Dick's Sporting Goods 2004 Annual Report Download - page 6

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realize an increase in our earnings per share of more
than 25 percent in 2005.1This increase will be driven by
a combination of factors, including greater efficiencies,
better procurement costs, fewer markdowns due to
tighter inventory control, and increased private-label
sales at higher margins in the converted Galyan’s
stores, as well as continued organic growth.
In addition to the growth we generated through the
acquisition, we continued to grow organically, opening
29 new locations during the year. These stores enabled
us to penetrate nine new markets and to “fill in”
markets where we already had a presence. We ended
fiscal 2004 with a total of 234 stores in 33 states.
Planning Ahead
Dick’s success has always been predicated on planning
ahead of our needs. In 2004, as we concentrated on
pursuing our growth, we also took steps to support our
increasing requirements and allow for future expansion.
For example:
We expanded our existing distribution center in
Smithton, Pennsylvania by more than 50 percent,
providing us with the capacity required to meet
the demands of our growing store base.
We introduced a highly scalable new merchandising
system that will enable us to manage our current
and long-term needs with greater effectiveness.
We implemented a new inventory allocation system
that will help us to speed merchandise to our selling
floors and maintain our track record of industry-
leading inventory turn and solid in-stock levels.
We moved into a new corporate headquarters
building, thereby centralizing our workforce and
providing us with the space necessary to expand.
Executing Our Strategy
Dick’s is founded on a great store concept – one that
combines the best elements of a small, specialty store
with those of a large-format retailer. We’ve created
this concept by concentrating exclusively on authentic
sporting goods, fitness and outdoor categories, as well
as by maintaining a commitment to selling authentic
merchandise. The concept of authenticity is crucial to
our strategy, since it distinguishes our product assort-
ment from mass merchants and helps reduce the
volatility of our business. We uphold our commitment to
authenticity by carrying performance-oriented products
from leading national brands, such as Nike and Under
Armour, as well as by offering high-quality merchandise
under a number of exclusive private-label brands. Our
private-label program creates a point of differentiation
for Dick’s, while also helping us to deliver customer
satisfaction, with increased margins. We extend our
commitment to authenticity beyond our merchandise by
offering product testing areas, providing equipment
maintenance and repair services, and staffing our
stores with sales associates who are themselves sports
enthusiasts. We enhance the value of our store concept
by maintaining a steady in-stock position and promot-
ing a strong service culture that makes shopping in our
stores easy and convenient.
Together, these strategies have made Dick’s Sporting
Goods the clear leader in the sporting goods retailing
sector. We enter 2005 excited about our future and
anxious to serve our customers and provide you, our
valued shareholders, with the consistent performance
you have come to expect.
Edward W. Stack
Chairman and CEO
During the year, we drove continuous
improvement in many areas of our business.
This discipline enabled us to fuel organic
growth, complete a significant acquisition
and lay the foundation for future expansion.
shareholder letter, continued…
DISCIPLINED
strategy
1Results exclude merger integration and store closing costs, gain on sale of investment, and loss on write-down of non-cash investment.