Dick's Sporting Goods 2014 Annual Report Download - page 55

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Net Sales
Net sales increased 6% to $6,213.2 million in fiscal 2013 from $5,836.1 million in fiscal 2012 due primarily to a 1.9% increase
in consolidated same store sales and the growth of our store network. The 1.9% increase in consolidated same store sales on a
52-week to 52-week basis contributed $104.9 million of the increase in revenue for fiscal 2013. The remaining $272.2 million
increase in the Company's noncomparable sales was primarily attributable to new stores, partially offset by the inclusion of the
53rd week of sales in fiscal 2012. Sales during the 53rd week of fiscal 2012 totaled approximately $74 million. The 1.9%
consolidated same store sales increase consisted of a 2.4% increase at Dick's Sporting Goods and a 7.1% decrease at Golf
Galaxy. eCommerce sales penetration was 7.9% of total sales during fiscal 2013 compared to 5.3% of total sales during the 53
weeks ended February 2, 2013, representing an approximate increase of 59% in eCommerce sales across both Dick's Sporting
Goods and Golf Galaxy.
The increase in consolidated same store sales was broad based, with larger increases in athletic apparel, athletic footwear and
outdoor apparel and cold weather accessories, partially offset by declines in the golf, fitness and outdoor equipment categories.
The same store sales increase at Dick's Sporting Goods was driven by an increase in sales per transaction of approximately
1.8% and an increase in transactions of approximately 0.6%. Based upon our fiscal 2013 sales mix, every 1% change in
consolidated same store sales, which consists of both brick and mortar and eCommerce sales, would have impacted earnings
before income taxes for fiscal 2013 by approximately $18.9 million.
Store Count
During fiscal 2013, the Company opened 40 new Dick's Sporting Goods stores, one new Golf Galaxy store, two new Field &
Stream stores and one new True Runner store. Additionally, the Company relocated one Dick's Sporting Goods store,
repositioned one Golf Galaxy store and closed three underperforming Golf Galaxy stores. As of February 1, 2014, the Company
operated 558 Dick's Sporting Goods stores in 46 states, 79 Golf Galaxy stores in 29 states, two Field & Stream stores in two
states and three True Runner stores in three states, totaling approximately 31.6 million square feet on a consolidated basis.
Income from Operations
Income from operations increased $13.1 million to $536.8 million in fiscal 2013 from $523.7 million in fiscal 2012.
Gross profit increased 6% to $1,944.0 million in fiscal 2013 from $1,837.2 million in fiscal 2012, but decreased as a percentage
of net sales by 19 basis points compared to fiscal 2012. Occupancy costs increased $62.8 million from fiscal 2012, and
increased as a percentage of net sales by 34 basis points. Our occupancy costs are generally fixed in nature and are largely
influenced by new store openings. As a percentage of net sales, occupancy costs increased at a higher rate than the 6% increase
in net sales during the fiscal year and were unfavorably affected by 13 basis points due to the inclusion of sales from the 53rd
week in fiscal 2012. Shipping expenses increased as a percentage of sales by 27 basis points due to the growth in eCommerce
sales relative to the sales growth at our brick and mortar stores. The decrease in gross profit as a percentage of net sales was
partially offset by merchandise margin expansion. Merchandise margins, which represent margins earned above the cost of the
product, excluding certain other items included in cost of goods sold (vendor allowances, inventory shrinkage, freight,
distribution, shipping and store occupancy costs), increased as percentage of sales by 35 basis points, due to changes in sales
mix as discussed above. Every 10 basis point change in merchandise margin would have impacted earnings before income taxes
for the current period by approximately $5.8 million.
Selling, general and administrative expenses increased approximately 7% to $1,386.3 million in fiscal 2013 from $1,297.4
million in fiscal 2012, and increased as a percentage of net sales by 8 basis points primarily due to increases in selling, general
and administrative expenses that do not correlate with the net sales increase for the period. Payroll and related benefit costs
increased $30.6 million in our administrative functions to support planned future growth initiatives. The Company also
recorded a $7.9 million non-cash impairment charge to reduce the carrying value of a Gulfstream G450 corporate aircraft held
for sale to fair market value. The increase in selling, general and administrative expenses was partially offset by lower incentive
compensation during the 52 weeks ended February 1, 2014 due to the Company's results in comparison to the pre-determined
performance targets and a contribution to the Dick's Sporting Goods Foundation during the 53 weeks ended February 2, 2013.