Dick's Misses Earnings, Raises Guidance Amid Foot Locker Restructuring Costs

Dick's Sporting Goods Q3 Earnings and Outlook

Dick's Sporting Goods reported third-quarter results that missed both top-line and bottom-line estimates, yet raised its full-year 2025 guidance. The company posted non-GAAP earnings per share of $2.07, below the expected $2.71. Revenue of $4.17 billion also fell short of the projected $4.43 billion. Despite the earnings shortfall, the company remains optimistic about its future performance.

The DICK'S business saw strong comparable sales growth of 5.7% year-over-year, driven by increases in both average ticket and transaction volume. The company added 13 new House of Sport locations and six new DICK'S Field House locations during the quarter, contributing to its optimistic outlook. CEO Lauren Hobart emphasized the effectiveness of the company's long-term strategies and the execution by the team.

Dick's also announced plans to review unproductive assets at its recently acquired Foot Locker business. This includes clearing inventory and closing underperforming stores. The company expects these actions to result in pre-tax charges of $500 to $750 million. Foot Locker's performance, however, is expected to face challenges, with Q4 2025 gross margins projected to decline significantly.

Raising the Outlook Amid Challenges

Despite the third-quarter earnings miss, Dick's raised its full-year 2025 guidance for the DICK'S business. The company now expects comparable sales growth in the range of 3.5% to 4.0%, up from the previous range of 2.0% to 3.5%. Earnings per diluted share guidance was also increased to $14.25 to $14.55, up from $13.90 to $14.50. This adjustment reflects the company's confidence in its ability to deliver strong performance despite broader economic challenges.

Analysts had expected Dick's to report adjusted earnings of $2.69 per share and revenue of $3.19 billion for the quarter according to market expectations. The company's results exceeded these expectations in terms of guidance, but fell short in actual earnings and revenue. The stock price dropped 5.8% premarket, signaling investor concerns despite the raised guidance.

The acquisition of Foot Locker has introduced both opportunities and challenges for Dick's. While the deal is expected to provide long-term benefits, the integration has been complicated by lower-than-expected performance at Foot Locker. The company is taking steps to address these issues, including streamlining operations and reducing costs.

What This Means for Investors

Investors are closely watching how Dick's manages the integration of Foot Locker and its impact on the company's overall performance. JPMorgan analysts expect the DICK'S brand to outperform Wall Street estimates, benefiting from strong trends and higher prices. However, they also anticipate that Foot Locker's performance may fall short due to promotional and tariff pressures.

The company's ability to drive growth through strategic initiatives and its DICK'S brand will be critical in maintaining investor confidence. The recent raise in full-year guidance indicates management's belief in the long-term potential of the business, even amid short-term challenges. However, the stock's performance suggests that investors remain cautious about the near-term outlook.

The retail sector as a whole is facing headwinds, with many companies struggling to meet consumer expectations amid rising prices and cautious spending. Dick's, however, appears to be in a stronger position than many of its peers, thanks to its focus on high-performing stores and effective execution of its strategies. The company's success in managing its operations and adapting to changing market conditions will be key factors in determining its future performance.