The Henry Fund
Henry B. Tippie School of Management
Adam Walter [adam-walter@uiowa.edu]
September 19, 2014
DICK’s Sporting Goods (DKS)
Investment Thesis
With 642 stores across the U.S., DKS is well-positioned for store growth by
expanding in both new and underpenetrated markets. Although recent
headwinds have depressed comparable store sales growth and merchandise
margins, DKS’ diverse product mix and multi-channel initiatives will continue
to drive revenue growth as the company reallocates square footage away
from underperforming segments to higher growth areas, including women’s,
youth, and team sports apparel. We believe DKS provides a solid return
opportunity with 15.4% upside based on our DCF price of $52.18 and issue a
BUY recommendation.
Drivers of Thesis
 Store base provides growth opportunities over the next three years, with
our square footage growth estimated at 8.7%, 10.8%, and 4.9% from
2014-2016 to achieve management’s stated goal of 815 stores by 2017
 Through branded and private brands, DKS provides exclusive products to
customers across a “good, better, best” product offering
 Opportunities for continued sales growth and margin expansion through
omni-channel initiatives, as evidenced by 65% online sales growth in 2013
and a 50% 4-year CAGR
Risks to Thesis
 Ability to drive sales and store productivity as approximately 1,000 square
feet/store (SFPS) is allocated from underperforming segments in golf and
fitness to women’s, youth, and team sports
 Merchandise margin risk as DKS shifts a greater percentage of sales from
hardline (golf equipment) to softline (apparel) categories as a highly
promotional retail environment persists
 In 2013, Nike (18%) and Under Armour (11%) represented approximately
33% of DKS total merchandise purchases, as a result any adverse impact
on these vendors may negatively impact DKS sales growth
Target Price
DCF/EP
DDM
Relative P/E
Price Data
Current Price
52wk Range
Consensus 1yr Target
Key Statistics
Market Cap (B)
Shares Outstanding (M)
Institutional Ownership
Five Year Beta
One Year Beta
Dividend Yield
Price/Earnings (TTM)
Price/Earnings (NTM)
Price/Sales (TTM)
Price/Book (TTM)
Profitability
Profit Margin
Operating Margin
Return on Assets (TTM)
Return on Equity (TTM)
DKS
2012
$2.39
9.13%
2013
$2.75
15.06%
2014E
$2.90
5.45%
2015E
$3.48
20.00%
2016E
$3.82
9.77%
12 Month Performance
DKS
20%
$45.22
$41.30 – $58.87
$50.82
$5.5
121.2
91.5%
1.15
1.10
1.1%
19.5
16.2
1.1
3.9
31.25%
8.64%
11.33%
20.59%
Industry
30
29.5
25
20
19.5
18.8
20.6
10
Earnings Estimates
2011
$2.19
40.12%
$49-$54
$52.18
$51.07
$40.98
35
15
Year
EPS
Growth
BUY
Stock Rating
Consumer Discretionary – Specialty Retail
8.9
5
8.7
0
P/E
ROE
EV/EBITDA
Company Description
S&P 500
DKS is the largest full-line sporting goods
retailer in the U.S. with 642 stores in 46
states. With an extensive assortment of
branded and private brands, DKS
differentiates itself from competitors
through in-store services and shop-in-shop
designs dedicated to team sports, athletic
apparel, golf, outdoor, fitness, and footwear
product categories.
10%
0%
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-30%
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F
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Important disclosures appear on the last page of this report.
EXECUTIVE SUMMARY
Operating in a highly competitive and fragmented
industry, DKS has employed strategic growth initiatives to
capture approximately 15.7% of the U.S. sporting goods
market.1 This growth has been achieved through a
differentiated shop-in-shop strategy featuring brands
such as The North Face, Under Armour, and Nike. This
merchandising model not only provides DKS customers
with exclusive product offerings, but also unrivaled
selection in breadth and depth.
In comparison to many big box retailers, DKS has yet to
reach its store saturation point and has a runway for
square footage growth before it hits its estimated
saturation point of 1,100 stores. As of fiscal year (FY)
2013 DKS operated a total of 642 stores across 46 states,
of which 558 (87%) are DICK’s branded, 79 (12%) are Golf
Galaxy branded, 2 are Field & Stream branded, and 3
True Runner branded. To continue to drive square
footage growth DKS is focusing on the build out of its
DICK’s branded stores in both new and underpenetrated
markets, while also aggressively pursuing a specialized
outdoor concept in its Field & Stream stores. This new
store format allows DKS to connect with dedicated
athletes and outdoor enthusiasts that are not specifically
targeted in a traditional DICK’s Sporting Goods store.
Through continued store growth, a niche focus, and the
ongoing development of omni-channel strategies, DKS
experienced 6.5% top line revenue growth in (FY) 2013
while achieving high single-digit operating margins of
8.6% driven by comparable (comp) and new store sales of
2.1% and 4.4%, respectively.4
COMPANY DESCRIPTION
Founded in 1948 with headquarters in Pittsburgh, PA,
DKS has grown through its specialty store concept and
strategic vendor partnerships. As the leading U.S.
sporting goods retailer with a broad range of products,
DKS has four reportable business segments: hardlines,
apparel, footwear, and other, which represent 49%, 30%,
20%, and 1% of total revenue, respectively.
Figure 2: DKS Sales by Product Category (2013)
Figure 1: DKS Sales by Store Brand (2013)
Source: DKS 2013 10-K
Product Overview
Source: DKS 2013 10-K
In addition to its store growth strategy, DKS has remained
committed to developing its technology infrastructure to
increase e-commerce sales penetration and offer an
integrated shopping experience for its customers. This
experience, often referred to as “omni-channel”, include
initiatives such as: more diverse online product
assortments; vendor direct fulfillment; ship-from-store
capability; buy on-line, pick-up in-store pilot program;
and desktop and mobile application enhancements.10
The hardlines segment includes items such as sporting
goods equipment, fitness equipment, golf equipment,
and hunting and fishing gear. Historically, hardline sales
have represented approximately 49%-51% of total sales;
however, with the recent secular declines in golf
participation rates and number of rounds played, as well
as DKS square footage reallocation from this particular
product category, we believe this category will represent
45%-46% of sales over the forecast horizon. The apparel
segment includes apparel items encompassing clothing
and accessories across all sport niches. Additionally,
apparel sales have represented 29%-30% of total sales;
however, for the reasons previously discussed we believe
this segment will represent 32%-33% of sales over our
forecast. Footwear has represented 20% of total sales,
but due to continued technology advancements in this
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category and continued shift in demand for highperformance athletic footwear, we believe this category
will ultimately represent 22%-23% of sales. Last, the
other category represents non-merchandise sales,
including in-store services and shipping revenues. We
believe this category will remain around 1%-2% of total
sales as it has historically and DKS will leverage these
services to build customer loyalty and differentiate
themselves from competitors.
Figure 4: Branded Shop Growth (2011 – 2013)
Figure 3: Product Category as % of Total (2009 – 2013)
Source: DKS 2013 10-K
Existing Store Base
Source: DKS 2009-2013 10-K
DKS’ store base is largely concentrated in the Eastern
U.S., with 26% of total stores in both the Northeast and
Southeast, as seen in the figure below. Furthermore, the
Northwest, Southwest, and South Central regions
compose a combined 21% of the total store base.
Brand Strategies
Figure 5: Consolidated Store Base (2013)
To ensure an optimal breadth and depth of product
assortment, DKS offers both branded and private brands.
Branded partnerships include well-known labels such as
Adidas, Columbia, Nike, The North Face, Under Armour,
and Remington. Additionally, DKS is able to leverage
these relationships for marketing initiatives and utilize
the athletes associated with the brands for relevant
marketing campaigns. Alternatively, DKS private brands
include names such as Fitness Gear, DBX, Field & Stream,
Maxfli, Top-Flite, and Nishiki. These private labels allow
DKS to offer customers products on an exclusive basis
and generally provide higher gross margins than those
obtained through branded products.4 The figure below
provides a historical view of branded shop growth within
DICK’s Sporting Goods store base over the last three
years. Notably, both Under Armour and Nike branded
shops have seen tremendous unit growth rates of 122%
and 67% in the most recent FY, each representing 39%
and 47% of total branded shops.
= Distribution Center
Source: DKS 2013 10-K
This proves beneficial as DKS’ management team has
expressed the opportunity to expand in both new and
underpenetrated markets to achieve their long-term
target of 1,100 stores. In comparison to other big box
retailers, there are 100 less DKS branded stores than the
next largest competitor, Ulta, as seen in Figure 6.
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traded or 8.5 times its three month average daily volume,
which led to an 18% decline in the stock price as of the
close on May 20, 2014.
Figure 6: U.S. Store Count Comparisons by Company
Performance of Golf & Hunting
Source: GS Global Retailing Conference
Furthermore, an average of 58 net store openings over
the next three years is required to achieve management’s
stated incremental goal of 815 total stores by the end of
FY 2017, which represents a 27% 3-year CAGR. The
average number of net store openings over the last ten
years is approximately 44 stores, further emphasizing
DKS’ realistic yet aggressive growth plan over the next
five years.
Figure 7: Store Unit Growth Outlook
Source: DKS 2005-2013 10-K & Henry Fund Analyst Forecasts
RECENT DEVELOPMENTS
DKS has a strong track record of being shareholder
friendly, with virtually no debt, competitive dividend
yield, strong operating cash flow, and a robust share
repurchase program; however, recent headwinds facing
the golf and hunting divisions were announced in their
Q1 2014 earnings call leading to downward revisions in FY
2014 EPS guidance from $3.03-$3.08 to $2.70-$2.85.
Additionally, annual comp store sales were revised down
from an estimated range of 3%-4% to 1%-3%.14 These
downward revisions and secular nature of the issues in
golf led to a significant sell-off with over 15 million shares
As announced on the Q1 earnings call, golf and hunting
sales negatively surprised naturally causing wide spread
pessimism. Specifically, golf missed sales estimates by
$34 million, while hunting missed by $15 million.
Together these businesses generate approximately 30%
of DKS total sales.14 Due to the secular nature of the
decline in golf and its impact on sales, DKS announced
initiatives to reallocate approximately 1,000 square feet
from golf to higher growth product categories such as
women’s and youth apparel and team sports. DKS
management guided for continued operating margin
pressure throughout the second half of the year as they
enter a period of heightened promotional activity to
move inventory, especially during Q2 as golf represents a
larger portion of quarterly sales due to the summer
season and key holiday’s such as Father’s Day. During the
Q2 earnings call, DKS announced further cost reduction
programs to realign the business more closely with
expected golf demand. These programs included an
elimination of golf positions in DICK’s stores held by PGA
and LPGA professionals, as well as consolidation of golfrelated corporate operations, which merges the
procurement and back office function of DICK’s and Golf
Galaxy into a single operation.15
The hunting business’ primary shortfall was temporary in
nature and due to tough comparison as Q1 2012 saw a
sales spike due to speculation about government
regulation of firearms due to the Sandy Hook Elementary
tragedy. Management reiterated that the performance of
hunting was a short-term trend and that tough
comparisons should subside in Q3 2014. Although
margins will face pressure over the remainder of this
fiscal year, we believe DKS management has aggressively
made changes to maximize store productivity and further
align their in-store merchandise with higher growth areas
previously mentioned.
Comparable Store Sales Growth Trends
Over the last four years, DKS has enjoyed consistent midto-lower single digit comp store sales growth due to its
differentiated business strategy and high-quality
merchandise. In an industry with average new store
productivity between 50%-70%, DKS opens new stores
that are highly productive, as evidenced by new store
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productivity rates regularly exceeding 90%. Given the
difficulties facing a few key operating segments
previously discussed, we believe comp store sales will
come under pressure in 2014, with an estimated 2%
growth rate, which is at the midpoint of management’s
guidance of 1%-3%. Comp growth should return to more
consistent levels over the next five years between 2.0%3.5%, as omni-channel initiatives and space reallocation
drives traffic and attachment purchases.
Figure 8: Annual Comp Store Sales Growth
New Store Format
According to the U.S. Census and the Outdoor Industry
Association, in 2013 the U.S. outdoor equipment market defined as camping, watersports, hunting, fishing, and
trail sports – excluding special equipment, such as
motorized vehicles, is estimated at $47 billion – up from
$34 billion in 2011 with annual market sales growing at a
5% CAGR from 2006-2011.10 Similar to the U.S. sporting
goods market, the outdoor equipment market is also
quite fragmented as the top five companies, represented
by Cabela’s, Bass Pro, Gander Mountain, DICK’s Sporting
Goods, and Wal-Mart account for one-third of the total
market, while smaller chains and mom-and-pop shops
compose the remainder.
Figure 10: Outdoor Equipment Market Share & Growth
Source: DKS 2008-2013 10-K & Henry Fund Analyst Forecasts
Looking at quarterly trends, DKS is one of the few
retailers approaching difficult comps in the second half of
the year and into 2015. Q4 2014 will be particularly
difficult as colder than normal winter in 2013 drove
seasonal sales, which is represented by 7.3% comp
growth. Despite this challenge, we believe DKS will be
able to turn the corner on golf and hunting and achieve
low single digit comps over the next three years. A
catalyst for higher growth would be the performance of
the three Field & Stream stores.
Figure 9: Quarterly Comp Store Sales Comparison
Source: DKS 2010-2013 10-K & Henry Fund Analyst Forecasts
Source: GS Global Retailing Conference
To take advantage of this market opportunity, DKS
opened its first specialized outdoor concept store, Field &
Stream, in fiscal 2012. The following year DKS opened
two additional stores based on the positive results and
strong customer demand in this category. Field & Stream
features strong brand selection and a compelling product
offering for outdoor enthusiasts. With the three stores
having been open for 53, 40, and 24 weeks, DKS has not
formally reported any performance metrics. However,
DKS management has outlined that these stores have a
lower margin product mix, but that they have room for
improvement and intend to integrate many of the same
technology initiatives similar to what they are rolling out
in DICK’s stores to provide margin expansion and improve
store productivity.15 Management also stated that they
would not release any formal numbers until a few stores
have been open at least 18 – 24 months, as a result
metrics will likely not be disclosed until late spring 2015.
A few of the more recognizable brands offered through
Field & Stream are highlighted below.
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$1 billion in sales by FY 2018 and a 5-year CAGR of 21%,
as outlined in the figure below.
Figure 11: Select Field & Stream Brands
Figure 13: eCommerce Sales Growth & Penetration Rates
Source: GS Global Retailing Conference
Source: GS Global Retailing Conference & Henry Fund Analyst Estimates
eCommerce
As of FY 2013, DKS had an e-commerce penetration rate
of 8% of total sales, up from 5% the previous year. DKS
has captured much of the low hanging fruit as the
company has rolled out versions of its desktop, tablet,
and mobile applications over the last four years, as
evidenced by a 4-year CAGR of 50%, well over estimated
sporting goods online sales of the top 500 competitors of
21%.10
Figure 12: eCommerce Merchandise Sales
INDUSTRY TRENDS
A highly fragmented industry, over 20,000 companies
participate in the U.S. retail sporting goods industry with
only 140 having more than five stores.10 In 2013, U.S.
sporting goods industry revenue totaled $42.7 billion, up
3% from $41.5 billion in 2012. Total revenue increased
despite a marginal increase in sports participation rate of
0.1% in 2013. With more consumers purchasing highquality sporting goods over the next five years, industry
revenue is forecast to grow at an annualized rate of 1.9%
to $47.8 billion by 2019, including a 2.3% increase in
2015.1
With growth muted in the low single digits, it is essential
for sporting goods retailers to differentiate themselves
through technology integration, exclusive contracts with
vendors, and a combination of private and branded
apparel and equipment product lines.
Omni-Channel Initiatives
Source: GS Global Retailing Conference
This equates to year-over-year growth rates from 20112013 of 35%, 51%, and 65%, respectively. Based on
company guidance and proposed e-commerce initiatives,
we forecast online sales growth rates to slow in 2014 to
19%, which represents a penetration rate of 8.5%. Over
our forecast horizon we estimate online penetrates rates
to increase to 11% in the out years due to the shift away
from sports equipment to apparel, as customers are
typically more comfortable purchasing clothing online
versus specialty sports equipment. This increase to
double digit penetration rates represents approximately
It is evident that the traditional retail business model is
rapidly changing and for retailers with physical locations
it is critical to develop a fully integrated, seamless
experience for customers to interact with a retailer,
whether it be in-store or online (mobile/tablet/desktop).
This convergence of retail and technology is not only
important to remain relevant to consumers, but to also
maximize sales growth. According to Forrester Research,
for every $1 that consumers spend online, they will spend
nearly $5 in physical stores; as a result retailers
nationwide are elevating or reallocating capital
expenditure budgets to build-out their IT infrastructure in
order to capture this evolving trend. These omni-channel
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initiatives include, but are not limited to: more diverse
product assortment online; vendor direct fulfillment;
ship-from-store capabilities; buy on-line, pick-up in-store
programs; return-to-store capability for online orders;
ability to place online orders in-store in the event of
inventory depletion; and ongoing desktop and mobile
application enhancements. Fortunately, DKS has
embraced this change and has, or is in the process of
implementing all of the strategies previously listed.
Additionally, DKS has outlined a three-phased approach
to ongoing innovation in this category as outlined in the
table below.
Figure 14: DKS Omni-Channel Strategies
Figure 15: Sports Participation Rates
Source: IBIS World and BLS Data
As mentioned, an older age group is helping evolve
participation by sport. Based on figure below, there has
been a shift away from team sports to higher
participation rates in individual sports or personal fitness,
such as yoga, pilates, and running/jogging. DKS has taken
notice of this trend as is allocating more square footage
and shop-in-shop displays to provide a more compelling
merchandise mix for active adults and youth in these
sports categories.
Source: GS Global Retailing Conference
Figure 16: Participation Rate by Sport
Further, DKS has recently launched an optimized tablet
site and new mobile app to continue to engage
customers, which is available for free download on both
iOS and Android operating systems.
Sports Participation Rates
Sports participation, the percentage of people who
participate in sports, exercise, or recreation each day, has
grown slightly over the past five years at 0.1% to 18.7% in
2013. As the unemployment rate is forecast to continue
to decline, people will have less time to allocate to leisure
or exercise. This alone would cause a slight decline in
participation; however, with an aging population and
growth in retirees, participation rates are projected to
expand at a slightly faster rate over the next five years at
0.5%, growing from 18.7% in 2013 to 19.3% in 2019.1
Source: UBS Broker Research Report
Retail Sales Trends
According to the U.S. Census Bureau, August Advance
Monthly Sales for Retail and Food Services (seasonally
adjusted) was $444.4 billion, up 0.6% from July and 5.0%
from August 2013. Looking further into this number, sales
of sporting goods, hobby, book & music stores increased
0.9% month-to-month and 4.2% year-over-year.
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Figure 17: Retail Sales (All Items) & Sports/Hobby/Music –
Month-Over-Month % Change
Figure 18: Full-Line Market Share Leaders (2013)
Source: U.S Census Bureau
Source: IBIS World
Following a difficult Q4 in 2013 and Q1 in 2014 due to
extremely cold winter weather, retail sales have
rebounded nicely, although at the expense of
merchandise margin as retailers have been significantly
discounting seasonal items to push through inventory
built-up over the winter. Although month-over-month
growth has stayed under 1%, it remains a positive
indicator for sporting goods retailers and is a leading
indicator for improving consumer confidence, albeit at a
moderate pace.12
Looking at a broader view of the sporting goods retail
landscape, the chart below shows an aggregate of the top
ten sporting goods retailers by 2013 sales volume (in
billions) which includes outdoor sports stores.
Interestingly, five of the ten companies are privately held,
including Academy Limited (ACA), Bass Pro, TSA, REI, and
Gander Mountain (GNDR MTN).
Figure 19: Diversified Sporting Goods Retailers by Sales
Market Leaders
The top four players in the industry comprise
approximately 40% of total market share, led by DICK’s
Sporting Goods (DICK’s), Foot Locker (FL), The Sports
Authority (TSA), and Recreational Equipment Inc. (REI).
This significant share capture among industry leaders
creates cost pressures on smaller, independent retailers
that do not have the ability to invest as heavily in
technology to increase customer touch points in and
away from the store.
With the acquisition of Golf Galaxy in 2006, DKS
diversified its business to include the sale of golf services
(fitting, resizing) and equipment adding an additional 64
stores to their existing store portfolio. This acquisition,
combined with consistent store growth within the DICK’s
format over the last eight years has allowed DKS to
emerge as the industry leader with 15.7% market share.1
With continued store growth and new store formats, DKS
is well-positioned to continue to capture share as they
expand in new and underpenetrated markets.
Source: GS Global Retailing Conference
MARKETS AND COMPETITION
Competition is fierce within the industry as major players
seek to consolidate or expand store bases, while also
pursuing the latest technology to ensure they continue to
meet evolving customer expectations and provide
“access anywhere” to purchase goods and services. The
firms outlined below are well positioned to leverage
industry growth over the next five years and pose the
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biggest threat to DKS’s continued growth in market share
and geographic expansion plans.
Hibbett Sports, Inc.
Founded in 1945 and headquartered in Birmingham, AL,
Hibbett Sports (HIBB) operates sporting goods stores in
small and mid-sized markets with an emphasis in the
Southeast, Southwest, Mid-Atlantic and Midwest. As of
the most recent FY HIBB operated 927 stores in 31 states
offering product mix composed of footwear, apparel, and
equipment, which represent 45%, 32%, and 23% of total
sales. HIBB’s merchandise assortment emphasizes team
sports and is customized to localize apparel and
accessories to appeal to customers within each individual
market. With a market cap of $1.1 B and 5-year sales
CAGR of 8.6%, HIBB had sales revenue of $852 million in
the most recent FY end. HIBB also has close ties with
many vendors, including Nike, which represents 52.3% of
total purchases in 2013. This high inventory purchase
concentration has proved beneficial as Nike has
continued to innovate and provide high-quality products;
however, this could be a potential risk if consumer
preferences change or an adverse event impacts Nike’s
operations.9
Cabela’s Incorporated
Cabela’s Incorporated (CAB) was founded in 1961 and is a
retailer and direct marketer of hunting, fishing, camping,
and related outdoor merchandise. Specifically, hunting
equipment, general outdoors, and clothing and footwear
represent 48%, 27.5%, and 24.5% of total sales. Products
are also offered through various sales channels, including:
retail stores, the internet, and regular and special catalog
mailings. CAB operates through three reportable
segments: retail, direct, and financial services. Within the
retail segment CAB sells outdoor merchandise through its
50 retail stores (4 in Canada), which represents 90% of
total revenue combined from retail and direct sales.
Additionally, CAB operates a large store format, with
150,000 square feet or larger, that offer a tourist-type
experience. Due to the large store format CAB has seen a
constant increase in long-term debt obligations, with over
$2.5 billion outstanding. Moreover, CAB has had an
increasing capitalization ratio over the last seven years,
increasing from 28.4 to 70.8, which could be a cause for
concern as they are highly levered.
The financial services segment, which represents the
remainder of CAB’s sales revenue, issues co-branded
credit cards. The Cabela’s CLUB Visa credit card is a
reward based credit program that allows customers to
earn and redeem points through retail stores or the
catalog business. In 2013, approximately 30% of
merchandise was sold on a Club Visa card.7
Foot Locker, Inc.
Foot Locker, Inc. (FL) operates as a global retailer of
athletic inspired shoes and apparel with over 3,473 stores
in 23 countries, although 70% of total sales are derived
from its U.S. operations. The two main business segments
are: athletic shoes and direct-to-customers, which
represent 89% and 11% of total sales. The athletic shoes
segment operates under many brands, including Foot
Locker, Lady Foot Locker, Kids Foot Locker, Champs
Sports, and Footaction. The direct-to-customer segment
sells athletic footwear, apparel, and equipment through
affiliates, including Eastbay, to customers via the internet
and tablet/mobile applications, and catalogs. In FY 2013,
FL’s inventory purchase strategy was heavily
concentrated in top vendors, with over 88% of
merchandise purchased from the top five vendors, 68%
of which was from Nike. As a result, consumer
acceptance of Nike branded footwear will be critical to
continue to drive revenue growth for the foreseeable
future.6
The Sports Authority Inc.
The Sports Authority Inc. (TSA) is headquartered in
Colorado and is one of the largest full-line sporting goods
retailers in the U.S. with over 450 stores in 45 states. TSA
sells sports equipment, general merchandise, shoes and
apparel. TSA has changed ownership multiple times over
its 27 year history and in 2006, Leonard & Partners, a
California private equity firm purchased the company for
as estimated $1.4 billion. As a private firm, TSA does not
provide detailed financials; however, according to
IBISWorld, it is estimated that revenue growth will
increase at a 3.7% 5-year CAGR by the end of FY 2015
with approximately $3.7 billion in sales. This growth
trajectory can be explained by store expansion and
healthy profit margins driven by their private label
program.1
Big 5 Sporting Goods Corporation
Big 5 Sporting Goods Corporation (BGFV) is one of the
smaller publicly traded firms in the sporting goods
industry with a $223 million market cap. BGFV is a
holding company through which its subsidiary Big 5 Corp.
operates sporting goods and accessories stores with a
Page 9
product offering of athletic shoes, apparel and
accessories, outdoor and athletic equipment for team
sports, fitness, camping, hunting, fishing, and other
outdoor sports equipment. Interestingly, BGFV has an
extremely competitive dividend yield of 4% and in the
most recent FY the dividend payment represented
approximately 33% of total operating cash flow, with
capital expenditures offsetting the remainder. As a result,
BGFV has experienced negative net change in cash four
out of the last seven years and negative free cash flow
one out of the last three. BGFV has a controlled store
growth strategy with a much smaller store format that
averages 11,000 square feet/store. As of the most recent
FY, BGFV operated 429 stores in 12 states in the Western
U.S. BGFV’s merchandise strategy is similar to its
competition in that they offer both branded and private
labels; however, they also seek vendor over-stock and
close-out merchandise to resell in stores.8
Figure 20: Peer Comparison
Source: FactSet Industry/Peer Comparison
ECONOMIC OUTLOOK
Real GDP
The U.S. economy experienced steady real GDP growth
over the first, second, and third quarters in 2013, while
dipping in the fourth quarter largely due to unusually cold
winter weather nationwide. 2013 reported GDP rates
came in at 1.1%, 2.5%, 4.1%, and 2.6%, respectively.
Record breaking cold weather persisted throughout the
first three months of 2014, leading to negative growth of
-2.1%. Q2 came back strong with 4.6% growth largely due
to an increase in goods exports, nonfarm inventory
investment, and consumer spending – most notably on
motor vehicles and parts.17 We believe sustained growth
will ensue for the remainder of the year and moderate
GDP growth will persist as represented by our target of
2.76%, driven by continued increases in capital
investment and personal consumption expenditures
(PCE). An increase in PCE will prove beneficial for the
sporting goods industry as additional dollars will flow to
retailers, especially as the holiday season approaches in
Q4.
Interest Rates
We believe interest rates will remain stable over the next
six months and slowly increase within our two-year
forecast. Accommodative monetary policies will continue
to persist, with the Federal Funds Rate remaining
unchanged in 2014 at 0.25%. Also, the 10-year treasury
yield will remain below 3% for the next six months,
despite the completion of the Federal Reserve’s bond
buying program in October, as investors look for safe
options to park their money in light of continued
geopolitical uncertainty in emerging markets. Our
forecast is for the 10-year treasury yield to reach 2.71%
over the next six months then slowly rebound to 3.44%
over the next two years. A low interest rate environment,
relative to the last ten years, will prove beneficial for the
sporting goods industry as it will allow a lower cost of
borrowing when financing store growth and also provide
the option to repurchase shares through debt issuance, a
common theme for retailers over the last six months.
Slowly increasing rates also implies that inflation will
remain in check for the next two years until the Federal
Funds Rate is raised from the current level of 0.25%,
which will help control variable rate interest for firms
with revolving credit facilities or other forms of nonpublicly traded debt. Fortunately, DKS’ statement of cash
flow and balance sheet are in a strong position with less
than $7 million in debt outstanding and sufficient
operating cash flow to fund growth in capital
expenditures and interest payments on operating leases,
among other items.
Disposable Income vs. Industry Revenue
As per capita disposable income increases over the next
two years, consumers will have a greater portion of their
income to allocate toward discretionary-based purchases,
including sports apparel and accessories. As the year
progresses, we believe there will be an upward trend in
per capita disposable income that will peak in 2015
before experiencing a slight drop in 2016 and then
flattening out from 2017-2020.
Page 10
Figure 21: U.S. Per Capita Disposable Income vs. Sporting
Good Industry Revenue (Y/Y Change)
Figure 22: Relative eCommerce Annual Growth
Source: Bureau of Economic Analysis and IBISWorld
Source: GS Global Retailing Conference
With a correlation coefficient of 0.40, changes in per
capita disposable income and industry revenue are
positively associated. Due to the highly discretionary
nature of many sporting goods product purchases,
especially equipment, an upward trend in disposable
income should positively impact overall industry revenue
as shown in Figure 21 above.
Further, DKS multi-channel customers spend three times
more than single channel customers and approximately
75% of orders are shipped to a customer within a 15-mile
radius of a DICK’s store.10 This emphasizes the
importance of a seamless selling strategy and opportunity
for margin expansion through DKS ability to route online
orders to stores, effectively turning each store into a
regional distribution center. This should decrease
shipping costs and improve margins, a trend not typically
seen with direct-to-consumer sales metrics.
CATALYSTS FOR GROWTH
There are several positive catalysts for growth, as well as
potential downside catalysts that drive our BUY
recommendation. On the upside, DKS should capitalize on
continued growth in online sales, increase store
profitability through space optimization, and return value
to shareholders through its capital allocation plan. On the
downside, management has expressed ongoing concern
for trends in golf and are not sure when DKS will see the
bottom in comp store sales declines for that segment.
Additionally, EPS targets for the second half of the year
may be difficult to achieve given the highly promotional
environment as seasonal inventory is turned over.
Additionally, DKS has a relatively low e-commerce
penetration rate in comparison to other retailers with a
focus on apparel and footwear products. Historically, DKS
had a 50%+ allocation of sporting good equipment as a
percent of total sales, a segment that does not typically
translate to online sales as customers prefer to demo or
physically interact with the product prior to purchasing.
The space optimization plan announced in Q1 will
allocate more square footage to apparel and footwear,
which should prove beneficial for DKS online sales.
Figure 23: eCommerce Penetration by Category (2012)
eCommerce
DKS has exhibited exceptional online sales growth over
the last three years and should continue to drive sales
through their various omni-channel strategies. In
comparison to other best-in-class retailers, vendors, and
other sporting goods stores, DKS had the second highest
online sales growth rate in 2013.
Source: pwc Consumer Goods Industry Overview
Page 11
Capital Allocation Plan
VALUATION
DKS management plans to repurchase $200+ million in
stock for FY 2014, which leaves approximately $480
million available under the $1 billion share repurchase
authorization plan. Additionally, DKS dividend yield of
1.1% is in-line with the median for their peer group. Last,
we believe approximately 56% of DKS $330 million capital
expenditure budget will be allocated to furniture,
fixtures, and equipment over the next five years, which
includes investment into IT and multi-channel technology
initiatives. This focus on capital deployment will benefit
shareholders and position DKS for high single digit
revenue growth over the next two years.4
INVESTMENT POSITIVES



DKS has above average store growth opportunities
with an opportunity to build-out both their core
DICK’s sporting format, as well as the new outdoor
format, Field & Stream
We believe continued growth in eCommerce sales
will generate a 21% 5-year CAGR by 2018, which will
contribute approximately $1 billion in total sales at
competitive profit margins
In addition to DKS’s industry and segment performance
outlined above, other key metrics driving our valuation
are described below.
Revenue Growth
DKS’s revenue is driven by comp store sales growth and
growth in contribution from new stores. Total revenue
increased 6.46% in 2013, with 2.1% from comp stores and
4.36% from new stores. DKS has a strong history of highly
productive new stores, and with new store productivity
over 90% it implies store openings are well-executed and
there is significant demand for their products and
services in the markets they enter. DKS revenue is
forecast to grow at 9.14%, 11.92% and 9.36% over the
next three years with comps in low single digits and new
store contribution in mid-to-high single digits, as seen in
the figure below.
Figure 24: Revenue Growth Breakdown
Source: DKS 2013 10-K and Henry Fund Analyst Estimates
Profit Margins
Very low reliance on debt financing allows more
flexibility in maximizing shareholder value, as
evidenced through their consistent dividend payout
and share repurchase program, while also investing
for growth in capex
INVESTMENT NEGATIVES

Ability to transition sales from golf to higher growth
areas, including women’s and children’s apparel and
team sports as DKS reduces square footage in golf

DKS profit margins may be under pressure in the
second half of 2014 due to continued promotional
activity in an effort to turn inventory in advance of
the holiday season

No short-term catalyst for growth and difficult comp
sales numbers going into the second half of the year
may cause downward pressure if DKS is unable to
meet earnings and growth targets
Historical profit margins have remained relatively
consistent over the last seven years and have recently
expanded from 28% to 30%-31%. DKS business strategy
to offer high-quality vendor merchandise lends itself to
higher cost of goods sold as vendors, such as Nike and
Under Armour typically charge a premium for access to
their product relative to other licensed/private label
brands. This business strategy will make optimizing gross
margins difficult going forward; however, through more
efficient inventory management and compelling
merchandise DKS can minimize heavy promotional
periods, similar to what we have seen in golf over the
past eight months. We forecast gross margins over the
next five years between 30%-31.4%, assuming a less
promotional environment and the ability for DKS to
provide high quality merchandise and a seamless
customer experience, both of which customers are willing
to pay a premium.
Page 12
Operating Expenses
Annual Comp Sales Growth vs. CV Growth
DKS has had a difficult time breaking out of the 8%-9%
range in operating margin over the last three years due to
elevated pre-opening expenses to support store growth,
as well as SG&A expenses of 22%-22.5% of sales on an
annual basis. As challenges persist in golf, DKS eliminated
specific golf positions and merged DICK’s golf and Golf
Galaxy corporate and admin functions, which should
better align the cost structure with the expected trends in
golf and help minimize payroll expenses. Over the next
two years, we believe this strategy will help DKS reach 9%
operating margins.
Comparable sales growth is one of the main revenue
drivers for DKS and will be increasingly important as store
growth slows over the next five to ten years. Based on
the table below, a 25 bps change in comp store sales
growth leads to a .06% change in price while holding the
CV growth constant at 2.75%. Alternatively, holding the
comp growth rate constant at 2.5%, 25 bps change in CV
growth leads to a 3.6%-3.9% change in price. Thus, in
comparison to comp sales growth, DKS is more sensitive
to changes in the CV growth rate all else constant.
Capital Expenditures
DKS elevated capital expenditures over the last year to
support its store growth strategies to achieve 815 total
stores by 2017. Approximately 42% of this spend will
support maintenance capex (leasehold improvements),
while 56% will support growth capex (furniture, fixtures &
equipment), with the remainder on existing owned
buildings and land. Based on management guidance on
store growth plans, we forecast a 16% increase in capex
spend in 2014 to $332 million. Further, we estimate a
5.2% 5-year CAGR, in line with our sales forecast
estimates.
Sensitivity Analysis
The following sensitivity tables outline key drivers of DKS
target price in our DCF model.
WACC vs. CV Growth
Both the WACC and CV growth rate are critical factors
impacting DKS target price in our DCF model. First, within
our target sensitivity range, as designated by the price
targets within the bold border, a 25 basis point (bps)
change in WACC causes a 10% change in price while
holding the CV growth constant at our model forecast
rate of 2.75%. Alternatively, holding the WACC constant
at 7.25%, a 25 bps change in the CV growth rate leads to
a 3.5%-4% change in the target price. All else constant,
DKS is more sensitive to changes in WACC.
Source: Henry Fund Analyst Estimates
Source: Henry Fund Analyst Estimates
Beta vs. Equity Risk Premium
With beta and equity risk premium (ERP) both directly
impacting the WACC calculation and ultimately the DCF
price target, we felt it was important to determine which
input the model was most sensitive to. With an ERP of
4.64% and beta of 1.10, our DCF returns a price of $52.18.
Holding ERP constant and modifying beta by .10 yields an
11.8%-12.6% change in our target price. Further, holding
beta constant at our estimate of 1.10 and changing ERP
by 25 bps leads to a 3%-3.9% change in price. While both
inputs are critical in determining the target price, DKS
model is more sensitive to changes in beta.
Source: Henry Fund Analyst Estimates
Discounted Cash Flow/Economic Profit (DCF/EP)
The DCF/EP model generates a target price of $52.18.
This model is based on a 2.75% CV growth rate
discounted at a weighted average cost of capital (WACC)
of 7.19%. This represents a 15.25% price premium over
the closing price on 9/19/14, largely driven by a recent
drop in price due to street sentiment regarding ongoing
headwinds facing golf and hunting and tough
comparisons moving into the back half of the year. The
Page 13
WACC remains consistent with analyst estimates, driven
by the pre-tax cost of debt of 7.5% and the cost of equity
of 8.37%.5
Dividend Discount Model (DDM)
The DDM returned a current target price of $51.07, in line
with the DCF/EP model. DKS has paid a $0.50 annual
dividend for the past three years. With a strong cash flow
position and growth from e-commerce and new stores, as
well as a differentiated shop-in-shop model we believe
DKS is well positioned to deliver on their existing dividend
payment. Due to limited forward guidance and
precedence regarding DKS’s dividend payout policies, we
remained conservative in our forecast and included a
constant quarterly payment of $0.125 per common share
throughout our five-year forecast. Although the DDM
does not weigh heavily in deriving the target price range,
it is important as it provides a level of reasonableness for
our fundamental analysis.
Relative P/E
The relative P/E model returned a target price of $40.98
in 2014 and $41.46 in 2015, approximately 20% below
the DCF price. Although this model provides a good
comparison to companies in the sporting goods retail
industry, there is not a comparable firm with the growth
and risk profile similar to DKS. Most of these companies
that do have similar operating segments are much
smaller in terms of total revenue and market cap. As a
result comparable selection was intended to capture the
best snapshot of players in the industry that together
represented DKS operating profile.
Overall, we reference the DCF/EP valuation model in
deriving our target price range as that valuation most
accurately captures DKS’s current operating profile and
the risk component within the headwinds facing two of
their business segments. The DDM and Relative P/E
models provide supporting evidence and may help
substantiate assumptions used in our DCF analysis, but
they do not heavily influence our target price range as
they fail to capture the many changes DKS has undergone
over the last five years to position itself as a leader in
sporting goods retail.
KEYS TO MONITOR
BUY Discipline
Continued support of our BUY recommendation would
derive from successful square foot optimization over the
next six months from golf and fitness to women’s, youth,
and team sports, as DKS transitions these business
segments from 30% of sales to an estimated 10% over
the next five years. We would further support this
recommendation assuming DKS is able to realize store
growth initiatives and reach the target goal of 815 stores
by 2017, while also building upon significant growth in
online sales and achieving our forecast of a 21% 5-year
CAGR and penetration rate of 11% of total sales by 2019.
SELL Discipline
A modification to a SELL recommendation would be
driven by an inability to execute store growth strategies
by entering new and underpenetrated markets, or
prolonged weakness in the segment performance of its
golf division. Additionally, with significant resources
allocated to the development of the Field & Stream
format, a return on invested capital greater than 7% will
be necessary to create value for shareholders; therefore,
any adverse performance related to this initiative would
lead us to be less optimistic about DKS long-term growth
prospects.
REFERENCES
1. IBISWorld – U.S. Industry Research – Sporting Goods
2. Bloomberg – Historical Volatility, Beta
3. Treasury.gov – 30 year risk-free rate
4. SEC.Gov. Corporate Filings. Edgar. DKS. 10-K
5. SEC.Gov. Corporate Filings. Edgar. FINL. 10-K
6. SEC.Gov. Corporate Filings. Edgar. FL. 10-K
7. SEC.Gov. Corporate Filings. Edgar. CAB. 10-K
8. SEC.Gov. Corporate Filings, Edgar. BGFV. 10-K
9. SEC.Gov. Corporate Filings, Edgar. HIBB. 10-K
10. Goldman Sachs 21st Annual Global Retailing
Conference Presentation
11. SFIA 2013 Sports, Fitness and Leisure Activities
Topline Participation Report
12. U.S. Census – Monthly & Annual Retail Trade
13. DICK’s Sporting Goods – Investor Relations –
http://phx.corporateir.net/phoenix.zhtml?c=132215&p=irolirhome&ab=Footer_Column1_InvestorRelations
14. DKS Q1 Earnings Transcript
15. DKS Q2 Earnings Transcript
Page 14
16. UBS Industry Primer – “Retail Hardlines Sector
Overview”
17. Bureau of Economic Analysis (GDP) –
http://www.bea.gov/newsreleases/national/gdp/gdp
highlights.pdf
18. Pwc Consumer Goods Industry Overview –
http://www.strategyand.pwc.com/media/file/Strateg
yand_E-Commerce-and-Consumer-Goods.pdf
IMPORTANT DISCLAIMER
Henry Fund reports are created by student enrolled in the
Applied Securities Management (Henry Fund) program at
the University of Iowa’s Tippie School of Management.
These reports are intended to provide potential
employers and other interested parties an example of the
analytical
skills,
investment
knowledge,
and
communication abilities of Henry Fund students. Henry
Fund analysts are not registered investment advisors,
brokers or officially licensed financial professionals. The
investment opinion contained in this report does not
represent an offer or solicitation to buy or sell any of the
aforementioned securities. Unless otherwise noted, facts
and figures included in this report are from publicly
available sources. This report is not a complete
compilation of data, and its accuracy is not guaranteed.
From time to time, the University of Iowa, its faculty,
staff, students, or the Henry Fund may hold a financial
interest in the companies mentioned in this report
Page 15
DICK'S SPORTING GOODSInc
Key Assumptions of Valuation Model
Ticker Symbol
Current Share Price (adjusted close as of 9/19/14)
Fiscal Year End
Pre-Tax Cost of Debt
Beta
Risk-Free Rate (30-yr bond)
Equity Risk Premium
CV Growth of NOPLAT
WACC
Marginal Tax Rate
Common Stock Outstanding
Dividend Yield
Same store sales growth
Profit Margin
Operating Margin
New store growth
Target
Upside/Downside
$ 52.18
15.40%
DKS
45.22
Jan. 31
7.50%
1.10
3.27%
4.64%
2.75%
7.19%
38.58%
121,238,890
1.1%
2.4%
30.98%
8.64%
4.94%
DICK'S SPORTING GOODSInc
Revenue Decomposition (In Thousands)
Fiscal Years Ending Jan. 31
Consolidated Revenue
Q1
Q2
Q3
Q4
Total Net Sales
Consolidated Revenue - % of Total
Q1
Q2
Q3
Q4
Total Net Sales
Consolidated Revenue Growth - Y/Y
Q1
Q2
Q3
Q4
Total Net Sales Growth
Annual Consolidated Revenue Growth
Breakdown
Comp Store Sales
Contribution from New Stores
Total Net Sales Growth
2012
2013
2014
2015E
2016E
2017E
2018E
2019E
1,113,849
1,306,695
1,179,702
1,611,556
5,211,802
1,281,704
1,437,041
1,312,072
1,805,302
5,836,119
1,333,701
1,531,431
1,400,623
1,947,418
6,213,173
1,438,908
1,688,890
1,531,009
2,122,411
6,781,219
1,592,177
1,889,233
1,718,391
2,389,805
7,589,606
21.4%
25.1%
22.6%
30.9%
100.0%
22.0%
24.6%
22.5%
30.9%
100.0%
21.5%
24.6%
22.5%
31.3%
100.0%
21.2%
24.9%
22.6%
31.3%
100.0%
21.0%
24.9%
22.6%
31.5%
100.0%
21.4%
25.2%
22.4%
31.0%
100.0%
100.0%
100.0%
15.07%
9.98%
11.22%
12.02%
11.98%
4.06%
6.57%
6.75%
7.87%
6.46%
7.89%
10.28%
9.31%
8.99%
9.14%
10.65%
11.86%
12.24%
12.60%
11.92%
11.56%
10.70%
8.39%
7.52%
9.36%
6.86%
6.49%
2013
4.30%
7.68%
2014
2.10%
4.36%
2015E
2.02%
7.12%
2016E
2.85%
9.07%
2017E
3.09%
6.27%
2018E
3.00%
3.86%
2019E
3.00%
3.49%
11.98%
6.46%
9.14%
11.92%
9.36%
6.86%
6.49%
1,776,238
2,091,295
1,862,545
2,569,564
8,299,642 8,868,906 9,444,656
DICK'S SPORTING GOODSInc
Revenue Decomposition (In Thousands)
Fiscal Years Ending Jan. 31
2012
Total
Q1
Q2
Q3
Q4
2013
Total
Q1
Q2
Revenue Forecast
Same Store (Comps - Includes eCommerce)
5,434,523 1,207,412 1,356,349
New Store
401,596
74,292
80,692
Total Net Sales
5,211,802 1,113,849 1,306,695 1,179,702 1,611,556 5,836,119 1,281,704 1,437,041
Check
0
0
Revenue Forecast Metrics
Same Store (Comps) Growth
2.00%
2.10%
2.50%
4.10%
0.10%
4.30%
8.40%
3.80%
New Store Productivity
96.4%
102.7%
Sq. Footage Growth
7.0%
6.9%
6.0%
Productivity/Retail Measures
Beginning Period Stores
Openings/Acquired
Closures/Sold
Ending Period Stores
Q3
1,239,867
72,205
1,312,072
0
Q4
1,630,895
174,407
1,805,302
0
2014
Total
5,956,752
256,421
6,213,173
5.10%
89.0%
6.9%
1.20%
150.6%
7.2%
2.10%
Q1
1,232,999
100,702
1,333,701
0
Q2
Q3
Q4
1,431,293 1,355,370 1,937,089
100,138
45,253
10,329
1,531,431 1,400,623 1,947,418
0
0
0
6.8%
-3.80%
121.1%
6.5%
-0.40%
92.9%
7.5%
3.30%
45.9%
7.5%
7.30%
8.3%
6.9%
525
36
0
561
525
3
0
528
528
8
0
536
536
19
0
555
555
6
0
561
561
38
0
599
561
6
0
567
567
4
0
571
571
21
0
592
592
7
0
599
599
46
3
642
599
2
0
601
601
7
0
608
608
30
0
638
638
7
3
642
Total Square Footage (Thousands)
Total Square Footage Growth (Q2Q)
Total Square Footage Growth (Q/Q)
Avg. Square Feet/Store (6 Quarter Historic)
Avg. Square Feet/Store
Total Sales/Square Foot
27,596
5.8%
26,054
26,462
1.57%
27,316
3.22%
27,596
1.03%
29,579
7.0%
27,857
0.9%
6.9%
28,054
0.7%
6.0%
29,193
4.1%
6.9%
29,579
1.3%
7.2%
31,622
6.8%
29,664
0.3%
6.5%
30,158
1.7%
7.5%
31,387
4.1%
7.5%
31,622
0.7%
6.9%
194
49,345
42.75
49,370
49.38
49,217
43.19
49,191
58.40
203
49,130
46.01
49,131
51.22
49,313
44.94
49,380
61.03
202
49,357
44.96
49,602
50.78
49,196
44.62
49,255
61.59
Fiscal Years Ending Jan. 31
2015E
Total
Q1A
Q2A
Q3E
Q4E
2016E
Total
Q1E
Q2E
Q3E
Q4E
2017E
Total
Q1E
Q2E
Q3E
Q4E
49,346
Revenue Forecast
Same Store (Comps - Includes eCommerce) 6,338,861 1,353,707 1,580,437 1,430,036 1,974,682 6,974,766 1,473,442 1,736,179
New Store
442,357
85,201 108,453 100,973 147,730 614,840 118,736 153,054
Total Net Sales
6,781,219 1,438,908 1,688,890 1,531,009 2,122,411 7,589,606 1,592,177 1,889,233
Revenue Forecast Metrics
Same Store (Comps)
New Store Productivity
Sq. Footage Growth
Productivity/Retail Measures
Beginning Period Stores
Openings/Acquired
Closures/Sold
Ending Period Stores
Total Square Footage (Thousands)
Total Square Footage Growth (Q2Q)
Total Square Footage Growth (Y/Y)
Avg. Square Feet/Store (6 Quarter Historic)
Avg. Square Feet/Store
Total Sales/Square Foot
2.02%
1,576,939
141,452
1,718,391
2,188,206
201,599
2,389,805
7,823,900
475,742
8,299,642
2018E
1,631,982
144,256
1,776,238
1,945,910 1,778,535 2,467,474 8,548,631
145,385
84,010 102,090 320,275
2,091,295 1,862,545 2,569,564 8,868,906
2019E
9,134,973
309,683
9,444,656
1.50%
79%
8.1%
3.20%
91%
7.8%
2.10%
85%
8.5%
1.40%
85%
8.9%
2.85%
10.8%
2.40%
85%
9.7%
2.80%
85%
10.7%
3.00%
85%
10.9%
3.10%
85%
11.2%
3.09%
8.7%
4.9%
2.50%
85%
10.7%
3.00%
85%
9.1%
3.50%
85%
5.8%
3.25%
85%
5.0%
3.00%
85%
4.5%
3.00%
85%
4.1%
642
56
0
698
642
8
0
650
650
9
0
659
659
31
0
690
690
8
0
698
698
79
1
776
698
15
0
713
713
17
1
729
729
36
0
765
765
11
0
776
776
40
1
815
776
13
0
789
789
7
1
795
795
14
0
809
809
6
0
815
815
38
1
852
852
35
0
887
34,444
8.7%
32,070
1.4%
8.1%
32,508
1.4%
7.8%
34,049
4.7%
8.5%
34,444
1.2%
8.9%
38,293
10.8%
35,184
2.1%
9.7%
35,973
2.2%
10.7%
37,750
4.9%
10.9%
38,293
1.4%
11.2%
40,217
4.9%
38,934
1.7%
10.7%
39,230
0.8%
9.1%
39,921
1.8%
5.8%
40,217
0.7%
5.0%
42,043
4.5%
4.5%
43,770
4.1%
4.1%
49,339
44.87
49,329
51.95
49,346
44.97
49,346
61.62
49,346
45.25
49,346
52.52
49,346
45.52
49,346
62.41
49,346
45.62
49,346
53.31
49,346
46.66
49,346
63.89
49,346
211
49,346
216
49,346
203
206
209
DICK'S SPORTING GOODSInc
Consolidated Income Statement (In Thousands)
Fiscal Years Ending Jan. 31
2013
Total
Q1
Q2
Q3
Q4
2014
Total
Q1
Q2
Q3
Q4
REVENUE
Net Sales
Total Revenue
Cost of goods sold, including occupancy & distribution costs
Gross Profit
5,836,119 1,281,704 1,437,041 1,312,072 1,805,302 6,213,173 1,333,701 1,531,431 1,400,623 1,947,418
5,836,119 1,281,704 1,437,041 1,312,072 1,805,302 6,213,173 1,333,701 1,531,431 1,400,623 1,947,418
3,998,956
887,097
989,261
905,948 1,216,650 4,269,223
922,047 1,052,101
975,724 1,319,351
1,837,163
394,607
447,780
406,124
588,652 1,943,950
411,654
479,330
424,899
628,067
EXPENSES
Selling, general & administrative expenses
Pre-opening expenses
Total Expenses
1,297,413
16,076
1,313,489
296,131
2,741
298,872
310,864
2,276
313,140
314,637
9,294
323,931
523,674
95,735
134,640
82,193
211,106
(6,034)
4,555
489,825
35.53%
201,478
(2,362)
(3,449)
1,865
94,151
(1,000)
(54)
101,216
(860)
1,113
82,446
37,585
(591)
48,144
(591)
32,898
(591)
Operating Income
Other Expenses (Income):
Interest income (expense), net
Other income (expense)
Income (loss) before income taxes
Total current income taxes
Total deferred income taxes
375,781 1,386,315
1,765
20,823
377,546 1,407,138
312,708
1,329
314,037
336,950
5,285
342,235
333,724
12,122
345,846
402,933
2,087
405,020
536,812
97,617
137,095
79,053
223,047
(725)
1,631
212,012
(2,929)
12,224
546,107
(669)
6,204
103,152
(716)
1,735
138,114
(696)
2,735
81,092
(848)
1,550
223,749
82,853
(591)
183,946
24,563
32,190
6,141
47,810
6,141
24,974
6,141
78,971
6,141
Income tax provision (benefit)
199,116
36,994
47,553
32,307
82,262
208,509
38,331
53,951
31,115
85,112
Net Income (Loss)
290,709
57,157
53,663
50,139
129,750
337,598
64,821
84,163
49,977
138,637
8.89%
2.39
0.47
0.45
0.41
1.06
14.95%
2.75
12.31%
0.53
53.04%
0.68
-1.23%
0.41
6.86%
1.13
2.50
21%
0.125
27%
0.125
28%
0.125
30%
0.125
12%
0.50
18%
0.125
24%
0.125
18%
0.125
31%
0.125
11%
121,629
121,514
119,928
122,103
122,500
122,878
122,702
122,901
123,221
122,489
Q4E
2016E
Total
Basic Net Income (Loss) Per Common Share Growth
Basic Net Income (Loss) Per Common Share
Dividends per common share
Dividend Payout Ratio
Weighted average number of common shares outstanding (In Millions)
Fiscal Years Ending Jan. 31
2015E
Total
Q1A
Q2A
Q3E
Q1E
Q2E
Q3E
Q4E
2017E
Total
2018E
Q1E
Q2E
Q3E
2019E
Q4E
REVENUE
Net Sales
Total Revenue
Cost of goods sold, including occupancy & distribution costs
Gross Profit
6,781,219 1,438,908 1,688,890 1,531,009 2,122,411 7,589,606 1,592,177 1,889,233 1,718,391 2,389,805 8,299,642 1,776,238 2,091,295 1,862,545 2,569,564 8,868,906 9,444,656
6,781,219 1,438,908 1,688,890 1,531,009 2,122,411 7,589,606 1,592,177 1,889,233 1,718,391 2,389,805 8,299,642 1,776,238 2,091,295 1,862,545 2,569,564 8,868,906 9,444,656
4,680,380
998,025 1,186,334 1,061,908 1,434,113 5,207,202 1,101,309 1,299,225 1,191,876 1,614,791 5,694,923 1,228,624 1,438,184 1,291,861 1,736,254 6,085,843 6,480,923
2,100,838
440,883
502,556
469,101
688,298 2,382,404
490,868
590,007
526,515
775,014 2,604,719
547,614
653,111
570,684
833,310 2,783,063 2,963,733
EXPENSES
Selling, general & administrative expenses
Pre-opening expenses
Total Expenses
1,512,072
28,368
1,540,441
322,589
6,206
328,795
383,054
7,940
390,994
365,965
12,048
378,012
Operating Income
560,398
112,088
111,562
Other Expenses (Income):
Interest income (expense), net
Other income (expense)
Income (loss) before income taxes
(2,644)
7,048
564,802
(610)
2,364
113,842
Total current income taxes
Total deferred income taxes
208,167
9,494
41,485
2,373
440,464 1,689,479
2,175
23,223
442,639 1,712,702
370,588
2,496
373,084
412,179
4,756
416,935
410,756
13,522
424,278
495,957 1,848,168
2,449
25,338
498,405 1,873,507
413,429
2,784
416,214
456,263
5,265
461,528
445,213
14,657
459,870
533,262 1,982,200 2,110,881
2,633
26,607
28,334
535,895 2,008,807 2,139,215
91,089
245,659
669,703
117,784
173,073
102,237
276,608
731,213
131,401
191,583
110,814
297,415
774,255
824,518
(763)
2,013
112,812
(635)
1,319
91,773
(635)
1,352
246,376
(2,794)
5,755
672,664
(698)
1,386
118,472
(698)
1,421
173,795
(698)
1,456
102,995
(698)
1,493
277,402
(3,106)
6,353
734,459
(776)
1,530
132,154
(776)
1,568
192,375
(776)
1,607
111,645
(776)
1,647
298,286
(3,380)
8,869
779,744
(3,605)
9,445
830,359
40,972
2,373
33,032
2,373
92,678
2,373
248,888
10,625
43,050
2,656
64,394
2,656
37,079
2,656
104,366
2,656
271,735
11,619
48,080
2,905
71,313
2,905
40,168
2,905
112,174
2,905
288,409
12,416
307,130
13,223
Income tax provision (benefit)
217,661
43,858
43,345
35,406
95,052
259,514
45,706
67,050
39,736
107,022
283,354
50,985
74,218
43,073
115,079
300,825
320,352
Net Income (Loss)
347,142
69,984
69,467
56,367
151,324
413,150
72,765
106,745
63,260
170,381
451,105
81,169
118,157
68,572
183,207
478,919
510,006
Basic Net Income (Loss) Per Common Share
2.90
0.58
0.58
0.47
1.27
3.48
0.61
0.89
0.53
1.43
3.82
0.68
1.00
0.58
1.55
4.08
4.42
Dividends per common share
Dividend Payout Ratio
0.50
17%
0.125
22%
0.125
22%
0.125
27%
0.125
10%
0.50
14%
0.125
21%
0.125
14%
0.125
24%
0.125
9%
0.50
13%
0.125
18%
0.125
13%
0.125
22%
0.125
8%
0.50
12%
0.50
11%
119,806
121,138
119,950
119,764
119,578
118,799
119,554
119,303
119,051
118,799
117,990
118,597
118,394
118,192
117,990
117,363
115,351
Weighted average number of common shares outstanding (In Millions)
DICK'S SPORTING GOODSInc
Consolidated Balance Sheet (In Thousands)
Fiscal Years Ending Jan. 31
ASSETS
Current Assets
Cash & cash equivalents
Accounts receivable, net
Income taxes receivable
Inventories, net
Prepaid expenses & other current assets
Deferred income taxes
Total Current Assets
249,170
441,846
676,606
946,044 1,193,834
734,402
345,214
181,731
38,338
34,625
60,779
51,537
57,681
63,077
67,404
71,779
4,113
15,737
7,275
11,528
12,902
14,109
15,077
16,056
1,014,997 1,096,186 1,232,065 1,312,844 1,469,348 1,606,811 1,717,020 1,828,485
64,213
73,838
99,386
89,512
100,183
109,555
117,070
124,669
12,330
30,289
38,835
39,418
40,009
40,609
41,218
41,836
1,868,393 1,595,889 1,620,071 1,754,009 2,121,969 2,510,768 2,903,832 3,276,661
Property & equipment, gross
Less: accumulated depreciation & amortization
Property & equipment, net
Intangible assets, net
Goodwill
Total other assets
Total Assets
1,520,423 1,687,005 2,059,625 2,391,905
744,527
846,870
975,096 1,170,311
775,896
840,135 1,084,529 1,221,593
50,490
98,903
98,255
98,255
200,594
200,594
200,594
200,594
98,941
152,286
68,038
91,856
2,996,452 2,887,807 3,071,487 3,366,307
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable
Accrued expenses
Deferred revenue & other current liabilities
Income taxes payable
Current portion of other long-term debt & leasing obligations
Total Current Liabilities
2012
2013
2014
2015E
2016E
2,703,079
1,390,198
1,312,881
98,255
200,594
103,077
3,836,775
2017E
2018E
2019E
3,026,765 3,363,783 3,713,235
1,626,517 1,878,561 2,145,901
1,400,248 1,485,222 1,567,334
98,255
98,255
98,255
200,594
200,594
200,594
112,712
120,410
128,227
4,322,577 4,808,313 5,271,071
824,170
420,386
219,949
63,173
1,077
1,528,755
877,673
447,677
234,227
67,274
1,148
1,627,999
9,960
987
8,973
31,169
424,112
464,253
10,643
1,077
9,566
33,091
453,201
495,858
11,334
1,148
10,186
35,239
482,622
528,046
Total Liabilities
1,363,707 1,300,483 1,379,308 1,544,078 1,733,237 1,895,248
2,024,613
2,156,045
Equity
Stockholders equity
Common stock
Retained earnings
Accumulated other comprehensive income
Treasury stock
Total Stockholders' Equity
700,980
875,466
960,153 1,004,501 1,052,562 1,104,648 1,161,095 1,161,095
932,871
911,704 1,187,514 1,473,217 1,826,464 2,218,169 2,638,093 3,089,418
118
112
24
24
24
24
24
24
(1,224) (199,958) (455,512) (655,512) (775,512) (895,512) (1,015,512) (1,135,512)
1,632,745 1,587,324 1,692,179 1,822,229 2,103,538 2,427,329 2,783,701 3,115,025
Total Liabilities & Stockholders' Equity
2,996,452 2,887,807 3,071,487 3,366,307 3,836,775 4,322,577
Long-term liabilities
Total debt
Less: current portion
Long-term debt & capital leases
Deferred income taxes
Deferred revenue & other liabilities
Total Long-Term Liabilities
510,398
507,247
562,439
630,165
705,287
771,269
264,073
269,900
265,040
321,430
359,747
393,403
128,765
146,362
154,384
168,174
188,222
205,831
29,484
68,746
19,825
45,709
54,498
59,504
7,426
8,513
899
777
883
987
940,146 1,000,768 1,002,587 1,166,255 1,308,638 1,430,995
159,022
7,426
151,596
269,827
423,561
16,275
8,513
7,762
7,413
284,540
299,715
7,375
899
6,476
38,617
331,628
376,721
8,137
777
7,360
23,943
346,520
377,823
9,108
883
8,224
28,547
387,829
424,600
4,808,313
5,271,071
DICK'S SPORTING GOODSInc
Cash Flow Statement (In Thousands)
Fiscal Years Ending Jan. 31
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)
263,906
290,709
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation & amortization
Deferred income taxes
116,581
25,152
125,096 154,928
(2,362) 24,563
Changes in working capital accounts:
Accounts receivable, net
Income taxes receivable
Inventories
Prepaid expenses & other assets
Accrued expenses
Accounts payable
Deferred revenues & other liabilities
Income taxes payable
Net Cash Flows Provided By (Used In) Operating Activities
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures
Deposits & purchases of other assets
Net Cash Flows Provided By (Used In) Investing Activities
2012
(3,350)
54,923
(118,102)
(9,174)
(21,410)
73,950
9,970
410,421
2013
2014
337,598
2015E
347,142
2016E
413,150
2017E
451,105
2018E
2019E
478,919
510,006
195,215 219,887 236,318 252,045
(16,480)
3,301
1,617
1,016
267,340
1,198
(4,328)
(9,690)
9,242
(6,144) (5,396) (4,326)
(4,376)
92,352 (13,357) (4,253) (1,374) (1,207)
(968)
(979)
(81,189) (135,879) (80,779) (156,504) (137,463) (110,209) (111,465)
(8,693)
(7,717)
9,874 (10,671) (9,372) (7,514)
(7,600)
(5,576)
(7,117) 56,390
38,318
33,656
26,983
27,291
(13,588) 11,684
67,726
75,122
65,982
52,901
53,503
12,152
303 13,790
20,048
17,609
14,118
14,279
25,884
8,789
5,007
3,669
4,101
438,284 403,870 623,750 603,922 657,855 706,632
753,297
(201,807) (219,026) (285,668) (332,280) (311,174) (323,686) (337,018)
(33,075) (76,748) (64,507) (22,595) (10,509) (9,230) (7,400)
(199,616) (324,354) (339,175) (354,875) (321,683) (332,917) (344,419)
CASH FLOWS FROM FINANCING ACTIVITIES
Total debt
Deferred revenue & other liabilities
Proceeds from exercise of stock options
Cash paid for treasury stock
Cash dividend paid to stockholders
Net Cash Flows Provided By (Used In) Financing Activities
33,098
78,285
43,482
(1,224) (198,774) (255,602)
(60,460) (306,972) (64,432)
(22,451) (503,112) (228,090)
Net Change In Cash And Cash Equivalents
188,350 (389,188) (163,483)
Cash and Cash Equivalents - Beginning of Period
Cash and Cash Equivalents - End of Period
546,052
734,402
734,402
345,214
345,214
181,731
(349,452)
(7,485)
(356,937)
762
970
852
683
691
14,892
41,309
36,283
29,089
29,421
44,348
48,061
52,086
56,448
0
(200,000) (120,000) (120,000) (120,000) (120,000)
(61,439) (59,903) (59,400) (58,995)
(58,682)
(201,437) (89,563) (90,179) (92,775) (148,570)
67,439 192,676
181,731
249,170
249,170
441,846
234,760
269,438
247,791
441,846
676,606
676,606
946,044
946,044 1,193,834
DICK'S SPORTING GOODSInc
Common Sized Income Statement
Fiscal Years Ending Jan. 31
REVENUE
Net Sales
Total Revenue
Cost of goods sold, including occupancy & distribution costs
Gross Profit
EXPENSES
Selling, general & administrative expenses
Pre-opening expenses
Total Expenses
2013
Total
100.00%
100.00%
68.52%
31.48%
2014
Q1
Q2
Q3
Q4
Total
Q1
Q2
Q3
Q4
100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
69.21% 68.84% 69.05% 67.39% 68.71% 69.13% 68.70% 69.66% 67.75%
30.79% 31.16% 30.95% 32.61% 30.98% 30.87% 31.30% 30.34% 32.25%
22.23% 23.10% 21.63% 23.98% 20.82% 22.31% 23.45% 22.00% 23.83% 20.69%
0.28%
0.21%
0.16%
0.71%
0.10%
0.34%
0.10%
0.35%
0.87%
0.11%
22.51% 23.32% 21.79% 24.69% 20.91% 22.65% 23.55% 22.35% 24.69% 20.80%
Operating Income
8.97%
7.47%
9.37%
6.26% 11.69%
8.64%
7.32%
8.95%
5.64% 11.45%
Other Expenses (Income):
Interest income (expense), net
Other income (expense)
Income (loss) before income taxes
-0.10%
0.08%
8.39%
-0.27%
0.15%
7.35%
-0.07%
0.00%
7.04%
-0.07% -0.04%
0.08%
0.09%
6.28% 11.74%
-0.05%
0.20%
8.79%
-0.05%
0.47%
7.73%
-0.05%
0.11%
9.02%
-0.05% -0.04%
0.20%
0.08%
5.79% 11.49%
Total current income taxes
Total deferred income taxes
3.45%
-0.04%
2.93%
-0.05%
3.35%
-0.04%
2.51%
-0.05%
4.59%
-0.03%
2.96%
0.40%
2.41%
0.46%
3.12%
0.40%
1.78%
0.44%
4.06%
0.32%
Income tax provision (benefit)
3.41%
2.89%
3.31%
2.46%
4.56%
3.36%
2.87%
3.52%
2.22%
4.37%
Net Income (Loss)
4.98%
4.46%
3.73%
3.82%
7.19%
5.43%
4.86%
5.50%
3.57%
7.12%
2015E
REVENUE
Net Sales
Total Revenue
Cost of goods sold, including occupancy & distribution costs
Gross Profit
est
EXPENSES
Selling, general & administrative expenses
Pre-opening expenses
Total Expenses
Total
100.00%
100.00%
69.02%
30.98%
30.76
2016E
2017E
Q1A
Q2A
Q3E
Q4E
Total
Q1E
Q2E
Q3E
Q4E
Total
100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
69.36% 70.24% 69.36% 67.57% 68.61% 69.17% 68.77% 69.36% 67.57% 68.62%
30.64% 29.76% 30.64% 32.43% 31.39% 30.83% 31.23% 30.64% 32.43% 31.38%
29.83
32.01
30.94
30.72
30.31
31.10
2018E
2019E
Q1E
Q2E
Q3E
Q4E
100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
69.17% 68.77% 69.36% 67.57% 68.62% 68.62%
30.83% 31.23% 30.64% 32.43% 31.38% 31.38%
31.30
22.30% 22.42% 22.68% 23.90% 20.75% 22.26% 23.28% 21.82% 23.90% 20.75% 22.27% 23.28% 21.82% 23.90% 20.75% 22.35% 22.35%
0.42%
0.43%
0.47%
0.79%
0.10%
0.31%
0.16%
0.25%
0.79%
0.10%
0.31%
0.16%
0.25%
0.79%
0.10%
0.30%
0.30%
22.72% 22.85% 23.15% 24.69% 20.86% 22.57% 23.43% 22.07% 24.69% 20.86% 22.57% 23.43% 22.07% 24.69% 20.86% 22.65% 22.65%
Operating Income
8.26%
7.79%
6.61%
5.95% 11.57%
8.82%
7.40%
9.16%
5.95% 11.57%
8.81%
7.40%
9.16%
5.95% 11.57%
8.73%
8.73%
Other Expenses (Income):
Interest income (expense), net
Other income (expense)
Income (loss) before income taxes
-0.04%
0.10%
8.33%
-0.04%
0.16%
7.91%
-0.05%
0.12%
6.68%
-0.04% -0.03%
0.09%
0.06%
5.99% 11.61%
-0.04%
0.08%
8.86%
-0.04%
0.09%
7.44%
-0.04%
0.08%
9.20%
-0.04% -0.03%
0.08%
0.06%
5.99% 11.61%
-0.04%
0.08%
8.85%
-0.04%
0.09%
7.44%
-0.04%
0.07%
9.20%
-0.04% -0.03%
0.09%
0.06%
5.99% 11.61%
-0.04%
0.10%
8.79%
-0.04%
0.10%
8.79%
Total current income taxes
Total deferred income taxes
0.00%
0.00%
2.88%
0.16%
2.43%
0.14%
2.16%
0.16%
4.37%
0.11%
0.00%
0.00%
2.70%
0.17%
3.41%
0.14%
2.16%
0.15%
4.37%
0.11%
0.00%
0.00%
2.71%
0.00%
3.41%
0.00%
2.16%
0.00%
4.37%
0.00%
0.00%
0.00%
0.00%
0.00%
Income tax provision (benefit)
3.21%
3.05%
2.57%
2.31%
4.48%
3.42%
2.87%
3.55%
2.31%
4.48%
3.41%
2.87%
3.55%
2.31%
4.48%
3.39%
3.39%
Net Income (Loss)
5.12%
4.86%
4.11%
3.68%
7.13%
5.44%
4.57%
5.65%
3.68%
7.13%
5.44%
4.57%
5.65%
3.68%
7.13%
5.40%
5.40%
DICK'S SPORTING GOODSInc
Common Sized Balance Sheet
2012
2013
2014
2015E
2016E
2017E
2018E
2019E
ASSETS
Current Assets
Cash & cash equivalents
Accounts receivable, net
Income taxes receivable
Inventories, net
Prepaid expenses & other current assets
Deferred income taxes
Total Current Assets
14.09%
0.74%
0.08%
19.47%
1.23%
0.24%
35.85%
5.92%
0.59%
0.27%
18.78%
1.27%
0.52%
27.35%
2.92%
0.98%
0.12%
19.83%
1.60%
0.63%
26.07%
3.67%
0.76%
0.17%
19.36%
1.32%
0.58%
25.87%
5.82%
0.76%
0.17%
19.36%
1.32%
0.53%
27.96%
8.15%
0.76%
0.17%
19.36%
1.32%
0.49%
30.25%
10.67%
0.76%
0.17%
19.36%
1.32%
0.46%
32.74%
12.64%
0.76%
0.17%
19.36%
1.32%
0.44%
34.69%
Property & equipment, gross
Less: accumulated depreciation & amortization
Property & equipment, net
Intangible assets, net
Goodwill
Total other assets
Total Assets
29.17%
14.29%
14.89%
0.97%
3.85%
1.90%
57.49%
28.91%
14.51%
14.40%
1.69%
3.44%
2.61%
49.48%
33.15%
15.69%
17.46%
1.58%
3.23%
1.10%
49.44%
35.27%
17.26%
18.01%
1.45%
2.96%
1.35%
49.64%
35.62%
18.32%
17.30%
1.29%
2.64%
1.36%
50.55%
36.47%
19.60%
16.87%
1.18%
2.42%
1.36%
52.08%
37.93%
21.18%
16.75%
1.11%
2.26%
1.36%
54.22%
39.32%
22.72%
16.59%
1.04%
2.12%
1.36%
55.81%
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable
Accrued expenses
Deferred revenue & other current liabilities
Income taxes payable
Current portion of other long-term debt & leasing obligations
Total Current Liabilities
9.79%
5.07%
2.47%
0.57%
0.14%
18.04%
8.69%
4.62%
2.51%
1.18%
0.15%
17.15%
9.05%
4.27%
2.48%
0.32%
0.01%
16.14%
9.29%
4.74%
2.48%
0.67%
0.01%
17.20%
9.29%
4.74%
2.48%
0.72%
0.01%
17.24%
9.29%
4.74%
2.48%
0.72%
0.01%
17.24%
9.29%
4.74%
2.48%
0.71%
0.01%
17.24%
9.29%
4.74%
2.48%
0.71%
0.01%
17.24%
3.05%
0.14%
2.91%
0.04%
0.00%
5.18%
8.13%
0.28%
0.15%
0.13%
0.00%
0.13%
4.88%
5.14%
0.12%
0.01%
0.10%
0.00%
0.62%
5.34%
6.06%
0.12%
0.01%
0.11%
0.00%
0.35%
5.11%
5.57%
0.12%
0.01%
0.11%
0.00%
0.38%
5.11%
5.59%
0.12%
0.01%
0.11%
0.00%
0.38%
5.11%
5.59%
0.12%
0.01%
0.11%
0.00%
0.37%
5.11%
5.59%
0.12%
0.01%
0.11%
0.00%
0.37%
5.11%
5.59%
Total Liabilities
26.17%
22.28%
22.20%
22.77%
22.84%
22.84%
22.83%
22.83%
Equity
Stockholders equity
Common stock
Retained earnings
Accumulated other comprehensive income
Treasury stock
Total Stockholders' Equity
13.45%
17.90%
0.00%
-0.02%
31.33%
15.00%
15.62%
0.00%
-3.43%
27.20%
15.45%
19.11%
0.00%
-7.33%
27.24%
14.81%
21.72%
0.00%
-9.67%
26.87%
13.87%
24.07%
0.00%
-10.22%
27.72%
13.31%
26.73%
0.00%
-10.79%
29.25%
13.09%
29.75%
0.00%
-11.45%
31.39%
12.29%
32.71%
0.00%
-12.02%
32.98%
Total Liabilities & Stockholders' Equity
57.49%
49.48%
49.44%
49.64%
50.55%
52.08%
54.22%
55.81%
Fiscal Years Ending Jan. 31
Long-term liabilities
Total debt
Less: current portion
Long-term debt & capital leases
Non-cash obligations for construction in progress - leased facilities
Deferred income taxes
Deferred revenue & other liabilities
Total Long-Term Liabilities
DICK'S SPORTING GOODSInc
Value Driver Estimation (In Thousands)
Fiscal Years Ending Jan. 31
Calculation of NOPLAT
EBITA
Net sales
Cost of sales:
Cost of goods sold, including occupancy & distribution costs
Selling, general & administrative expenses
Pre-opening expenses
Implied Interest from Operating Leases
EBITA
Marginal Tax Rate
Federal statutory rate
State income tax
Other permantent items
Marginal Tax Rate
Less: Adjusted Taxes
Income Tax Provision (Benefit)
(+) Tax Shield on Interest Expense
(+) Tax Shield on Implied Lease Interest
(-) Tax Shield on Other Income
Adjusted Taxes
Plus: Change in Deferred Taxes (DT)
DT Liabilities
DT Assets
Change in Deferred Taxes
NOPLAT (EBITA - Adjusted Taxes + Change in DT Liabilities)
2012
2013
2014
2015E
2016E
2017E
2018E
2019E
5,211,802
5,836,119
6,213,173
6,781,219
7,589,606
8,299,642
8,868,906
9,444,656
(3,616,921) (3,998,956) (4,269,223) (4,680,380) (5,207,202) (5,694,923) (6,085,843) (6,480,923)
(1,148,268) (1,297,413) (1,386,315) (1,512,072) (1,689,479) (1,848,168) (1,982,200) (2,110,881)
(14,593)
(16,076)
(20,823)
(28,368)
(23,223)
(25,338)
(26,607)
(28,334)
176,900
182,465
188,863
213,415
228,354
242,055
254,158
266,866
608,920
706,139
725,675
773,813
898,057
973,268 1,028,413 1,091,384
35.00%
4.10%
-0.20%
38.90%
35.00%
3.60%
0.05%
38.65%
35.00%
3.50%
0.10%
38.60%
35.00%
3.50%
0.08%
38.58%
35.00%
3.50%
0.08%
38.58%
35.00%
3.50%
0.08%
38.58%
35.00%
3.50%
0.08%
38.58%
35.00%
3.50%
0.08%
38.58%
168,120
5,395
68,814
0
247,746
199,116
2,332
70,523
(1,761)
286,243
208,509
1,131
72,901
(4,718)
287,259
217,661
1,020
82,335
(2,719)
303,735
259,514
1,078
88,099
(2,220)
350,911
283,354
1,198
93,385
(2,451)
380,388
300,825
1,304
98,054
(3,422)
403,605
320,352
1,391
102,957
(3,644)
428,344
0
24,896
21,222
7,413
34,671
(2,362)
38,617
41,312
24,563
23,943
43,118
(16,480)
28,547
44,421
3,301
31,169
45,426
1,617
33,091
46,332
1,016
35,239
47,282
1,198
382,396
417,535
462,979
453,597
550,447
594,496
625,824
664,239
734,402
38,338
4,113
1,014,997
64,213
1,856,063
345,214
34,625
15,737
1,096,186
73,838
1,565,600
181,731
60,779
7,275
1,232,065
99,386
1,581,236
249,170
51,537
11,528
1,312,844
89,512
1,714,591
441,846
57,681
12,902
1,469,348
100,183
2,081,960
676,606
63,077
14,109
1,606,811
109,555
2,470,159
946,044
67,404
15,077
1,717,020
117,070
2,862,614
1,193,834
71,779
16,056
1,828,485
124,669
3,234,825
Calculation of Invested Capital
Operating Current Assets
Normal Cash
Accounts receivable, net
Income taxes receivable
Inventory, net
Prepaid expenses & other current assets
Current Operating Assets
Operating Current Liabilities
Accounts payable
Accrued expenses
Deferred revenue & other current liabilities
Income taxes payable
Current Operating Liabilities
510,398
264,073
128,765
29,484
932,720
507,247
269,900
146,362
68,746
992,255
562,439
265,040
154,384
19,825
1,001,688
630,165
321,430
168,174
45,709
1,165,478
Net Operating Working Capital
923,343
573,345
579,548
549,113
Net Property, Plant, & Equipment
775,896
840,135 1,084,529 1,221,593 1,312,881 1,400,248 1,485,222 1,567,334
Capitalized PV of Operating Leases
Intangible assets, net
Other Assets
Other Long-Term Operating Assets
Deferred revenue & other liabilities
Other Long-Term Operating Liabilities
705,287
359,747
188,222
54,498
1,307,754
771,269
393,403
205,831
59,504
1,430,008
824,170
420,386
219,949
63,173
1,527,678
877,673
447,677
234,227
67,274
1,626,851
774,206 1,040,151 1,334,936 1,607,973
2,358,663 2,432,873 2,518,170 2,845,533 3,044,720 3,227,403 3,388,773 3,558,212
50,490
98,903
98,255
98,255
98,255
98,255
98,255
98,255
86,375
147,904
65,561
88,156
98,665
107,895
115,296
122,781
2,495,528 2,679,680 2,681,986 3,031,943 3,241,640 3,433,553 3,602,324 3,779,247
269,827
271,965
284,540
284,540
331,628
331,628
346,520
346,520
387,829
387,829
424,112
424,112
453,201
453,201
482,622
482,622
Invested Capital
3,922,802 3,808,620 4,014,435 4,456,130 4,940,897 5,449,841 5,969,281 6,471,933
NOPLAT
Beginning Invested Capital
Return on Invested Capital (ROIC)
382,396
417,535
462,979
453,597
550,447
594,496
625,824
664,239
3,605,442 3,922,802 3,808,620 4,014,435 4,456,130 4,940,897 5,449,841 5,969,281
10.61%
10.64%
12.16%
11.30%
12.35%
12.03%
11.48%
11.13%
NOPLAT
Invested Capital Current Year
Invested Capital Previous Year
Free Cash Flow (FCF)
382,396
3,922,802
3,605,442
65,036
Beginning Invested Capital
ROIC
WACC
Economic Profit (EP)
3,605,442 3,922,802 3,808,620 4,014,435 4,456,130 4,940,897 5,449,841 5,969,281
10.61%
10.64%
12.16%
11.30%
12.35%
12.03%
11.48%
11.13%
7.19%
7.19%
7.19%
7.19%
7.19%
7.19%
7.19%
7.19%
123,230
135,557
189,208
165,032
230,132
239,336
234,079
235,156
417,535
3,808,620
3,922,802
531,717
462,979
4,014,435
3,808,620
257,163
453,597
4,456,130
4,014,435
11,903
550,447
4,940,897
4,456,130
65,680
594,496
5,449,841
4,940,897
85,553
625,824
664,239
5,969,281 6,471,933
5,449,841 5,969,281
106,383
161,587
DICK'S SPORTING GOODSInc
Weighted Average Cost of Capital (WACC) Estimation
Estimates
Common Stock Outstanding
(x) Current price
MV of Equity
Current portion of other long-term debt & leasing obligations
Other long-term debt & capital leases
MV of Debt
Weights
121,238,890
45.22
5,482,422,606
899.00
6,476.00
7,375
68.53%
0.0001%
MV of Operating Leases
2,518,170,471
31.47%
MV of Total Capital (E+D+OPER)
8,000,600,452
100.00%
Cost of Equity
CAPM:
Risk-free rate
Equity Risk Premium
Beta
Cost of Equity
Cost of Debt
Marginal Tax Rate
Credit Rating
Bond Yield
Pre-Tax Cost of Debt
WACC
3.27% based on 30 year treasury bond from treasury.gov
4.64% based on 30 year geometric average
1.10 based on 2 year weekly data from Bloomberg
8.37%
38.58%
Not Rated credit rating not provided
7.50% avg of stated yield of notes payable (no publicly traded bonds)
7.50%
7.19%
DICK'S SPORTING GOODSInc
Discounted Cash Flow (DCF) and Economic Profit (EP) Valuation Models
Key Inputs:
CV Growth
CV ROIC
WACC
Cost of Equity
2.75%
11.13%
7.19%
8.37%
Fiscal Years Ending Jan. 31
2015E
2016E
2017E
2018E
2019E (CV)
DCF Model
FCF
PV FCF
11,903
11,104
65,680
57,166
85,553
69,469
106,383
80,591
11,267,744
8,535,900
8,754,231
PV Oper
+PV Non-Oper
Excess Cash
0.00
-PV Debt
-PV Other
ESOP
Operating Leases
PV of Equity
Shares Outstanding
Target Price as of 1/31/14
Target Price as of 9/19/14
7.38
94,831
2,518,170
$
$
EP Model
Invested Capital
EP
PV EP
4,014,435
165,032
153,965
PV Oper
+PV Non-Oper
Excess Cash
8,754,231
0.00
-PV Debt
-PV Other
ESOP
Operating Leases
PV of Equity
Shares Outstanding
Target Price as of 1/31/14
Target Price as of 9/19/14
6,141,222
121,239
50.65
52.18
7.38
94,831
2,518,170
$
$
6,141,222
121,239
50.65
52.18
230,132
200,301
239,336
194,342
234,079
177,327
235,156
4,013,860
DICK'S SPORTING GOODSInc
Dividend Discount Model (DDM) or Fundamental P/E Valuation Model
2015E
Fiscal Years Ending Jan. 31
EPS
$
2.90 $
2016E
3.48 $
2017E
3.82 $
2018E
2019E (CV)
4.08 $
Key Assumptions
CV Growth
CV ROE
Net Income
Avg. Shareholders Equity
Cost of Equity
Retention Ratio
2.75%
17.29%
510,006
2,949,363
8.37%
15.90%
Future Cash Flows
EPS (CV Year)
Future Cash Flow
Dividends Per Share
Discounted Dividends
Target Price as of 1/31/14
Target Price as of 9/19/14
4.42
$
0.50
0.46
$
$
49.57
51.07
0.50
0.43
0.50
0.39
0.50
0.36
4.42
66.11
0.50
47.93
DICK'S SPORTING GOODSInc
Relative Valuation Models
Ticker
FL
COLM
CAB
BGFV
SPWH
HIBB
FINL
Company
FOOT LOCKER Inc
$
COLUMBIA SPORTSWEAR CO
$
CABELA'S INCORPORATED
$
BIG 5 SPORTING GOODS CORP
$
SPORTSMAN'S WAREHOUSE HOLDINGS Inc
$
HIBBETT SPORTS Inc
$
FINISH LINE
$
DKS
DICK'S SPORTING GOODSInc
Target Price:
Relative P/E (EPS14)
Relative P/E (EPS15)
Price
55.15
35.82
56.46
9.47
7.71
42.50
24.73
$ 43.24
$
$
EPS
2014E
$3.44
$3.50
$3.57
$0.73
$0.51
$2.71
$1.88
EPS
2015E
$3.80
$4.04
$4.19
$0.95
$0.69
$3.07
$2.13
Average
$2.90
$3.48
40.98
41.46
P/E 14
16.0
10.2
15.8
13.0
15.1
15.7
13.2
14.1
P/E 15
14.5
8.9
13.5
10.0
11.2
13.8
11.6
11.9
14.9
12.4
Est.
5yr Gr.
11.2
13.4
17
13.5
20.3
12.6
10.8
2.75
PEG 14
1.43
0.76
0.93
0.96
0.74
1.24
1.22
1.0
5.4
PEG 15
1.30
0.66
0.79
0.74
0.55
1.10
1.08
0.9
4.5
DICK'S SPORTING GOODSInc
Key Management Ratios
Fiscal Years Ending Jan. 31
Liquidity Ratios
Current Ratio = Current Assets/Current Liabilities
Current Assets
Current Liabilities
Current Ratio
Activity or Asset-Management Ratios
Asset Turnover = Sales/Avg. Total Assets
Sales
Average Total Assets
Asset Turnover
Days Sales Outstanding = AR/(Annual Sales/360)
Accounts Receivable
Annual Sales/360
Days Sales Outstanding
2012
1,868,393
940,146
1.99
2013
1,595,889
1,000,768
1.59
2014
1,620,071
1,002,587
1.62
2015E
1,754,009
1,166,255
1.50
5,211,802
2,796,994
1.86
5,836,119
2,942,130
1.98
6,213,173
2,979,647
2.09
6,781,219
3,218,897
2.11
38,338
14,477
2.65
34,625
16,211
2.14
60,779
17,259
3.52
51,537
18,837
2.74
2016E
2017E
2018E
2019E
2,121,969 2,510,768 2,903,832 3,276,661
1,308,638 1,430,995 1,528,755 1,627,999
1.62
1.75
1.90
2.01
7,589,606 8,299,642 8,868,906 9,444,656
3,601,541 4,079,676 4,565,445 5,039,692
2.11
2.03
1.94
1.87
57,681
21,082
2.74
63,077
23,055
2.74
67,404
24,636
2.74
71,779
26,235
2.74
Financial Leverage Ratios
Debt Ratio = Total Liab/Total Assets
Total Liabilities
Total Assets
Debt Ratio
1,363,707 1,300,483 1,379,308 1,544,078 1,733,237 1,895,248 2,024,613 2,156,045
2,996,452 2,887,807 3,071,487 3,366,307 3,836,775 4,322,577 4,808,313 5,271,071
45.51%
45.03%
44.91%
45.87%
45.17%
43.85%
42.11%
40.90%
Debt-to-Equity = Total Liab/Equity
Total Liabilities
Shareholders' Equity
Debt-to-Equity Ratio
1,363,707 1,300,483 1,379,308 1,544,078 1,733,237 1,895,248 2,024,613 2,156,045
1,632,745 1,587,324 1,692,179 1,822,229 2,103,538 2,427,329 2,783,701 3,115,025
0.84
0.82
0.82
0.85
0.82
0.78
0.73
0.69
Capitalization Ratio = LT Debt/LT Debt+Equity
Long-Term Debt
Long-Term Debt+Shareholders' Equity
Capitalization Ratio
151,596
7,762
6,476
7,360
8,224
8,973
9,566
10,186
1,784,341 1,595,086 1,698,655 1,829,589 2,111,762 2,436,302 2,793,266 3,125,211
8.50%
0.49%
0.38%
0.40%
0.39%
0.37%
0.34%
0.33%
Profitability Ratios
Gross Profit = Gross Profit/Revenue
Gross Profit
Sales Revenue
Gross Profit
1,594,881 1,837,163 1,943,950 2,100,838 2,382,404 2,604,719 2,783,063 2,963,733
5,211,802 5,836,119 6,213,173 6,781,219 7,589,606 8,299,642 8,868,906 9,444,656
30.60%
31.48%
31.29%
30.98%
31.39%
31.38%
31.38%
31.38%
Operating Profit = Operating Profit/Revenue
Operating Profit
Sales Revenue
Operating Profit
432,020.00 523,674.00 536,812.00 560,397.70 669,702.58
731,213
774,255
824,518
5,211,802 5,836,119 6,213,173 6,781,219 7,589,606 8,299,642 8,868,906 9,444,656
8.29%
8.97%
8.64%
8.26%
8.82%
8.81%
8.73%
8.73%
Return on Equity = Net Income/Avg. Equity
Net Income
Average Shareholders' Equity
Return on Equity
263,906
290,709
337,598
347,142
413,150
451,105
478,919
510,006
1,498,163 1,610,035 1,639,752 1,757,204 1,962,883 2,265,433 2,605,515 2,949,363
17.62%
18.06%
20.59%
19.76%
21.05%
19.91%
18.38%
17.29%
Return on Assets = Net Income/Avg. Total Assets
Net Income
Average Total Assets
Return on Assets
263,906
290,709
337,598
347,142
413,150
451,105
478,919
510,006
2,796,994 2,942,130 2,979,647 3,218,897 3,601,541 4,079,676 4,565,445 5,039,692
9.44%
9.88%
11.33%
10.78%
11.47%
11.06%
10.49%
10.12%
Payout Policy Ratios
Dividend Payout Ratio = Dividends per Share/EPS
Dividends per Common Share
Earnings per Share
Dividend Payout Ratio
0.50
2.19
22.78%
0.50
2.39
20.92%
0.50
2.75
18.20%
0.50
2.90
17.26%
0.50
3.48
14.38%
0.50
3.82
13.08%
0.50
4.08
12.25%
0.50
4.42
11.31%
Retail Related Ratios
Sales-to-Inventory Spread = Sales Growth - Inventory Growth
Sales Growth (Y/Y)
6.99%
Inventory Growth (Y/Y)
13.17%
Sales-to-Inventory Spread
-6.18%
11.98%
8.00%
3.98%
6.46%
12.40%
-5.93%
9.14%
6.56%
2.59%
11.92%
11.92%
0.00%
9.36%
9.36%
0.00%
6.86%
6.86%
0.00%
6.49%
6.49%
0.00%
Present Value of Operating Lease Obligations - 2008
Present Value of Operating Lease Obligations - 2009
Operating
Leases
360532
369937
360940
348479
342322
1878352
3660562
1173749
2486812.69
Fiscal Years Ending Jan. 31
2009
2010
2011
2012
2013
Thereafter
Total Minimum Payments
Less: Interest
PV of Minimum Payments
Capitalization of Operating Leases - 2008
Lease
Commitment
360532
369937
360940
348479
342322
342322
7.50%
5.5
PV Lease
Payment
335378.6
320118.6
290542.5
260941.3
238447.3
1041384.5
2486812.69
Present Value of Operating Lease Obligations - 2011
Year
1
2
3
4
5
6 & beyond
PV of Minimum Payments
Lease
Commitment
370512
367521
357528
350459
335788
335788
7.50%
4.7
PV Lease
Payment
344662.3
318027.9
287795.9
262423.9
233896.0
897297.4
2344103.52
Pre-Tax Cost of Debt
Number Years Implied by Year 6 Payment
Year
1
2
3
4
5
6 & beyond
PV of Minimum Payments
Lease
Commitment
381833
386122
381519
367583
350868
350868
7.50%
4.1
PV Lease
Payment
355193.5
334124.0
307107.8
275246.3
244400.1
842449.5
2358521.14
Present Value of Operating Lease Obligations - 2013
Operating
Leases
432329
442861
430219
407243
365614
1245643
3323909
891036
2432873.26
Fiscal Years Ending Jan. 31
2013
2014
2015
2016
2017
Thereafter
Total Minimum Payments
Less: Interest
PV of Minimum Payments
Operating
Leases
381833
386122
381519
367583
350868
1451173
3319098
960577
2358521.14
Fiscal Years Ending Jan. 31
2011
2012
2013
2014
2015
Thereafter
Total Minimum Payments
Less: Interest
PV of Minimum Payments
Capitalization of Operating Leases - 2010
Pre-Tax Cost of Debt
Number Years Implied by Year 6 Payment
Present Value of Operating Lease Obligations - 2012
Operating
Leases
405379
413538
399681
383975
361487
1288062
3252122
893459
2358663.36
Fiscal Years Ending Jan. 31
2012
2013
2014
2015
2016
Thereafter
Total Minimum Payments
Less: Interest
PV of Minimum Payments
Fiscal Years Ending Jan. 31
2010
2011
2012
2013
2014
Thereafter
Total Minimum Payments
Less: Interest
PV of Minimum Payments
Capitalization of Operating Leases - 2009
Pre-Tax Cost of Debt
Number Years Implied by Year 6 Payment
Year
1
2
3
4
5
6 & beyond
PV of Minimum Payments
Present Value of Operating Lease Obligations - 2010
Operating
Leases
370512
367521
357528
350459
335788
1575332
3357140
1013036
2344103.52
Operating
Leases
469583
479560
456977
415395
362633
1234277
3418425
900255
2518170.47
Fiscal Years Ending Jan. 31
2014
2015
2016
2017
2018
Thereafter
Total Minimum Payments
Less: Interest
PV of Minimum Payments
891.0357385
Capitalization of Operating Leases - 2011
Capitalization of Operating Leases - 2012
Pre-Tax Cost of Debt
Number Years Implied by Year 6 Payment
Year
1
2
3
4
5
6 & beyond
PV of Minimum Payments
Lease
Commitment
405379
413538
399681
383975
361487
361487
7.50%
3.6
PV Lease
Payment
377096.7
357847.9
321727.4
287520.7
251796.9
762673.7
2358663.36
Present Value of Operating Lease Obligations - 2007
Operating
Leases
330857
346068
341636
328490
315983
1950607
3613641
1208545
2405096.33
Fiscal Years Ending
2008
2009
2010
2011
2012
Thereafter
Total Minimum Payments
Less: Interest
PV of Minimum Payments
Capitalization of Operating Leases - 2007
Pre-Tax Cost of Debt
Number Years Implied by Year 6 Payment
Year
1
2
3
4
5
6 & beyond
PV of Minimum Payments
Lease
Commitment
330857
346068
341636
328490
315983
315983
7.50%
6.2
PV Lease
Payment
307774.0
299463.9
275003.5
245973.5
220100.7
1056780.8
2405096.33
Pre-Tax Cost of Debt
Number Years Implied by Year 6 Payment
Year
1
2
3
4
5
6 & beyond
PV of Minimum Payments
Lease
Commitment
432329
442861
430219
407243
365614
365614
Capitalization of Operating Leases - 2013
7.50%
3.4
PV Lease
Payment
402166.5
383222.1
346309.3
304943.8
254671.6
741560.0
2432873.26
Pre-Tax Cost of Debt
Number Years Implied by Year 6 Payment
Year
1
2
3
4
5
6 & beyond
PV of Minimum Payments
Lease
Commitment
469583
479560
456977
415395
362633
362633
7.50%
3.4
PV Lease
Payment
436821.4
414978.9
367848.5
311048.0
252595.1
734878.6
2518170.47
Effects of ESOP Exercise and Share Repurchases on Common Stock Balance Sheet Account and Number of Shares Outstanding
Number of Options Outstanding (shares):
Average Time to Maturity (years):
Expected Annual Number of Options Exercised:
Current Average Strike Price:
Cost of Equity:
Current Stock Price:
Increase in Shares Outstanding:
Average Strike Price:
Increase in Common Stock Account:
Change in Treasury Stock
Expected Price of Repurchased Shares:
Shares Issued
Number of Shares Repurchased:
Shares Outstanding (beginning of the year)
Plus: Shares Issued Through ESOP
Plus: Issuance of Common Stock
Less: Shares Repurchased in Treasury
Shares Outstanding (end of the year)
4,954,047
3.19
1,553,617
$
$
$
$
28.54
8.37%
43.24
2015E
1,553,617
28.54 $
44,347,563
2016E
1,553,617
30.94 $
48,061,228
2017E
1,553,617
33.53 $
52,085,875
2018E
1,553,617
36.33 $
56,447,546
2019E
2020E
2021E
2022E
2023E
2024E
39.38 $
-
42.67 $
-
46.25 $
-
50.12 $
-
54.32 $
-
58.86
-
200,000,000
43.24 $
120,000,000
46.86 $
120,000,000
50.79 $
120,000,000
55.04 $
120,000,000
59.65 $
64.64 $
70.05 $
75.92 $
82.28 $
89.17
4,625,347
2,560,769
2,362,900
2,180,320
2,011,848
-
-
-
-
-
122,878,000
1,553,617
119,806,271
1,553,617
118,799,119
1,553,617
117,989,836
1,553,617
117,363,134
0
115,351,286
0
115,351,286
0
115,351,286
0
115,351,286
0
115,351,286
0
4,625,347
119,806,271
2,560,769
118,799,119
2,362,900
117,989,836
2,180,320
117,363,134
2,011,848
115,351,286
115,351,286
115,351,286
115,351,286
115,351,286
115,351,286
VALUATION OF OPTIONS GRANTED IN ESOP
Ticker Symbol
Current Stock Price
Risk Free Rate
Current Dividend Yield
Annualized St. Dev. of Stock Returns
Range of
Outstanding Options
Range 1
Range 2
Range 3
Range 4
Number
of Shares
1,307,546
1,369,573
1,238,804
1,038,124
Total
4,954,047 $
DKS
43.24
3.27%
1.10%
26.54%
Average
Exercise
Price
14.97
23.14
32.67
47.85
28.54
Average
Remaining
Life (yrs)
1.76
2.44
3.42
5.70
$
$
$
$
3.19 $
B-S
Option
Price
28.28
20.99
14.75
10.44
$
$
$
$
$
18.58 $
Value
of Options
Granted
36,977,742
28,748,257
18,266,170
10,838,686
94,830,855
DICK'S SPORTING GOODSInc
Value Driver Estimation (In Thousands)
Capital Expenditures
2012
2013
2014
2015E
2016E
2017E
2018E
2019E
Buildings & land
Leasehold improvements
Furniture, fixtures & equipment
Property & equipment, gross
177,740
679,001
663,682
1,520,423
215,816
736,005
735,184
1,687,005
220,295
895,798
943,532
2,059,625
226,941
1,035,355
1,129,609
2,391,905
233,164
1,162,937
1,306,978
2,703,079
239,638
1,292,411
1,494,716
3,026,765
246,378
1,427,219
1,690,186
3,363,783
253,367
1,563,505
1,896,363
3,713,235
Y/Y Change
Buildings & land
Leasehold improvements
Furniture, fixtures & equipment
Property & equipment, gross
4,241
89,574
91,813
185,628
38,076
57,004
71,502
166,582
4,479
159,793
208,348
372,620
6,646
139,557
186,077
332,280
6,223
127,581
177,369
311,174
6,474
129,474
187,738
323,686
6,740
134,807
195,471
337,018
6,989
136,286
206,177
349,452
% of Total Spend
Buildings & land
Leasehold improvements
Furniture, fixtures & equipment
Property & equipment, gross
2.3%
48.3%
49.5%
100%
22.9%
34.2%
42.9%
100%
1.2%
42.9%
55.9%
100%
2%
42%
56%
100%
2%
41%
57%
100%
2%
40%
58%
100%
2%
40%
58%
100%
2%
39%
59%
100%
3.9%
5,211,802
201,807
3.8%
5,836,119
219,026
4.6%
6,213,173
285,668
4.90%
6,781,219
332,280
4.10%
7,589,606
311,174
3.90%
8,299,642
323,686
3.80%
8,868,906
337,018
3.70%
9,444,656
349,452
% of Sales (from SCF)
Sales
Capital Expenditures
Sensitivity Analysis
CV Growth
Beta
CV Growth
Pre Tax Cost of Debt
$ 52.18
1.75%
2.00%
2.25%
2.50%
2.75%
3.00%
3.25%
3.50%
3.75%
6.00%
68.37
71.39
74.83
78.75
83.28
88.56
94.80
102.30
111.45
6.25%
62.64
65.18
68.03
71.27
74.97
79.23
84.21
90.09
97.15
6.50%
57.53
59.66
62.05
64.73
67.77
71.25
75.26
79.93
85.46
6.75%
52.93
54.73
56.73
58.97
61.48
64.33
67.59
71.35
75.73
WACC
7.00%
48.78
50.30
51.98
53.85
55.94
58.29
60.95
63.99
67.50
7.25%
45.01
46.30
47.72
49.28
51.02
52.96
55.15
57.63
60.46
7.50%
41.58
42.67
43.86
45.17
46.62
48.23
50.04
52.06
54.36
7.75%
38.44
39.36
40.36
41.46
42.67
44.01
45.50
47.16
49.03
8.00%
35.55
36.33
37.17
38.09
39.10
40.21
41.44
42.80
44.33
$ 52.18
0.80
0.90
1.00
1.10
1.20
1.30
1.40
4.00%
87.11
77.55
69.41
62.41
56.31
50.96
46.22
4.25%
82.13
72.82
64.92
58.13
52.23
47.07
42.50
4.50%
77.55
68.48
60.81
54.22
48.52
43.53
39.12
ERP
4.64%
75.14
66.21
58.65
52.18
46.58
41.68
37.36
4.75%
73.32
64.49
57.03
50.65
45.12
40.29
36.04
5.00%
69.41
60.81
53.55
47.35
42.00
37.33
33.21
5.25%
65.79
57.39
50.34
44.32
39.12
34.59
30.61
5.50%
62.41
54.22
47.35
41.50
36.46
32.07
28.22
5.75%
59.26
51.27
44.58
38.89
34.00
29.74
26.00
$ 52.18
1.75%
2.00%
2.25%
2.50%
2.75%
3.00%
3.25%
3.50%
3.75%
$ 52.18
5.50%
6.00%
6.50%
7.00%
7.50%
8.00%
8.50%
9.00%
9.50%
1.75%
45.84
47.18
48.65
50.28
52.10
54.13
56.42
59.02
62.00
6.00%
71.55
74.65
77.64
80.51
83.28
85.95
88.52
91.01
93.40
Annual Comp Sales Growth
2.25%
2.50%
2.75%
45.90
45.92
45.95
47.24
47.26
47.29
48.71
48.74
48.77
50.35
50.38
50.41
52.16
52.20
52.23
54.20
54.23
54.27
56.49
56.53
56.56
59.10
59.13
59.17
62.08
62.12
62.16
2.00%
45.87
47.21
48.68
50.31
52.13
54.16
56.46
59.06
62.04
6.25%
63.94
66.85
69.66
72.36
74.97
77.48
79.90
82.23
84.49
6.50%
57.35
60.10
62.75
65.31
67.77
70.14
72.43
74.64
76.77
6.75%
51.59
54.20
56.72
59.14
61.48
63.74
65.91
68.01
70.03
WACC
7.00%
46.51
49.00
51.40
53.71
55.94
58.09
60.16
62.16
64.08
3.00%
45.98
47.32
48.80
50.44
52.26
54.30
56.60
59.21
62.20
7.25%
42.01
44.39
46.68
48.89
51.02
53.07
55.05
56.96
58.81
3.25%
46.00
47.35
48.83
50.47
52.29
54.34
56.64
59.25
62.24
7.50%
37.98
40.27
42.46
44.58
46.62
48.59
50.49
52.32
54.09
3.50%
46.03
47.38
48.86
50.50
52.33
54.37
56.67
59.29
62.28
7.75%
34.37
36.56
38.67
40.71
42.67
44.57
46.39
48.15
49.85
8.25%
32.89
33.54
34.25
35.02
35.86
36.78
37.80
38.92
40.16
3.75%
46.06
47.41
48.89
50.53
52.36
54.40
56.71
59.33
62.33
8.00%
31.10
33.21
35.25
37.21
39.10
40.93
42.69
44.39
46.03
8.25%
28.14
30.18
32.14
34.04
35.86
37.63
39.33
40.97
42.55