DICK'S SPORTING GOODS, INC. 10-Q10-Q

Financial Statements (unaudited)

adoption of ASU 2020-06; see Part I. Item 1. Financial Statements, Note 1 – Description of Business and Basis of Presentation for additional details. Other Expense (Income) Other expense totaled $7.4 million in the current quarter compared to other income of $6.8 million in the prior year quarter. The change was primarily due to changes in our deferred compensation plan investment values, which we account for by recognizing investment income or expense and recording an offsetting charge or reduction to selling, general and administrative costs. Income Taxes Our effective tax rate increased to 25.5% in the current quarter from 24.5% in the quarter ended July 31, 2021. 26 Weeks Ended July 30, 2022 Compared to the 26 Weeks Ended July 31, 2021 Net Sales Net sales were $5,812.6 million in the current period, a 6.2% decrease from net sales of $6,193.6 million reported for the prior year period, due primarily to a $403.2 million, or 6.6%, decrease in comparable store sales, partially offset by a $22.2 million increase in net sales primarily attributable to new stores. The decrease in comparable store sales included a 7.4% decrease in transactions offset by a 0.8% increase in sales per transaction, and reflects an anticipated sales normalization in certain categories, including fitness and outdoor equipment, along with last year’s favorable sales impact following government stimulus payments, and inventory constraints affecting apparel, partially offset by growth in footwear and team sports. 21 Table of Contents Income from Operations Income from operations decreased to $826.7 million in the current year-to-date period, compared to $1,139.4 million in the prior year period. Gross profit decreased to $2,106.1 million for the current period from $2,395.7 million for the prior year period, a decrease as a percentage of net sales of 245 basis points, primarily due to a 98 basis point increase in supply chain related costs, primarily due to continuing global disruptions and 81 basis points of occupancy deleverage. O ur occupancy costs increased $15.5 million compared to the prior year period and decreased gross profit as a percentage of net sales due primarily to the decrease in net sales. The remaining decrease in gross profit as a percentage of net sales was primarily driven by lower merchandise margin and higher eCommerce shipping expenses. Selling, general and admini