Dick’s Sporting Goods Delivers Solid Q1, Reaffirms 2025 Guidance as Foot Locker Acquisition Takes Center Stage

Dick’s Sporting Goods kicked off fiscal 2025 with a solid beat on both revenue and earnings, reinforcing the strength of its business model in a volatile consumer environment. The company also reaffirmed full-year guidance, a notable sign of stability in a retail sector plagued by macroeconomic uncertainty and promotional pressures. However, the spotlight was arguably more focused on its recently announced $2.4 billion acquisition of Foot Locker, a transformative deal that could reshape the athletic retail landscape. While the Q1 print provides support around technical levels, investors may stay in a “wait and see” posture as they digest the acquisition and monitor integration risks.

Watch: CFRA VP of Equity Research Zachary Warring discusses Dick's acquisition of Foot Locker.

In the quarter ended May 3, Dick’s delivered adjusted earnings per share of $3.37, handily topping analyst expectations of $3.22. Revenue came in at $3.175 billion, a 5.2% increase from the prior year and ahead of the $3.13 billion consensus. Comparable sales rose 4.5%, marking the fifth consecutive quarter of comps above 4%, driven by both higher average ticket and transaction volumes. Importantly, the company maintained full price selling strategies and disciplined cost controls, leading to gross margin expansion of 41 basis points year-over-year.

The strong Q1 performance was widely anticipated, as Dick’s preannounced much of the financial detail alongside its Foot Locker acquisition announcement. The transaction, which is expected to close in the second half of fiscal 2025, values Foot Locker at approximately $2.5 billion on an enterprise basis. It will be financed through a mix of cash, revolving credit, and new debt, depending on shareholder election of cash or stock consideration. Dick’s expects the deal to be accretive to earnings in its first full year post-close and to deliver $100–125 million in annual cost synergies.

CEO Lauren Hobart positioned the merger as a strategic leap, stating, “By bringing our two great brands together, we see the opportunity to create a global leader in the sports retail industry.” The acquisition is expected to give Dick’s international reach and deeper access to the sneaker and streetwear consumer base—areas where Foot Locker has long held a cultural edge. Still, the move comes with risk: Foot Locker has been a structurally challenged business for years, facing pressure from vendor disintermediation and weak mall traffic.

Back to fundamentals, Dick’s operating margin in Q1 expanded to 11.4% on a non-GAAP basis, a 5 basis point improvement from last year. SG&A expenses were well-controlled at 25.3% of sales, roughly flat year-over-year, while the effective tax rate rose sharply to 24% from 19.6%, impacting GAAP net income. Adjusted net income was $275 million, essentially flat versus the prior year, while cash and equivalents stood at $1.036 billion, down 37% as capital expenditures and share buybacks increased.

On guidance, Dick’s reiterated its fiscal 2025 outlook for EPS of $13.80–14.40, with comparable sales expected to grow between 1% and 3%. The company is projecting full-year revenue between $13.6 billion and $13.9 billion. Notably, the guidance includes the expected impact from currently enacted tariffs but excludes any contribution or costs related to the Foot Locker acquisition.

Consumer demand trends continue to present a mixed backdrop. While discretionary categories remain under pressure, Dick’s appears to be benefiting from its focus on key growth segments like footwear and private label apparel. The company called out strength in trending brands like On and Hoka, as well as continued traction in omnichannel services like BOPIS (buy online, pick up in store). New store concepts, such as House of Sport and Dick’s Field House, are also helping to drive incremental traffic and engagement.

From a technical perspective, shares of DKS have been trending lower since the Foot Locker announcement, which was met with a 15% selloff as investors weighed strategic benefits against execution risk. However, the stock has found some footing near the $170 level and is showing early signs of stabilization. The $175–190 zone remains a key area of overhead resistance that the company will need to grind through to recapture momentum.

In short, Dick’s Q1 results show a company executing well amid challenging conditions, while also positioning itself for long-term strategic growth through the Foot Locker deal. The steady guidance, despite tariffs and ongoing macro headwinds, signals confidence from management. That said, investors will likely remain cautious until they gain more visibility on how the Foot Locker acquisition progresses, particularly as it relates to integration costs, brand overlap, and post-merger profitability. For now, the stock may be range-bound as bulls and bears digest a tale of strong fundamentals layered with bold strategic ambition.