DICK'S Sporting Goods, Inc. (DKS) Earnings Call Transcript & Summary

Okay. Great. Thank you, everybody, for joining us. Good afternoon. My name -- thanks for joining us for the fireside chat with DICK'S Sporting Goods. My name is Adrienne Yih, and I am the U.S. specialty retail analyst here at Barclays. So we have dubbed DICK'S the next great compound growth retail story, which is actually quite rare in the cyclical world of retail. Today, more than ever, an investment in a multiyear growth story is an investment in the strength and vision of management. And so with me today, I'm very pleased to introduce President and CEO, Lauren Hobart; and EVP, CFO, Navdeep Gupta. So remarkably, Lauren is the -- only the third CEO in the company's history, having been promoted to the role in 2021, preceded by current Executive Chairman, Ed Stack; and the company's founder, Dick Stack. Lauren joined DICK'S in February 2011 as the Chief Marketing Officer, and in 2017, was appointed as President of DICK'S. She has been instrumental in driving technology adoption, eCommerce, culture and customer experience. Navdeep joined DICK'S in 2017 and was appointed CFO also in 2021. He's adeptly navigated DICK'S through its transformation through COVID and now leads the financial aspects of the next leg of growth behind House of Sport and next-gen DICK'S Sports while at the same time is also spearheading the growth strategy for GameChanger. I know you just did a webcast earlier this morning. So for the listening audience, I want to touch on a slight variation on many of the same topics with the goal of how to identify longevity of competitive advantage through executive leadership vision, strategic investments to grow market share, and why DICK'S can maintain its position of industry dominance. So 2 housekeeping things. 4:00 today, there will be a cocktail reception for everybody who's still here, management and investors alike. And there will also be about 5 minutes at the end of the presentation for your Q&A. So if you have a question, please, there's a roaming mic. So with that, okay.

Adrienne, can I do my safe harbor reminder?

Yes, please.

So our safe harbor statement is posted on the IR website. Anybody has questions, reach out to Nate, not me. With that, we will turn it over to you.

Fantastic. So let's start with a few questions that we're asking sort of all the companies at the conference to get a sense of any common themes across consumer discretionary. So Lauren, I'll start with you, sort of consumer health, which is kind of the main topic of du jour. As we exit 2024, how has consumer health evolved throughout the year versus what you thought at the beginning of the year? And how are you thinking about the state of the consumer now that we are post Black Friday as we enter 2025?

Well, thanks, Adrienne. It's great to be here with you. It's great to see all of you. So we have had -- our consumer has held up very well. And this is not just a quarter story or a year story. It's been a few years now where people are prioritizing a healthy and active lifestyle, they're prioritizing things like fitness and golf and team sports and being outside. And that has benefited us. But at the same time, increasingly, they're coming to DICK'S to meet all their athletic and their athletic lifestyle needs. And I think as we look at the part of this year, we just finished a comp of 4.2% during the quarter 3. We've been above 4% every quarter this year, so -- and we've had beat and raised quarters every quarter this year. So almost definitionally, the consumer has been a little better than we even had predicted. We've seen growth across all income graphics. We've been getting new athletes joining our ecosystem and coming to shop with us. So I think generally speaking, from our lens, the consumer is doing well. I do think the fact that we are rooted in sport is an important part of that. So I think sport has had an increased impact on all things culture. I think culture is also having an impact on sport. And because we've been investing in our experience, where we have premium full-service footwear decks and these incredible House of Sport locations, we have access to not just the great performance product that we've always had access to, but also the lifestyle of sport. And as that continues to build, it's another tailwind for us.

Perfect. Navdeep, for you, maybe a tougher one. So the political backdrop, right, the new administration coming in, I think, first and foremost, it's going to be your comments on sort of tariffs. And then how do you think about the package of policy that could come into force in 2025? How do you manage against the uncertainty and the unknown?

Yes. So we will start with tariffs. Still there is so much unknown in terms of what is likely going to be the policy, how much of this is just a negotiation tactic versus how much of this is expected to be actually implemented. We are going back to the playbook that we had in 2018 and 2019, so started some of the thoughts being fleshed out, not just internally within our own vertical brands, but also how we are thinking and partnering with the national brand. So that's the part and parcel there. As far as 2025 is concerned, as we are starting to think about the budgets and everything, there are things that we are relying on, are the things that are within our control. So things like what Lauren talked about, the work that we have done around building a very strong brand portfolio, the work that we have done and the confidence that we have got within our House of Sport strategy. I'm sure we'll be talking a lot about it. We have talked about the fact that we'll be opening 15 House of Sport locations additionally next year. The cascade of the House of Sport learnings into the Field House, which is the 50k format. We are really excited about that opportunity. We intend to open an additional 20 of those next year. So we are using the same playbook that we had for this year, building a truly a grounds-up expectation to say what revenue, what comp can we expect irrespective of the industry or the consumer environment that can be? There will be pluses or minus. If there is a tailwind and the consumer holds up well, that should actually help us. And if there's a little bit of a geopolitical uncertainty or if the tariff become a bigger topic of discussion, then we know we'll be able to pivot off of that. So we are focusing on the things that we can control.

Right. You may have already kind of answered this, but what are you positive or you are most excited about in terms of kind of 2025 opportunities? Lauren, maybe I'll start you off.

Yes. I think building on what I said before about sport and the impact on culture, I feel like we are in a moment in sports in the United States. And that's coming off of the Olympics. It's the women's basketball craze. It's the fact that the World Cup is going to be in the U.S. in '26 and L.A. Olympics in '28. And so I just -- I get excited because what we provide, what our vision is, is a lofty vision. We want to be the best sports company in the world. So the fact that the environment around sport is just growing gives me a lot of hope -- but opens up opportunities in footwear, in license and the whole team sports, a whole bunch of different categories.

Yes, I would still stay with the macro theme, right, because it's really exciting to see how important sport has become and how important the culture has become as part of the lifestyle and sport itself. And those are -- that intersection opportunity continues to be really exciting for us.

Right. So let's move to kind of like the overall sporting goods backdrop. The -- you had mentioned in kind of the earlier session that the backdrop for sporting goods is indeed promotional. And if you just look at anything on holiday, it's just promotional. Most people are forgoing average in the retail and margin in order to drive the comp through transactions. You're completely the opposite, right? Your transaction size, your basket was the driver of this, whether it's brand, mix, et cetera. So what is so rare? And I think you touched on this. But what allows you to continue to do that year in, year out?

So when you look at Q4, we're looking at holiday right now. And we've mentioned, in general, it seems like there's -- some people have a little too much inventory. Things are a little bit promotional. Similarly, last year, we were worried that the environment -- not worry. We had noted that the environment will be a little more promotional than it had been the prior year. But we have been able to navigate through those promotional environment. So we will choose based on the product we have. We have a very differentiated product set where we don't have to just knee-jerk -- we've got access to fantastic product. We don't have to knee-jerk and put it on a promotion. We'll decide how many weeks and how deep to participate in a MAP break and base it on the products that we need to turn. So we factored in all of that promotionality into our guidance. We're still expecting a margin increase in the fourth quarter. And we feel that this is part of what we've been building for all these years, is our ability to navigate through these things to be more surgical.

Yes. what we're also differentiating is, in addition to the product, is the service and the capabilities, right? Our eCommerce platform, really resilient. We are really excited about the service and the quality of service that is available in our stores. So that, in addition to product and the pricing opportunities that we see, that is the bedrock of what gives us the confidence. And based on which, we raised the expectations for comp in fourth quarter versus 3 months ago.

Fantastic. I want to talk about sort of the balance of negotiating power, is kind of say as much as you -- or little as you want. It just seems like, pre-pandemic, the 5% margins, to the 16%, to the 11% with some, obviously, room, head space above you. What is the -- where have things turned in terms of now you sort of -- you're the place where brands want to grow, right, and be seen. So how does that change sort of how you negotiate with brands and how important you are to them?

Yes. I love that question because it makes -- and this is -- the question implies that it's like a transactional relationship, like we're going to negotiate, who's got the power? And the truth is, over the last multiple years, the relationship that we have with our key brand partners has become so much more than that. It's really a strategic look ahead. What are the trends? What product are they developing? They'll take feedback and input from us in what we're seeing in the marketplace, they'll adapt. We can -- we are true strategic partners. And so I just -- I don't -- we don't look at it as a battleground negotiation. It's more about how can we drive the consumer to love the products and to pick up the -- what we all think is the best product. And that results in a profit sharing that makes sense. But we have a really -- we have a great relationship. It's one of our biggest assets with our key brand partners.

So staying on that same topic. When you have emerging brands. And one of these nascent brands that kind of -- we've talked about this, is kind of going from the minor league to the major leagues, right? And then all of a sudden, they -- if you succeed, there's a big order on the back of that. So how do you prepare these brands for the main stage? Tell them what's probably coming, work with them on new categories, et cetera? And sort of just hold their hand and bring them up to speed?

Yes. It's a really important point because access to emerging brands and being able to get behind new and different emerging brands has been a key part of our strategy. And House of Sport has been a really terrific asset to do that in because we'll have -- we have 19 House of Sports now, but we can be very hands-on in terms of the experience that we provide. We'll go as slow as the brand wants to go. Some people are concerned about going into wholesale. We have all the time in the world to get people to understand how we can bring our brands to life. Look at -- we have a collab space, a collaborative space, where they can have their hands in what it looks like and how their brand's [ in flight ]. And so it's just an entry point so we can all get to know each other, and the trust builds that way. And we've had many brands have gone from that, like in our FP Movement, Free People Movement off that way. On even started off with Public Lands and then at House of Sport. And so it's just a natural on-ramp that makes sense, I think, for everybody.

Great. I'm going to step a little bit back on kind of where we are in the footwear cycle. Clearly, during the pandemic, we were in high performance athleisure and then high performance, whether it's run or performance athletic shoes. It seems like this year, we've seen the emergence of adidas' Terrex collection, kind of a flat bottom, more lifestyle-oriented shoe. So can you talk about whether those 2 things can coexist at the same time, right? Because you still have HOKA and On that are the emerging stars, but then you have like all these technical shoes that are now getting used sort of not for technical purposes?

Can they live together? 100%, they can live together. I think it goes back to what I was saying about just sport and culture merging together. But people are wearing shoes that used to be the soccer shoe, and it's a lifestyle shoe now. You wouldn't wear it on the pitch, but it would be -- it's a fantastic-looking shoe. And then look at things like the adidas Terrex collection is really doing so well from a lifestyle standpoint, but it's not taking away from performance. I mean, when people need -- we always say this. Footwear is the engine that pulls the train. So what we mean by that is people -- the outfit starts with the foot, first of all, and that for a kid -- for sure in terms of how their look, looks, and then -- or look is. But they need shoes for on court, on field, going to-from, a slide, a cleat, and then a lifestyle shoe, running shoe, training shoe. So it's -- there's plenty of room, and we keep investing in footwear. We've invested -- our premium full-service footwear decks are a fantastic experience. And our House of Sport premium full-service footwear decks are so -- they're bigger than some of our competitors in malls. They're just really focused on footwear. We have a lot of belief that, that category continues to grow.

Great. I'm going to go specifically to your business model. If you were to talk about DICK'S competitive moat, what is the most difficult thing to replicate in your business model? And why has DICK'S succeeded as the largest national players where others have failed?

Okay. I'll take it. Our competitive moat, I think, is a couple of very important things. It speaks to our long-term strategies. But the focus that we have on building strategic relationships with our brand partners, which we just talked about, is a key, key differentiator because it takes time to build the trust. Everything we talked about, even from an emerging brand standpoint, then take it to some of our biggest partners, that is a relationship that doesn't just happen overnight. It's really important. At the same time, we are investing in athlete experience across all aspects of brick-and-mortar as well as online. But the service model, the team, the investment in people and training, so that they can put people into the gear that is the absolute best product for them. I feel like the secret sauce behind our success but is not really well known is the quality and the caliber of the team that we have, the 50,000 teammates. The culture in our company is amazing. We're in a fun business. We have fun. We work hard, but we have a lot of fun. And in stores, teammates, where most of 50,000 are, feel they are empowered, they're excited. And that momentum feeds our momentum. And I think that also contributes to the competitive moat, so to speak.

Great. In every industry, there's usually 2 players: #1 and the distant or not so distant #2. We can't really come up with your #2. Who do you perceive is your most direct #2 competitor?

The way we think about it is, within each category of business, we are competing with the best specialty. And so we really do break hard and look at it differently because, you're right, there isn't one national competitor that we'd say, "Oh, that's the one." But it keeps us on our toes because in any given category, competing with somebody who might just focus on that one category, it's a challenge for us. How do we keep all of those things top of mind as if we were just focused on that category? And that's how we stay current.

Great. So Navdeep, I'm now going to go to you. Since 2019, the DICK'S model has grown sales by about 50%. Gross margins -- these are dollars, by the way, by about 80% and EBIT dollars by over 200%. That profile is usually inverted for most of the people over the past 5 years. So this is a pretty tremendous performance. It's significantly different. Can you talk about sort of the permanent drivers that have made DICK'S successful in expanding those operating margins from, call it, 5% to its peak of 16.5%, now settling in that kind of 11% range? And then I'll ask the margin question in a different way. From this 11% pretax margin, is the next leg of operating margin expansion more likely to come from top line growth and leverage? Or is there still more opportunity in gross margin?

Well, that's a pretty complicated question. But I think there's -- let's do a little bit of a look back. I'll answer it in 2 ways from the -- if you look at the prospective versus 2019 to where we are right now. The -- there's clear point driven in retail environment, sales drive tremendous amount of value. So being able to drive sales up over 50% growth has been a big driver of how we have been able to drive leverage in the fixed cost, whether it is supply chain, occupancy, you can name it. So that's the one factor. The second one is, actually, I would say we should go back and take a look at it, because 2019, sometimes we say, is not the right time frame to look at it. The 2019, you have to look back and say, what was happening in 2018? That's why we were at that, call it, $300 million or $400 million of EBT dollars because we were making a big transition. We were exiting the hunt category. And as part of that decision, we were transitioning not only the category, we were changing the square footage within the store, and we were making investments to be able to exit one of the key categories of the business and keep value prop to our athletes and transitioning that whole business over to the new categories. So where we have driven the growth is -- first and foremost is when we transitioned out of that hunt category, we were very purposeful in what categories we were going to lean into. And that's where we talk about the fact that we -- the core 4 categories for us, apparel, footwear, team sports and golf, that clearly became the focus area of our top line trajectory. And that's exactly where we have seen, over the 5 years, where the share gains have come from. Then you come into the margin story. The drivers of margin, again, goes back to the 4 key categories and the access that Lauren talked about. The partnership, the relationship that we have with the national brands, the work that we have done with our own vertical brands, DSG brand as a brand didn't exist. VRST was not even an idea that we had a brand called Second Skin at that time. And if you look, CALIA was still pretty much in the infancy stages. It was a little more mature. So the work that we have done not only with the vertical brand but with our national brand partners, getting access to differentiated apparel, footwear, team sports. That has allowed us to, one, capture a much better margin recovery. You're not open to the promotional intensity that may be in the marketplace. Vertical brands have 600 to 800 basis points of higher margin. Our eCommerce business, which was always profitable, but because of the leverage that we were able to drive because of having that platform in-house has been a big driver of the profitability improvement. We launched buy online, pickup in store capability in 2019. The work that we have done on supply chain as well as on the value chain and being able to clear and get the much better recovery on clearance margin are the big drivers of why the merch margin is significantly higher and why we have confidence that we can continue to keep these margins going and growing in the future as well. And at the same time, we have been investing in capabilities. You and I were just talking about the RFID technology that we have invested for over 2 years now. And that is starting to bear fruit in terms of what we are seeing from driving labor productivity, being able to recover more effectively the sales that are within the 4 walls that we may have missed out because you couldn't locate the product. Those are the opportunities where we are able to capture those sales and profitability more effectively. So let me pause there. Hopefully that gives you the bridge from '19 to now. So in terms of forward-looking expectation, I think you will have to help us. The way we think about it is our goal to drive sales and profitability over the long term. As you look at what we have done this year, we have beaten our top line sales expectations. We have grown our merch margin and our gross profit expectations significantly over our expectations like we have said. And what we are doing is we are using a portion of these beat and investing that back into the business. And that's where the SG&A deleverage is coming from. But then at the end of the day, we are still growing our top line and the bottom line in terms of profitability growth. And that's kind of the framework that I look to future as well. Our margin opportunities exist where we can grow a differentiated product. We have just launched our retail media network capability. Vertical brands, we are -- I think we finished last year at $1.6 billion. We still have a goal to get to $2 billion. So there are the organic opportunities of continuing to improve the margins exist in addition to new capabilities around retail media network that can drive continued margin expansion as we look to the future.

Very helpful. Okay, House of Sport. Let's talk about House of Sport. So when I remember when we went to visit the Boston one, the comment was made that you wanted to create an entity that would put your old selves out of business.

Yes. Correct.

So typically, these prototypes are an evolution, right? We go 50,000, maybe a little bit bigger. But this is a revolution, right, in the store format. What was the vision that was going to put the old DICK'S out of business? And why are you so confident that this is the -- indeed the right format?

Yes. I'll start. But House of Sport, for anybody who hasn't been there, is just an unbelievable experience. It's hard to explain. The pictures don't do it justice. But it's over 100,000 square feet. So it's like 2x what a typical DICK'S store is. It's got climbing walls and the track and field and incredible experiences, incredible fitting room experiences. There's treadmills in the fitting rooms. You can try on clothes and see how they work. It's really -- it's our best expression, and it's the first step that we have in terms of what we're calling repositioning the portfolio. But at DICK'S, to your point, we don't ever -- we're not iterative. We consider our DNA as like relentless improvement. That's part of our DNA. And that was Ed's challenge when he gave it to the team and said, "I want you to come up with a store, if it opened across the street from us, it would kill DICK'S Sporting Goods." So we thought big, and we iterated. And we now have come up with this concept that is working so well. Like athletes are resonating with it. The community is embracing it. Landlords love it and it's driving traffic to the mall. And so we're getting better real estate opportunities as a result of that. And our brands are able to tell their story in an incredible way. We've got a showcase of all of the seasonal fashion items, which can be team sport, by the way. Fashion is different for us. So it's just been a win-win-win. Yes. Have I answered your question? Or that...

And you've also answered the part about going back, like that's a moat. I mean...

Yes. No, that's a moat, right. And the learnings from House of Sport are absolutely translating into our Field House concept, which is our 50,000 square foot version, so smaller, but based on the same principles of incredible product, incredible visual presentation, service, experience. So it's been a really wonderful project. It's inspired all of us.

Fantastic. So also staying on House of Sport. Same topic, different question. The question is that -- and we've talked about this. Historically, retail investors get scared of big stores. We just are. It's scary. What I would say is that you have the model up there, it's similar 4-wall margin, so all that works. But over the horizon, right, we always see kind of like future horizon risk. So what you're seemingly doing differently is that, within that same market, you're opening this new format but you're not leaving the existing -- like the dollars are being funneled, like you're almost like store real estate balancing as you go along. Not just putting something up next to it that is going to service the same MSA. So can you talk about why we should think about this version of what you're doing differently and why we shouldn't be concerned?

Well, so first of all, let's start with the economic returns of the stores that we have opened in the first year itself is really attractive. It's not like a lot of times, when you have seen the retail investment, that there is an investment story. You have to believe it. There's a second year or a third year return on that investment. But the returns that we see in our year 1 is -- are really strong. And so that's the first thing. The second is what we are also focused on is we don't want to have a tired old chain as part of the retail evolution. When you look at it, you can look at so many retailers that don't -- no longer exist because they were not -- they were unwilling to invest in their own chain to be able to keep the customer experience relevant. In today's day and age, pricing and availability is ubiquitous. Where you are starting to differentiate is, do you have expertise? Do you have service in your store? Can you really provide me a full-basket solution? That is solution selling? And that's what House of Sport is all about. In addition to having the really innovative product, access to the product, service is really focused. The engagement with community is a real big focus. So that's why when we look at it, like in Pittsburgh, and we have opened a Ross Park store. Literally across -- less than a mile away was a store, there's a very high-performing 50k box, very high-performing 50k box. And we were very purposeful in saying that we can differentiate this marketplace in a very different way with a House of Sport location than a 50k which was a very high-performing, very productive box for us. And we purposefully disrupted that, and the returns that we are seeing are really attractive. And so that's where it's like -- and for us, it's also about the fact that what can we do to serve the marketplace really well, by leaning into the fact that our real estate portfolio is really flexible. We have 100 stores that come up for lease renewal each year. So we can be a little bit more forward looking, looking into '26 and '27 lease openings and saying which are really productive locations and how can we be reimagining that -- the marketplace overall?

Great. Sticking to the stores topic. So House of Sport, big numbers by 2028. Texas is a market where you're clearly underpenetrated relative to just the general retail landscape. So you have 50 stores there now. You just opened 2 House of Sport transformations, right? And they're doing very well. What is the Texas market size? What's that TAM opportunities for you? How many House of Sport can it support?

Yes. So I won't lay out the full plan. But as you think about it, it started out with Texas is really -- and is an exciting market. There's a lot of growth happening in that market. We have 50 stores. The stores do really well. But at the same time, when you look at from a distribution capability perspective, we actually have a little bit of a hole in the middle of the American because we have distribution centers on the East Coast, we have a distribution center on the West Coast. So as we thought about distribution center opportunity and where can we be differentiating in terms of service being provided in the marketplace, Texas will be a good opportunity. Then we also have Katy and Baybrook, the 2 House of Sport conversions that we have done, really, really exciting results. So we feel like there is an opportunity for us to differentiate and serve that marketplace in a very different way going forward. We'll share more about our 2025 opening plans as part of the next earnings call. But Texas is an exciting opportunity for us.

Maybe can I ask it a little bit different way? What has been the kind of impediment to kind of having Texas kind of be more similar to the double-digit exposure that some retailers have? Just straight footprint and mall footprint?

I mean, there's strong competition in Texas. And we do believe that the more the -- we opened with a splash in Houston, I think, for the first time 5 or 6 years ago. So we're still relatively new to the market, and we just need to keep driving. Because when people come to shop at a DICK'S, they're having a really positive experience and we're seeing that in the results. We are doing a really fun campaign right now in Texas, where we're -- we have 4 athletes in each of the 4 major cities vying to see who can become the DICK'S holiday -- Chief Holiday Decorating Officer. And whether that's going to be Chris Paul or Simone Biles or Dak Prescott or Quinn Ewers, like all 4 of them are competing and driving incredible buzz. So we're just not -- we're not from there, like we need to put our roots down. And we've been doing that for the past 10 years and really driving the connection with the athletes there.

Great. I'm going to take a quick pause and see if there's any questions in the audience. Raise your hand if there are.

Navdeep, earlier today, you spoke a little bit about opportunities to potentially leverage your balance sheet in case there were attractive opportunities to buy back the stock. Could you just talk about that a little bit? It's been a while since you guys accessed the debt market. You're fairly underlevered. So maybe just walk us through how you're thinking about utilizing that one piece of your capital structure.

The reason I chuckled is we talk about what is underlevered, right? We say we are optimally levered from our balance sheet perspective because we are a very conservative company. As you look back to even before pre-COVID, when we were not investment grade, our intent was to not have the debt on the balance sheet. And so you have a capital structure, which we feel is really adequate. Investment-grade status for us is really important. Having sufficient amount of liquidity, having gone through -- having managed treasury through COVID was a tough and probably learning experience that you don't want to go through again. So those things make you a little more cautious on how you think about the capital structure and balance sheet. Having said all of that, if you look back to what we have done over the last 3 years, right, we have returned 100% of the free cash flow to our shareholders. We have raised -- we doubled our dividend in 2023. And then if you look at it, we have paid dividend for over 10 years now. So our focus continues to be, one, position the company for long-term growth, continue to invest in the company. So if you look at our CapEx profile, it's up to $800 million this year. So that's the first and foremost, the goal is, besides maintaining an adequate liquidity and capital structure. The second is to return the excess free cash flow in a capital-aware way to the shareholders. So our focus is continuing to grow our dividend and then be opportunistic from a share buyback perspective.

Okay. No conversation would be complete without a conversation on Nike. So the Nike relationship has grown from sort of just under 20% of sales to almost a 1/4 of the business now in 2023, 24% in 2023. So I guess it replaced some of the other brands, perhaps. So how should investors think about the concentration of Nike representation? Is it kind of like an ebb and flow kind of move just as any other brand would within the portfolio, the composition? And to the extent that there are other globally dominant payers, right? I think you had mentioned this earlier on in 2022 when Nike had kind of said that they were going to partner with you. It sort of elevated everybody else's game. And so they kind of come to you with their best stuff. Can you talk about those 2 dynamics?

Yes. So our Nike relationship is incredibly important to us. They are our largest vendor, but they are only 24%. So we are -- we benefit from 80% of our shoppers come in and want a multi-branded experience. And that's definitely part of our DNA. So there was a time -- until we invested in premium full-service footwear and really started to elevate our partnership with Nike from a strategic standpoint, getting more access to those cool shoes, we had incredible Nike apparel presentation pads. And we used to say, like kids would come in and say, "okay, this is fantastic. But where is the cool Nike shoe that I need?" And we didn't have it. That was an enormous -- really, the main driver for the premium full-service footwear decks, is so that we never have to tell a kid, whether it's Nike or another brand, that yes, we've got this, but we don't have -- we can't complete the outfit. So naturally speaking, as a result of investing in footwear and getting access to that product, the mix goes up. I think there's growth ahead of us for sure with Nike because we still have allocation and access gains to have. And we've seen a look down their pipeline and feel very excited about the products coming. But we also have a very balanced portfolio and our vertical brands continue to grow, and we feel -- we don't feel like we have an overexposure.

Fantastic. So I usually end with this question. What question do you get most from investors that surprises you? And what questions do you not get that also surprises you that you believe is important to understanding the DKS story?

Want me to take that?

So I think the problem -- the question that we get that still surprises me is just sort of this comparison back to 2019 because I guess I understood that for a year or 2 years, 3 years. But I just feel like we are just a fundamentally different business. It seems like it's time to move on and look toward the future rather than trying to understand the past and how far we've come. The part that we don't talk about, although it did come up today and I'm grateful for it, is just the power of our people at DICK'S and the culture. I just don't think people ask about that, and it's probably one of the most important things. Our team is extraordinary. Our leadership team is extraordinary. But the culture, the enthusiasm. Like we've been -- we were on all-store calls all weekend with -- it's joyous, like it's a fun place to work. So I think probably something people underfocus on.

I agree.

Yes. I would say it's similar to Lauren, but sometimes you have to look deeper under the covers of the transformation that we were driving because 2019 is what everybody starts to pick as a point of inflection. But our inflection began, if you go back, into 2016 and 2017. So our transformation was well underway. It's just that happened to happen in the second half of 2019 and early part of 2020 right before COVID happened, so that becomes the compare point. But we internally talk a lot about 2016 and 2017 has truly been -- when we started to go through the transformation process. So that's probably the one that I would say still not understood very well. People tend to take the early point and say, "Oh, that was the low point of EV or profitability, and here you are, inflected." The other point that I'll build on what Lauren said that is starting to be a little bit better understood is the opportunity that we have with GameChanger. It's a fantastic tool that is out there. It's the best tool from a youth sports tech industry perspective. It's a $100 million size that is growing at 30% to 40% each year. Extremely profitable platform. So not only are we excited about the platform and what it can do. What we're also equally excited about is the TAM in that space is $30 billion to $40 billion, and here's a tool that is $100 million. The growth opportunity and the dominant position that we can have in that space is exciting. What can we do at the intersection of the data between -- that exists on the GameChanger platform, which is so much more at the subscriber level and at the youth athlete level, couple that with the data that we have at DICK'S Sporting Goods itself, that's another really exciting opportunity as we look to the future.

That is a wonderful place to end the conversation. Thank you so much, and thank you for listening as well.

Thank you.

Thank you so much.

Thanks, Adrienne. Thank you.