[Management View]
DICK'S Sporting Goods reported a strong Q1 FY2025, with comparable sales (comp sales) increasing 4.5%, marking the fifth consecutive quarter of over 4% comp growth. Consolidated net sales grew 5.2% to $3.17 billion, driven by market share gains from online-only and omnichannel retailers. The company announced its planned acquisition of Foot Locker, aiming to create a global sports retail leader and achieve $100-$125 million in medium-term cost synergies. Management emphasized the success of its strategic pillars, including omnichannel athlete experience, differentiated product assortment, and digital innovation.

[Outlook]
The company reaffirmed its FY2025 guidance, expecting comp sales growth of 1%-3% and non-GAAP EPS of $13.80-$14.40. Gross margin is projected to improve by approximately 75 basis points, offset by SG&A deleverage due to strategic investments. DICK'S plans to open 16 House of Sport and 6 Fieldhouse locations in 2025, with continued focus on digital growth through its Game Changer app and DICK'S Media Network.

[Financial Performance]
- Comp sales: +4.5% YoY
- Consolidated net sales: $3.17 billion (+5.2% YoY)
- Gross margin: 36.7% (+41 basis points YoY)
- Non-GAAP EPS: $3.37 (+2.1% YoY)
- Inventory: +12% YoY, attributed to deliberate investments in key categories

[Q&A Highlights]

**Question 1:** What is the market missing about the Foot Locker acquisition, given the stock's reaction?
**Answer:** Management acknowledged some shareholders prefer the company to focus on its current operations. However, they emphasized the acquisition's long-term benefits, including strengthening brand relationships, expanding global reach, and achieving $100-$125 million in cost synergies. They reiterated that the transaction is expected to be accretive to EPS in the first full fiscal year post-close.

**Question 2:** How is DICK'S navigating tariffs and their impact on pricing?
**Answer:** All known tariffs have been factored into the FY2025 guidance. Management highlighted their advanced pricing capabilities and close collaboration with brand partners to mitigate impacts. They reaffirmed their guidance, including 75 basis points of gross margin improvement.

**Question 3:** Why is comp sales guidance conservative despite strong performance?
**Answer:** Management cited tougher year-over-year comparisons in the second half of FY2025 but expressed confidence in the resilience of their business and consumer prioritization of healthy lifestyles and sports.

**Question 4:** How is the Nike partnership evolving, and what is the outlook for product innovation?
**Answer:** Nike remains a key strategic partner, with strong segmentation and product innovation across categories like running, lifestyle apparel, and women's basketball. Management expects minimal overlap with new distribution channels and continued growth in the partnership.

**Question 5:** Can you elaborate on the Game Changer and Unrivaled Sports investments?
**Answer:** Game Changer, a $150 million software subscription business, is growing rapidly and integrates with DICK'S Media Network for targeted advertising. The Unrivaled Sports investment enhances youth sports experiences and complements Game Changer's ecosystem, targeting a $40 billion TAM in youth sports infrastructure.

**Question 6:** How does the Foot Locker acquisition impact customer overlap and revenue synergies?
**Answer:** Management expects the acquisition to provide access to urban locations and new customer segments. They anticipate incremental revenue opportunities and stronger global brand partnerships.

**Question 7:** What drives gross margin improvement for FY2025?
**Answer:** Key drivers include higher merchandise margins, pricing optimization, vertical brand performance, and contributions from Game Changer and DICK'S Media Network.

**Question 8:** Will buybacks continue during the acquisition process?
**Answer:** Management will remain flexible but noted certain restrictions during the S-4 filing phase.

**Question 9:** How does DICK'S plan to manage tariffs without trimming product assortment?
**Answer:** The company will maintain a broad assortment to meet consumer needs, leveraging dynamic pricing and inventory optimization.

**Question 10:** What is the mix of free vs. paid users on Game Changer, and how does it evolve?
**Answer:** Both free and paid models show strong engagement. The DICK'S Media Network monetizes free users through targeted advertising, while upselling and cross-selling drive paid subscriptions.

[Sentiment Analysis]
Analysts expressed optimism about DICK'S strategic initiatives, particularly the Foot Locker acquisition and digital growth. Management maintained a confident and forward-looking tone, emphasizing long-term value creation.

[Quarterly Comparison]
| Metric | Q1 FY2025 | Q1 FY2024 | YoY Change |
|-------------------------|-------------------|-------------------|------------------|
| Comp Sales Growth | +4.5% | +4.0% | +0.5% |
| Consolidated Net Sales | $3.17 billion | $3.01 billion | +5.2% |
| Gross Margin | 36.7% | 36.3% | +41 basis points |
| Non-GAAP EPS | $3.37 | $3.30 | +2.1% |
| Inventory Growth | +12% | N/A | N/A |

[Risks and Concerns]
1. Tariff uncertainties and potential cost pressures.
2. Execution risks related to the Foot Locker acquisition, including regulatory approvals and integration challenges.
3. Macroeconomic headwinds and consumer spending volatility.

[Final Takeaway]
DICK'S Sporting Goods delivered another strong quarter, driven by robust comp sales growth, gross margin expansion, and strategic investments in digital and experiential retail. The planned Foot Locker acquisition represents a transformative opportunity to expand global reach and strengthen brand partnerships. While macroeconomic and tariff challenges persist, management's reaffirmed guidance and strategic focus position the company for sustained growth. Investors should monitor the integration of Foot Locker and the scaling of digital initiatives like Game Changer for long-term value creation.