Are Dick’s Sporting Goods investors waiting for the other shoe to drop?
Shares of the Pittsburgh-based retailer plummeted more than 30% yesterday after a second-quarter earnings report that wasn’t promising.
Despite seeing a 53% increase in consolidated net sales, the company reported earnings per diluted share of only $3.50, compared to last year’s $4.71. The number falls short of Wall Street’s $3.76 prediction, as cited by CNBC.
Dick’s says it has initiated a review of unproductive assets, hoping to optimize inventory, close underperforming stores, and re-evaluate assets that don’t align with the company’s mission.
A key component keeping the company down was its 2025 acquisition of Foot Locker, the footwear retail chain.
Dick’s released a revised outlook and lowered operating income projections as it continues with a Foot Locker turnaround effort in the third quarter.
Dick’s performed well, but expectations have changed
Dick’s reported $5.59 billion quarterly profit and 4.9% comparable sales growth driven by strong results from the FIFA World Cup. The company continues to expect projected full-year comp sales growth in the 2.5%-4% range.
But Dick’s lowered its overall net sales outlook for the year to between $22.1 billion and $22.4 billion. The original projection was between $21.9 billion and $22.2 billion.
“While second quarter results met our expectations and we believe that underlying trends remain healthy, we are taking a more cautious view of the second half of this year given the marketplace conditions we saw in Q2,” said Dick’s CFO Navdeep Gupta.
The company now expects operating margins in the range of 10.6%-10.9%, compared to prior expectations in the 11%-11.4% range.
After a challenging quarter, Dick’s reported a $1.25 dividend, an increase from its previous $1.21 payout.
Foot Locker is stuck in the mud
The poor performance was mostly tied to Foot Locker, which Dick’s acquired in September 2025 in a $2.4 billion deal to fold the 52-year-old brand into Dick’s growing sports apparel portfolio and cement the company in the footwear sphere.
Despite a thorough turnaround effort, Dick’s is still struggling with Foot Locker: pro forma comparable sales for Foot Locker declined 3.6% for the second quarter.
Dick’s executives attributed the decline to challenging conditions in the footwear market.
Ed Stack, executive chairman, said the promotional environment was particularly competitive this quarter, with brands clearing built-up inventory into the market.
According to Stack, Foot Locker relies on “legacy footwear silhouettes” that aren’t performing as well as they once did. He cited high discounts from competitors and fewer product launches—key challenges as customers are more likely to purchase new products.
But the outlook is part of a wider reckoning over Dick’s Foot Locker acquisition. As of August 1, the company closed 110 Foot Locker branded stores this year already.
Which Foot Locker stores have closed?
Dick’s Sporting Goods did not provide a list of Foot Locker stores that have closed, but rather it broke down store closures by region and type:
- Foot Locker North America: 20 stores closed
- Champs Sports: 8 stores closed
- Kids Foot Locker: 12 stores closed
- WSS (Warehouse Shoe Store): 44 stores closed
- Foot Locker Europe: 16 stores closed
- Foot Locker Asia Pacific: 2 stores closed
- Atmos: 2 stores closed
- Total Foot Locker Business: 110 stores closed
Dick’s says Foot Locker’s business closed 67 locations as part of its “review of unproductive assets” in addition to relocating or remodeling 41 locations during the current year period.
According to the earnings statement, Foot Locker’s business had 2,478 stores as of August 1, compared to 2,561 at the beginning of the period.
Not the sole brand getting hit
Other big players in the sneaker business are struggling with physical retail, too.
Adidas’s stock dropped 12% at the end of July, despite a revenue boost from the World Cup. Under Armour and On Holding—the brand behind On Running—have also seen a challenging year, according to Sportico.
On Monday, Fast Company reported that Nike closed two dozen stores across 12 states as the brand attempts to streamline its retail footprint.
On Dick’s earnings call, a JPMorgan analyst asked if there is a hangover in the footwear cycle as innovation slows.
Stack replied that “we have the hangover right now,” and noted that almost every brand is going through a reset.
Turnaround not dead in its tracks yet
Despite a tough second quarter, there may be a light at the end of the tunnel.
Dick’s executives expect the promotional environment to remain challenging “at least through the fourth quarter,” especially in more competitive European markets. But they still believe the turnaround effort will be successful.
“Let me be clear: We believe the Dick’s business remains strong, and none of this changes our confidence in the long-term opportunity at Foot Locker,” said Stack on an earnings call. “We are still early in the Foot Locker turnaround . . . We have navigated environments like this before, and we remain confident in our strategy, our competitive position, and long-term opportunities ahead.”
With yesterday’s stock price decline, shares of Dick’s Sporting Goods Inc (NYSE: DKS) were down more than 45% over the last 12 months.
