Dick's Sporting Goods has a sneaker problem. Footwear stocks are feeling the pinch.

Shares of the sporting goods retailer cratered after reporting second-quarter earnings on Tuesday. Dick's fell more than 25% at one point, marking its largest percentage decrease on record, according to Dow Jones Market Data. The shares were on pace for their lowest close since late 2023, and are having their worst month since March 2020, when pandemic shutdowns proliferated across the U.S.

The bad day for the retailer, perhaps inevitably, sent Nike and other footwear stocks tumbling.

For Dick's, the dramatic decline reflects a dismal quarter. Earnings per share, revenue, and same-store sales were all below expectations. (The latter has been a particularly closely watched metric this quarter, as a way to cut through the noise of tariff refunds, and was largely behind the decline at Walmart.)

Both its Dick's and recently acquired Foot Locker divisions disappointed, with the latter now more clearly an "albatross," as Quo Vadis Capital President John Zolidis puts it.

"The takeaway is that DKS did not understand what it was buying with Foot Locker," he wrote. "Shareholders are now saddled with a chain that has structural issues including the complexity of overlapping banners in multiple markets, over-dependence on a single struggling vendor, aged mall-based real estate, as well as exposure to a lower-income consumer cohort."

Competition is fierce too. Plenty of companies are using their tariff refunds to cut prices, and management cited an "increasingly promotional" athletic apparel and footwear environment in the earnings release.

Apparel was a drag on earnings at Target and TJX Cos. last week as well, but given the Foot Locker results, Dick's report was a clearer window into footwear-and the picture wasn't a pretty one.

Legacy styles were a problem in the quarter, with discounts and fewer launches, and Foot Locker's outlook was cautious.

"The results will confirm many concerns/bear arguments about the ability to effectively turnaround the Foot Locker business, even if the current issues are tied to a more difficult environment," writes Baird analyst Jonathan Komp.

Likewise the company said it was a marketwide issue, rather than related to one brand; little wonder then that shares of companies like Nike, On Holding, and Hoka owner Deckers Outdoor were also falling following the Dick's news. The stocks were down 2.4%, 1.9%, and 3.2%, respectively, as of midday Tuesday.

"Management relayed that a brand partner told them they had never seen the specialty channel so promotional," writes Jefferies analyst Randal Konik.

He thinks On has the most to worry about.

Dick's Executive Chairman Ed Stack said that we're in the midst of a footwear cycle "hangover" with companies like Adidas, Nike, On, and Hoka in the midst of a reset, but when Stack discussed "what is working, On was absent," Konik notes.

"Our checks found core On SKUs up to 50% off at run specialty and Nordstrom Rack," Konik writes.

However, it's hard to think this is good news for Nike either; perhaps it's better seen as the best of the mess. We're in the midst of a "newness drought," writes Stifel analyst Peter McGoldrick.

His back-to-school shopping research shows that Nike is the most mentioned brand, but its popularity is bouncing off all-time lows and is just a shadow of its 2021 peak. Its top spot is due to "the Air Force 1, a Hoops Classic that has been in the popular domain for 8 consecutive years, and far longer than a reasonable product cycle."

Rather than blazing new trails, it seems footwear makers are running to stand still.