SEC Company Response from DICK'S SPORTING GOODS, INC. (DKS) (CIK 0001089063) (DKS) — Sep 23, 2014
DICK'S SPORTING GOODS, INC. (DKS) (CIK 0001089063)
Date: Sept. 23, 2014 · CIK: 0001089063 · Accession: 0001089063-14-000112
AI Filing Summary & Sentiment
Reasoning
Referenced dates: August 26, 2014
Letter
Division of Corporation Finance Securities and Exchange Commission Re: Dick’s Sporting Goods, Inc. Form 10-K for Year Ended February 1, 2014 Filed March 28, 2014 File No. 1-31463
Dear Ms. Thompson:
Enclosed please find our responses to the comments set forth in the letter dated August 26, 2014 from the Staff (the “Staff”) of the Division of Corporation Finance of the U.S. Securities and Exchange Commission (the “Commission”), with respect to the above-referenced document. References to the “Company”, “we”, or “our” in this letter refer to Dick’s Sporting Goods, Inc. and its consolidated subsidiaries. This response letter has been filed on EDGAR, and a copy has been sent by overnight mail to the address shown above. Please note that the Company is providing a portion of its responses to Comment #1 and Comment #9 pursuant to Rule 83 of the Commission’s Rules of Practice, and requests confidential treatment for the redacted portions of the response, which are indicated herein as [*]. Please promptly inform me of any request for disclosure of all or a portion of such material made pursuant to the Freedom of Information Act or otherwise, so that the Company may substantiate the foregoing request for confidential treatment in accordance with Rule 83. A copy of this request is also being delivered to the Freedom of Information Act Officer of the Commission.
All responses set forth below are keyed to the sequential numbering of the comments and to the headings used in the Staff’s letter. The Staff’s comments are in bold and our responses and supplemental information are in regular type.
Securities and Exchange Commission
September 23, 2014
Page 2
Confidential Treatment Requested by Dick’s Sporting Goods, Inc. Pursuant to 17 CFR 200.83
Form 10-K for Year Ended February 1, 2014
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, page 24
Overview, page 24
1.
We note your eCommerce sales are included within your same store sales calculation. Tell us your basis for inclusion of online sales in your same store sales calculation and explain to us what consideration you gave to also disclosing same store sales excluding eCommerce sales. In explaining your basis, please tell us and disclose whether the prices, margins or types of products ordered online differ materially from products available at your brick and mortar stores.
Response:
The Company is an omni-channel retailer offering an extensive assortment of sports equipment, apparel, footwear and accessories both in its brick and mortar stores as well as on its websites. Our omni-channel platform allows our customers to connect with the Dick’s Sporting Goods brands and have a seamless shopping experience, regardless of the channel through which they shop with us. Over the course of the past few years, we have cross-developed shopping channels to allow customers to seamlessly shop both in stores and online. We view our stores and eCommerce operations in an integrated and fundamentally inseparable manner that is reflected in the way we plan and manage the business. For example:
▪
In fiscal 2013, [*]% of online orders were fulfilled and shipped from our brick and mortar stores, making stores both retail locations and mini-distribution centers for online orders;
▪
Customers are able to return merchandise purchased online at any of our stores;
▪
Customers may buy selected products online, and pick those products up at any of our brick and mortar stores;
▪
Customers at our brick and mortar stores can place online orders through in-store kiosks for product that is not available at the store, and select whether the product is shipped to the store or the customer’s home;
▪
In fiscal 2013, [*]% of our eCommerce sales represented online orders placed in our brick and mortar stores, through our in-store kiosks or through associate-assisted mobile or tablet sales;
▪
Our eCommerce website allows customers to locate products they are looking at online in brick and mortar stores, so they can experience the look and feel of the product before purchasing the product;
▪
The merchandise assortment, pricing and margins offered online is similar to our stores;
▪
The Company’s eCommerce and brick and mortar merchandising, planning and allocation and marketing departments are consolidated;
▪
The Company’s marketing and promotional activities are consistent across channels, so the customer shopping experience online is consistent with the customer experience in store,
Securities and Exchange Commission
September 23, 2014
Page 3
Confidential Treatment Requested by Dick’s Sporting Goods, Inc. Pursuant to 17 CFR 200.83
including use of coordinated signage and content, promotions, featured products, and advertising;
▪
There is a single customer loyalty program across all channels that allows customers to use discounts and coupons online or in brick and mortar stores;
▪
Online resources allow our customers to research products prior to visiting our stores to experience the merchandise and consult with our in-store experts; and
▪
Approximately 75% of our online orders are shipped to a customer within a 15-mile proximity of a Dick’s store.
Differentiating between the in-store and online channels is challenging because the source from which a sale is initiated, originated, fulfilled and serviced is affected by the interdependencies discussed above. As a result, simply differentiating between these channels does not enhance an understanding our net sales. We anticipate these interdependencies will continue to grow with further development of our omni-channel strategy.
Today the Company classifies each sale that is completed on our eCommerce websites as an eCommerce sale, including a sale that takes place through our in-store kiosks or an associate-assisted mobile or tablet sale. Accordingly, even though the sale is generated from traffic in our brick and mortar store, the sale is classified as an eCommerce sale. The Company acknowledges that its internal definition of eCommerce sales could differ from the definition of other retail companies, as varying points of view exist in defining eCommerce sales by origin of order or fulfillment.
The Company includes Dick’s Sporting Goods eCommerce sales within its Dick’s Sporting Goods same store calculation and Golf Galaxy eCommerce sales within its Golf Galaxy same store calculation. In order to provide investors with information about the relative contribution of eCommerce sales, the Company also provides the overall penetration of eCommerce sales, as a percentage of total sales. This penetration metric is used by management in understanding the channels through which its customers are shopping, and allows our investors to calculate total eCommerce sales. In the Company’s Annual Report on Form 10-K for fiscal 2013, the Company disclosed that “Net sales increased 6% to $6,213.2 million in fiscal 2013 from $5,836.1 million in fiscal 2012 due primarily to a 1.9% increase in consolidated same store sales on a 52-week to 52-week basis and the growth of our store network, partially offset by the inclusion of the 53rd week of sales in fiscal 2012. Sales during the 53rd week of fiscal 2012 totaled approximately $74 million. The 1.9% consolidated same store sales increase consisted of a 2.4% increase at Dick's Sporting Goods and a 7.1% decrease at Golf Galaxy. eCommerce sales penetration was 7.9% of total sales during the current period compared to 5.3% of total sales during the 53 weeks ended February 2, 2013.”
The Company also provides quantitative disclosure about sales per square foot in its brick and mortar stores. Management considers this to be an important metric to assess the productivity of brick and mortar stores and to analyze the Company’s short term and long term omni-channel strategy, and, specifically, the Company’s new store strategy. Management reviews, and the Company discloses, net sales per square foot by excluding eCommerce sales. Because the Company provides the penetration of eCommerce sales to its total sales, our investors are able to understand how management calculates and monitors net sales per square foot.
Securities and Exchange Commission
September 23, 2014
Page 4
Confidential Treatment Requested by Dick’s Sporting Goods, Inc. Pursuant to 17 CFR 200.83
Based on the interdependencies of the Company’s omni-channel retail sales, and the quantitative information the Company currently provides regarding its eCommerce and brick and mortar sales, we do not believe that providing additional quantitative emphasis or detail on eCommerce sales would be useful to investors.
The Company also notes that we changed how we report our eCommerce sales in order to enhance our discussion of results in the context of our omni-channel business in accordance with Item 303(a)(3) of Regulation S-K and SEC Release No. 33-8350 (2003). From fiscal 2010 to fiscal 2013, the Company included eCommerce sales in its consolidated same store sales and reported period-over-period growth in its eCommerce business, but apart from same store sales for Dick’s Sporting Goods and Golf Galaxy. At that time, the overall penetration of eCommerce sales to the Company’s total sales was relatively low, representing 4.0% in fiscal 2011 and 5.3% in fiscal 2012. Because eCommerce period-over-period growth was based on a smaller base of business, the Company experienced eCommerce growth of 36.4% in fiscal 2011 and 48.5% in fiscal 2012. As noted in the Company’s Form 8-K filed March 11, 2013, beginning in fiscal 2013, the Company began to include eCommerce sales in its separate calculations of Dick’s Sporting Goods and Golf Galaxy same store sales. The Company made this change because, as the Company’s eCommerce sales grew, the changes in our customer’s expectations and shopping behaviors made it clear that interdependencies existed between our brick and mortar stores and our online channels, as we discussed above. We believe our current disclosure best reflects the Company’s omni-channel business and provides our investors the relevant measures to understand the relative contribution of eCommerce and brick and mortar sales.
Net Sales, page 27
2.
We note your disclosure, “eCommerce sales penetration was 7.9% of total sales during the current period compared to 5.3% of total sales during the 53 weeks ended February 2, 2013.” Based on our calculations, it appears that online net sales increased by approximately 59% from fiscal 2012 to 2013 and represented nearly half of the increase in your total net sales. We also note your disclosure on page 28, “Shipping expenses as a percentage of sales increased due to the growth in eCommerce sales relative to the sales growth at our brick and mortar stores.” Considering the growth realized in your eCommerce operations, please enhance your disclosures to highlight the significance of eCommerce sales on your sales trends and also consider providing additional discussion of the costs associated with these sales. If you do not believe such information would be useful to investors, please explain the reasons for your determination.
Response:
We confirm the Staff’s calculation that online net sales increased by approximately 59% from fiscal 2012 to 2013, which represented approximately 48% of the increase in the Company’s total net sales for the same period.
The gross profit rate for brick and mortar sales is similar to the gross profit rate for eCommerce sales, though the cost components for those two channels are slightly different. For our brick and mortar stores, we principally incur store occupancy expenses, such as rent, depreciation, maintenance, utilities and other real estate related costs, whereas through our eCommerce operations we incur fulfillment costs with a third party who operates and hosts our Dickssportingoods.com website and customer shipping expenses. However, despite these different
Securities and Exchange Commission
September 23, 2014
Page 5
Confidential Treatment Requested by Dick’s Sporting Goods, Inc. Pursuant to 17 CFR 200.83
cost components, the relative impact of these costs compared to sales is similar, and as a result, the gross profit rate shown in the Company’s income statement and discussed in the Management’s Discussion and Analysis is indicative of the Company’s gross profit rate for all sales regardless of channel.
In response to the Staff’s comment, the Company recognizes that, in addition to the quantitative metrics the Company already discloses as discussed in response to Comment #1, the Company can better highlight the significance of its eCommerce sales on its sales trends as well as the interrelationships between our eCommerce and brick and mortar costs. The Company proposes to include enhanced disclosure regarding its eCommerce sales in Management’s Discussion and Analysis of Financial Condition and Results of Operations in future filings, beginning with the Company’s Quarterly Report on Form 10-Q for the period ending November 1, 2014. The Company has provided draft disclosure in response to the Comment #4, in order to provide the complete draft disclosure in response to both Comment #2 and Comment #4.
3.
Please quantify for us and disclose the change in noncomparable net sales between periods. In doing so, please distinguish the amounts attributable to new stores, closed stores, and/or other noncomparable drivers.
Response:
For the year ended February 1, 2014, the Company’s noncomparable net sales increased $346.6 million on a 52-week to 52-week basis (fiscal 2012 was a 53-week fiscal year). Sales attributable to new stores that are not yet included in our same store sales calculation increased net sales by $362.8 million. In future filings, beginning with our Quarterly Report on Form 10-Q for the period ending November 1, 2014, we will disclose the dollar amount of changes in our net sales that are attributable to same store and noncomparable net sales, to read substantially as follows (additional disclosure is noted in bold):
Net sales increased X% to $X,XXX.X million in fiscal 201X from $X,XXX.X million in fiscal 201X. The X.X% increase in consolidated same store sales contributed $XXX.X million of the increases in revenue for fiscal 201X. The remaining $XXX.X million increase in the Company’s noncomparable sales is primarily attributable to new stores.
Income from Operations, page 28
4.
Where you identify intermediate causes of changes in your operating results, also describe the reasons underlying the intermediate causes. For example, you disclose on page 28 that your gross profit percentage decreased from fiscal 2012 to 2013 largely due to increases in occupancy costs that were offset by “merchandise margin expansion.” Please explain in reasonable detail the reasons for these fluctuations and, in doing so, ensure you adequately explain the meaning of “merchandise margin expansion” and discuss the specific drivers, such as changes in retail prices, vendor allowances, the promotional environment, and/or other factors that led to increased margins. Also, to the extent that changes in certain expenses classified within costs of goods sold do not track closely with changes in sales, please discuss and quantify on an absolute dollar basis, if material, the nature and amount of those expenses. See SEC Release No. 33-8350.
Response:
Securities and Exchange Commission
September 23, 2014
Page 6
Confidential Treatment Requested by Dick’s Sporting Goods, Inc. Pursua
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CORRESP
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filename1.htm
DKS-2014.09.23-SEC Comment Letter Response
345 Court Street, Coraopolis, PA 15108
FOIA Confidential Treatment Request
Confidential Treatment Requested by Dick’s Sporting Goods, Inc.
Pursuant to 17 CFR 200.83
September 23, 2014
BY EDGAR SUBMISSION
Ms. Jennifer Thompson
Accounting Branch Chief
Division of Corporation Finance
Securities and Exchange Commission
100 F Street, NE
Washington, D.C. 20549
Re: Dick’s Sporting Goods, Inc.
Form 10-K for Year Ended February 1, 2014
Filed March 28, 2014
File No. 1-31463
Dear Ms. Thompson:
Enclosed please find our responses to the comments set forth in the letter dated August 26, 2014 from the Staff (the “Staff”) of the Division of Corporation Finance of the U.S. Securities and Exchange Commission (the “Commission”), with respect to the above-referenced document. References to the “Company”, “we”, or “our” in this letter refer to Dick’s Sporting Goods, Inc. and its consolidated subsidiaries. This response letter has been filed on EDGAR, and a copy has been sent by overnight mail to the address shown above. Please note that the Company is providing a portion of its responses to Comment #1 and Comment #9 pursuant to Rule 83 of the Commission’s Rules of Practice, and requests confidential treatment for the redacted portions of the response, which are indicated herein as [*]. Please promptly inform me of any request for disclosure of all or a portion of such material made pursuant to the Freedom of Information Act or otherwise, so that the Company may substantiate the foregoing request for confidential treatment in accordance with Rule 83. A copy of this request is also being delivered to the Freedom of Information Act Officer of the Commission.
All responses set forth below are keyed to the sequential numbering of the comments and to the headings used in the Staff’s letter. The Staff’s comments are in bold and our responses and supplemental information are in regular type.
Securities and Exchange Commission
September 23, 2014
Page 2
Confidential Treatment Requested by Dick’s Sporting Goods, Inc.
Pursuant to 17 CFR 200.83
Form 10-K for Year Ended February 1, 2014
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, page 24
Overview, page 24
1.
We note your eCommerce sales are included within your same store sales calculation. Tell us your basis for inclusion of online sales in your same store sales calculation and explain to us what consideration you gave to also disclosing same store sales excluding eCommerce sales. In explaining your basis, please tell us and disclose whether the prices, margins or types of products ordered online differ materially from products available at your brick and mortar stores.
Response:
The Company is an omni-channel retailer offering an extensive assortment of sports equipment, apparel, footwear and accessories both in its brick and mortar stores as well as on its websites. Our omni-channel platform allows our customers to connect with the Dick’s Sporting Goods brands and have a seamless shopping experience, regardless of the channel through which they shop with us. Over the course of the past few years, we have cross-developed shopping channels to allow customers to seamlessly shop both in stores and online. We view our stores and eCommerce operations in an integrated and fundamentally inseparable manner that is reflected in the way we plan and manage the business. For example:
▪
In fiscal 2013, [*]% of online orders were fulfilled and shipped from our brick and mortar stores, making stores both retail locations and mini-distribution centers for online orders;
▪
Customers are able to return merchandise purchased online at any of our stores;
▪
Customers may buy selected products online, and pick those products up at any of our brick and mortar stores;
▪
Customers at our brick and mortar stores can place online orders through in-store kiosks for product that is not available at the store, and select whether the product is shipped to the store or the customer’s home;
▪
In fiscal 2013, [*]% of our eCommerce sales represented online orders placed in our brick and mortar stores, through our in-store kiosks or through associate-assisted mobile or tablet sales;
▪
Our eCommerce website allows customers to locate products they are looking at online in brick and mortar stores, so they can experience the look and feel of the product before purchasing the product;
▪
The merchandise assortment, pricing and margins offered online is similar to our stores;
▪
The Company’s eCommerce and brick and mortar merchandising, planning and allocation and marketing departments are consolidated;
▪
The Company’s marketing and promotional activities are consistent across channels, so the customer shopping experience online is consistent with the customer experience in store,
Securities and Exchange Commission
September 23, 2014
Page 3
Confidential Treatment Requested by Dick’s Sporting Goods, Inc.
Pursuant to 17 CFR 200.83
including use of coordinated signage and content, promotions, featured products, and advertising;
▪
There is a single customer loyalty program across all channels that allows customers to use discounts and coupons online or in brick and mortar stores;
▪
Online resources allow our customers to research products prior to visiting our stores to experience the merchandise and consult with our in-store experts; and
▪
Approximately 75% of our online orders are shipped to a customer within a 15-mile proximity of a Dick’s store.
Differentiating between the in-store and online channels is challenging because the source from which a sale is initiated, originated, fulfilled and serviced is affected by the interdependencies discussed above. As a result, simply differentiating between these channels does not enhance an understanding our net sales. We anticipate these interdependencies will continue to grow with further development of our omni-channel strategy.
Today the Company classifies each sale that is completed on our eCommerce websites as an eCommerce sale, including a sale that takes place through our in-store kiosks or an associate-assisted mobile or tablet sale. Accordingly, even though the sale is generated from traffic in our brick and mortar store, the sale is classified as an eCommerce sale. The Company acknowledges that its internal definition of eCommerce sales could differ from the definition of other retail companies, as varying points of view exist in defining eCommerce sales by origin of order or fulfillment.
The Company includes Dick’s Sporting Goods eCommerce sales within its Dick’s Sporting Goods same store calculation and Golf Galaxy eCommerce sales within its Golf Galaxy same store calculation. In order to provide investors with information about the relative contribution of eCommerce sales, the Company also provides the overall penetration of eCommerce sales, as a percentage of total sales. This penetration metric is used by management in understanding the channels through which its customers are shopping, and allows our investors to calculate total eCommerce sales. In the Company’s Annual Report on Form 10-K for fiscal 2013, the Company disclosed that “Net sales increased 6% to $6,213.2 million in fiscal 2013 from $5,836.1 million in fiscal 2012 due primarily to a 1.9% increase in consolidated same store sales on a 52-week to 52-week basis and the growth of our store network, partially offset by the inclusion of the 53rd week of sales in fiscal 2012. Sales during the 53rd week of fiscal 2012 totaled approximately $74 million. The 1.9% consolidated same store sales increase consisted of a 2.4% increase at Dick's Sporting Goods and a 7.1% decrease at Golf Galaxy. eCommerce sales penetration was 7.9% of total sales during the current period compared to 5.3% of total sales during the 53 weeks ended February 2, 2013.”
The Company also provides quantitative disclosure about sales per square foot in its brick and mortar stores. Management considers this to be an important metric to assess the productivity of brick and mortar stores and to analyze the Company’s short term and long term omni-channel strategy, and, specifically, the Company’s new store strategy. Management reviews, and the Company discloses, net sales per square foot by excluding eCommerce sales. Because the Company provides the penetration of eCommerce sales to its total sales, our investors are able to understand how management calculates and monitors net sales per square foot.
Securities and Exchange Commission
September 23, 2014
Page 4
Confidential Treatment Requested by Dick’s Sporting Goods, Inc.
Pursuant to 17 CFR 200.83
Based on the interdependencies of the Company’s omni-channel retail sales, and the quantitative information the Company currently provides regarding its eCommerce and brick and mortar sales, we do not believe that providing additional quantitative emphasis or detail on eCommerce sales would be useful to investors.
The Company also notes that we changed how we report our eCommerce sales in order to enhance our discussion of results in the context of our omni-channel business in accordance with Item 303(a)(3) of Regulation S-K and SEC Release No. 33-8350 (2003). From fiscal 2010 to fiscal 2013, the Company included eCommerce sales in its consolidated same store sales and reported period-over-period growth in its eCommerce business, but apart from same store sales for Dick’s Sporting Goods and Golf Galaxy. At that time, the overall penetration of eCommerce sales to the Company’s total sales was relatively low, representing 4.0% in fiscal 2011 and 5.3% in fiscal 2012. Because eCommerce period-over-period growth was based on a smaller base of business, the Company experienced eCommerce growth of 36.4% in fiscal 2011 and 48.5% in fiscal 2012. As noted in the Company’s Form 8-K filed March 11, 2013, beginning in fiscal 2013, the Company began to include eCommerce sales in its separate calculations of Dick’s Sporting Goods and Golf Galaxy same store sales. The Company made this change because, as the Company’s eCommerce sales grew, the changes in our customer’s expectations and shopping behaviors made it clear that interdependencies existed between our brick and mortar stores and our online channels, as we discussed above. We believe our current disclosure best reflects the Company’s omni-channel business and provides our investors the relevant measures to understand the relative contribution of eCommerce and brick and mortar sales.
Net Sales, page 27
2.
We note your disclosure, “eCommerce sales penetration was 7.9% of total sales during the current period compared to 5.3% of total sales during the 53 weeks ended February 2, 2013.” Based on our calculations, it appears that online net sales increased by approximately 59% from fiscal 2012 to 2013 and represented nearly half of the increase in your total net sales. We also note your disclosure on page 28, “Shipping expenses as a percentage of sales increased due to the growth in eCommerce sales relative to the sales growth at our brick and mortar stores.” Considering the growth realized in your eCommerce operations, please enhance your disclosures to highlight the significance of eCommerce sales on your sales trends and also consider providing additional discussion of the costs associated with these sales. If you do not believe such information would be useful to investors, please explain the reasons for your determination.
Response:
We confirm the Staff’s calculation that online net sales increased by approximately 59% from fiscal 2012 to 2013, which represented approximately 48% of the increase in the Company’s total net sales for the same period.
The gross profit rate for brick and mortar sales is similar to the gross profit rate for eCommerce sales, though the cost components for those two channels are slightly different. For our brick and mortar stores, we principally incur store occupancy expenses, such as rent, depreciation, maintenance, utilities and other real estate related costs, whereas through our eCommerce operations we incur fulfillment costs with a third party who operates and hosts our Dickssportingoods.com website and customer shipping expenses. However, despite these different
Securities and Exchange Commission
September 23, 2014
Page 5
Confidential Treatment Requested by Dick’s Sporting Goods, Inc.
Pursuant to 17 CFR 200.83
cost components, the relative impact of these costs compared to sales is similar, and as a result, the gross profit rate shown in the Company’s income statement and discussed in the Management’s Discussion and Analysis is indicative of the Company’s gross profit rate for all sales regardless of channel.
In response to the Staff’s comment, the Company recognizes that, in addition to the quantitative metrics the Company already discloses as discussed in response to Comment #1, the Company can better highlight the significance of its eCommerce sales on its sales trends as well as the interrelationships between our eCommerce and brick and mortar costs. The Company proposes to include enhanced disclosure regarding its eCommerce sales in Management’s Discussion and Analysis of Financial Condition and Results of Operations in future filings, beginning with the Company’s Quarterly Report on Form 10-Q for the period ending November 1, 2014. The Company has provided draft disclosure in response to the Comment #4, in order to provide the complete draft disclosure in response to both Comment #2 and Comment #4.
3.
Please quantify for us and disclose the change in noncomparable net sales between periods. In doing so, please distinguish the amounts attributable to new stores, closed stores, and/or other noncomparable drivers.
Response:
For the year ended February 1, 2014, the Company’s noncomparable net sales increased $346.6 million on a 52-week to 52-week basis (fiscal 2012 was a 53-week fiscal year). Sales attributable to new stores that are not yet included in our same store sales calculation increased net sales by $362.8 million. In future filings, beginning with our Quarterly Report on Form 10-Q for the period ending November 1, 2014, we will disclose the dollar amount of changes in our net sales that are attributable to same store and noncomparable net sales, to read substantially as follows (additional disclosure is noted in bold):
Net sales increased X% to $X,XXX.X million in fiscal 201X from $X,XXX.X million in fiscal 201X. The X.X% increase in consolidated same store sales contributed $XXX.X million of the increases in revenue for fiscal 201X. The remaining $XXX.X million increase in the Company’s noncomparable sales is primarily attributable to new stores.
Income from Operations, page 28
4.
Where you identify intermediate causes of changes in your operating results, also describe the reasons underlying the intermediate causes. For example, you disclose on page 28 that your gross profit percentage decreased from fiscal 2012 to 2013 largely due to increases in occupancy costs that were offset by “merchandise margin expansion.” Please explain in reasonable detail the reasons for these fluctuations and, in doing so, ensure you adequately explain the meaning of “merchandise margin expansion” and discuss the specific drivers, such as changes in retail prices, vendor allowances, the promotional environment, and/or other factors that led to increased margins. Also, to the extent that changes in certain expenses classified within costs of goods sold do not track closely with changes in sales, please discuss and quantify on an absolute dollar basis, if material, the nature and amount of those expenses. See SEC Release No. 33-8350.
Response:
Securities and Exchange Commission
September 23, 2014
Page 6
Confidential Treatment Requested by Dick’s Sporting Goods, Inc.
Pursua