DICK'S Sporting Goods (DKS) 22 Nov 222022 Q3 Earnings call transcript

Hello, everyone, and welcome to the Q3 2022 DICK'S Sporting Goods, Inc. Earnings Conference Call. My name is Emily, and I'll be your operator for today's call. [Operator Instructions]. I will now turn the call over to our host, Nate Gilch, Senior Director of Investor Relations. Nate. ahead, go Please

Navdeep and in quarter for call XXXX our at call approximately Executive Lauren everyone, A for Financial discuss of investors.dicks.com Investor playback will us Relations our Hobart, today's Officer; Chief and third results. be President months. our thank morning, Chief joining Officer. archived you will to be Gupta, our Good XX On located today's website

uncertainties subject we these reminder, forward-looking be our could assume to results forward-looking statements various SEC statements actual update will and and release filings cautionary statements statements. these should risk last no our from any are a As during be conjunction of Form statements in with including to risks in considered making statements call. that such materially this obligation XX-K earnings made our cause the to in which We factor annual and differ cautionary or with discussions our report information. on Any

During basis, which will this non-GAAP related impact XXXX. certain of notes in on the to QX discuss diluted items share issued morning's earnings convertible eliminates a senior per call, our we

For find of non-GAAP call. scheduling fourth XXXX purposes, a XXXX. measures planning publish or this tentatively any to website. today's additional earnings our our X, Please quarter referenced for reconciliation on Investor to your March future on financial refer results Relations details finally, to And we on are

now I'll call that, with So to turn the over Lauren.

morning, you, everyone. Nate, Thank and good

exceptionally announced As strong delivered morning, quarter. earlier we an this we

improvements past transformational demonstrate on strength journey the Our we've of foundational the years. QX our our and the success over X made based results and continued business

athletes. with clearly are and working are resonating our strategies Our

as held well face as to our well athletes we up assortment a compelling a While consumers continue macroeconomic and omnichannel best-in-class uncertainties, differentiated continue experience. very to offer them as have

compared to spent saw consumer trip the More In quarter, last year. from and more frequently they the athletes fact, period they more purchased trends. purchased important during three each we us, same

our assortment, Our standards QX, in a best-in-class us athlete momentum and differentiated omnichannel sales we lasting a service elevated transactions average in a comp This strong XX% last industry comp and top This our ticket. the by driven on setting both record and X.X%, increases was comps achieved strong comp XX% and X% and XXXX $X.XX shift comp of marketplace. billion in XXXX. in are has increased of year, a given apart in consumer behavior experience

is company, sustainable you've our As our heard DICK'S say evidence QX of times, growth many story. and a growth are powerful us results

last position and our of call, key and the at our items. were strong meet demand. very on indicated consumer enabled robust back-to-school in season QX, a we to inventory in we end us As back This deliver was stock strong,

and of to pockets mentioned Additionally, address we have inventory that apparel that also quarter. have this of addressed much overage we we

As merchandise XXX decline of basis a points result, year. as expected, and last margin we saw versus a

quarter basis. delivered ahead our rate We of margins share XXXX merchandise efficiency. meaningfully pre-COVID and annual driven in margin in expanded greater EBT our quarter, elevated higher structurally diluted history. we Xx sales, total, In remain a pre-COVID merchandise ahead, XX.X% achieved $X.XX, significantly This to to by of our looking of non-GAAP basis. our on And double-digit margin be we XXXX. our operating earnings was Importantly, the any non-GAAP will third on levels per than very that confident higher compared remained merchandise continue margin an over

the of in commitment about to assortment excited DICK'S which we're I'd Navdeep we financial our results over their healthy about Looking have to ahead, possible and non-GAAP continued of confidence place full our sales make the the range range negative turn in our of $XX.XX. be helped enthusiastic quarter this $XX.XX for upcoming our and work and negative future our quality diluted inventory their hard I'm more to store performance outlook Goods, In review efforts strong per of well-positioned, the of to in the like our closing, for strong comparable thank very detail. now year we the expect year in in holiday all to of season. earnings pleased call business. business, X.X% have We share the we're is our holiday teammates results and during season. remain and the our outlook. with the and raising Sporting X% to that for inventory for be I'll and and Because third now to performance, to

Thank you, Lauren, and good morning, everyone.

results. a with quarter of review begin brief third our Let's

excited to are X.X% increase to billion. sales report $X.XX of a We consolidated

noted, increase QX of XXXX in Lauren the increased comparable a X.X% As of year, X% on top store a in increase XXXX. in of sales QX last period same XX.X% increase XX.X% a and

a significant net XXXX, in quarter XXX increased basis recent $X.XX XX.XX% or the versus sequential by apparel team ticket. and year. transactions a and from back-to-school average in footwear, by sales increase billion versus X.X% Gross our and quarters. XX%. sales the sales X.X% in increase Our well, portfolio, did was categories When trends compared very to XXXX differentiated third points Within strong of last This acceleration were our across assortment profit in reflects driven sports. driven comps our a declined

However, XXX basis QX of over it increased points XXXX.

the XXX was decline year-over-year of driven merchandise basis rate As by margin points. decline expected,

have this overage successful late We to product. cleaning up We continue to excess to start been value products. addressing in targeted quarter, our some focused due we liquidating the During apparel clean. XXXX very this concept intend inventory in of to order QX in inventory overages moved arriving much spring on chain and

basis. in to pre-COVID appropriately points investments year $XXX.X differentiated points margin SG&A increase earnings $XX $X.XX. and $X.XX was margin an our compared million net million diluted sales, of higher meaningfully to issued a per increase sophisticated hourly SG&A X Because non-GAAP also principal dollars rate This XXXX's delivered merchandise included $X.X represents million expect driven of in than levels, leveraged product per In disciplined XXXX, the sales. to This related compares are to XXX in non-GAAP The by a diluted year expanded last $X.X or of wage we and of The Driven last to of share XX.XX% non-GAAP EBT strategies as and increase expectations of million sales. XXXX. compared net and or a compares senior outlook. quarter talent basis pricing to approximately margin on basis million, Compared our technology remain a sales basis earnings annual merchandise Our pre-COVID structurally margins period by during of XXX% percentage our $XX.X of This by notes. $XXX.X a share million $X.XX. year. net a of merchandise of was points $XX.X $XX.X was our inducement to and of was within were outstanding current combined mix. due an rate increase support higher Interest our our primarily favorable non-GAAP QX of reflected operating earnings is XXXX with interest higher million and a assortment, to driven expense rates, drivers, these last we of XXX EBT expenses $XXX.X same an annual growth on on $XX.X total, QX related share over of million per compared million of and strategies. structural $XXX to efficiency to sales. the senior or of charges expense our or non-GAAP billion net notes continue a million to convertible basis XX.XX% levels exchange increase sales diluted to increase X.XX% net our of in

We unsecured of balance cash sheet. our approximately cash ended to $X.X and with and facility. billion our no looking credit billion borrowings QX Now equivalents on $X.X

XX% increased Our quarter last QX of year. end compared to inventory levels

chasing last our reminder, Therefore, a increase XXXX, XX% well XXXX. QX compared amidst to of comparison in the supply better sales year QX ahead were And our XX% against industry-wide increase inventory. chain in of disruptions. As was is inventory we

well healthy and is inventory Our positioned.

allocation. quarter $XXX and expenditures third dividends. our were capital to turning paid we Net in Now quarterly capital $XX million million approximately

convertible approximately aggregate have hedge taken cash warrants portion of shares with for quarter, we and of outstanding exchange, $XXX notes the During of our unwound the our we of out notes note million corresponding X.X outstanding. exchanged convertible million this $XXX the the or principal convertible in and completing still million million common senior approximately $XXX principal After stock. of approximately

to year-to-date, have in we retiring of million repurchases $XXX share through growth returned to our invest while Beyond dividends business. shareholders of our continuing the and convertible profitable X/X notes, nearly

with let outlook our So wrap for up XXXX. me

guidance. XXXX our holiday raising QX As performance a season, the we result assortment for and of are our of strong quality our the

to given updated uncertain backdrop. our level the Importantly, macroeconomic of appropriate outlook an continues caution incorporate

comparable compared expect For sales the to now of X.X% negative prior negative of negative to store our X% range expectation in X% X%. year, the to we negative

In $XX. be and more XXXX is XX.X% $XX.XX addition, midpoint, share EBT now our expected margin expect to of rate. $XX range $XX.XX earnings approximately the we of diluted to in the prior per our non-GAAP than expectation now to compared at double

the on of approximately rate pleased is shares with are and assumes and average we outstanding. effective based In our closing, earnings an Our XX XX% QX interest Sporting about million results, Thank guidance you tax very diluted enthusiastic Goods. you prepared the DICK'S very about now comments. open of Operator, This line for questions. future remain DICK'S. may we concludes your our for in

Instructions]. [Operator

Our Gutman first question Morgan today Stanley. from Simeon with comes

margin first on gross or merch question is margin. My

inventory, I been the getting fact saying a being of where excess still majority able through of gains. COVID to your if retain your gross you've well wanted think And of that margin? I period majority think, to I the build to this ask a have guess expect confidence I the that's that retain, forecast that you're case. that we this around vendors relatively does

at of start of back-to-school we gains. aggressively to were from maintain merchandise we a Simeon, particular this a took we apparel, clean. still be gotten of in could that you XXXX if that quarter back you. merch so late will in spring indicated and quarter, had we've care top that came to receipts able in we so amount our on up we and that we our that margin our significant clean inventory, and believe of taken inventory heavy holiday -- QX, thank we lot had look This Yes, retain

margin. that believe fact up absolutely in clean changes was we structural margin, even the point XX.X%. with in that the made that our overall our EBT would apparel, we it I So to to investment

So have in we profitability. over long-term the Xx was of our what it sustainability pre-XXXX, tremendous confidence

on is sales. follow-up my then And

categories or a back look than couple normalizing at level market Some the or the just the years. if business, of a higher maybe performing you thought, better would of overall either have

some been reversion. rebounded? You're prepared that to growing about talk can you talk business or stabilized about 'XX, of and Has digest can there's business the just categories but the the year? some Does keep next where

Yes.

that So QX on. core focused most the the that in categories the our we are ones are categories

back-to-school So categories and extremely team all well. our apparel, and top sports, they footwear, performed key categories,

which single grow from we anymore, If category key should you level. this reason every be our look no have meaningfully We long pre-COVID everything one not key able is levels. across to term, see not a categories, why versus we to except of hunt, rebaselined continue

comes next Adrienne from question Yih with Barclays. Our

to Congratulations this always. stellar execution on team the as

long your apparel? getting guess safe And buying for of clearly, into that. How that So actually seeing of over be footwear? to it kind you for spillage Are promo you're only made you've vendor through spill are you is Lauren, sounds for how my going those you like lasts? It environment. on promos? year. first next then I -- much support Navdeep, spring question do any Is And the way think

you excluding, you stock whatever of transit, buildup how unit So but right, are that outside that you about in-transit call safety buys, want of had it, in to thinking inventory.

Adrienne. Thanks,

always, the work be. it to at that vendor that in marketplace to is inventory we closely very our we the with as want all partners, the levels sure So make

needs past our partners. to category. move be was product with clean we vendor We moved, in quarter, to needs it will issue an every in be that's in partnership this cleaned up continue Apparel QX up when aggressive and and to whatever to be

the main really they're to looking and that thrilled great people holiday going Navdeep? we for Our a with is what robust time exactly priority inventory be to to and will now able start XXXX in have that gifts. few for right find in years clean, be stock we're QX first for that's

thanks. Adrienne, Yes,

to even of sports able indicated, and footwear, XXXX, as For guidance. category. I'm very early we going be about to But are not confident outdoor the provide the as the about team you core any business think Lauren apparel, aspects

about cautious long-term quarter provide with on of part being a And the sales as basis. we earnings XXXX our our -- are the we very confident overall, macroeconomic are outlook we'll So appropriately outlook. expectations But release. about fourth

Robby Our next from Bank comes with question of America. Ohmes

the on uplift the is to Maybe do basket color more driving should guys in that continue because dynamic you My quarter? is question year? third the Is you look in-stock stock -- the for on high into the we saw size? quarter, you driving it Like ticket more that on what's in and it increase fourth is average of of levels would helpful. be Or last items? transaction better the were out that the what

Yes.

terms and some some to our buying. consumers, which what that going. consumers transactions we some of mix was within the this driven strong, quarter is are passing basket, a Consumers signaling lifestyle keep -- was they shift comps year also items -- discretionary premiumization of that inflation provide along outdoor by lifestyle was active ourselves. this absorbed in And the by driven and impact considering people basket. are there by important a that really absolutely we to So XX% healthy of to costs But are than was they're there buying of to and them, what more the some and rest

So improved. were the really it basket. across Things was entire

our comment. and we Robby, did customer. we customers better. highly that the really, we income quarter. what in that our more have our actually was Yes, third And well demographic in Those I'll have saw did of gold add athletes Each really maybe even engaged one that loyal within store consumer

when And so optimistic business really the at we to quarter. aspects of the fourth continue look the we be core about

overall, now. the with that But very right the We are pleased balancing QX. were against in that macroeconomic see constraints that we we results we saw

how last quick of a planning out this Can against us just year you're follow-up. pull-forward holiday quarter? remind in of year you for terms played maybe and And fourth that how spending the

season. year pretty probably, retailer bit much little a Yes. last was to of bit of if look season, it that existing. you at XXXX were and little as to look saw as business, the constrained Robby, a inventory the We because look And but like early as we well overall in start however, there that both every the we the -- levels holiday overall

October. So not focused too or on weeks the few late first

McShane question from line the Sachs. with comes Kate next Goldman The of

the your that inventory risk over transit. said reconcile of in trying I that the next vendors there they was might as what just a I'm to if two or one And had of of to wondered have to with regards amount you manage deliveries result? any further quarter late

really now, Yes, everything very are product our factored got with a which of closely been feeling guidance, into flow thank Kate, our you. partners. vendor great working we're right about. and we really, good We've has

comes question Citi. from Lejuez next Our Paul with

in clearance, a to could sales you to in curious excess you clear can picked you in just you if clear a provide on you you Maybe the the if what margin for that compares through And driver to of think related through frame have had quarter? Any lift and XQ. guess to amount XQ, us side. saw inventory I'm that help cadence, traffic promotional the up I as the during Was sales? you it the merchandise how

there are think I two there. Paul, questions

came the sales have. that in transaction increase from And we the driver our allocated high inventory, the kind and of AUR highly portion and alluded the to, come clearance it growth saw quarter. not the quantification was third a the saw AUR Lauren heat more of from terms of gain material In in our sales I the we we of assortment would the of say like the increase. and What comp also

inventory risk the is had of been through continue fourth In we There quarter, quarter, moved terms in into fourth moved the much quickly potential markdown for of was of and some address. that clearance here will in inventory activated pockets which to quarter. third

guidance. meaningful that confident XXXX. And in guidance contemplated compared a able we fourth very margins merch that our we our gain be this are in to that have we'll However, to been has all quarter given, of with maintain

from Christopher comes question with Horvers next Our JPMorgan.

a Were you a how well line, the freight that if year-over-year? look of that quarters? still Is basis then in dig mix you sort will bit about as Can the are footwear as include basis the apparel XXX The thinking did relative you other freight to think pressure benefit on gross side? does we they really delayed And flow on categories? points, the over margin there and costs? through any inventory little costs capitalized a coming about

wasn't there that small not it the call Yes, to but it mix, Chris, the of in included. out, that's was material was probably terms benefit, a and reason

of terms down that when but and XXXX. the come continued compare this the are versus beginning freight the down not yes, freight to year, still In -- we seeing it since of come have costs, down costs have you to

flow take this the of into yes, be realized it terms -- of XXXX. reduced In will benefit some cost that cost the the will or time of will product,

a to prudent quarter. And guidance be fourth then as mentioned follow-up, conservative the around you in the trying and

of what there's sort arrive -- is October trend you are the implied that November, CAGR relative the comp? at of of seasonality about speak view? extrapolating degrading the of XXXX. informs sort are are end business there sort Or we baked through is that's of You occurring of X-year conservatism point and current XQ to degree the growth -- I as what your talk can normalized you to in? you some know I of guess,

QX. in We're very And of QX, out momentum about see point feel business strong our signs QX. three about we no of any would I in enthusiastic incredibly coming a QX. strong absolutely out, very months the we coming degradation. Chris, we really good had into

that of cautious and is fact our but now, as going consumer environment is been. the confidence macroeconomic right are the just We high through because it's a uncertain the being lot appropriately as

next D.A. question Mike Our with comes Baker from Davidson.

a That decline what how third basis question XXX guidance previous left not, -- Or margins better down now I smallest much over inventory the than Is expected on is in follow-up you're mostly why be and the to markdowns? is a just better think points. the EBT on is quarter. through So that if the decline than clear. margin year The the you previous be your fourth quarter would EBT to the saw in fourth quarters? the because quarter

won't can I would sure fourth to to are behind there fourth us. expected it. said, Yes, say you things we back clearance Mike, quarter. as activity in guide quarter, we third quarter is I activating into we that Like the of into improve I'm the specifically structurally are were go much

So reason. that's one

is about The feel manage other as well drive confident reason to ability just as our because higher productivity. we expenses our

each If with Makes the one that's more sense. follow-up, $XX ask could it's the a expense line this everything million, non-GAAP $XX of moving million all converted convert there. in three can mundane should pieces why that I question, going of reason but us that the the been be about a know any you stuff, different? with quarters just lot a there's basis, year. I and help interest On

if that can wondering line. you with just So us help

Yes.

million at the on over the basis. in associated are You it convert, costs look on terms $XX spot with year-to-date onetime of a when you it's

convert in we But So the look in an continue that quarter, you on convertible fourth execute out decide quarter contemplated do transaction take fourth and that not our tranche to basis. was will note if headwind guidance. in the opportunistic on another of to

from with is ISI. question Cheng next Evercore Our Warren

quarter. Great execution this

it's really here. but the on margin this keep understand just to Sorry to dynamics question, important hammering think I merchandise

you just spring of to from the apparel would look points XXXX us that we sense So like basis clearance can issue better Can about looks how came receipts. from little quarter the give bit much what late that excluding degraded maybe to this so understand it of merchandise like just margin look margins merchandise third. a second if I relative levels, XXX with

end that that of QX. activation Lauren from at of decline majority the overages the the saw quarter had the third indicated apparel we vast around here the Warren, we in came that

it. Got

own your process Okay. more a know of running lot of stores? clearing own a through follow-up old these just clearance And us chain your give I when just on your you Can is any the mainline it concepts, inventories. the concepts. margin my own content the way runs uplift through sense own through versus color is value your

better. value We and ongoing had on concepts, stores. can do see our that We've Yes. our chain our optimize success on margin with great we clearance both warehouse our

have helps great into product we to also also us which clear DICK'S products product but us We drive going when don't the enables margin. stores, bring think -- I to specifically. it Navdeep, also fresh success online, answer we're

of to the say this confidence of significantly locations. have than the is pleased would a that gains able I better our a concept we structural warehouse XXXX. recovery have to portion Going, XXXX. that from And compared the we with in Warren, Like very key what as well one strategy Going, drivers clearance meaningful on we product used this the of are we Yes. to Gone! that on perspective leveraging out margin the as of Lauren indicated of us have called the maintain being as

Michael The Lasser from question today next with UBS. comes

experienced with end next will transitory out in degradation year. presumably So of the you that it's associated margin is quarter, offering have now be the into this and morning because third the in the will message quarter having you're nature is fourth this by inventory that that that the moving you cleared excess

way think a to to that activity year environment experience the have to demand will driving benefit have it? that softer next your overall about promotional this Now might Is customers from and some next year, to you'll cleaner will of you that the harder you increase offset inventory. such right work

not but clean to all. next No. be year. margin we into going degradation, The Michael, expect Partly,

athletes, significant point to to do our to investments we X of So we'll are the in that XX.X We're new they this get athletes continue we've million X.X joining, number the in athlete inventory and the that and fact and to not guiding our athletes were growing. clean year-to-date, growth. correct that driving over made and would year, I years customers last new gold transactions We've had just had are that. next growth these million but

So would not overall of require heavy sort an change we're point a that say expecting this in promotional demand time, I would at any that environment.

one Yes, you have more out. called Michael, add I'll and

-- the yes. of One

have the now typically structural remain that drivers of by continuing that allocated, might is stores. the we that talked in happening. impacted be and assortment our significantly margin the about One merch to is high have in we heat not assortment And elevated highly promotional activity that

tremendous that's confidence So we another to factor gives as that of amount us look XXXX.

going known hadn't going a objectively, a one to been of is up school be got because time that back-to-school My results that's some where in the kids question great in assortment the footwear retail unique that in -- years. know quarter. is sporting was within on. across to or of follow-up retail be DICK's is in it's put lot footwear, And in is a weren't the last of cycle for has, related drawing few ahead Presumably, good traffic. the a of to happening time DICK'S part of the content strongest going to This at school there's where to this and

next not you there that the So set given unique for especially that may at where hold environment year, a -- of time to likely is consumer overall would anything demand soften. is persist into going responsible is circumstances driving those

a I what really We've of where few what allocation got to consumers. have our the out transformational journey higher and say offering we're laid the changed is we just years products essentially have that would over heat you we experience past our have, the in Michael, experience, elevating elevating at And the stores, products. want they when consumer available time, service on elevating omnichannel to it. close working differentiated same been more digital of we've having the -- where athlete our and product

shouldn't strongest The drove and there's very to how that into So sports. that be showcase persist this we happens nothing year. about categories in next a unique team back-to-school apparel of nothing quarter season won't But footwear, about demand persist. unique our

Kernan with comes question John Cowen. from Our next

Congrats on nice quarter.

on on QX. in $X.X Just billion inventory. sheet balance the

what Some like obviously the think of of look you inventory about in finish? growth how in levels from where should that's think And cost, we QX higher might just you inventory 'XX? think year-over-year but of spring the you

were John, inventory go bit we inventory. let's of the the quarter it's season. better plenty of of much in remaining ready growth including little year, deeper fourth all results -- out, last with just chasing we deep as the as versus into our inventory QX terms XXXX And for at were in getting we to a product called holiday look as transit

look quarter. grew XX% and So sales And Overall, want and actively is feel is the in are continue for our at that the work right to athletes XXXX, third our the versus in make our like growth we in that the holiday inventory And will when you we grew for our is holiday season. quarter, well-positioned same inventory available season. fourth We important manage XX%. inventory the the we'll way. in-stock availability inventory there very pockets healthy inventory, for of sure said, to there and on we have the

down see about costs. to into inbound one next everybody some have some follow-up do can the Got it. And chain domestic the QX that year? we freight significantly. think relates and come and go we costs as of then as freight pretty quick it shipping Obviously maybe of supply costs How

of this year? QX meant You

Yes.

Okay.

I about How do we think. think --

it with you the to closely onwards. call still supply costs third the freight we the seen, works No, probably still is That and side closely side very with agree chain domestic a working be However, from I very And be the to of definitely would continued our volatile, team quarter continues have partners we that's with that continues on we lowering there No, vendor as our domestic international helpful. are as volatile. well. partners well as that

sure it. as season. the make playing opportunities to stores and now, to here attention that inventory are in right available to available looking the focus for buy athlete We holiday good is is close for are But our they for

Our Nagel Oppenheimer. with Brian comes question next from

on for Brian quarter. Dawson Nagel. William is Congrats This nice a on

over update the this mix brands quarter you how is your in product national our the just your brands? you're provide can how And So vertical on and an behaving? question time, customer and performance accounts your private label on is balancing between actually for

Yes.

the vertical product well. It's athletic of do male, done at toward for the price to really The athletic CALIA has in space consumer female very now. at performance brand, assortment outperformed QX. DSG more right this are brands and Our in fashion, filling and brands. and VRST It's leaning And continue lifestyle point. white high year high-function perfect time, our well a very our same and attractive incredibly and that particular, a a in

we very, the we're brands. was annually, an The brand it last vertical with time update pleased was and it XX% do that we gave penetration. very vertical So our

end So at that year. Yes. we'll of again this update the

appreciate follow-up, I do other across And and just product variability you spectrums? any Okay. across geographies see that. a

quarter. the in meaningful Nothing No.

today question next Trading. Williams Sam The comes from with Poser

-- of been but them e-commerce bunch What e-commerce your have I a have answered, for your quarter? few or A or was the more. penetration sales

out. no Sam, that longer we break

the operate agnostic the basis As is athlete on want that's decision, and making athlete business. our the channel we athlete, we omnichannel look an the think about because to at we the way

beginning giving that are of since So breakout. this been on going no the longer year. Actually, we that's

missed that... I Okay.

both were very, We across that. add saw performance channels. the happy that overall very we with I'll Maybe

So let just follow up. me

Okay.

be forward at forward that pre-COVID. or or it weeks target back seeing -- of you we XX? be now your optimum be because slower right little you from So how of or -- think supply weeks weeks optimum what's of -- annual than It's you a XX what you're be pre-COVID. -- what supply supply to on running should should would about basis? turning it's But with what an is like so up turn optimum having inventory, XX of XX or should Should forward sort

inventory. Yes, way is level because inventory as about and XXXX haven't we the Sam, guidance, are the that is given level some we of but probably compared growth growth that normalized time sales had this last to of think comparing to we our

So easiest you probably the could and now that's right best comparison do. the

make up of business much the members these And Okay. loyalty how then your days?

XX are XXX over we've both then active of million million million who importantly, our over XX over overall. and and XX% members, within our got of in over athletes database members, our It's business. But outside loyalty loyalty

So they comprise a...

you of to business. what the you long-term then lot about And my and the reported, I everything better because call your of have the from overcome of to improving you else engagement, the the for wouldn't that you on lastly, Where so levels another the -- can there's use macro. is about but a We're and over why what But in going week. are is necessarily growth grow you doing done CRM and perspective talk process here? a Okay. it question continuum reason the hear asked macro personalization is about competitor, questions about of the and sort direct evolving of from retailer your up put the somebody Can you're next how of of the rebasing from numbers. athletic significantly and the business guys

athletes what is our we say, set our database the have, I'm and best not and a question. question all-time would of Great person and it's saying sports, high, only in because is that. at data the an knowledge I continue to Yes, our great

have We an data set. amazing

our in innings. personalized we're We would say, online I athlete are early very experience. say We're engagement, also, and ever But so in stores same on before. would I the we how serve time, both we're focused at athletes, more terms in the of than driving

I with So a way to we've go think got personalization. long

with We're best come. people of the along how lot CRM think, using We early continue this for we've a for on to I still far them. athletes. despite innings database very gain And that provide experience focused new -- to that's,

Our with next Steven Guggenheim. Forbes is question from

trends, to basis, at a transaction on meaningful it a it we in if sequential improvement. look X-year wanted really, was acceleration the I revisit

just curious if acquired. So do expand what you to were on that it could if with athletes new drove that, anything had

trend. $X is more transactions weighted Really You sustainability just the in trying $X million multiyear get the on quarter. step-up on mentioned that to to insight heavily million, a but third the any of

for the you thank question. Steven, Yes,

-- growth from transaction came important in our trends. we So several

we athletes have all, new of come First did in.

of quarter. the those past X.X mentioned were million year-to-date, I So X.X million in

grown in fairly how driving So our But are stores. dollars year. how every and they're consistent to in has But industry levels transactions increased to doing consumers our I are think past it's dive meaningfully and And been per income important the transaction. into one demographic the our single it's quarter. responding they increased our throughout also of

of meet still we needs providing terms in that can we clear it's for So and their everybody outdoor lifestyle. are something -- so deliver that

are seeing trade people not We down.

So for forward. into going continue driver expect us that will key between year, our which we a athlete database that, growing, our will increased personalization be efforts, next

obviously, of share and Navdeep, sort so the with a unwind and quick follow-up convertible on a just settlement of net right, forth. issuer note hedges you the Maybe

just the over decision look So here can maybe forward repurchase the would quarter. current pause last updates you activity on to as NTM? capital the if we to allocation Any expand love on

start question me let first. No, second your with Yes.

we cash we -- strong to capital think and continue sheet allocation, cash as balance equivalents. with billion with have a of So really more about $X.X

we then an that, to we important have. aggressively have of balance a of the as excess the structure. of question basis, think to investment invest grade XXX. between capital the at repurchases, guided business on growth To your we in year-to-date million the beginning the addition we In of cash the we which $XXX and about criteria year, the returned is minimum maintaining that And the opportunities our part a on sheet are continuing share

that. on already eclipsed have We this we in quarter, focused And the out converts. taking

convert much potential -- trades that out money, it's the is rise by equity. out taking it took future price you convert, pretty an of as said, right now. deep dilution $XXX the And convert how are to we like in we continues So the the million taking like stock

to as continue back allocation buyback our balance more opportunistic of be be we'll terms year. we'll to shares we capital in in look flexible of for this overall, and the share So the buying

Feldman with Telsey next question Joe from comes Our Advisory Group.

I layout. I brands, brands wanted replacing you say, more ask more, stores And brands. a what test? see should vertical a store, is adjust like me, to the brands, stores you've more just where even fact, testing should I'm private something we emphasizing feels learning layout if some things in at couple of in curious the done keep in the local to that and used something in Maybe the it from that bit the to around about center the you're the to least national front that's future? you're big and expect And and

you're Joe, on picking moment. that with out very is the up I approach how based what's based consumer think what we the have to a in-stocks, we on products lay hot at on flexible adopted

into are to and everything a you're store so where days the DICK'S out laid the longer -- going And see walk way. no same

optimizing. We frequently are around as space constantly and needed. optimization We do move things

Got it.

just Okay. and And of to Sport two wanted concepts? just and for those maybe plans then Public get update expansion latest House Lands, learnings on an

rest bring both terms down products to the of able House exceeded in of done have and some terms chain. of are our have far there launched of levels we're of that doing. of of Sport take has been our that the the service tremendous, even themselves and from products well have chain rest They the also we expectations. Sport to how terms what absolutely and House locations But in -- new in really

really also really really, equally about. about excited Sport. Lands House excited So Public of

Publicly think, meant Lands an are just launched, a month. very new broad explorers those are well. outdoor very incredible I in into past they have about tap They the stores serving job doing to consumer, We and five

key phase. So we're roll forward very definitely support excited. Public Lands, our Sport part still in of a House strategies. of test

with from The Seth next question Securities. Basham Wedbush comes

a to parse of that Is since it. of you're and you amount previously this sorry meaningful merchandise you've indicating words, XXXX, that it seen regarding retain significant versus the retain expecting just margin nuance, to a expect that a improvement a but now maybe to is or amount I'm majority accurate?

guiding will that portion still maintain Seth, gain. we meaningful I of a that would margin say we are

recap seeing, and the I'll maybe that have we we are some reasons confidence. structural again, that So of

what that a our back performance lower look piece basis to of X,XXX these third really of XXXX. performance you small is a in Gone! we at have pricing the will then that from Going, gains tremendous you you And that meaningful saw look the these that that kind continued know a gives really The me, to amount in look to us has QX we our of keep. When I And to what versus something points well that higher about we meaningfully again, where XXX it resonated us capabilities strong tremendous will gives the product again, The structural the drove promotional And be portion confidence. product of strategy, of used the the on we penetration, there If success QX, is amount is or was that and that margin. margin, of have that third that highly-allocated question really, we go-forward amount XXX mix, compared benefit that's these drivers, have, maintain of in points a and business. delivered brands. vertical a whether vertical brands confidence almost at the hunt and a the Going, And we basis all at that, brands, it in have QX, significant tools a delivered And can in XXXX. quarter. was quarter. is that's and become of

a clarify, maintain amount? expect just That's necessarily don't majority meaningful helpful. to But just to anymore, you

can you maintain meaningful of confident Yes, are words, we'll we that but Yes. parse gains very portion those versus the a XXXX.

to it's year I full and look absolutely our full talking year margin add important meaningful expect maintain at to think We've on our a of been to significantly just this, we amount -- results. improvements. about

into holiday season? regarding how levels relative characterize that apparel, Wonderful. environment pre-pandemic just to as And expectations your and you a the follow-up the outside promotional question of would

Yes.

how Our approach to very prepandemic. holiday from was is the it different season

of approach have sledgehammer to more and and making surgical. value but item longer much we gifts athletes. that great We that whole to we sites at holiday being sale, We're are have great are doing going sort surgical. on for a that people excited sure well-received approach we We're focused We're much promotion. household being much very targeted, our to more about in-stock by levels more be much more really the no is

with The next question comes Kleber Baird. from Justin

merch a follow-up Just ask wanted to margins. on

your expect in do the through you here merchandise declines apparel based inventory XQ, largely the to guidance? margin your in on XQ Given on comments moderate working

Yes.

that at to definitely that we we then the in Lauren that of And very of into on basis, an we as landscape couple Justin, the I quarter. mind. year the commentary it's fourth like of quarter When gains would XXXX. fourth laid just we'll feel factors have our a have annual you expectation meaningful out. the go we to versus compared in last keep look the gains promotional we'll merch where portion meaningful those around been said, outlook. a our to you annual portion gave margin, confident to in Comparing XXXX, maintain say Overall, there have into implied are a look maintain you

SG&A Okay. Maybe on follow-up, just flexibility. a Navdeep,

to have based sales on versus Your maybe the up like will guidance 'XX. basis are be leveraged at SG&A midpoint. going XX.X% around XXX points Looks to the

in how in reinvesting the you the or some I this line So event SG&A wages. past my do EBT store? few demand much of margins SG&A have is course within without level been the the service does you've flexibility marketing at your into in of that's soften, sacrificing clearly, structure maintain upside years, question top to levels guess whether

Yes.

that SG&A agree really the are long-term we profile the growth company. think you've that strategies investing in read of I the well. Justin, We

In addition, continue remain compared wage the pressures elevated XXXX. to to

you as those the look this SG&A are in So investment big of areas year. to

always of terms is the of view, expense flexible variable sales. first forward-looking all, the In

for So will that if our the reason, we sales variable definitely believe reflect. whatever expenses are volatile

for conditions. in required. flexibility investments versus well. And And keeping of you In healthy have strategies to discretionary look out, the fixed in actions growth at long-term company the what addition, we our the aspect could the the balance thing called also is our business and will as as right as do the well really we expenses we with as these

growth and the will company. growth and internally, really to feel So profitability we long-term navigate the of conditions be really confident able we sales the that macroeconomic drive well

next The Stifel. Jim comes with question from Duffy

I the strategy. have a store few about warehouse questions

locations. XX about have We

So it Gone! looks I'm curious this? locations. of that Going, the temporary fits like part how about a is the permanent with Going, that concepts? think you And Or Is strategy? that how

Going, pop change you about Yes. a the way we're Jim. how DICK's before Going, and the thinking up, consumer The where you're seeing value real permanent and a of have Great what portion we a we are see in how warehouse like location. at strategy then we buy Gone! stores. question, that estate See into the do reacts, try converted the that's a general, is those

try So actually be of our a strategy. that we great will ongoing a sign before long-term We success deal find lease.

Got large. footprints the Are for there these stores? inventory question those it. in And I've ones to are inventory then seen is in opportunistically a the stores, around Or the you populate buying regular brick-and-mortar is stores silos? in And those are way business. visible also strategy, store accessed that Or these the from I'm curious, shoppable simply is and outlet that online? kind of inventory

are They Yes. shoppable online.

find In can fact, like stocks into not safety they location. all really and about help inventory and things up it that. one worrying online, clearance consolidating light by it the We easily of us

that's key clearance for stores. So of Going, a But and they warehouse part Sporting DICK'S channels by Gone! Going, We are for opportunistically at primarily large, buy a the bit little do Goods. it.

that can that DICK'S. fresh product is receipts Our into main so goal clear new we to bring

last question from Daniel today Stephens Inc. Imbro comes with Our

the the sound But about just to the you sense doesn't of would other the then Or as expect yet. And as consumer? are you're box, price health seeing you're of looking to on weakness get Lauren, what you than of consumer. one, increase first? ask trade customer? slow for to be down DICK'S weakens, retain the would offering to like times to pull categories any that where levers think you can there a wanted kind I It of value just consumer the has the

we to everyone. something the the for way assortment approach Daniel, have that want is we

up people all of gear opening We are but to offer fantastic not down, seeing we apparel points, do a way premium. and trade most price range the the

mean, we there's I sort of can pull. So levers

-- board, a That's slowdown see great message in I I can't healthy. across seeing predict us any to It get to any of for categories. enables But all Our us. scorecard They're high. the personalized out not engagement athletes. is don't our because tool we're really our key

way. inventory equally and the healthy your you I And just Or thinking dig of? that consumer then strong maybe a inventory on or inventory kind maybe helpful. inventory? a subsets vertical Just detail trade with stuck there across a brand opting different asked national That's brands? out your the more down, held exposed? is you are is national different how of about brands think if in could more to Is Or get of across or little inventory more was the

into well-positioned was The healthy lump would and this I already our we season. we are been holiday say here out the that. for to side activated on really quarter, our important third much feel like in-stock very levels about called very in athletic through holiday and I only But Overall, and overall, apparel we going said, has continue inventory that that Yes. the work of season. -- we'll strong is

are Those the have all questions we today. for

the Hobart, call So turn back concluding I will President Lauren now to and CEO, for remarks.

your Goods. you and Thanks, I a interest hope everybody, safe Sporting happy, for in Bye-bye. healthy holiday. DICK'S have

call, This Thank you, now you everyone, our lines. your for and concludes joining disconnect us may today.