Dick's Sporting Goods 2012 Annual Report Download - page 49

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27
In order to monitor the Company’s success, the Company’s senior management monitors certain key
performance indicators, including:
Consolidated same store sales performance – Fiscal 2012 consolidated same store sales increased
4.3% compared to a 2.0% increase in fiscal 2011. The Company believes that its ability to
consistently deliver increases in consolidated same store sales will be a key factor in achieving its
targeted levels of earnings per share growth and continuing its store expansion and omni-channel
development programs.
Operating cash flow – The Company generated $438.3 million of cash flow from operations in
fiscal 2012 compared to $410.4 million in fiscal 2011. See the ‘‘Liquidity and Capital Resources’’
section herein for further discussion of the Company’s cash flows. The Company believes that a
key strength of its business has been the ability to consistently generate positive cash flow from
operations. Strong cash flow generation is critical to the future success of the Company, not only
to support the general operating needs of the Company, but also to fund capital expenditures
related to its store network, distribution and administrative facilities, costs associated with
continued improvement of information technology tools, costs associated with potential strategic
acquisitions that may arise from time to time and stockholder return initiatives, including cash
dividends and share repurchases.
Quality of merchandise offerings – To monitor and maintain acceptance of its merchandise
offerings, the Company monitors sell-throughs, inventory turns, gross margins and markdown rates
on a department and style level. This analysis helps the Company manage inventory levels to
reduce cash flow requirements and deliver optimal gross margins by improving merchandise flow
and establishing appropriate price points to minimize markdowns.
Store productivity – To assess store-level performance, the Company monitors various indicators,
including new store productivity, sales per square foot, store operating contribution margin and
store cash flow. New store productivity compares the sales increase for all stores not included in
the same store sales calculation with the increase in square footage.
Executive Summary
Net income for the 53 weeks ended February 2, 2013 increased 10% to $290.7 million, or $2.31 per
diluted share, as compared to net income of $263.9 million, or $2.10 per diluted share, during the
52 weeks ended January 28, 2012.
Fiscal 2012 net income included a charge of $27.6 million, net of tax, or $0.22 per diluted
share related to the Company’s impairment of its investment in JJB Sports plc (‘‘JJB
Sports’’).
Fiscal 2011 net income included a gain on sale of investment of $8.7 million, net of tax,
or $0.07 per diluted share and an increase to net income of $1.3 million, net of tax, or
$0.01 per diluted share, resulting from a partial reversal of litigation settlement costs
previously accrued during fiscal 2010.
Net sales increased 12% to $5,836.1 million in fiscal 2012 from $5,211.8 million in fiscal 2011 due
primarily to a 4.3% increase in consolidated same store sales on a 52-week to 52-week basis,
growth of our store network and the inclusion of the 53rd week of sales.
Gross profit increased to 31.48% in fiscal 2012 as a percentage of net sales from 30.60% in fiscal
2011 due primarily to leverage of fixed occupancy costs and higher merchandise margins.
In fiscal 2012, the Company:
Declared aggregate cash dividends of $2.50 per share, including a special cash dividend in
the amount of $2.00 per share.
Augmented its private brand portfolio through the acquisition of the Top-Flite brand. The
Company acquired all Top-Flite trademarks and service marks world-wide.