Dick's Sporting Goods 2012 Annual Report Download - page 52

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in sales of large fitness equipment, like treadmills and ellipticals. The same store sales increase at
Dick’s stores was driven by an increase in sales per transaction of approximately 3.3%, offset by a
decrease in transactions of approximately 0.9% at Dick’s stores. Every 1% change in consolidated same
store sales would have impacted fiscal 2012 earnings before income taxes by approximately $17 million.
Store Count
During 2012, we opened 38 new Dick’s stores, relocated five Dick’s stores and repositioned one Golf
Galaxy store, resulting in an ending store count of 599 stores with approximately 29.6 million square
feet in 44 states.
Income from Operations
Income from operations increased $91.7 million to $523.7 million in fiscal 2012 from $432.0 million in
fiscal 2011.
Gross profit increased 15% to $1,837.2 million in fiscal 2012 from $1,594.9 million in fiscal 2011. As a
percentage of net sales, gross profit increased to 31.48% in fiscal 2012 from 30.60% in fiscal 2011. The
88 basis point increase is due primarily to a 58 basis point decrease in fixed occupancy costs resulting
primarily from the leverage on the increase in sales compared to last year, including 13 basis points due
to the inclusion of sales from the 53rd week and merchandise margin expansion of 40 basis points that
resulted from our continued inventory management efforts. Every 10 basis point change in merchandise
margin would have impacted fiscal 2012 earnings before income taxes by approximately $6 million.
Selling, general and administrative expenses increased 13% to $1,297.4 million in fiscal 2012 from
$1,148.3 million in fiscal 2011, representing a 20 basis point increase as a percentage of net sales.
Administrative expenses increased 54 basis points as a percentage of net sales as a result of payroll
increases relative to sales, charitable contributions made this fiscal year and last year’s partial reversal
of previously accrued litigation settlement costs. Higher administrative expenses were substantially
offset by a 16 basis point reduction in both store payroll expenses and advertising expenses from fiscal
2011 due to leverage on the increase in net sales this year.
Pre-opening expenses increased $1.5 million to $16.1 million in fiscal 2012 from $14.6 million in fiscal
2011. Pre-opening expenses were for the opening of 38 new Dick’s stores as well as the relocation of
five Dick’s stores and the repositioning of one Golf Galaxy store in fiscal 2012 compared to the
opening of 36 new Dick’s stores as well as the relocation of one Golf Galaxy store in fiscal 2011.
Pre-opening expenses in any year fluctuate depending on the timing and number of store openings and
relocations.
Gain on Sale of Investment
Gain on sale of investment was $13.9 million in fiscal 2011 resulting from the sale of the Company’s
remaining investment in GSI Commerce, Inc., the Company’s eCommerce service provider.
Impairment of Available-for-Sale Investments
Impairment of available-for-sale investments was $32.4 million in fiscal 2012 resulting from the full
impairment of the Company’s investment in JJB Sports, as further described in Note 15 to the
Consolidated Financial Statements.
Interest Expense
Interest expense totaled $6.0 million for fiscal 2012 compared to $13.9 million for fiscal 2011. Interest
expense included rent payments under the Company’s financing lease for its corporate headquarters
building for fiscal 2012 and fiscal 2011 of $2.9 million and $10.6 million, respectively. The decrease in
interest expense reflected the Company’s purchase of its corporate headquarters building on