DICK’S Sporting Goods, Inc. (NYSE:DKS) stock plunged Tuesday after the retailer missed second-quarter earnings and sales estimates. The company also cut its full-year outlook as weakness at Foot Locker weighed on results.
Net sales rose 53.2% year over year to $5.59 billion. However, that missed the $5.65 billion estimate.
Adjusted earnings fell to $3.53 per share from $4.38 a year earlier. The result missed the $3.77 estimate. GAAP earnings declined to $3.50 per share from $4.71.
Core Business Grows As Foot Locker Struggles
The core DICK’S business generated $3.85 billion in sales and $485.2 million in segment profit.
Comparable sales rose 4.9%, driven by growth across footwear, apparel and hardlines. Higher transactions and average ticket also supported results. However, operating margin narrowed to 12.6% from 13%.
Foot Locker generated $1.74 billion in sales but posted a $31.9 million segment loss. Pro forma comparable sales fell 3.6% amid fewer product launches and heavier athletic footwear promotions.
Management Flags Further Pressure
During the earnings call, management said Foot Locker’s European business faced heavier promotions, excess inventory and cautious consumer spending.
The company expects third-quarter conditions to be more challenging than the fourth quarter. Still, Fast Break stores continue to outperform legacy locations. DICK’S expects to operate more than 300 Fast Break stores worldwide by year-end.
Executive Chairman Ed Stack said demand for older footwear styles slowed quickly as shoppers favored newer, more innovative products. The shift left excess inventory across the industry and fueled aggressive discounting, which pressured margins at DICK’S and hit Foot Locker even harder. “We’re going to go through some pain,” Stack said, describing the downturn as a temporary industry reset.
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Foot Locker Charges Hit Margins
GAAP net income fell 17% to $315 million. Consolidated operating margin declined to 7.9% from 12.4%.
DICK’S recorded $125.8 million in pretax charges related to its Foot Locker asset review during the first 26 weeks. Cumulative charges reached $515.8 million. The company expects total charges of up to $750 million.
Operating cash flow totaled $792.3 million during the first 26 weeks. Cash and equivalents stood at $913.7 million.
DICK’S Cuts 2026 Outlook
DICK’S lowered fiscal 2026 adjusted earnings guidance to $11-$12 per share from $13.50-$14.50. The revised range is below the $14.22 estimate.
The retailer cut its sales forecast to $21.9 billion-$22.2 billion from $22.1 billion-$22.4 billion. Analysts expect $22.36 billion.
DICK’S maintained its core comparable sales forecast of 2.5% to 4%. However, it lowered Foot Locker’s pro forma comparable sales outlook to a decline of 2% to flat.
DKS Price Action: DICK’S Sporting Goods shares were down 23.65% at $136.91 at the time of publication Tuesday, according to Benzinga Pro data.
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