AOkay, good morning, everyone. We're gonna get started. It's my pleasure to introduce Dick's Sporting Goods to our Fireside Chat. Today, we have with us Lauren Hobart, President and Chief Executive Officer of Dick's Sporting Goods. Lauren joined Dick's in two thousand and eleven as Senior Vice President and Chief Marketing Officer, and became President and CEO in... I don't know if I have it as 2017. That's not right. No, President in 2017- President in 2017. 2021 was the CEO. Thank you. Sorry about that. Yeah, and we also have Navdeep Gupta, Chief Financial Officer of Dick's. Navdeep joined Dick's in 2017 as Senior Vice President of Finance and Chief Accounting Officer, and became CFO in 2021. That's right. Right. That's correct. Is that correct? Yes. Yeah. Okay. Excellent. Okay. So Dick's just reported Q2 results yesterday, so I think we'll spend some time asking you some questions about that. But I thought we could maybe just kick off what you're seeing with the consumer. Your comps yesterday were extremely strong. Yeah. There's a lot of debate about what is going on with the consumer. Yeah. If you could maybe start there and tell us what you're seeing, that would be helpful. Great. Thanks, Kate, and thanks for having us here. Thank you all for your interest in DICK'S Sporting Goods. For those of you who heard or didn't hear our call yesterday, we did deliver our Q2 comp of 4.5%, on top of the 2% the year prior. And we are feeling really good about both the momentum in our business and the state of our consumer. We call our consumer athletes, and this past quarter, we saw strength in our athletes in terms of increased ticket, increased transactions, more people joining our system, so 1.6 million new athletes. And we didn't see trade down in any. We saw growth across every income demographic. So that is maybe a little bit of an outlier. I think it speaks to the fact that the value that people are putting on a healthy, active lifestyle, outdoor lifestyle, team sports, but it also speaks to the strength of our long-term strategies, which I think are working really well. I know are working really well, and I would speak to a couple of them in particular. One is differentiated products. So we have made a really concerted effort over many, many years now. This is a long-term, I would say, five, six, seven or longer year strategy to make sure that we have the best product for people, whether, you know, they're introducing to a new category or the most elite and looking for high performance. And we've worked particularly on our premium full service footwear experience, which enable us to bring in all of the products that people want from a performance, but also from a lifestyle standpoint, the cool shoes. So the product, differentiated products is a huge piece of what's driving that engagement with our athletes. And I would say the biggest or the second one I would love to talk about is what we call athlete experience. So how we treat our consumer, our athletes, when they're in store, when they're online, the focus on service, getting them into the right product for them, and then the reinvention of our entire portfolio. We've got House of Sport. Hopefully, some of you guys have seen a House of Sport. If you haven't, I strongly encourage you to come visit us. We'll give you a tour, in case you haven't seen it. It is a complete reinvention of how we come to life, and it's bringing our brand partners to life in new and different ways that are very exciting for them, but athletes are reacting in incredible ways. So we keep reinventing ourselves. That learnings from House of Sport have translated down into what we're calling our Field House concept, as well as across our entire portfolio. And we feel really good about the state of the business. I'm proud of the 4.5% comp. Feel good about the consumer. Yeah. Well, that's great to hear. I mean, I think it's interesting to hear, too, that the health and wellness piece is driving a lot of this. But I think you've said in the past, just for your expectations for 2024, that the industry in and of itself is pretty much flat. Yeah. Whatever you're seeing in terms of growth is mostly market share gains. So could you maybe talk about what you were seeing pre-pandemic when it came to industry growth and what you expect maybe will be normal for the industry? Sure. -once we- Yeah. Once we get out 2024. Good morning. Yeah, so before I get started, Nate reminded me that, you know, I need to do the safe harbor disclosure, so. Oh, yeah, the safe harbor. Sorry. Get that out of the way, and then we can talk about the industry. So, Kate, thank you. Great question. First of all, let's start with the overall industry, the trend that we operate in, and it's a $140 billion industry. Like Lauren said, our share is just around 8.5% share today. So when we see the opportunity ahead of us, not only it's about the industry growth itself, but we feel there is a tremendous amount of opportunity for us to continue to gain the share that we have, that we feel is deservedly ours. The work that we have done around House of Sport, the work that we have done on our Field House concept, the work that we have done on premium full service footwear, is allowing us to differentiate our... and showcase the product in a very different way and provide the experience and service to our athlete in a differentiated way as well. But then coming back to the overall industry, it's a $140 billion industry, and you look at it, pre-pandemic was growing probably in low single digits%. And over the last six years, I would thought four, five years now, it's been growing at around 6% CAGR. There is a maturation that has happened in the industry since just there was such a demonstrable growth that happened right after pandemic. But as we see it, we see the opportunity for us to continue to differentiate ourselves and gain share, even if the industry continues to remain relatively neutral to flat. The other aspect that I would add is what Lauren called out, the propensity to, for an active and healthy lifestyle. 3/4 of the U.S. population today is participating in an active lifestyle. There are 27 million kids that are active under the age of 17, that are active in youth sports. And those we see as the core customer that we are going after and trying to provide them a very differentiated product and an experience in our stores and online. And you mentioned differentiation of products, too, which is very obvious as you walk through the store, and Dick's has continued to benefit, we think, from more premium products from some of the bigger brands. How does the level of access compare versus pre-pandemic? I'm sorry to keep going back to pre-pandemic, but I do feel like, you know, the business had a certain trajectory pre-pandemic, and now it's a little bit different. So I feel like that's why we keep comparing it to that. And just how do you think about the differentiation and your access to brand breadth and exclusives going forward? Yes. I think you're right to point out that the business is meaningfully different, and you could say pre-pandemic, you could even say longer. But you know, from 2016 on, we say nothing about our business is the same. Absolutely nothing. And that's because we have invested so much in the athlete experience and that when they come in, that they can have a premium experience, that when in footwear, there's a premium fit environment, that we do have access now to the cool footwear, the cool kids. And it used to be, you know, we've always been rooted in sport, and sports is always going to be our core heritage. Sport and culture have come together now in such a way that our House of Sport stores, for example, are just right in the center of sport and culture and lifestyle and performance. We can now outfit the entire athlete, and it used to be that they maybe had to go somewhere else for the cool shoes. Access is a huge piece. Our merchant team has done an absolutely incredible job making partnerships with strategic vendor partners. In fact, those relationships are at an all-time high, and I think access will continue to be a really important part of our story. It's not just footwear, it's across the board, you know, even the depths of soccer cleats that we're getting access to now. Just really, and that is a piece of footwear, but it's performance footwear, all different than it was before, and much higher elevation. And- Kate, if I could just build on. I think it's beyond product as well. Yes. If you think about it, right? The capabilities that we have in the company, how well our website is functioning, how differentiated the experience that we are able to provide within the, within our stores. Even from a balance sheet and the financial transformation that we have done from the capital structure of the company is at a very different level than where we were pre-pandemic. So that's where going back to where Lauren started her answer, nothing about our business today is where it was pre-pandemic. Literally, every aspect of the business, we have gone through a significant transformation. I think that's, you know, important to flag, because one question we do get is that there is a brand who might be looking to go back into wholesale distribution versus pursuing direct to consumer. I think there's been some thought that Dick's has been a beneficiary of being the preferred wholesale- Yep. Location for that particular brand. How do you think about something like that or a change like that? Yeah, it's a great question. Many of our preferred partners, I think, are realizing the benefits of wholesale, and that's a positive for us. Mm-hmm. We are able to bring a brand to life in a way that's really unique. We've got the square footage to bring a brand, apparel and footwear, performance and lifestyle, and showcase, like in a House of Sport, we have these collaborative spaces, the collab spaces, where we can tell a brand story in such an impactful way, be that one of our partner brands or a new brand. So we view the return to wholesale. You know, we had strong partnerships throughout some of the back and forth of the last few years, but even stronger now. And we feel very confident that we can bring our brand partners to life in a way that is really unique in the industry. How important of a role is your ScoreCard or your loyalty program with regards to this partnership? Our loyalty program is incredibly important to us. Over 70% of our sales go through a loyalty, our loyalty, our ScoreCard program, which says several things. First of all, indicates just that people are finding value in the program, but it also gives us a data set that we believe and we know is the best data set in youth sports, and our data is such a powerhouse of an asset, and you think about working with some of our vendor partners, if they want to target a certain type of athlete, we know the first-party data. We can actually work with them to target reaching those athletes, and it's just going to keep growing. It's a big, big part. I think our loyalty program is something that we've had in place now for 20 years at least, and it is so ubiquitous in terms of consumer acceptance. There's only upside in terms of how we can make it even more exciting, more access to cool and different products, but it's a great, great foundation. Kate, if I could build on one more point, so yesterday we shared one of the other important statistics about the GameChanger business. Mm. There are 6 million athletes on the GameChanger platform. These athletes that are on the GameChanger platform, these are parents, coaches, they are families that are watching their youth athletes perform different sports in different stats, their video highlights. What we are seeing is the athlete that is on the GameChanger platform and is part of the ScoreCard program that Lauren talked about, their revenue is two times higher than an average ScoreCard user. So the profitability, the level of engagement, the level of relationship that we have with these 6 million athletes is significantly different than even on the ScoreCard. So we see tremendous opportunity to continue to build that deeper relationship with the athletes that we have across the portfolio. I might skip around then and ask about GameChanger, if that's okay. Of course. And then we can go back to some of the brand questions we have. But just since you mentioned it, GameChanger definitely seems to have gotten more airtime on the first quarter and second quarter call. I know it's been. You've owned it for quite some time, actually. I remember talking years ago at another conference about watching my son's baseball game. It was very different at the time. Yeah. It was really just- You were watching the dots move. Dot move. ... you're watching the kids. Yeah. Yes. It's amazing how it's changed, but on a standalone basis, how big can this business be? What does it mean for your margins? Where can this take Dick's? I think we're starting to talk more about it because I think it is such a powerful asset, both in its own right and then also, to Navdeep's point, the collaboration that Dick's and GameChanger can have to really develop an athlete experience. I don't know. Is anybody? I'm looking for head nods if anybody uses GameChanger with their kids. Anybody? All right, so I'm going to take time to explain what it is, because you're probably all like, "What the heck is GameChanger?" But, it is the largest, scoring and statistics app in youth sports. Started in diamond sports, baseball, softball, and what Kate's remembering is, in the old days, literally, if you missed your kid's game, you could watch, you know, so and so advance, and you'd see it on a drawing, honestly, that the kid was moving and who scored this run and such. It's now been completely updated with video. So you can not only... You can get highlights of just your kid and what they did in this past game. You get statistics on how they're performing, scatter charts on how the team is doing. You can use it as a recruiting tool. It's incredibly addictive and so addictive because it's such great content that people want for their families and addictive in the best way. The fact that they're spending 45 minutes a day really speaks to the fact, like, that's like, you know, TikTok levels of engagement. Mm-hmm. in terms of... And it's because it's your kid. It's really, really engaging. So we have. You asked about the financial aspect of it. We've said it's $100 million in revenue this year. It's highly profitable software as a subscription. It's a freemium model, so you can start, but you, the more you if you engage, and it's relatively inexpensive, you get access to some of those really cool video clips. It does a postmortem article about the game, you know, like a reel. There's radio, where you can listen to the game, and we think it's a huge, huge asset in its own right and increasingly with our data. Yeah, and, Kate, to add to what Lauren said, the growth that we have seen in the recent five years is about 35%-40% CAGR. Mm-hmm. Mm-hmm. So we see this, this business continuing to evolve, continuing to go deeper. We started out with the diamond sports, but we have now expanded the product and the solution to include basketball, volleyball. The team is working on AI capability that, you know, if you're sitting and watching the game and you're holding the camera like this because you want to get the full view of the field, you no longer have to pan the camera. There's AI capabilities that are now built into the app itself that automatically pans the camera, and it gives you that wider view of the field. It can actively, automatically generate the highlights at the end of the quarter based on or end of the game, to be able to... and then email directly to the families. That's the reason that the engagement that we are seeing with this platform is really, really exciting. If we could go back to the merchandising and the store. We talked about national brands, but I think we should talk a little bit about private label, too- Yeah. Because I think you have seen a lot of success in your private label. I can remember the days of exclusive partnerships with Umbro. I mean, I'm really going back here. You are. where there was a lot of testing about what you wanted your private label business to be. Nike ACG was another one- ACG. that I remember. Yes. Yeah. But why do you think the suite of private label brands that you have now with VRST and CALIA and the Dick's Sporting Goods brand? Yep. Why is that working? Why... What has come together for that to be so successful? Yeah. The one thing that's maybe it sounds like it's a word change, but it's a really meaningful change, is we don't call them private labels anymore. We call it, we call it vertical brands, and that's because we have chosen, as opposed to just filling white space gaps- Mm-hmm. -with, you know, a product that doesn't have a personality or a brand, we are now building brands. And yes, they do fill some white space in our portfolio. So for instance, DSG is an opening price point brand that is incredibly attractive to somebody who's looking for high fashion, high function, and a really attractive price point, something we didn't really carry. But it's, it. We are building a brand here, so it's filling an opportunity, filling a white space. And, you know, we're creating. DSG has become a brand. We're advertising it, we're building it, and it's doing incredibly well. CALIA and VRST. CALIA is a women's apparel line, VRST is our men's apparel. Both have had incredible innovation, both strong brand building. But the CALIA Inspire collection, for anyone who wants to go try it, I really recommend it, but it's also from the gym to your life, so you can live in it, you can work out in it. It's really tapped into the insight that women want to have a comfortable casual, but be able to work out and still have a decent, you know, look good. So... And then for the men's brand, VRST, there's a new Limitless pant that if you've tried the VRST pant before, I would say come back, try the Limitless pant. It's amazing. And we've built these brands into really... So it's nothing like what you remember when we were sort of swapping labels and trying different things. These are meaningful brands, and they're doing incredibly well. Part of what I think the vertical brands has done as well is contribute to your gross margin, and gross margins do remain, again, back to pre-pandemic, way well above pre-pandemic levels. Mm-hmm. ... You know, you walked around several calls about why you think the gross margins are structurally higher. What about going forward, you know, in terms of how you think about gross margins and driving them? Sure. Yeah, I would say the same drivers that we have consistently said in the recent past, that there are three big drivers of the, of gross margin, merch margin improvements, and start with the merch margin. The differentiated product. Where this whole experience begins is from the differentiated product. Having access to differentiated products, being able to really relate with the athletes with those differentiated products, allows us to, one, be a little bit more, controlling of the pricing and the, and the promotionality that is associated with these products. So that is the first part of this. The second, I would say the work that we have done on the vertical brand side. We said, like for even in Q2, the performance that we saw from the vertical brands, actually they outperformed the company average. These brands carry 600-800 basis points of higher margin rate. That's the mix that we are able to get from the vertical brand penetration. The third, the work that collectively our team has done over the last several years in pricing and promotions management capability. We can be really selective and targeted on where and how deep do we wanna partner, even if there is some promotionality within the marketplace. As evident by the fact, like, you know, a lot of retailers have called out that the Q2 marketplace was much more dynamic compared to where the Q1 was. If you look at it, we delivered 90 basis points of merch margin expansion, again, driven by the same three factors that I'm talking about. So the same factors that have contributed to the merch margin expansion so far to date, we believe are the continued drivers as we look into the future as well. And then if I thought we could spend like the last few minutes talking about unit growth. House of Sport has been a big initiative. And again, it's a pretty different store experience than just a normal Dick's store. Right. So I wondered if you could talk a little bit about how the customer profile differs for House of Sport. And additionally, you mentioned that you're opening 75-100 locations by 2027. Can you walk through how you're thinking through store conversions, how you're picking the locations, and a little bit more background on the concept? Yeah. I'll start just with the... For anyone who hasn't been in a House of Sport, these are over 100,000 sq ft. They are fully experiential, so lots of interactive elements. There's a track and field, there's a rock climbing wall. There, you can swing a bat, you can swing a golf club, and higher levels of service. There's these collaborative collab spaces, as I mentioned, and, elevated product as well, elevated fitting room experience. It's really the-- it is the, best expression of the, the Dick's brand, but it is translating into the, into our 50,000 Field House concept as well. The House of Sport, I'll turn to you to talk about the units, but it has done an incredible job resonating with athletes, with consumers, with communities, bringing life to community, but also our vendor partners who are excited to bring their brands to life, and then mall developers and landlords who are noticing when they put in a House of Sport, they're seeing increased traffic to their malls, increased sales per square foot, and that's getting us access to a whole different real estate base. So, it's been a win, win, win. Profitability, we shared last quarter, really great returns, and so we are moving forward aggressively with 75- 100. But also the Field House concept, which is a takedown of it, is really the scale model for the rest of our portfolio. Yeah. So, Kate, just building on what Lauren said, we finished last year with twelve House of Sport locations. Our goal this year is to open eight. We have opened two this year, so you can imagine there are six more that are coming here in the next, I would say, just quarter and plus. Couldn't be more excited about how well these stores are performing. In terms of the unit count, we have. I would say that approximately about fifteen locations as we see opening being opened in 2025. So what you are seeing is a little bit of a ramp up, because as like Lauren said, it's not just finding the real estate. First of all, you have to be able to find 100 - 120,000-sq-ft location to be able to have the real estate available. You wanna make sure that it is in the right node as well. At the same time, we have also been learning as to what type of market, what demographics work with this. And what we have been very, call it encouraged by the fact that we opened our first location in Victor, and then the next one opened in small markets like Knoxville, and they have done fantastic. And so we are now taking the learnings out of that, and we have the confidence to open Prudential Center earlier this year. We have, in our backyard, we have opened Ross Park Mall. So what we are learning is that these stores can work really well in a small market to a mid-market, as well as in a really urban location like Prudential Center. So you will see us continuing to march towards the 75-100 locations by 2027. We'll finish with around 20 locations by the end of this year and with the goal to open another 15 next year. And then the next gen stores, the 50K stores you mentioned, can you just remind us, is that more being looked at as a store remodel of existing stores into this better concept, or are you opening new doors? It'll be a combination very similar to what we said. You know, maybe the, maybe I'll back up and say the premise that we talk internally a lot about is we don't wanna have a tired old chain. What we have done really well is invested into our store, into that athlete experience, providing that differentiated assortment and providing that excitement that the brands want to be represented when they come into our store in terms of the expression to the athlete, and that's what you are seeing us do, whether it is through House of Sport, through the Field House or what we are doing even with the Golf Galaxy locations. So just on the Field House concept, which is kind of an internal name for the next gen 50K sq ft format store, which is a mouthful to say. So we call them Field Houses. The expectation is that we will open about 11 of those this year, and that will reach around 26. But keep in mind, we don't own any of our stores. A vast majority of the stores, except for the few exceptions that we have done with the House of Sport, are all lease locations. On an average, we have about 100 stores that come up for lease renewal each year. So we see this as a great opportunity for us to reposition our store if it's needed to be repositioned, or to partner with the landlord to remodel the store and bring this new excitement and the new expression of the sporting goods to their malls. And then the same questions for Golf Galaxy, because you're taking a look at Golf Galaxy as well in terms of unit growth. What can we expect to see in some of the newer Golf Galaxy stores versus the heritage stores? Yeah, so there's a little bit of a nuance in Golf Galaxy as well. We call them Golf Galaxy Performance Center, because the focus is not just on having the product, providing that, that access to both the equipment and the apparel side. The focus is as much on the fitting experience, to be able to provide that differentiated and elevated level of specialty store experience in the Golf Galaxy Performance location. So our goal that we have stated is about 45-50 Golf Galaxy Performance locations. Most of the new Golf Galaxy locations that we are opening are in the performance center type approach, where there is an elevated level of TrackMan technology that has been installed, where you can go not only take get fitted for the club, but you can actually go and take lessons with a PGA pro. And so that will continue to be our focus as we look to the Golf Galaxies. And then anything from the Golf Galaxy Performance Centers that you'd bring into the Field House, or is it gonna be kept separate? Because you'll have golf in the Field House as well. We'll have golf there as well, because there is a different athlete we feel we serve. There is an enthusiast-level athlete that wants a specialty store experience. They tend to go to a Golf Galaxy Performance Center location. But even in a Field House location, you're gonna have the TrackMan technology installed in the bays that we have within the store. Great. Historically, Dick's has always experimented with new banners. And again, I might be dating myself, but there was a time where you could see a pop-up in Pittsburgh with some- Oh, yeah. -new concept. Is that still part of the, of the formula? Are you still looking to think outside the box when it comes to new retail concepts? I think what you're thinking of is, like, our True Runner concept- Yep, yep. -and Chelsea Collective, yeah. We are incredibly innovative at our core. We love to try things, and I think our newest baby is Public Lands. And so we've... We're iterating on that model to figure out what the right size of the store is, what, how we're gonna serve our outdoor customers in that way. But, I'll never say never, but that Public Lands is done. We have so much work we're doing right now in terms of just the reinventing of our entire portfolio- Mm-hmm. -via House of Sport, Field House, Golf Galaxy Performance Center, that there aren't too many, offshoots like that. Okay. Yeah. We launched the Going Going Gone chain- Okay. which is about 50 stores on there. Yeah. We are really happy with the performance that we are seeing from these current locations. It allows us to move the clearance out of the regular store into the Going Going Gone store, where we are able to provide a very differentiated service and experience with a much more value-conscious athlete. It's bringing us new form of athletes to our overall database. You're able to provide the full size and color run. Sometimes it gets broken in a store, and the activation and the engagement that we are seeing then on the online platform is fantastic. Like Lauren said, we're never too comfortable with where we are. We are always trying to push ourselves. Relentless improvement. Relentless improvement. There you go. Thanks, Lauren. We're asking five questions of every company that sits on stage with us during the conference, so we thought we'd go a little rapid round in the last five minutes here with these questions. We talked about the health of the consumer. Just what are your expectations for the consumer environment in the second half of 2024 versus the first half, things that are worse? We've seen strong momentum with our consumer, and we expect that to continue into the back half, so. And we actually raised our guidance. We did raise our guidance, so- Yes. Things are better. Right. On the topic of margins, and cost pressures, you know, we've seen some tailwinds this year with rates coming down and certainly inflation, dissipating a little bit. But as we look to 2025, how are you looking at costs when it comes to materials, labor, maybe even tariffs? Just things that are worse than 2025. Yeah, I would say tariffs is still unknown, so I don't know if we can comment on that. In terms of the cost pressure, I would say that, you know, it will moderate compared to what we have seen in the recent past, but probably we'll see some pressure, especially on the labor side. One expression we've heard throughout the conference is about the consumer behavior of looking for value. Mm-hmm. We wondered, in your opinion, is this more something that's happening because of what's happening with the macro, it's cyclical? Or is it more of a secular trend in terms of what the consumer is looking for and how they're shopping? I think consumers are choosing where to spend their money, and of course, they're looking for value, but there's also opportunities where they're willing to spend if it's something- Mm. -that they're passionate about or that's part reflects who they are or their performance desire. So, we see it as both, and that's part of the... We're seeing growth across every income demographic- Right. but partly because of that. We've also kind of talked about this. We've been asking every company if they expect to have more or less points of distribution in the U.S. Yes. We've talked about more House of Sport. Yes. Yeah. Yeah, go ahead. Yeah, we would, we see us having more points of distribution. We return to positive square footage growth this year. We are expecting our square footage to increase by about 2%. So we see us continuing to evolve our points of distribution. We are also excited about the new distribution center that will be opening in 2026, which will allow us to continue to serve the athletes in a differentiated way, both from online as well as from our stores. As we grow some square footage in stores, our stores are very critical points of e-commerce fulfillment. Yeah -and distribution for us, too. So inherently, there's more fulfillment there, more distribution. Our last question is on promotionality, which we didn't talk about too much before, but just do you expect to be more or less promotional this holiday season versus last year? I expect to be... Us or the industry? You, and then the industry. I, I- Yeah. The industry was extremely promotional last holiday. Mm-hmm. So I would hope it will be slightly less so, but we would expect a level of promotionality. Mm-hmm. We navigated through it well last holiday. We'll navigate it well, you know, I don't expect it to be materially different. Okay. Thank you so much for joining us today. Thank you. Thanks for the time. Appreciate it.