Dick's Sporting Goods 2003 Annual Report Download - page 28

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FISCAL 2003 COMPARED TO FISCAL 2002
Net Income Our net income increased by $14.5 million, or 38.0%, to $52.8 million from $38.3 million in 2002.
This represented an increase in diluted earnings per share of $0.12, or 12.9%, to $1.05 from $0.93 in 2002.
Net Sales Net sales increased by $198.2 million, or 15.6%, to $1,470.8 million from $1,272.6 million in 2002. This
increase resulted from a comparable store sales increase of $24.2 million, or 2.1%, and $174.0 million in new store
sales, which reflected the opening of 22 new stores and relocation of one store in 2003 compared to the opening of
16 new stores and relocation of three stores in 2002. The increase in comparable store sales is mostly attributable to
sales increases in the majority of the Company’s merchandise categories, with team sports, women’s apparel, water
sports, paintball and licensed apparel recording the largest increases. These increases were partly offset by lower
sales of in-line skates, hunting equipment and fishing tackle.
Income from Operations Income from operations increased by $17.2 million, or 25.0%, to $86.3 million from
$69.1 million in 2002. The increase in income from operations is primarily a result of increased gross profit partially
offset by an increase in selling, general and administrative expenses and pre-opening expenses.
Gross profit increased by $70.3 million, or 20.9%, to $407.7 million from $337.4 million in 2002. As a percentage of net
sales, gross profit increased to 27.7% from 26.5% in 2002. The increase in gross profit percentage was primarily due
to improved selling margins in the majority of the Company’s product categories, including private label products that
provide us with significantly higher gross margins than comparable products we sell. The gross profit percentage was
also favorably impacted by the classification of a larger portion of cooperative advertising funds as a reduction of cost
of goods sold, as fewer of these funds were directly tied to advertising expenditures in 2003 as compared to 2002. In
addition, the gross profit percentage improved due to improved productivity at the Company’s distribution center.
Selling, general and administrative expenses increased by $52.1 million to $314.9 million from $262.8 million in 2002.
As a percentage of net sales, selling, general and administrative expenses increased to 21.4% from 20.7% in 2002.
The percentage increase was due to the classification of a larger portion of cooperative advertising funds as a reduction
of cost of goods sold (as discussed above), higher employee benefits costs, higher associate relocation expense,
additional professional and insurance expenses associated with being a public company for all of 2003 as compared
to approximately one quarter in 2002, and higher information systems costs associated with the implementation of the
new merchandising systems, partially offset by lower incentive compensation expense.
Pre-opening expenses increased by $0.9 million to $6.5 million from $5.6 million in 2002. Pre-opening expenses were
for the addition of 22 new stores and one relocation compared to 16 new stores and three relocations in 2002.
(Gain) on Sale / Loss on Write-Down of Non-Cash Investment Gain on sale of investment of $3.5 million resulted
from the sale of a portion of the Company’s non-cash investment in its third-party Internet commerce service provider.
Loss on write-down of non-cash investment resulted from a $2.4 million write-down in 2002 of the non-cash investment
in the Company’s third-party Internet commerce service provider due to a decline in the value of that company’s
publicly traded stock. In July 2001, the Company had converted a cash-based royalty arrangement with that provider
into an equity investment in that company which resulted in this non-cash investment.
Interest Expense, Net Interest expense decreased by $1.1 million to $1.8 million from $2.9 million in 2002 primarily
due to lower interest rates and lower average borrowings on the Company’s senior secured revolving credit facility.
FISCAL 2002 COMPARED TO FISCAL 2001
Net Income Our net income increased by $14.8 million, or 63.0%, to $38.3 million from $23.5 million in 2001.
This represented an increase in diluted earnings per share of $0.27, or 40.9%, to $0.93 from $0.66 in 2001.
Net Sales Net sales increased by $198.0 million, or 18.4%, to $1,272.6 million from $1,074.6 million in 2001. This
increase resulted from a comparable store sales increase of $48.3 million, or 5.1%, and $149.7 million in new store
sales, which reflected the opening of 16 new stores and relocation of three stores in 2002 compared to the opening
of 20 new stores in 2001. The increase in comparable store sales is mostly attributable to sales increases in the majority
of the Company’s merchandise categories, with women’s apparel, exercise, team sports and camping recording the
largest increases. These increases were partly offset by lower sales of fishing tackle.
Income from Operations Income from operations increased by $23.7 million, or 52.3%, to $69.1 million from
$45.4 million in 2001. The increase in income from operations is primarily a result of increased gross profit partially
offset by an increase in selling, general and administrative expenses and pre-opening expenses.
Gross profit increased by $73.8 million, or 28.0%, to $337.4 million from $263.6 million in 2001. As a percentage of net
sales, gross profit increased to 26.5% from 24.5% in 2001. The increase in gross profit percentage was primarily due to
improved selling margins in the majority of the Company’s product categories, which was aided by favorable weather