Dick's Sporting Goods 2014 Annual Report Download - page 50

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24
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis should be read in conjunction with Part II, Item 6, "Selected Financial Data" and our
Consolidated Financial Statements and related notes appearing elsewhere in this Annual Report on Form 10-K. This Annual
Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act
of 1995. See "Forward-Looking Statements" and Part I, Item 1A. "Risk Factors".
Overview
Dick's Sporting Goods, Inc. (together with its subsidiaries, referred to as the "Company", "we", "us", and "our" unless specified
otherwise) is a leading omni-channel sporting goods retailer offering an extensive assortment of authentic, high-quality sports
equipment, apparel, footwear and accessories through a blend of dedicated associates, in-store services and unique specialty
shop-in-shops.
As of January 31, 2015, we operated 603 Dick's Sporting Goods stores in 46 states, 78 Golf Galaxy stores in 29 states and 10
Field & Stream stores in five states, with approximately 34.2 million square feet on a consolidated basis, the majority of which
are located throughout the eastern half of the United States. We also operate eCommerce websites at www.DICKS.com and
www.golfgalaxy.com.
The primary factors that have historically influenced the Company's profitability and success have been the growth in its
number of stores and selling square footage, positive same store sales and strong gross profit margins. For example, in the last
five years, the Company has grown from 419 Dick's Sporting Goods stores at the end of fiscal 2009 to 603 Dick's Sporting
Goods stores at the end of fiscal 2014.
As a complement to the Company's store growth, the Company has also grown its eCommerce business year-over-year. Over
the past three years, the Company has innovated its eCommerce sites, with enhancements in the customer experience, new
releases of its mobile and tablet sites, and development of capabilities that integrate the Company's online presence with its
brick and mortar stores, including ship-from-store; buy-online, pick-up in-store; return-to-store and multi-faceted marketing
campaigns that are consistent across our stores and our eCommerce websites.
The Company's store network remains fundamental to the strength of its omni-channel platform, and it continues to expand its
presence through the opening of new stores. The Company believes it has the potential to reach approximately 1,100 Dick's
Sporting Goods locations, including smaller-market locations across the United States. The Company believes the expansion of
its store network will also drive growth in eCommerce sales as the Company continues to deliver an omni-channel shopping
experience for its customers.
The Company's senior management focuses on certain key indicators to monitor the Company's performance including:
• Consolidated same store sales performance – Same store sales provide a measure of sales growth for stores open at
least one year over the comparable prior year period and sales completed on our eCommerce websites. A store is
included in the same store sales calculation in the same fiscal period that it commences its 14th full month of
operations. Stores that were closed or relocated during the applicable period have been excluded from same store sales.
Each relocated store is returned to the same store sales base in the fiscal period that it commences its 14th full month of
operations at that new location. Our management considers same store sales to be an important indicator of our current
performance. Same store sales results are important to leverage our costs, which include occupancy costs, store payroll
and other store expenses. Same store sales also have a direct impact on our total net sales, cash and working capital.
See further discussion of the Company's same store sales in the "Results of Operations" section herein.
• Operating cash flow – Cash flow generation supports the general operating needs of the Company and funds capital
expenditures related to its omni-channel platform, distribution and administrative facilities, costs associated with
continued improvement of information technology tools, costs associated with potential strategic acquisitions or
investments that may arise from time to time and stockholder return initiatives, including cash dividends and share
repurchases. We typically generate significant positive operating cash flows and proportionately higher net income
levels in our fiscal fourth quarter in connection with the holiday selling season. See further discussion of the
Company's cash flows in the "Liquidity and Capital Resources" section herein.