Dick’s Sporting Goods plummeted 14% after the retailer posted disappointing second quarter numbers and lowered its full-year guidance.
The company slashed its full-year EPS outlook from the $13.27 – $14.27 range to $10.94 – $11.94. It cut its net sales guidance for 2026 from the $22.1 billion – $22.4 billion range to $21.9 billion to $22.2 billion. It also lowered its Foot Locker in-store sales expectations growth to the -2% – 0% range.
An acquisition idea that seemed great at the time for Dick’s Sporting Goods is now becoming a pain.
Foot Locker was a huge emphasis on the company’s weak numbers. Foot Locker sales were expected to grow 3.2% but instead fell by 3.6%. Foot Locker’s biggest problem seems to be too much inventory. At the time of the acquisition, this wasn’t an issue though.
The troubles for the subsidiary stem from heavy competitor discounts, a blower buying cycle, and weak demand for legacy sneaker lines, according to Executive Chairman Ed Stack.
The Consumer Is Speaking
It’s not just Dick’s that’s experiencing these issues. British sportswear retailer JD Sports slashed its profit guidance last week after a drop is second quarter sales.
Nike shares are down 35% year-to-date, with its latest fourth quarter earnings showing a 1% decrease in revenue, a 4% drop on a currency-neutral basis. The company’s sales dropped 7% in store and 12% online.
Puma also experienced a slide in sales during its second quarter by 9.7%.
Although these companies are struggling, this doesn’t necessarily mean there’s a lack of consumer demand. Adidas actually reported a 14% increase in revenue during its second quarter earnings report.
The Direction of DSG
Aside from its foot locker subsidiary, Dick’s Sporting Good stores actually performed really well, delivering a sales growth of 4.9% adding 1.5 million new customers and increasing transactions by 0.5%.
The parent company is capable of handling it’s operations perfectly, it just will take some time to turn around Foot Locker. The $2.5 billion acquisition’s biggest issue is its inventory, but that doesn’t mean it can’t be fixed.
