Dick's Sporting Goods 2012 Annual Report Download - page 51

29
are recorded. Revenue from gift cards and returned merchandise credits (collectively the ‘‘cards’’)
are deferred and recognized upon the redemption of the cards. These cards have no expiration
date. Income from unredeemed cards is recognized on the Consolidated Statements of Income
within selling, general and administrative expenses at the point at which redemption becomes
remote. The Company performs an evaluation of the aging of the unredeemed cards, based on the
elapsed time from the date of original issuance, to determine when redemption becomes remote.
(2) Cost of goods sold includes the cost of merchandise, inventory shrinkage and obsolescence, freight,
distribution and store occupancy costs. Store occupancy costs include rent, common area
maintenance charges, real estate and other asset-based taxes, store maintenance, utilities,
depreciation, fixture lease expenses and certain insurance expenses.
(3) Selling, general and administrative expenses include store 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.
(4) Pre-opening expenses consist primarily of rent, marketing, payroll and recruiting costs incurred
prior to a new or relocated store opening which are expensed as incurred.
(5) Impairment of available-for-sale investments reflects the Company’s impairment of its investment
in JJB Sports.
(6) Gain on sale of investment resulted from the sale of the Company’s available-for-sale securities in
GSI Commerce, Inc.
(7) Interest expense primarily includes rent payments under the Company’s financing lease obligation
for its corporate headquarters building, which the Company purchased on May 7, 2012.
(8) Results primarily from gains and losses associated with changes in deferred compensation plan
investment values and interest income earned on highly liquid instruments purchased with a
maturity of three months or less at the date of purchase.
Fiscal 2012 (53 weeks) Compared to Fiscal 2011 (52 weeks)
Net Income
The Company reported net income for the year ended February 2, 2013 of $290.7 million, or $2.31 per
diluted share, as compared to net income of $263.9 million, or $2.10 per diluted share, in fiscal 2011.
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. Additionally, fiscal 2012 included
approximately $0.03 per diluted share for the 53rd week. 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
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. The 4.3% consolidated same store sales
increase consisted of a 2.4% increase at Dick’s Sporting Goods stores, a 5.5% increase at Golf Galaxy
and a 48.5% increase in the Company’s eCommerce business. The inclusion of the eCommerce
business resulted in an increase of approximately 166 basis points to the Company’s consolidated same
store sales calculation for fiscal 2012.
The increase in consolidated same store sales was broad based, with larger increases in athletic apparel,
hunting, athletic footwear, golf, accessories and team sports, partially offset by a sales decrease in
outerwear and cold weather accessories due to a second consecutive warm winter season and a decline