Dick’s Sporting Goods Is Taking These Steps to Maintain Cash Flow as Stores Remain Closed

As the coronavirus pandemic continues, Dick’s Sporting Goods is making a series of moves to maintain its cash flow.

In a step to bolster liquidity, the Pittsburgh-based chain announced on Tuesday that it will offer $500 million in convertible senior notes, which mature in 2025. The retailer intends to use a portion of the net proceeds from the offering for general corporate purposes.

As of April 4, Dick’s had about $973.5 million in cash and equivalents, including proceeds after it drew down $1.429 billion of its $1.855 billion revolving credit line. With its current cash and the remaining borrowing capacity, Dick’s says it has enough money to “continue operations for several months, even with stores remaining closed.”

All of the company’s 800-plus units across the country have been temporarily shut since March 18. The retailer is continuing to serve customers through its e-commerce channels and is offering curbside, contactless pickup at Dick’s and Golf Galaxy locations, where permitted. It says that e-commerce during this time “has significantly accelerated and has exceeded our expectations, which have partially offset our lost sales from our store closures.”

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Among the other measures Dick’s is taking to maintain cash flow, the company is reducing its planned capital expenditures and has temporarily suspended its share repurchase and dividend programs. Dick’s is working with its landlords to extend payment terms and has engaged in “productive discussions” with vendors to reduce purchases.

Further, effective April 12, Dick’s furloughed a “significant” number of employees. Nonetheless, workers to continue to receive scheduled benefits during this time. Small teams in Dick’s stores, distribution centers and corporate offices are continuing to work, but many are taking pay cuts for the duration of the crisis. Additionally, Dick’s announced last month that Chairman and CEO Edward Stack and President Lauren Hobart would receive no salary — other than an amount covering their benefits — starting March 29. The company also said the salary of EVP and CFO Lee Belitsky would be reduced by 50%.

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