import duties quotas, the introduction of U.S. taxes on imported goods or the extension of U.S. income taxes on our foreign suppliers’ sales of imported goods through the adoption of destination-based income tax jurisdiction, loss of “most favored nation” status with the U.S., freight cost increases and economic and political uncertainties.
Foreign imports subject us to risk relating to changes in import duties and quotas, the introduction of U.S. taxes on imported goods or the extension of U.S. income taxes on our foreign suppliers’ sales of imported goods through the adoption of destination-based income tax jurisdiction, loss of “most favored nation” status with the U.S., freight cost increases and economic and political uncertainties and conflict.
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.
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 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, among other things.
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.
Negative publicity or perceptions involving us or our brands, products, vendors, foreign manufacturers, spokespersons, influencers, 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.
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.
Our business is also 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 and timely transportation resources at competitive prices to fulfill our delivery schedules to our distribution centers or our stores.
Issues that may pose potential risks for our new store concepts and formats include: increased potential liability for bodily injury to athletes or teammates; increased liability for property damage; increased costs for implementing, installing, building, repairing, and maintaining our experiential concepts or creating new concepts; our ability to attract and retain teammates with specific skill sets as it relates to experiential concepts; our ability to anticipate consumer trends or engaging activities; increased reputational risks related to community involvement, giving, and other activations at a localized level; increased risk related to competitors attempting to create similar concepts to gain market share; and our ability to successfully administer and comply with obligations under license agreements that we have with third-party licensors of certain brands.
Issues that may pose potential risks for our new store concepts, formats and enhanced experiential opportunities include: increased potential liability for bodily injury to athletes or teammates; increased liability for property damage; increased costs for implementing, installing, building, repairing, and maintaining our experiential concepts or creating new concepts; our ability to attract and retain teammates with specific skill sets as it relates to experiential concepts; our ability to anticipate consumer trends or engaging activities; increased reputational risks related to community involvement, giving, and other activations at a localized level; increased risk related to competitors attempting to create similar concepts to gain market share; and our ability to successfully administer and comply with obligations under license agreements that we have with third-party licensors of certain brands.
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.
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/or profitability to suffer.
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.
Unauthorized use or disclosure of sensitive or confidential athlete, teammate, vendor or Company information could result in substantial costs and reputational damage, harm to 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.
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.
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 Senior Notes or the Revolving Credit Facility.
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.
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, athleisure, and active lifestyle products.
Provisions of our Amended and Restated Certificate of Incorporation, as amended, and our Amended and Restated Bylaws as well as provisions of Delaware law could discourage, delay, or prevent a merger, acquisition or other change in control of our Company, even if such change in control would be beneficial to our stockholders.
Provisions of our Amended and Restated Certificate of Incorporation, as amended, and our Second Amended and Restated Bylaws as well as provisions of Delaware law could discourage, delay, or prevent a merger, acquisition, or other change in control of our Company, even if such change in control would be beneficial to our stockholders.
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.
Negative customer perceptions regarding the safety, sourcing and labeling of the products we sell, and events that give rise to actual, potential, or perceived product safety or labeling concerns could expose us to government enforcement action and/or private litigation.
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.
Although in fiscal 2023 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.
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 and labeling laws, and we are dependent on them to ensure that the products we buy comply with all safety and labeling standards.
Further, closing stores generally result in certain short-term economic consequences, such as, ongoing rent payment obligations or other expenses for the balance of the lease term or ownership period, termination charges in connection with a lease or, if the property is owned, costs, expenses and losses in connection with a sale.
Further, closing stores generally result in certain short-term economic consequences, such as, ongoing rent payment obligations or other expenses for the balance of the lease term or ownership period, termination charges in connection with a lease or, if the property is owned, costs, expenses and losses in connection with a sale or other asset disposition.
We may incur losses relating to claims filed against us, including costs associated with defending against such claims, and there is risk that any such claims or liabilities will exceed our insurance coverage, or affect our ability to retain adequate liability insurance in the future.
We may incur losses relating to claims filed against us, including costs associated with defending against such claims, and there is risk that any such claims or liabilities will exceed our insurance coverage, or affect our ability to retain adequate liability or workers’ compensation insurance in the future.
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.
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/regional geographic and demographic tastes; offering differentiated and premium products and desirable in-store experiences; delivering elevated customer service; and providing fast, accurate and reliable delivery and pick-up, and convenient return options.
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.
For example, under the indenture governing the Senior Notes, if a takeover results in a change of control triggering event, then noteholders will have the right to require us to repurchase their Senior Notes for cash equal to 101% of the aggregate principal amount of such notes.
Our liquidity or access to capital could also be adversely affected by unforeseen changes in the financial markets and global economy. Our indebtedness and liabilities could limit the cash flow available for our operations and we may not be able to generate sufficient cash to service all of our indebtedness.
Our liquidity or access to capital could also be adversely affected by unforeseen changes in the financial markets and global economy. 20 Table of Contents Our indebtedness and liabilities could limit the cash flow available for our operations and we may not be able to generate sufficient cash to service all of our indebtedness.
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 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. Our vertical brand offerings and new specialty concept stores expose us to potential increased costs and certain additional risks.
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.
Changes in consumer shopping habits and patterns, reduced customer traffic in the shopping centers, malls and/or retail nodes where our stores are located, financial difficulties of our landlords, property owners or the shopping center operators, anchor tenants or a significant number of other retailers, and vacancies or closures, could impact the profitability of our stores and increase the likelihood that our landlords, property owners or the shopping centers operators fail to fulfill their obligations and conditions under our lease agreements or governing documents.
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.
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, executive and management level talent, and professionals to implement our technology and other strategic initiatives.
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.
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 2023, we purchased merchandise from approximately 1,500 vendors. Purchases from Nike represented approximately 24% of our total merchandise purchases.
Furthermore, reputational damage caused by real or perceived product safety concerns could have a negative impact on our sales and operating results. 17 Table of Contents We may be subject to various types of litigation and other claims, and our insurance may not be sufficient to cover damages related to those claims.
Furthermore, reputational damage caused by real or perceived product safety or labeling concerns could have a negative impact on our sales and operating results. We may be subject to various types of litigation and other claims, and our insurance may not be sufficient to cover damages related to those claims.
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.
Establishing the necessary internal infrastructure to allow for the 18 Table of Contents monitoring and other compliance requirements required by these new laws and regulations and enforcement efforts requires expenditure of considerable Company resources.
Our athletes have expectations about how they shop in stores or through eCommerce or more generally engage with businesses across different channels or media (through online and other digital or mobile channels or particular forms of social media), which may vary across demographics and may evolve rapidly.
Our athletes have expectations about how they shop in stores or through eCommerce or more generally engage with businesses across different channels or media (through online and other digital or mobile channels, including social media), which may vary across demographics and may evolve rapidly.
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.
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 because of supply chain disruptions or other causes, or fail to continue to develop new products that create consumer demand.
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.
Furthermore, extreme weather conditions and natural disasters caused by climate change or otherwise and other catastrophic events in the areas in which our stores or distribution centers and fulfillment centers are located could negatively impact consumer shopping patterns, consumer confidence and disposable income, create interruptions to our business, or otherwise could have a negative effect on our financial performance.
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.
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 cybersecurity measures to protect against data breaches; failure of our data governance and privacy programs to protect against data misuse; 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 perceived transparency (or lack thereof) regarding our progress toward certain ESG goals and initiatives and ultimately, whether we are able to meet our published 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 and athlete 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.
Even if a claim is unsuccessful or is not fully pursued, the negative publicity surrounding any such assertions could adversely affect our reputation. Due to the inherent uncertainties of litigation and other claims, we cannot accurately predict the ultimate outcome of any such matters. We sell firearms and ammunition in some of our stores.
Even if a claim is unsuccessful or is not fully pursued, the negative publicity surrounding any such assertions could adversely affect our reputation. Due to the inherent uncertainties of litigation and other claims, we cannot accurately predict the ultimate outcome of any such matters.
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.
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 the Inflation Reduction Act; changes in transfer pricing rules; and the outcome of income tax audits in various 19 Table of Contents jurisdictions.
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.
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 cyberattacks from cyberattackers or sophisticated organizations or through negligent or intentional actions of teammates); catastrophic events; and usage errors by our teammates.
A substantial increase in the prices of raw materials or commodities used in the products we sell, whether due to material shortages, supply chain disruptions or otherwise could increase the costs associated with manufacturing our products and the products that we purchase from our vendors.
Our product costs are affected, in part, by the costs and availability of component materials. A substantial increase in the prices of raw materials or commodities used in the products we sell, whether due to material shortages, supply chain disruptions or otherwise could increase the costs associated with manufacturing our products and the products that we purchase from our vendors.
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.
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 property owners, landlords and vendors, company policies, workplace injuries and other matters.
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.
The ability to optimize our distribution and fulfillment network, which includes our distribution centers, eCommerce fulfillment center, and our stores that serve as forward distribution points, in a way that avoids disruptions and maximized efficiencies, is dependent on a variety of factors, many 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 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.
In this and in other cases, our obligations under the indenture governing the Senior 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. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
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.
If the products that we offer, whether via national brands or our vertical brands, do not meet applicable safety or labeling standards or our athletes’ expectations regarding safety or labeling of products, we could experience decreased sales, increased costs, and/or be exposed to legal and reputational risk.
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.
Further, difficulties in moving products manufactured overseas through established trade routes and then through the ports of North America, whether due to ongoing geopolitical conflict or other global or regional conflicts, port congestion or inaccessibility, government shutdowns, labor disputes, product regulations and/or inspections, changes in laws or other factors, including natural disasters, or health pandemics, could negatively affect our business.
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.
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 (including AI and machine learning); data protection and data usage; privacy (including new and emerging privacy laws); advertisement and marketing; labor and employment (including employee safety); taxes, including changes to tax rates and new taxes, tariffs, and surcharges; knives, food items or other regulated products; accounting, corporate governance and securities, including adequate disclosure; custom or import; intellectual property; and social, environmental and/or climate change, including programs, transparency and reporting.
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.
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.
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 cybersecurity and/or privacy 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, athlete experience, reputation or investor confidence. 15 Table of Contents Further, the data privacy and cybersecurity regulatory environment is constantly changing, with new and increasingly rigorous and complex requirements.
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.
Our financial performance is further dependent on our ability to reposition and optimize our existing 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; renewing or extending leases; restructuring leases 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 concept opportunities or ancillary retail support to other stores in the market.
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.
Our focus on long-term strategic investments, including investments in our technology and other digital capabilities, (such as AI and machine learning), 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 store concepts, expansion of our real estate portfolio (including store remodels, experiential concepts and relocations), and improving teammate productivity through strategic talent investments and otherwise may require changes to our existing cost structure and/or significant capital investment and management attention at the expense of other business initiatives and may take longer than anticipated to achieve the desired return.
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.
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.
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.
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; adoption of new work models and policies regarding on-site and remote work; immigration, federal and state minimum wage requirements, and benefit costs; changing demographics; and our reputation within the labor market.
We may need to respond to declines in customer traffic or conversion rates by increasing markdowns or promotions to attract athletes, which could adversely impact our financial results. Our business relies on our distribution and fulfillment network and our customer support center.
We may need to respond to declines in customer traffic or conversion rates by increasing markdowns or promotions to attract athletes and/or increasing marketing spend, which could adversely impact our financial results.
The loss of one or more of our key executives or the inability to successfully attract and retain executive officers or implement effective succession planning strategies could have a material adverse effect on our business.
Our response to any such efforts could be perceived negatively and harm our business and reputation. 16 Table of Contents The loss of one or more of our key executives or the inability to successfully attract and retain executive officers or implement effective succession planning strategies could have a material adverse effect on our business.
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.
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.
Furthermore, the prevalence of social media and a constant, on-demand news cycle may accelerate and in the short-term increase the potential scope of any negative publicity we or others might receive and could increase the negative impact of these issues on our reputation, business, results of operations, and financial condition.
Furthermore, the prevalence of social media and a constant, on-demand news cycle may accelerate and in the short-term increase the potential scope of any negative publicity we or others might receive and could increase the negative impact of these issues on our reputation, business, results of operations, and financial condition. 13 Table of Contents Our strategic plans and initiatives may initially result in a negative impact on our financial results, and such plans and initiatives may not achieve the desired results within the anticipated time frame or at all.
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.
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. Provisions in the indenture governing the Senior Notes could delay or prevent an otherwise beneficial takeover of us.
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.
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 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.
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; and • placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital.
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.
The seasonality of certain categories of our operations, along with the current geographic concentrations of our stores, exposes us to certain seasonal influences and weather-related risks. Our business is subject to seasonal influences and certain holidays and sports seasons during the year.
If any of these or other factors, including trade tensions between the U.S. and foreign nations, including China and Russia, were to cause a disruption of trade from the countries in which our vendors’ supplies or our vertical brand products’ manufacturers are located, our inventory levels may be reduced and/or the cost of our products may increase.
If any of these or other factors, including heightened tensions between the U.S. and foreign nations, including China and Russia, as well as other regions of U.S. national security concern, such as the Middle East, were to cause a disruption of trade through the imposition of sanctions, additional tariffs, geopolitical risk, trade remedy action, trade route inaccessibility, or other restraints on trade from the countries in which our vendors’ supplies or our vertical brand products’ manufacturers are located, our inventory levels may be reduced and/or the cost of our products may increase.
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.
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. If we are unable to protect against inventory shrink, our results of operations and financial condition could be adversely affected.
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.
Certain provisions in the indenture governing the Senior Notes could make a third-party attempt to acquire us more difficult or expensive.
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.
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.
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.
We may also experience shipment delays caused by shipping port constraints (including inaccessibility to or delays on vital trade routes), labor strikes, work stoppages, acts of war, terrorism and global conflicts, or other supply chain disruptions, including those caused by extreme weather due to climate change or otherwise, natural disasters, and pandemics and other public health concerns.
We may not be able to maintain our existing distribution and fulfillment network if the cost of the facilities increase or the location of a facility is no longer desirable. In those cases, we may not be able to locate suitable alternative sites or modify or enter into new leases on acceptable terms.
We may not be able to maintain our existing distribution and fulfillment network if the cost of the facilities increases or the location of a facility is no longer desirable.
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.
Maintaining our compliance with those requirements, including state and local consumer privacy laws and federal cybersecurity disclosure requirements, 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 or other marketing and advertising.
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.
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.
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.
An inability to otherwise successfully respond to competitive pressures could have a material adverse effect on our results of operations, reputation or profitability. 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.
We compete with retailers from multiple categories and in multiple channels, including large formats; traditional and specialty formats; mass merchants; department stores; internet-based and direct-sell retailers; and increasingly from vendors that sell directly to customers.
We compete with retailers from multiple categories and in multiple channels, including large formats; traditional and specialty formats; mass merchants; department stores; internet-based and direct-sell retailers; and from vendors that sell directly to customers. Our competitors include companies that have greater market presence (both brick and mortar and online), name recognition and financial, marketing, and other resources than we do.
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.
Additionally, any new initiative is subject to certain risks, including athlete acceptance, competition, product differentiation, our ability to successfully implement technological initiatives, and the ability to attract and retain qualified personnel to support the initiative.
We also may develop and introduce new store concepts and formats or expand upon existing formats, which may require considerable resources, and there is no assurance that these initiatives will be successful. We have included a variety of other experiential opportunities in our current store concept offerings, such as climbing walls, fields, ice rinks, and other in-person activations.
We have also developed and may in the future develop and introduce new store concepts and formats or expand upon existing formats, which may require considerable resources, and there is no assurance that these initiatives will be successful.
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.
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.
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.
In addition, 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 conduct regular trainings as part of our cybersecurity and data privacy efforts, the training does not guarantee prevention of successful cyberattacks.
We rely upon third-party transportation to deliver products from vendors and our manufacturing facilities to our distribution centers, from our distribution centers to our stores, and directly to our athletes using our omni-channel platform. Consequently, our results may be adversely affected by those factors impacting transportation, including the price of fuel and the availability of aircraft, ships, trucks, and drivers.
We rely upon third-party transportation to deliver products from vendors and our manufacturing facilities to our distribution centers, from our distribution centers to our stores, and directly to our athletes using our omni-channel platform.
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.
Additionally, our ability to negotiate favorable lease, purchase or operating terms depends on conditions in the real estate, capital and construction markets, including competition for desirable properties; our relationships with current and prospective landlords, property owners and shopping center or mall operators; construction costs; the availability of labor and materials; access to sufficient capital and/or financing vehicles, such as sale-leasebacks; local regulations; private restrictions; third party or political opposition; and other factors that are not within our control.
We develop and offer our athletes vertical brand products that are not available from other retailers and expend considerable resources to develop new brands.
We develop and offer our athletes vertical brand products that represent approximately 13% of our overall sales, generally carry higher margins than equivalent national brand products, and are not available from other retailers. We expend considerable resources to develop new brands and continually seek to improve and expand our current vertical brand offerings.
If we are 15 Table of Contents unable to attract and retain a workforce that meets our needs, our operations, service levels, support functions, and competitiveness could suffer and our results could be adversely affected.
If we are unable to attract and retain a workforce that meets our needs, our operations, service levels, support functions, and competitiveness could suffer, and our results could be adversely affected. We also cannot predict whether any unionization or other organizing efforts could occur with our teammates. Any such efforts could increase our costs and negatively impact our operational flexibility.
Furthermore, we may need to locate new sites for additional eCommerce fulfillment centers to satisfy omni-channel demand. If we cannot locate suitable locations for these fulfillment centers on acceptable terms, we will need to increase reliance on our store network, third-party logistic fulfillment centers, our distribution centers, and vendors to help meet our fulfillment needs.
In those cases, we may not be able to locate suitable alternative sites or modify or enter into new leases on acceptable terms and we may need to increase reliance on our store network, third-party logistic fulfillment centers, our distribution centers, and vendors to help meet our fulfillment needs.
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.
We may be forced to take certain actions to satisfy our obligations under our indebtedness or we may experience a financial failure. Our ability to make scheduled payments on or to refinance our debt obligations, including the Senior Notes and our Revolving Credit Facility, will depend on our financial and operating performance.
If we change shipping companies, we could face logistical difficulties that could adversely impact deliveries and we would incur costs and expend resources in connection with such change.
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. If we change shipping companies, we could face logistical difficulties that could adversely impact deliveries and we would incur costs and expend resources in connection with such change.
Our strategic plans and initiatives may initially result in a negative impact on our financial results and such plans and initiatives may not achieve the desired results within the anticipated time frame or at all. Our ability to successfully implement and execute our strategic plans and initiatives depends on many factors, some of which are out of our control.
Our ability to successfully implement and execute our strategic plans and initiatives depends on many factors, some of which are out of our control.
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.
We may remain liable for certain post-assignment or sublease obligations if the assignee, sublessee, or tenant, as applicable, does not perform. 14 Table of Contents Our business relies on our distribution and fulfillment network and our CSC.

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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 (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.
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 1 14 Arizona 9 3 12 Arkansas 4 1 5 California 57 7 64 Colorado 16 2 18 Connecticut 11 3 14 Delaware 3 1 4 District of Columbia 1 — 1 Florida 48 9 57 Georgia 23 3 26 Idaho 6 1 7 Illinois 32 5 37 Indiana 20 2 22 Iowa 7 2 9 Kansas 10 2 12 Kentucky 12 2 14 Louisiana 8 — 8 Maine 4 — 4 Maryland 17 3 20 Massachusetts 18 4 22 Michigan 21 5 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 4 23 New Mexico 4 — 4 New York 43 3 46 North Carolina 31 7 38 North Dakota 1 — 1 Ohio 36 10 46 Oklahoma 7 2 9 Oregon 10 2 12 Pennsylvania 39 10 49 Rhode Island 2 1 3 South Carolina 11 3 14 South Dakota 1 — 1 Tennessee 17 3 20 Texas 48 9 57 Utah 5 2 7 Vermont 2 — 2 Virginia 27 6 33 Washington 16 — 16 West Virginia 6 — 6 Wisconsin 13 4 17 Wyoming 1 — 1 Total 724 131 855 (1) As of February 3, 2024, includes twelve DICK'S House of Sport stores, including nine new openings during fiscal 2023, which were either converted or relocated from prior store locations.
In some markets we operate DICK’S Sporting Goods stores adjacent to our specialty concept stores on the same property with a pass-through for athletes. We refer to this format as a “combo store” and include combo store openings within both the DICK’S Sporting Goods and specialty concept store counts, as applicable.
In some markets we operate DICK’S Sporting Goods stores adjacent to our specialty concept stores on the same property with a pass-through for our athletes. We refer to this format as a “combo store” and include combo store openings within both the DICK’S Sporting Goods and specialty concept store counts, as applicable.
(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.
(3) Excludes Warehouse Sale store locations that are temporary in nature, of which we operated 36 and 43 as of February 3, 2024 and January 28, 2023, respectively. 23 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. 21 Table of Contents As of January 28, 2023, we operated 853 stores in 47 states.
Our stores are primarily located in shopping centers in regional shopping areas, as well as in freestanding locations and malls. 22 Table of Contents As of February 3, 2024, we operated 855 stores in 47 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.
(2) Includes our Golf Galaxy, Public Lands, Going Going Gone! and Moosejaw specialty concept stores. As of February 3, 2024, we operated 104 Golf Galaxy stores in 35 states, seven Public Lands stores in seven states, 17 Going Going Gone! stores in 15 states and three Moosejaw stores in three states.
As of January 28, 2023, we operated 16 combo stores.
As of February 3, 2024, we operated 18 combo stores.
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During 2024 we plan to begin construction on a new regional distribution center that is currently expected to be operational in 2026.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS We and our subsidiaries are involved in various proceedings that are incidental to the normal course of our businesses. As of the date of this Annual Report on Form 10-K, we do not expect that any of such proceedings will have a material adverse effect on our financial position or results of operations.
Biggest changeWe and our subsidiaries are involved in various other proceedings that are incidental to the normal course of our business. As of the date of this Annual Report on Form 10-K, we do not expect that any of such other proceedings will have a material adverse effect on our financial position or results of operations.
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LEGAL PROCEEDINGS On February 16, 2024, Plumbers and Pipefitters Local Union No. 719 Pension Trust Fund filed a purported class action complaint against the Company and certain of our executive officers and directors in the United States District Court for the Western District of Pennsylvania (Case No. 2:24-cv-00196-KT), purportedly on behalf of all purchasers of our common shares between May 25, 2022 and August 21, 2023.
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The complaint alleges that the defendants violated Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by making material misrepresentations and omissions about the Company’s business and financial condition, including regarding the Company’s inventory, margins, and business prospects.
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The complaint seeks relief including unspecified damages and an award of costs and expenses, including attorneys’ fees. The Company does not believe the complaint states any meritorious claim and intends to defend this case vigorously. At this early stage of the proceedings, the Company cannot predict the ultimate outcome of the litigation.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer 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.
Biggest changeThe graph assumes that $100 was invested on February 1, 2019 in our common stock, the S&P 500 and the S&P Specialty Retail Index and that all dividends were reinvested. 25 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 February 3, 2024: 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 29, 2023 to November 25, 2023 557 $ 113.05 — $ 779,565,161 November 26, 2023 to December 30, 2023 3,946 $ 137.78 — $ 779,565,161 December 31, 2023 to February 3, 2024 2,431 $ 145.93 — $ 779,565,161 Total 6,934 $ 138.65 — (a) Includes shares withheld from employees to satisfy minimum tax withholding obligations associated with the vesting of restricted stock during the period.
(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.
(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. ITEM 6. [RESERVED]
As of March 17, 2023, there were 233 and 15 registered holders of our common stock and Class B common stock, respectively.
As of March 22, 2024, there were 231 and 16 registered holders of our common stock and Class B common stock, respectively.
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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.
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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
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
The 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.
Removed
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.
Removed
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

61 edited+29 added−28 removed34 unchanged
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.
Biggest changeAlthough we were required to assume that our Convertible Senior Notes would be settled in shares of our common stock in accordance with the “if-converted method” under generally accepted accounting principles, we fully settled our Convertible Senior Notes without dilutive effect, due to cash payments for principal, shares received from our convertible bond hedge and share repurchases to offset the share settlement of the remaining $59.1 million principal during the first quarter of fiscal 2023. • In addition, during fiscal 2023, we: ◦ Retired the remaining $59.1 million of our aggregate principal amount outstanding of the Convertible Senior Notes and terminated the remaining convertible bond hedge and warrants for a collective issuance of 1.7 million shares of our common stock; ◦ Declared and paid aggregate cash dividends on a quarterly basis for a total amount of $4.00 per share on our common stock and Class B common stock; and ◦ Repurchased 5.4 million shares of common stock under our share repurchase program for a total cost of $648.6 million. 28 Table of Contents • The following table summarizes store openings and closings in fiscal 2023 and fiscal 2022: Fiscal 2023 Fiscal 2022 DICK’S Sporting Goods Specialty Concept Stores (1) Total (2) DICK’S Sporting Goods Specialty Concept Stores (1) Total (2) Beginning stores 728 125 853 730 131 861 New stores 1 10 11 4 9 13 Acquired stores (3) — 12 12 — — — Closed stores 5 16 21 6 15 21 Ending stores 724 (4) 131 855 728 125 853 Relocated stores 18 2 20 3 1 4 (1) Includes our Golf Galaxy, Public Lands, Going Going Gone! and other specialty concept stores.
Critical accounting policies are those that we believe are both 1) most important to the portrayal of our financial condition and results of operations and 2) require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Critical accounting policies and estimates are those that we believe are both (1) most important to the portrayal of our financial condition and results of operations and (2) require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
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.
The key drivers of earnings before taxes are comparable store sales, gross profit, and our ability to control selling, general and administrative expenses. 27 Table of Contents • 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 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.
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 2023. The following sections describe the potential short and long-term impacts to our liquidity and capital requirements.
Inventory Valuation We value inventory using the lower of weighted average cost and net realizable value, which is generally based on the selling price expectations of the merchandise.
Inventory Obsolescence We value inventory using the lower of weighted average cost and net realizable value, which is generally based on the selling price expectations of the merchandise.
(3) Selling, general and administrative expenses include store and field support payroll and fringe benefits, advertising, bank card charges, operating costs associated with our internal eCommerce platform, information systems, marketing, legal, accounting, other store expenses and all expenses associated with operating our customer support center.
(3) Selling, general and administrative expenses include store and field support payroll and fringe benefits, advertising, bank card charges, operating costs associated with our internal eCommerce platform, information systems, marketing, legal, accounting, other store expenses and all expenses associated with operating our CSC.
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.
A discussion regarding our financial condition and results of operations for Fiscal 2022 compared to the year ended January 29, 2022 (Fiscal 2021) can be found under Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended January 28, 2023, filed with the SEC on March 23, 2023.
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 addition to DICK’S Sporting Goods stores, we own and operate Golf Galaxy, Public Lands, Moosejaw and Going Going Gone! specialty concept stores, and also offer our products online and through our mobile apps.
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.
Leases We lease substantially all of our stores, three of our distribution centers, and certain equipment under non-cancellable operating leases that expire at various dates through 2040.
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.
As of February 3, 2024, 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 February 3, 2024. Refer to Part IV. Item 15.
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.
Exhibits and Financial Statement Schedules of this Annual Report on Form 10-K. 30 Table of Contents A discussion regarding our financial condition and results of operations for the year ended February 3, 2024 (Fiscal 2023) compared to the year ended January 28, 2023 (Fiscal 2022) is presented below.
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”).
Exhibits and Financial Statement Schedules, Note 8 – Revolving Credit Facility for further information. Senior Notes As of February 3, 2024, 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”).
There were no other significant long-lived assets impairment charges recognized during fiscal 2022, 2021 or 2020. 34 Table of Contents
There were no other significant long-lived assets impairment charges recognized during fiscal 2023, 2022 or 2021. 35 Table of Contents
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.
We typically experience lower operating cash flows in our third fiscal quarter due to increased inventory purchases in advance of the holiday selling season and anticipated higher cash flows during our fourth fiscal quarter.
As of January 28, 2023, we had no reporting units at risk of impairment and a 10% change in the fair value of our reporting units would not indicate a potential impairment of goodwill. The fair value of our reporting unit has remained substantially in excess of its carrying value over the last three fiscal years.
As of February 3, 2024, we had no reporting units at risk of impairment and a 10% change in the fair value of our reporting units would not indicate a potential impairment of goodwill. The fair value of our reporting units has remained substantially in excess of their carrying value over the last three fiscal years.
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.
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.
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.
We converted the remaining 17 Field & Stream stores, the majority of which were 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.
As a result, fiscal 2022 earnings per diluted share excluded $27.1 million of interest expense, net of tax, and included 10.8 million diluted shares related to the Convertible Senior Notes, which together decreased earnings per diluted share by $1.01.
Additionally, earnings per diluted share for fiscal 2022 excluded $27.1 million of interest expense, net of tax, and included 10.8 million diluted shares related to the convertible senior notes due 2025 (the “Convertible Senior Notes”), which together decreased earnings per diluted share by $1.01.
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.
In addition, disruption of supply chains, including factory closures and port congestion, resulted in apparel overages in fiscal 2022 from late arriving inventory and elevated container and transportation costs which began to moderate during the second half of fiscal 2022. We took actions during the third and fourth quarter of fiscal 2022 to address these targeted inventory overages.
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.
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.
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.
A 10% change in our shrink reserves as of February 3, 2024, would have affected income before income taxes by approximately $3.0 million in fiscal 2023. 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.
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.
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 write-down of inventory. Additionally, we sold the Field & Stream trademark in fiscal 2023 for proceeds near its carrying value.
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.
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.
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.
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.
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.
On March 13, 2024, our Board of Directors declared a 10% increase in our quarterly cash dividend compared to the previous quarterly per share amount. The dividend of $1.10 per share of common stock and Class B common stock is payable on April 12, 2024 to stockholders of record as of the close of business on March 29, 2024.
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.
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.
Excludes temporary Warehouse Sale store locations. Fiscal 2022 store count reflects the closure of twelve Field & Stream stores for which the associated square footage of each closed store was retained as we plan in the near-term to convert them into DICK’S House of Sport stores, expanded DICK’S Sporting Goods stores, or other specialty concept stores.
Fiscal 2022 store count reflected the closure of twelve Field & Stream stores for which the associated square footage of each closed store was retained as we converted them into DICK’S House of Sport stores, expanded DICK’S Sporting Goods stores, or other specialty concept stores in 2023.
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.
We currently anticipate 2024 share repurchases of approximately $300 million. 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 2023, we paid $351.2 million of dividends to our stockholders.
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.
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 2023 to fiscal 2022: Fiscal Year Basis Point Change in Percentage of Net Sales from Prior Year 2022 - 2023 (A) 2023 2022 (A) Net sales (1) 100.00 % 100.00 % N/A Cost of goods sold, including occupancy and distribution costs (2) 65.08 65.36 (28) Gross profit 34.92 34.64 28 Selling, general and administrative expenses (3) 24.68 22.68 200 Pre-opening expenses (4) 0.36 0.13 23 Income from operations 9.88 11.83 (195) Interest expense 0.45 0.77 (32) Other income (0.72) (0.13) (59) Income before income taxes 10.15 11.19 (104) Provision for income taxes 2.09 2.75 (66) Net income 8.06 % 8.43 % (37) Other Data: Comparable store sales increase (decrease) 2.4 % (0.5) % Number of stores at end of period (5) 855 853 Total square feet at end of period (in millions) (5) 42.7 42.6 29 Table of Contents (A) Column does not add due to rounding.
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.
Cash Flows Changes in cash and cash equivalents for the last three fiscal years are as follows (in thousands): Fiscal Year Ended February 3, 2024 January 28, 2023 January 29, 2022 Net cash provided by operating activities $ 1,527,335 $ 921,881 $ 1,616,872 Net cash used in investing activities (614,676) (392,894) (343,979) Net cash used in financing activities (1,035,748) (1,247,636) (287,722) Effect of exchange rate changes on cash and cash equivalents (77) (170) (33) Net (decrease) increase in cash and cash equivalents $ (123,166) $ (718,819) $ 985,138 33 Table of Contents Operating Activities Cash flows provided by operating activities increased $605.5 million in 2023 compared to 2022.
(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.
As of February 3, 2024, we operated 104 Golf Galaxy stores, seven Public Lands stores, 17 Going Going Gone! stores and other specialty concept 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.
The amount of non-cancellable purchase commitments as of January 28, 2023 were approximately $265 million. Critical Accounting Policies and Use of Estimates Our significant accounting policies are described in Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 1 – Basis of Presentation and Summary of Significant Accounting Policies.
Critical Accounting Policies and Use of Estimates Our significant accounting policies are described in Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 1 – Basis of Presentation and Summary of Significant Accounting Policies.
An impairment loss is recognized when the carrying amount of the store location is not recoverable and exceeds its fair value.
An impairment loss is recognized when the carrying amount of the store location is not recoverable and exceeds its fair value. During 2023, we recorded non-cash impairment charges from our Business Optimization.
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.
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. 31 Table of Contents Income Taxes Our effective tax rate decreased to 20.6% in the current year from 24.6% in 2022.
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.
Selling, general and administrative expenses increased to $3,204.1 million in the current year from $2,805.5 million in 2022, and increased as a percentage of net sales by 200 basis points.
As of January 28, 2023, the Company operated 16 combo stores. (3) Excludes 43 and 14 temporary Warehouse Sale store locations as of January 28, 2023 and January 29, 2022, respectively.
As of February 3, 2024, the Company operated 18 combo stores. (2) Excludes Warehouse Sale store locations that are temporary in nature, of which the Company operated 36 and 43 as of February 3, 2024 and January 28, 2023, respectively.
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.
We recognize an impairment charge when the estimated fair value of the intangible asset is less than its carrying value. See Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 11 – Fair Value Measurements for further information. We recorded no significant impairments in fiscal 2023, 2022 or 2021.
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.
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.
During fiscal 2022, we recorded a non-cash impairment charge of $28.5 million for store asset disposals at twelve Field & Stream stores that we closed in the period for conversion into DICK’S House of Sport stores or expanded DICK’S Sporting Goods stores.
During 2022, we recorded non-cash impairment charges for store asset disposals at twelve Field & Stream stores that we closed in the period for conversion into DICK’S House of Sport stores or expanded DICK’S Sporting Goods stores. See Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 11 – Fair Value Measurements for further information.
(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.
(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 the Company takes possession of a site through the date of store opening and during periods when stores are closed for remodeling. (5) Excludes temporary Warehouse Sale store locations.
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.
As of February 3, 2024, our Senior Notes have long-term credit ratings by Moody’s and Standard & Poor’s rating agencies of Baa3 and BBB, respectively. Convertible Senior Notes Following our exchanges during 2022, we had an aggregate remaining principal amount of $59.1 million of Convertible Senior Notes outstanding as of January 28, 2023.
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.
Income from Operations Income from operations decreased to $1,282.4 million in 2023 from $1,463.0 million in 2022. Gross profit increased to $4,533.7 million in 2023 from $4,284.6 million in 2022 and increased as a percentage of net sales by 28 basis points due primarily to lower supply chain costs, partially offset by lower merchandise margins.
The current year effective tax rate was unfavorably impacted by eliminated tax deductions from our bond hedge following our Convertible Senior Notes exchange transactions, which impacted our income tax expense by $21.5 million, partially offset by the favorable rate impact of the vesting of employee equity awards on lower pre-tax income.
Additionally, the prior year effective tax rate was unfavorably impacted by eliminated tax deductions from our bond hedge following our Convertible Senior Notes exchange transactions, which increased income tax expense by $21.5 million. Liquidity and Capital Resources Our cash on hand as of February 3, 2024 was $1.8 billion.
Other purchase obligations are for marketing commitments to promote our brand and products, including media and naming rights, technology-related commitments, licenses for trademarks, and other ordinary course commitments. In the ordinary course of business, we enter into many contractual commitments, including purchase orders and commitments for products or services, but generally, such commitments represent annual or cancellable commitments.
In the ordinary course of business, we enter into many contractual commitments, including purchase orders and commitments for products or services, but generally, such commitments represent annual or cancellable commitments. The amount of non-cancellable purchase commitments as of February 3, 2024 were approximately $215 million.
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.
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.
Our rights and obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted. Our liability associated with the funded participation in the arrangements, which is presented within accounts payable on the Consolidated Balance Sheet, was $40.1 million and $76.0 million as of January 28, 2023 and January 29, 2022, respectively.
Liabilities associated with the funded participation in these arrangements, which is presented within accounts payable on the Consolidated Balance Sheet, were $45.9 million and $40.1 million as of February 3, 2024 and January 28, 2023, respectively.
Supply Chain Financing We have entered into supply chain financing arrangements with several financial institutions, whereby suppliers have the opportunity to settle outstanding payment obligations early at a discount. In turn, we settle invoices with the financial institutions in accordance with the original supplier payment terms.
Supply Chain Financing We have entered into supply chain financing arrangements with third-party financial institutions, whereby suppliers have the opportunity to settle outstanding payment obligations early at a discount. We do not have an economic interest in suppliers’ voluntary participation and we do not provide any guarantees or pledge assets under these arrangements.
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.
As we continue to reposition our store portfolio, these investments will be concentrated in new store development, relocations and remodels that will include eight DICK’S House of Sport stores, ten Golf Galaxy Performance Centers and 16 next generation 50,000 square foot DICK’S stores that will open in 2024 as well as, improvements within our existing stores including converting approximately 50 stores to premium full-service footwear decks.
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.
As a result of our core strategies, foundational improvements and these strong secular consumer trends, net sales increased 48.4% in fiscal 2023 compared to fiscal 2019, while our pre-tax income as a percentage of net sales grew from 4.7% in fiscal 2019 to 10.2% in fiscal 2023.
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.
Additionally, fiscal 2023 earnings per diluted share includes approximately $0.19 from the 53 rd week. ◦ Fiscal 2022 net income included charges of $22.3 million, net of tax, or $0.25 per diluted share, related to the Field & Stream Exit.
Exhibits and Financial Statement Schedules, Note 7 – Leases, Note 9 – Senior Notes and Note 10 – Convertible Senior Notes for amounts outstanding as of January 28, 2023 related to operating leases and long-term debt.
Exhibits and Financial Statement Schedules, Note 7 – Leases and Note 9 – Senior Notes for amounts outstanding as of February 3, 2024 related to operating leases and long-term debt. Other purchase obligations are for marketing commitments to promote our brand and products, including media and naming rights, technology-related commitments, licenses for trademarks and other ordinary course commitments.
This total $31.7 million decrease related to our deferred compensation plan investment values was offset by a $26.7 million increase in interest income as a result of higher average interest rates on cash and cash equivalents during the current year. 30 Table of Contents Income Taxes Our effective tax rate increased to 24.6% in the current year from 23.8% in fiscal 2021.
This $77.9 million increase in income was primarily driven by a $52.3 million increase in interest income as a result of higher average interest rates on cash and cash equivalents and a $28.6 million expense reduction from changes in our deferred compensation plan investment values primarily driven by performance in equity markets.
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.
Fiscal 2023 (53 weeks) Compared to Fiscal 2022 (52 weeks) Net Sales Net sales increased 5.0% to $12.98 billion in 2023 from $12.37 billion in 2022 due to a $290.6 million, or 2.4% increase in comparable store sales on a 52-week to 52-week basis, as well as the inclusion of $170.2 million of net sales from the 53 rd week during fiscal 2023.
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.
Our occupancy costs increased $46.5 million compared to 2022 and leveraged by five basis points as a percent of net sales primarily due to sales from the 53 rd week in 2023.
The increase was primarily due to a $52.8 million increase in interest expense related to the aggregate $1.5 billion Senior Notes issued during the fourth quarter of 2021 and $23.3 million of inducement charges related to the exchange of $515.9 million aggregate principal amount of the Convertible Senior Notes, partially offset by a $36.2 million reduction in interest expense related to our Convertible Senior Notes, due to exchange transactions and our adoption of ASU 2020-06; Refer to Part IV.
Interest Expense Interest expense decreased to $58.0 million in 2023 compared to $95.2 million in 2022, primarily due to $23.3 million of inducement charges related to the exchange of $515.9 million aggregate principal amount of the Convertible Senior Notes in 2022 and lower interest expense following their retirement in April 2023.
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.
Consumers have also made what we believe will be lasting lifestyle changes in recent years, prioritizing sport and maintaining healthy, active lifestyles, which has increased demand for our products.
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.
Through our strategic pillars of athlete experience, teammate experience, differentiated product and brand engagement, we have transformed our business to drive sustained profitable growth. As part of our strategy, we have meaningfully improved our merchandise assortment through strong relationships with our key brand partners, which provides access to highly differentiated product, and our vertical brands.
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.
Business Environment The macroeconomic environment in which we operate remains dynamic as a result of numerous factors, including inflationary pressures, the expiration of student loan payment deferments, and the potential impact of elevated interest rates, which could impact consumer discretionary spending behavior and the promotional landscape in which we operate.
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.
In 2023, capital expenditures totaled $587.4 million on a gross basis and $520.4 million on a net basis, inclusive of construction allowances provided by landlords, which included the opening of nine DICK’S House of Sport stores and eleven Golf Galaxy Performance Centers. 32 Table of Contents We anticipate 2024 capital expenditures of approximately $800 million, net of construction allowances provided by landlords.
The decrease in comparable store sales included a 0.7% decrease in transactions offset by a 0.2% increase in sales per transaction, and reflects an anticipated sales normalization in certain categories, including fitness and outdoor equipment, along with a favorable sales impact in fiscal 2021 following government stimulus payments, partially offset by growth in footwear, team sports and athletic apparel.
The remaining $155.4 million increase in net sales was primarily attributable to Moosejaw and temporary Warehouse Sale stores. The increase in comparable store sales included a 1.6% increase in transactions and a 0.8% increase in sales per transaction, and reflects growth in footwear, hydration and licensed apparel, offset by declines in fitness and outdoor-related categories including outerwear, equipment and hunt.
Interest Expense Interest expense increased to $95.2 million in fiscal 2022 compared to $57.8 million in fiscal 2021.
Other Income Other income increased to $93.8 million in 2023 compared to $15.9 million in 2022.
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Our profitability is primarily influenced by growth in comparable store sales, the strength of our merchandise margins and ability to manage operating expenses.
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We have also enhanced our store selling culture and service model and incorporated additional experiential elements and technology into our stores to engage our athletes. Lastly, we continue to innovate in our omni-channel athlete experience through our DICK’S House of Sport stores, Golf Galaxy Performance Centers and our next generation 50,000 square foot DICK’S store.
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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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A key driver of our future omni-channel growth will include repositioning our portfolio to grow our DICK’S House of Sport stores, Golf Galaxy Performance Centers and next generation 50,000 square foot DICK’s stores. 26 Table of Contents Business Optimization During 2023, we completed a business optimization to better align our talent, organizational design and spending in support of our most critical strategies while also streamlining our overall cost structure (the “Business Optimization”).
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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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As part of our Business Optimization, we eliminated certain positions primarily at our customer support center and optimized our outdoor business, which included the integration of our Moosejaw and Public Lands operations, decisions about their go-forward inventory assortment and a comprehensive review of their store portfolios and closure of ten Moosejaw stores.
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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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We incurred pre-tax charges of $84.8 million from our Business Optimization, including $46.1 million of non-cash impairments of store and intangible assets, $26.7 million of severance-related costs and a $12.0 million write-down of inventory. Field & Stream Exit During the fourth quarter of 2022, we decided to exit the Field & Stream brand (the “Field & Stream Exit”).
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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”).
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Overview of current trends affecting 2023 • Within merchandise margin, we have experienced higher inventory shrink relative to historical levels, which has been noted throughout the retail industry. As a percentage of net sales, inventory shrink was approximately 50 basis points higher than 2022 on a full year basis.
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We took actions during the third and fourth quarter of fiscal 2022 to address these targeted inventory overages, and as a result, we believe our inventory is healthy and well-positioned to meet the demands of our athletes in fiscal 2023.
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We expect inventory shrink in the first quarter of 2024 to remain higher than the comparable 2023 period, until the trend is reflected in the results of the current and prior year periods beginning in the second quarter of 2024. • Following the moderation in elevated container and transportation costs that began in the second half of 2022, supply chain costs were lower in 2023.
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Although we have successfully managed these issues thus far, the continued effect of these challenges may impact longer-term consumer discretionary spending behavior and the promotional landscape in which we operate.
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We do not expect meaningful year-over-year declines to continue in 2024. • Following our Business Optimization actions, our selling, general and administrative expenses during the fourth quarter of 2023 have moderated by approximately 78 basis points as a percentage of net sales.
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Additionally, earnings per diluted share for fiscal 2022 reflects our adoption of ASU 2020-06, which requires the assumption that our convertible senior notes due 2025 (the “Convertible Senior Notes”) will be settled in shares of our common stock.
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In 2024, we expect selling, general and administrative expenses to leverage as a percentage of net sales, driven by the future benefits from our Business Optimization actions and our ongoing focus on improving productivity and reducing discretionary costs. The Company’s current expectations described above include forward-looking statements.
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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.
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Please see the “Cautionary Statement Concerning Forward-Looking Statements” in this Form 10-K for information regarding important factors that may cause the Company’s actual results to differ from those currently projected and/or otherwise materially affect the Company.
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Prior year fiscal 2021 information was revised to reflect this change for comparability purposes. See additional details as furnished in Exhibit 99.2 of the Company’s Form 8-K, which was filed with the SEC on March 8, 2022. (6) Includes our DICK’S Sporting Goods, Golf Galaxy, Public Lands, Going Going Gone! and Field & Stream stores.

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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 changeHowever, 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.
Biggest changeThe cash coupons on our 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. Item 15.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk We maintain our Credit Facility to support potential liquidity and capital needs. The interest rate under our current Credit Facility is variable and is benchmarked to, at our option, a base rate or an adjusted secured overnight financing rate (“SOFR”) plus, in each case, an applicable margin percentage.
The interest rate under our current Credit Facility is variable and is benchmarked to, at our option, an alternate base rate or an adjusted secured overnight financing rate (“SOFR”) plus, in each case, an applicable margin percentage.
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.
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 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.
As of February 3, 2024 and January 28, 2023, there were no outstanding borrowings under the Credit Facility, and we did not draw on our Credit Facility during fiscal 2023 or fiscal 2022. 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.
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.
However, results for any quarter are not necessarily indicative of the results that may be achieved for the fiscal year.
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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. 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.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk We maintain our Credit Facility to support potential liquidity and capital needs.
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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.
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Exhibits and Financial Statement Schedules, Note 11 – Fair Value Measurements. Our cash equivalents generate interest income that is variable in relation to short-term interest rates. Accordingly, utilizing average cash equivalents balances during 2023, a hypothetical 100 basis point change in interest rates would have affected income before income taxes by approximately $16 million.
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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.

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