Are Dick’s Sporting Items traders ready for the opposite shoe to drop?
Shares of the Pittsburgh-based retailer plummeted greater than 30% yesterday after a second-quarter earnings report that wasn’t promising.
Regardless of seeing a 53% enhance in consolidated web gross sales, the corporate reported earnings per diluted share of solely $3.50, in comparison with final 12 months’s $4.71. The quantity falls in need of Wall Avenue’s $3.76 prediction, as cited by CNBC.
Dick’s says it has initiated a assessment of unproductive belongings, hoping to optimize stock, shut underperforming shops, and re-evaluate belongings that don’t align with the corporate’s mission.
A key part conserving the corporate down was its 2025 acquisition of Foot Locker, the footwear retail chain.
Dick’s launched a revised outlook and lowered working earnings projections because it continues with a Foot Locker turnaround effort within the third quarter.
Dick’s carried out effectively, however expectations have modified
Dick’s reported $5.59 billion quarterly profit and 4.9% comparable gross sales progress pushed by robust outcomes from the FIFA World Cup. The corporate continues to count on projected full-year comp gross sales progress within the 2.5%-4% vary.
However Dick’s lowered its general web gross sales outlook for the 12 months to between $22.1 billion and $22.4 billion. The unique projection was between $21.9 billion and $22.2 billion.
“Whereas second quarter outcomes met our expectations and we consider that underlying developments stay wholesome, we’re taking a extra cautious view of the second half of this 12 months given {the marketplace} circumstances we noticed in Q2,” stated Dick’s CFO Navdeep Gupta.
The corporate now expects working margins within the vary of 10.6%-10.9%, in comparison with prior expectations within the 11%-11.4% vary.
After a difficult quarter, Dick’s reported a $1.25 dividend, a rise from its earlier $1.21 payout.
Foot Locker is caught within the mud
The poor efficiency was largely tied to Foot Locker, which Dick’s acquired in September 2025 in a $2.4 billion deal to fold the 52-year-old model into Dick’s rising sports activities attire portfolio and cement the corporate within the footwear sphere.
Regardless of an intensive turnaround effort, Dick’s remains to be scuffling with Foot Locker: professional forma comparable gross sales for Foot Locker declined 3.6% for the second quarter.
Dick’s executives attributed the decline to difficult circumstances within the footwear market.
Ed Stack, govt chairman, stated the promotional surroundings was significantly aggressive this quarter, with manufacturers clearing built-up stock into the market.
In response to Stack, Foot Locker depends on “legacy footwear silhouettes” that aren’t performing in addition to they as soon as did. He cited excessive reductions from opponents and fewer product launches—key challenges as clients usually tend to buy new merchandise.
However the outlook is a part of a wider reckoning over Dick’s Foot Locker acquisition. As of August 1, the corporate closed 110 Foot Locker branded shops this 12 months already.
Which Foot Locker shops have closed?
Dick’s Sporting Items didn’t present a listing of Foot Locker shops which have closed, however fairly it broke down retailer closures by area and kind:
- Foot Locker North America: 20 shops closed
- Champs Sports activities: 8 shops closed
- Children Foot Locker: 12 shops closed
- WSS (Warehouse Shoe Retailer): 44 shops closed
- Foot Locker Europe: 16 shops closed
- Foot Locker Asia Pacific: 2 shops closed
- Atmos: 2 shops closed
- Complete Foot Locker Enterprise: 110 shops closed
Dick’s says Foot Locker’s enterprise closed 67 areas as a part of its “assessment of unproductive belongings” along with relocating or reworking 41 areas in the course of the present 12 months interval.
In response to the earnings assertion, Foot Locker’s enterprise had 2,478 shops as of August 1, in comparison with 2,561 at the start of the interval.
Not the only real model getting hit
Different large gamers within the sneaker enterprise are scuffling with bodily retail, too.
Adidas’s inventory dropped 12% on the finish of July, regardless of a income increase from the World Cup. Below Armour and On Holding—the model behind On Working—have additionally seen a difficult 12 months, in line with Sportico.
On Monday, Quick Firm reported that Nike closed two dozen stores throughout 12 states because the model makes an attempt to streamline its retail footprint.
On Dick’s earnings name, a JPMorgan analyst requested if there’s a hangover within the footwear cycle as innovation slows.
Stack replied that “we’ve the hangover proper now,” and famous that just about each model goes by a reset.
Turnaround not useless in its tracks but
Regardless of a troublesome second quarter, there could also be a light-weight on the finish of the tunnel.
Dick’s executives count on the promotional surroundings to stay difficult “a minimum of by the fourth quarter,” particularly in additional aggressive European markets. However they nonetheless consider the turnaround effort shall be profitable.
“Let me be clear: We consider the Dick’s enterprise stays robust, and none of this modifications our confidence within the long-term alternative at Foot Locker,” stated Stack on an earnings name. “We’re nonetheless early within the Foot Locker turnaround . . . Now we have navigated environments like this earlier than, and we stay assured in our technique, our aggressive place, and long-term alternatives forward.”
With yesterday’s inventory worth decline, shares of Dick’s Sporting Items Inc (NYSE: DKS) had been down greater than 45% over the past 12 months.
