Overview
- DICK'S reported second-quarter results on Aug. 25 that missed expectations and prompted management to reduce full-year operating income guidance to about $1.46–$1.56 billion and adjusted EPS to $11.00–$12.00.
- The company said pro forma comparable sales at the acquired Foot Locker business fell about 3.6%, which it blamed on heavy discounting and weaker demand for launch and retro footwear silhouettes.
- Integration costs have already reached roughly $516 million of an expected $750 million, and adding Foot Locker raised SG&A by about $477 million and pulled consolidated gross margin down roughly 300 basis points.
- Investors punished the stock after the report, with DKS shares plunging about 30% and other apparel and footwear names, including Nike, also falling on concern the weakness could reflect wider market softness.
- A securities firm has opened an investigation into whether DICK'S made misleading statements about its outlook, and management says it will pursue $100M–$125M of synergies while expecting elevated promotions at least through Q4.