Dick's Sporting Goods shares plunge as Foot Locker weakness forces profit-outlook cut

DICK'S Sporting Goods shares tumbled as much as 17% in early trading on Tuesday after the retailer reported second-quarter earnings that missed Wall Street estimates and cut its full-year profit outlook, as a weakening athletic footwear market weighed heavily on Foot Locker, the chain it acquired less than a year ago.

The Pittsburgh-area retailer said in a filing with the Securities and Exchange Commission that net sales for the 13 weeks ended August 1 rose 53.2% to $5.59 billion, but that figure fell short of the roughly $5.64 billion analysts had projected, driven almost entirely by the consolidation of Foot Locker's revenue rather than organic growth. Adjusted earnings of $3.53 a share missed the $3.76 consensus estimate by a wide margin, and the stock gave back more than a year's worth of gains within the first hour of trading before paring some of its losses.

The numbers

Net income fell to $315 million from $381 million a year earlier, even as revenue rose sharply. The divergence traces back to a split performance between the company's two main businesses. The core DICK'S chain delivered comparable sales growth of 4.9%, which executives attributed to strong demand tied to the 2026 FIFA World Cup and continued market-share gains in team sports and outdoor categories. Foot Locker, by contrast, posted a pro forma comparable sales decline of 3.6%, dragging consolidated pro forma comps to a much thinner 2.1% gain.

Management responded by trimming its full-year guidance across the board. The company now expects consolidated net sales of $21.9 billion to $22.2 billion, down from a prior range of $22.1 billion to $22.4 billion, and cut its operating income outlook to between $1.45 billion and $1.55 billion from an earlier forecast of $1.69 billion to $1.81 billion. The midpoint of adjusted earnings-per-share guidance dropped to roughly $11.50 from $14.00, a nearly 18% reduction, a cut that trading desks flagged as one of the steeper full-year guidance revisions among large-cap retailers this earnings season. Foot Locker's own comparable-sales outlook was lowered to a range of negative 2% to flat for the year, with the division now expected to post a segment loss of between $40 million and $80 million.

• Q2 net sales: $5.59 billion, up 53.2% year over year but below the roughly $5.64 billion analysts expected
• Adjusted EPS: $3.53 versus a $3.76 consensus estimate; GAAP net income fell to $315 million from $381 million
• DICK'S comparable sales: +4.9%; Foot Locker pro forma comparable sales: -3.6%
• Full-year adjusted EPS guidance cut to a $11.00-$12.00 range, roughly an 18% reduction at the midpoint from prior guidance

A bet on Foot Locker turns costly

DICK'S completed its roughly $2.4 billion acquisition of Foot Locker in September 2025, a deal that gave the sporting-goods giant control of thousands of mall-based footwear stores and, crucially, closer ties to sneaker brands such as Nike and New Balance that prize Foot Locker's shelf space for product launches. Executives framed the deal at the time as a way to diversify beyond DICK'S big-box format and capture a bigger share of the athletic footwear market.

Nearly a year in, the integration has proven expensive. According to the company's earnings release, DICK'S has now recognized $515.8 million in cumulative pre-tax charges tied to the Foot Locker integration and a broader review of underperforming stores, including $125.8 million booked in the first half of this fiscal year alone. Management said it expects total charges of up to $750 million, with roughly $200 million more to be recorded before the fiscal year is out. As part of that review, the company has identified 67 Foot Locker locations for closure this year on top of stores already shuttered since the deal closed.

Executive Chairman Ed Stack said conditions in the footwear market deteriorated as the quarter went on. "As the quarter progressed, conditions across portions of the athletic footwear and apparel marketplace became increasingly promotional, and we took action to remain competitively priced to protect and grow our leadership position," the company said in its official results announcement. Foot Locker's exposure to older, "legacy" sneaker styles and a lighter-than-expected slate of new footwear launches left it more exposed to that discounting than the DICK'S banner, executives said.

Who is affected

The immediate impact falls hardest on DICK'S shareholders, who saw roughly a sixth of the stock's value erased in premarket trading before the shares recovered some ground to trade down closer to 12% to 13% by midday. Foot Locker's roughly 2,478 stores and their employees face continued uncertainty as the company works through further closures tied to its unproductive-asset review, on top of the 2,561 Foot Locker locations it started the year with. Sneaker and apparel brands that rely on Foot Locker's mall footprint for launch traffic are also watching closely, given the chain's diminished bargaining position during a soft patch for athletic footwear demand generally.

The DICK'S core business, meanwhile, continues to perform well by most measures. The company's 892 namesake stores generated healthy comparable-sales growth, and the retailer disclosed it received $59 million in tariff refunds during the quarter tied to import-duty relief, along with $2.1 million in related interest income, a modest tailwind that partly offset the Foot Locker drag.

"We remain highly confident in the strength of the DICK'S Business and our long-term opportunity at Foot Locker," President and Chief Executive Lauren Hobart said in the earnings release, while acknowledging the company is "taking a more cautious view of the balance of the year."

What happens next

DICK'S executives are betting that the worst of the Foot Locker drag is a near-term problem rather than a structural one, pointing to plans for further store closures, inventory discipline and a narrower focus on higher-performing Foot Locker locations as the basis for a turnaround. The company's regulatory filing shows management still expects the DICK'S segment's comparable sales to grow between 2.5% and 4% for the full year, suggesting confidence that the core chain can keep offsetting weakness at Foot Locker even as it works through nearly a billion dollars of integration and restructuring costs.

Investors will get a clearer read on whether that bet is paying off when DICK'S reports third-quarter results later this year, a period that will capture the critical back-to-school and early holiday selling seasons for both banners. Analysts covering the stock will also be watching whether rival retailers report similar promotional pressure in footwear, which would suggest the problem is industrywide rather than specific to Foot Locker's execution under new ownership.