ITEM 8.01. OTHER EVENTS
Convertible Notes Offering
On April 14, 2020, Dick’s Sporting Goods, Inc. (“Dick’s,” “we,” “us,” “our,” or the “Company”), issued a press release announcing its intention to offer, subject to market and other conditions, $500 million aggregate principal amount of convertible senior notes due 2025 (the “notes”) in a private offering only to persons
reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and the related grant to the initial purchasers of the notes of an option to purchase up to an
additional $75 million aggregate principal amount of notes in the private placement. In connection with the pricing of the notes, the Company expects to enter into convertible note hedge and warrant transactions with one or more of the initial
purchasers or affiliates thereof and/or other financial institutions.
A copy of the press release is being filed as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
This Current Report on Form 8-K does not and will not constitute an offer to sell, or the solicitation of an offer to buy, the notes, any shares of the Company’s common stock issuable upon conversion of the notes, or any other securities, nor will there
be any sale of the notes or any such shares or other securities, in any state or other jurisdiction in which such offer, sale or solicitation would be unlawful. Any offer will be made only by means of a private offering memorandum.
Update Regarding COVID-19
On April 14, 2020 the Company provided a further update related to the current business environment as impacted by COVID-19.
Prior to the impact of COVID-19, the Company was very pleased with its comparative sales performance through March 10, 2020. However, after March 10, 2020, the
Company experienced a significant reduction in customer traffic and demand resulting from the continued spread of COVID-19. The Company closed its stores to the public after the close of business on March 18, 2020.
The Company continues to operate its eCommerce business. Since the first day that our stores were closed to the public, our eCommerce sales growth has
significantly accelerated and has exceeded our expectations, which have partially offset our lost sales from our store closures. We have also continued to leverage our store network for ship-from-store and Contactless Curbside Pick-Up, allowing us
to sell through inventory in stores and provide service to our customers who want to pick up their items.
The Company does not have a firm date on when its stores will reopen to the public, and when, once re-opened, in-store customer traffic will return to levels
prior to the outbreak of COVID-19. As a result, the Company expects its results for fiscal 2020 will be significantly adversely impacted. The longer the Company’s stores remain closed to the public, the greater impact it will have on the Company’s
financial results. The Company has withdrawn its fiscal 2020 outlook because of the negative impact of COVID-19 on the Company’s financial results and the uncertainty related to its
duration.
The Company is also taking several precautionary measures and appropriately adjusting its operational needs due to the impact of COVID-19, including a significant reduction in
expenses and planned inventory receipts. The Company is modifying its capital allocation plan for 2020, including significantly reducing its planned capital expenditures and temporarily suspending its share repurchase and dividend programs. In
addition, the Company has had productive discussions with its vendors to reduce purchases and extend terms as well as with its landlords regarding the extension of payment terms.
Furthermore, the Company has drawn $1.429 billion on its $1.855 billion senior secured revolving credit facility, as of April 4, 2020 (not including $16.1
million of outstanding letters of credit), to bolster its cash position and maximize flexibility. As of the same date, the Company had approximately $973.5 million in cash and cash equivalents which includes the proceeds from the revolver
drawdown. Together with the additional borrowing capacity under the credit facility, the Company will be able to continue operations for several months, even with stores remaining closed.