Dick's Sporting Goods 2015 Annual Report Download

Download and view the complete annual report

Please find the complete 2015 Dick's Sporting Goods annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 84

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84

2015 Annual Report

Table of contents

  • Page 1
    2015 Annual Report

  • Page 2

  • Page 3
    .... Finally, we will be able to capitalize on emerging market opportunities by quickly developing and launching new sites that align with customer demand. Together, these advantages will support our mission to make DICK'S the online community that inspires, educates, entertains and equips athletes and...

  • Page 4
    ...DICK'S stores across the nation. This multi-faceted program not only helps these athletes to pursue their Olympic dreams, it also enhances our customer service and brings our Olympic sponsorship to life in our stores. Investing in Our Future We move forward with confidence. The sporting goods market...

  • Page 5
    ... aggregate market value of the voting common equity held by non-affiliates of the registrant was $4,662,073,283 as of July 31, 2015 based upon the closing price of the registrant's common stock on the New York Stock Exchange reported for July 31, 2015. The number of shares of common stock and Class...

  • Page 6
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 7
    ... and Procedures...Item 9B. Other Information...Part III ...Item 10. Directors, Executive Officers and Corporate Governance ...Item 11. Executive Compensation...Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters...Item 13. Certain Relationships...

  • Page 8
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 9
    ...New York under the name Dick's Clothing and Sporting Goods, Inc. In November 1997, we reincorporated as a Delaware corporation and in April 1999 we changed our name to Dick's Sporting Goods, Inc. Our executive office is located at 345 Court Street, Coraopolis, Pennsylvania 15108 and our phone number...

  • Page 10
    ...-store returns or exchanges, or expediting fulfillment of eCommerce orders. We believe that offering support services for the products we sell enhances the credibility of our associates and specialty store concepts with our customers and further differentiates our stores from our competitors. Brand...

  • Page 11
    ...such as sporting goods equipment, fitness equipment, golf equipment and hunting and fishing gear. Includes the Company's non-merchandise sales categories, including in-store services and shipping revenues. (2) Selling Channels We offer products to our customers through our retail stores and online...

  • Page 12
    ... our websites to ship orders placed online from our retail locations, which reduces delivery times for online orders and improves inventory productivity. We also have capability for our customers to buy merchandise online and pick it up in store. In fiscal 2015, our eCommerce business accounted for...

  • Page 13
    ... and Planning, Allocations and Replenishment Executive Vice President - Chief Marketing Officer Executive Vice President - eCommerce and Supply Chain Senior Vice President, General Counsel and Secretary Senior Vice President - Chief Accounting Officer Senior Vice President - Human Resources Edward...

  • Page 14
    ...Morse Shoe, Inc. and as an Audit Manager with KPMG LLP. Lauren R. Hobart became our Executive Vice President - Chief Marketing Officer in September 2015. Ms. Hobart joined Dick's Sporting Goods in February 2011 as our Senior Vice President and Chief Marketing Officer. Prior to that, Ms. Hobart spent...

  • Page 15
    ... customers and our sales may decline. Our success depends in part on our ability to anticipate and respond in a timely manner to changing consumer demand, preferences and shopping patterns regarding sporting goods. We must develop and execute merchandising initiatives with marketing programs that...

  • Page 16
    ...risks relating to a brick and mortar retail store model could affect our results. Opening stores in new and existing markets is a critical part of our business strategy. Our plans to increase our number of retail stores will depend in part on the availability of existing retail stores or store sites...

  • Page 17
    ...eCommerce, data protection and privacy; advertisement and marketing; labor and employment; firearms, ammunition, knives, food items or other regulated products; custom or import; and intellectual property. In addition to potential damage to our reputation and brand, failure to comply with applicable...

  • Page 18
    ... of business, including those related to federal or state wage and hour laws, product liability, consumer protection, advertising, employment, intellectual property, tort, privacy or data protection and other matters. We sell hunting rifles, semi-automatic hunting rifles and ammunition, and in some...

  • Page 19
    ... operate a 914,000 square foot distribution center near Atlanta, Georgia, a 725,000 square foot distribution center in Plainfield, Indiana, a 601,000 square foot distribution center in Smithton, Pennsylvania and a 624,000 square foot distribution center in Goodyear, Arizona. Any natural disaster or...

  • Page 20
    ...We cannot provide any guaranty of future dividend payments or that we will continue to repurchase our common stock pursuant to our stock repurchase program. Although our Board of Directors has indicated an intention to pay future quarterly cash dividends on our common stock, any determination to pay...

  • Page 21
    ... Arizona Arkansas California Colorado Connecticut Delaware Florida Georgia Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma...

  • Page 22
    ..., RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES MARKET INFORMATION AND DIVIDEND POLICY The shares of Dick's Sporting Goods, Inc. common stock are listed and traded on the New York Stock Exchange ("NYSE") under the symbol "DKS". The Company also has shares of Class B common...

  • Page 23
    ...as part of the Company's previously announced five-year $1 billion share repurchase program, authorized by the Board of Directors on March 7, 2013. (b) The information set forth under Part III, Item 12. "Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters...

  • Page 24
    ... (8) Number of stores at end of period Net sales per square foot (10) Other Data: Gross profit margin Selling, general and administrative expenses as a percentage of net sales Operating margin Inventory turnover (11) Depreciation and amortization Balance Sheet Data: Inventories, net Working capital...

  • Page 25
    ...new location. The same store sales calculation for fiscal 2012 excluded sales during the 53rd week. Includes Dick's Sporting Goods, Golf Galaxy, Field & Stream and other specialty concept stores. Calculated using net sales and gross square footage of all stores open at both the beginning and the end...

  • Page 26
    ...; buy-online, pick-up in-store; return-to-store and multi-faceted marketing campaigns that are consistent across our stores and our eCommerce websites. On average, approximately 80% of the Company's eCommerce sales are generated within brick and mortar trade areas. The Company's senior management...

  • Page 27
    ... the maturity date to August 12, 2020. Ended the period with no outstanding borrowings under the Credit Agreement. • • • • • The following table summarizes store openings and closings for fiscal 2015 and fiscal 2014: Fiscal 2015 Dick's Sporting Goods 603 41 3 44 647 3 644 2 7 Specialty...

  • Page 28
    ... majority of our markets during the back half of fiscal 2015. The same store sales increase at Dick's Sporting Goods was driven by an increase in sales per transaction of approximately 1.3% and a decrease in transactions of approximately 1.2%. Based upon our fiscal 2015 sales mix, every 1% change in...

  • Page 29
    ... basis points. This increase was primarily driven by higher advertising expenses and planned investments to support the Company's eCommerce initiatives, partially offset by lower incentive compensation expense compared to fiscal 2014. Pre-opening expenses increased to $34.6 million in fiscal 2015...

  • Page 30
    ... million related to the Company's golf restructuring. Fiscal 2013 included a $7.9 million noncash impairment charge to reduce the carrying value of a Gulfstream G450 corporate aircraft held for sale to fair market value. Apart from the enumerated items, the year-over-year change in selling, general...

  • Page 31
    ... primarily relate to the development of our omni-channel platform, including new and existing Dick's Sporting Goods stores and eCommerce technology investments. The Company also plans to invest in its specialty store concepts and continuously improve its supply chain and corporate information...

  • Page 32
    ... self-developed stores opened by the Company in fiscal 2015. Financing Activities Cash used in financing activities consists primarily of the Company's capital return initiatives, including its share repurchase program and cash dividend payments, and cash flows generated from stock option exercises...

  • Page 33
    ... tax benefits as we cannot reasonably estimate the timing of settlement. These payments include interest and penalties. The Company's purchase obligations relate primarily to marketing commitments, including naming rights, licenses for trademarks, corporate aircraft, and technology-related and...

  • Page 34
    ...Company values inventory using the lower of weighted average cost or market method. Market price is generally based on the selling price expectations of the merchandise. The Company regularly reviews inventories to determine if the carrying value of the inventory exceeds market value and the Company...

  • Page 35
    ...on estimated undiscounted future cash flows. Assets are reviewed at the lowest level for which cash flows can be identified, which is the store level. The Company uses an income approach to determine the fair value of individual store locations, which requires discounting projected future cash flows...

  • Page 36
    ... Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's ("SEC") rules and forms, and that it is accumulated and communicated to management, including our principal executive and financial officers, or persons performing...

  • Page 37
    ... of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, management...

  • Page 38
    ... OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Dick's Sporting Goods, Inc. Pittsburgh, Pennsylvania We have audited the internal control over financial reporting of Dick's Sporting Goods, Inc. and subsidiaries (the "Company") as of January 30, 2016...

  • Page 39
    ... Game: The Dick's Sporting Goods Code of Ethics and Business Conduct" (the "Code of Conduct") that applies to all of its employees, including Executive Officers, and the Board of Directors, the complete text of which is available through the Investor Relations section of the Company's website at www...

  • Page 40
    ... relating to equity compensation plans of the Company pursuant to which grants of options, restricted stock, restricted stock units or other rights to acquire shares may be granted from time to time: Equity Compensation Plan Information Number of Securities Remaining Available for Future Issuance...

  • Page 41
    ... be filed hereunder is included on page 64 of this Annual Report on Form 10-K. Other schedules have not been included because they are not applicable or because the information is included elsewhere in this report. (3) Exhibits. The Exhibits listed in the Index to Exhibits, which appears on pages 65...

  • Page 42
    ... FINANCIAL STATEMENTS Page 37 38 39 40 41 42 43 - 61 Report of Independent Registered Public Accounting Firm ...Consolidated Statements of Income for the Fiscal Years Ended January 30, 2016, January 31, 2015 and February 1, 2014 ...Consolidated Statements of Comprehensive Income for the Fiscal...

  • Page 43
    ...ACCOUNTING FIRM To the Board of Directors and Stockholders of Dick's Sporting Goods, Inc. Pittsburgh, Pennsylvania We have audited the accompanying consolidated balance sheets of Dick's Sporting Goods, Inc. and subsidiaries (the "Company") as of January 30, 2016 and January 31, 2015, and the related...

  • Page 44
    DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Amounts in thousands, except per share data) Fiscal Year Ended January 30, 2016 Net sales Cost of goods sold, including occupancy and distribution costs GROSS PROFIT Selling, general and administrative expenses Pre-...

  • Page 45
    DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Dollars in thousands) Fiscal Year Ended January 30, 2016 NET INCOME OTHER COMPREHENSIVE LOSS:...,285 $ (97) (97) 344,101 $ (88) (88) 337,510 $ 330,391 $ January 31, 2015 344,198 $ February 1, 2014 337,598 39

  • Page 46
    DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share and per share data) January 30, 2016 ASSETS CURRENT ASSETS: Cash and cash equivalents Accounts receivable, net Income taxes receivable Inventories, net Prepaid expenses and other current ...

  • Page 47
    ... taxes of $57 Purchase of shares for treasury Cash dividends declared, $0.50 per common share BALANCE, January 31, 2015 Exercise of stock options Restricted stock vested Minimum tax withholding requirements Net income Stock-based compensation Total tax benefit from exercise of stock options Foreign...

  • Page 48
    ...benefit from exercise of stock options Gain on sale of asset Other non-cash items Changes in assets and liabilities: Accounts receivable Inventories Prepaid expenses and other assets Accounts payable Accrued expenses Income taxes payable / receivable Deferred construction allowances Deferred revenue...

  • Page 49
    ... and other specialty concept stores as well as eCommerce websites at www.DICKS.com, www.golfgalaxy.com, www.fieldandstreamshop.com and www.caliastudio.com. Fiscal Year - The Company's fiscal year ends on the Saturday closest to the end of January. Fiscal years 2015, 2014 and 2013 ended on January 30...

  • Page 50
    ... reviewed by management. Intangible Assets - Intangible assets consist primarily of trademarks and acquired trade names with indefinite lives, which are tested for impairment annually or whenever circumstances indicate that a decline in value may have occurred. The Company estimates the fair value...

  • Page 51
    ... and field support payroll and fringe benefits, advertising, bank card charges, information systems, marketing, legal, accounting, other store expenses and all expenses associated with operating the Company's corporate headquarters. Advertising Costs - Production costs of advertising and the costs...

  • Page 52
    DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Segment Information - The Company is a specialty omni-channel retailer that offers a broad range of products in its specialty retail stores primarily in the eastern United States. Given the economic...

  • Page 53
    ...) and the retail inventory method (RIM) to measure inventory at the lower of cost and net realizable value. ASU 2015-11 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2016. Prospective application is required. Early application is permitted as of...

  • Page 54
    ... 31, 2015. During fiscal 2014, the Company recorded a $12.4 million non-cash impairment charge for a trademark and trade name related to the Company's golf restructuring to reduce the carrying value of the respective assets to their estimated fair value. On October 1, 2014, the Company purchased the...

  • Page 55
    ...and other liabilities consist of the following as of the end of the fiscal periods (in thousands): 2015 Current: Deferred gift card revenue Deferred construction allowances Other Total current Long-term: Deferred rent, including pre-opening rent Deferred construction allowances Other Total long-term...

  • Page 56
    DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) 7. Debt The Company's outstanding debt consists of the following as of the end of the fiscal periods (in thousands): 2015 Revolving line of credit Capital leases Other debt Total debt Less: current ...

  • Page 57
    ... for 10 to 15 years and most store leases contain multiple five-year renewal options and rent escalation provisions. The lease agreements provide primarily for the payment of minimum annual rentals, costs of utilities, property taxes, maintenance, common areas and insurance, and in some cases...

  • Page 58
    ... declared and paid cash dividends of $0.55, $0.50 and $0.50 per share of common stock and Class B common stock during fiscal 2015, 2014 and 2013, respectively. Treasury Stock - On March 7, 2013, the Company's Board of Directors authorized a five-year share repurchase program of up to $1 billion...

  • Page 59
    DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) (3) The risk-free interest rate is based on the implied yield available on U.S. Treasury constant maturity interest rates whose term is consistent with the expected life of the stock options. The ...

  • Page 60
    ... end of an applicable vesting period. The awards generally vest on the third anniversary of the date of grant, subject to the employee's continuing employment as of that date. The restricted stock activity from February 2, 2013 through January 30, 2016 is presented in the following table: Weighted...

  • Page 61
    ... periods ended (in thousands): Inventory Employee benefits Deferred rent Stock-based compensation Gift cards Other accrued expenses not currently deductible for tax purposes Capital loss carryforward Non income-based tax reserves Deferred revenue currently taxable Store closing expense Uncertain...

  • Page 62
    ... Income during fiscal 2016. The Company participates in the Internal Revenue Service ("IRS") Compliance Assurance Program ("CAP"). As part of the CAP, tax years are audited on a contemporaneous basis so that all or most issues are resolved prior to the filing of the tax return. The IRS has completed...

  • Page 63
    ... Revenue Code, covers regular status full-time hourly and salaried employees as of their date of hire and part-time regular employees who have worked 1,000 hours or more in a year. Employees must be 21 years of age to participate. Under the terms of the retirement savings plan, the Company may make...

  • Page 64
    ... 2015, 2014 and 2013, respectively. The aggregate amount of future minimum payments at January 30, 2016 is as follows (in thousands): Fiscal Year 2016 2017 2018 2019 2020 Thereafter Total Licenses for Trademarks Within the ordinary course of business, the Company enters into licensing agreements...

  • Page 65
    DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Other The Company also has other non-cancellable contractual commitments, including corporate aircraft and technology-related commitments extending through 2020. The aggregate payments under these ...

  • Page 66
    DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The Company uses quoted prices in active markets to determine the fair value of the aforementioned assets determined to be Level 1 instruments. The Company's policy for recognition of transfers ...

  • Page 67
    ... common stock and Class B common stock payable on March 31, 2016 to stockholders of record as of the close of business on March 11, 2016. On March 16, 2016, our Board of Directors authorized a five-year share repurchase program of up to $1 billion of the Company's common stock. The Company currently...

  • Page 68
    ... 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DICK'S SPORTING GOODS, INC. (Registrant) By: /s/ TERI L. LIST-STOLL Teri L. List-Stoll Executive Vice President - Chief Financial Officer Date: March 25, 2016 Pursuant to the...

  • Page 69
    ... REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Dick's Sporting Goods, Inc. Pittsburgh, Pennsylvania We have audited the consolidated financial statements of Dick's Sporting Goods, Inc. and subsidiaries (the "Company") as of January 30, 2016 and January 31, 2015, and...

  • Page 70
    DICK'S SPORTING GOODS, INC. AND SUBSIDIARIES SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (Dollars in thousands) Balance at Beginning of Period Fiscal 2013 Inventory reserve Allowance for doubtful accounts Reserve for sales returns Allowance for deferred tax assets Fiscal 2014 Inventory reserve ...

  • Page 71
    ... Award entered into between Registrant and various executive officers, directors and employees under Registrant's Amended and Restated 2002 Stock and Incentive Plan Amended and Restated Lease Agreement, originally dated February 4, 1999, for distribution center located in Smithton, Pennsylvania...

  • Page 72
    ... Stock Award Agreement granted under Registrant's Amended and Restated 2002 Stock and Incentive Plan Aircraft Charter Agreement, dated December 19, 2011 between Registrant and Corporate Air, LLC Lease Agreement originally dated June 25, 2007, for distribution center located in East Point, Georgia...

  • Page 73
    ... and made pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the SarbanesOxley Act of 2002 Certification of Teri L. List-Stoll, Executive Vice President - Chief Financial Officer, dated as of March 25, 2016 and made pursuant to Section 1350...

  • Page 74
    ... corporation Chick's Sporting Goods, LLC, a California limited liability company Blue Sombrero, LLC, a Georgia limited liability company DSG Finance, LLC, a Delaware limited liability company DCSG Ventures, LLC, a Delaware limited liability company Dick's Merchandising & Supply Chain, Inc., an Ohio...

  • Page 75
    ... the effectiveness of Dick's Sporting Goods, Inc. and subsidiaries' internal control over financial reporting, appearing in this Annual Report on Form 10-K of Dick's Sporting Goods, Inc. and subsidiaries for the year ended January 30, 2016. /s/ Deloitte & Touche LLP Pittsburgh, Pennsylvania March 25...

  • Page 76
    ... Stack, certify that: 1. 2. I have reviewed this Annual Report on Form 10-K of Dick's Sporting Goods, Inc. (the "registrant"); Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light...

  • Page 77
    ...-Stoll, certify that: 1. 2. I have reviewed this Annual Report on Form 10-K of Dick's Sporting Goods, Inc. (the "registrant"); Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light...

  • Page 78
    ... connection with the Annual Report on Form 10-K of Dick's Sporting Goods, Inc. (the "Company") for the period ended January 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Edward W. Stack, Chief Executive Officer of the Company, certify, pursuant...

  • Page 79
    ... with the Annual Report on Form 10-K of Dick's Sporting Goods, Inc. (the "Company") for the period ended January 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Teri L. List-Stoll, Chief Financial Officer of the Company, certify, pursuant...

  • Page 80
    [THIS PAGE INTENTIONALLY LEFT BLANK]

  • Page 81
    ... on January 28, 2011 in the Company's common stock, the S&P 500 and the S&P Specialty Retail Index and that all dividends were reinvested. DKS S&P 500 S&P Specialty.../31/14 DATE OF CLOSING PRICE The stock performance graph is not necessarily indicative of future performance. 10/30/15 1/29/16

  • Page 82
    ... AND STOCKHOLDER INFORMATION Corporate Office 345 Court Street Coraopolis, PA 15108 724-273-3400 DICK'S Sporting Goods Website www.DICKS.com Transfer Agent and Registrar American Stock Transfer & Trust Company 59 Maiden Lane New York, NY 10038 Independent Registered Public Accounting Firm Deloitte...

  • Page 83
    ... Chief Marketing Officer Michele B. Willoughby Executive Vice President - eCommerce and Supply Chain John E. Hayes III Senior Vice President - General Counsel and Secretary Joseph R. Oliver Senior Vice President - Chief Accounting Officer Deborah M. Victorelli Senior Vice President - Human Resources

  • Page 84
    DICK'S Sporting Goods, Inc. 345 Court Street Coraopolis, PA 15108