Dick's Sporting Goods cuts outlook after Q2 miss and Foot Locker drag

Dick's Sporting Goods Inc. (NYSE: DKS ) stock extended its decline in Wednesday's premarket trading after plunging 30.68% Tuesday.

The retailer reported second-quarter earnings and revenue below analysts' expectations.

It also cut its full-year outlook as weakness at Foot Locker weighed on results.

Earnings Snapshot Net sales rose 53.2% year over year to $5.59 billion but missed the $5.65 billion estimate.

Adjusted earnings fell to $3.53 per share from $4.38 a year earlier.

That missed the $3.77 estimate.

GAAP earnings declined to $3.50 per share from $4.71.

Dick's ended the quarter with $914 million in cash and no borrowings under its $2 billion credit facility.

Inventory totaled $5.57 billion, while inventory at the core Dick's business rose 6%.

Net capital expenditures totaled $325 million.

The company also paid $111 million in dividends.

Dick's received about $57 million in tariff refunds, while Foot Locker received $2 million.

The company recognized $21 million of the $59 million total as a non-GAAP benefit during the quarter.

The retailer reinvested the refunds in pricing.

That helped it remain competitive and offset higher fuel, supply-chain and inflation-related costs.

Core Business Outperforms Foot Locker Sales at the core Dick's business rose 5.6%, while comparable sales increased 4.9%.

Higher transaction volume and average spending drove the gains.

Comparable sales outpaced the broader industry by nearly 200 basis points.

Two-year comparable sales rose 9.9%, while three-year comparable sales increased 14.4%.

However, Foot Locker's pro forma comparable sales fell 3.6%.

Demand weakened for legacy footwear styles, while fewer product launches and soft customer response also hurt results.

World Cup investments through Adidas AG generated strong results.

Foot Locker's Fastbreak program also exceeded its 250-store back-to-school target.

Margins Feel Foot Locker Pressure Adjusted gross profit totaled $1.9 billion.

Gross margin contracted 300 basis points to 34.06%, mainly due to the addition of Foot Locker and an unfavorable sales mix.

However, gross margin at the core Dick's business expanded 79 basis points.

Growth at Dick's Media Network and GameChanger, along with tariff refunds, supported the improvement.

Adjusted operating income fell to $453.3 million from $475 million a year earlier.

Operating margin narrowed to 8.11% from 13.02%.

The core Dick's business generated $485.2 million in operating income.

Foot Locker posted an operating loss of $31.9 million.

Dick's Cuts 2026 Outlook Dick's lowered its fiscal 2026 adjusted earnings guidance to $11 to $12 per share from $13.50 to $14.50.

The new range also fell below the $14.22 analyst estimate.

The company cut its sales outlook to between $21.9 billion and $22.2 billion from $22.1 billion to $22.4 billion.

Analysts expect $22.36 billion.

Dick's maintained its core comparable-sales forecast of 2.5% to 4%.