Dick's Sporting Goods 2006 Annual Report Download - page 4

DICK’S SPORTING GOODS, INC. 2006 ANNUAL REPORT
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Among the year’s accomplishments, we once again posted
improved results in a number of important financial metrics;
drove strong organic growth; forged an agreement to acquire
Golf Galaxy; and continued to deliver consistent profitable
growth fueled by execution across many aspects of our
business, from merchandising, to store operations, marketing,
supply chain and information technology. Collectively, our
achievements reinforced Dick’s Sporting Goods as a leader in
the industry, and set the stage for our continued success.
Showcasing our Financial Discipline
Top athletes recognize that achieving excellence demands
endless training and constant preparation. We believe that this
same approach applies to maintaining optimal financial health
and performance, so we practice financial discipline across our
Company as a matter of course. Our diligence has made Dick’s
a strong, lean and nimble organization with the flexibility
to manage changing market conditions and capitalize on
promising growth opportunities.
We showcased these strengths in 2006 by delivering another
year of industry-leading financial performance underscored
by our record results. We also made outstanding progress in
seizing the visible growth opportunities we talked about in last
year’s annual report, making 2006 yet another year in which
our bottom line grew faster than our top line.
2006 – A Year of Growth
In 2006, we increased our sales 19 percent to more than
$3.1 billion, driven by a 6 percent comparable store sales gain.
In the second quarter, the former Galyan’s stores entered the com-
parable store base on a positive note. We also opened 39 new
stores and completed two store relocations and one remodel.
Our blend of new markets and in-fill stores will ensure we
continue to capture market share, and our ongoing emphasis
on execution is reflected in our results. We delivered increases
in our gross, operating, EBITDA and net income margins,
culminating in a 35 percent increase in proforma earnings
per share.1
I am pleased that our 2006 performance enabled us to meet
or exceed all three of our long-term financial goals:on an
annual basis to grow our store base by approximately 15 percent,
improve our operating margin by approximately 30 basis points,
and increase our earnings by approximately 20 percent.1
The dictionary defines momentum as “the power to increase or develop
at an ever-growing speed.” In 2006, Dick’s Sporting Goods clearly
demonstrated this principle, drawing on our past success to continue
our growth and pave the way to seize new opportunitiesin the future.
DEAR FELLOW SHAREHOLDERS
1Results exclude merger integration and store closing costs, gain on sale of
investment, and are adjusted for the effect of expensing stock options as if we
had applied SFAS 123, “Accounting for Stock-Based Compensation”, in 2005