Macy's vs. Dick's Sporting Goods: Navigating Tariffs and Retail Resilience

The retail sector faces relentless headwinds, from rising tariffs to shifting consumer preferences. Amid this turbulence, two major players—Macy's and Dick's Sporting Goods—are charting contrasting paths. While Macy's grapples with declining sales and store closures, Dick's has emerged as a beacon of adaptability, leveraging strategic acquisitions and operational innovation. This analysis examines why Dick's Sporting Goods (DKS) offers superior resilience and valuation advantages over Macy's (MACY), positioning it as the better buy for investors seeking stability and growth.

Financial Performance: A Stark Divide

Let's start with the numbers. In Q1 2025, Dick's Sporting Goods reported net sales growth of 5.2% to $3.175 billion, driven by strong comparable sales (+4.5%) and its non-GAAP EPS of $3.37. The company reaffirmed its 2025 guidance, including EPS of $7.50–$8.00, despite rising tariffs and promotional pressures. This contrasts sharply with Macy's, which saw net sales fall 5.1% to $4.6 billion, with adjusted EPS of just $0.16—a 41% drop from 2024.

The stock market has already priced in this divergence: Macy's trades at a P/E ratio of 5.7, while Dick's sports a P/E of 6.2 (using its Q1 2025 EPS). However, Dick's boasts a 6.8% dividend yield—far exceeding Macy's 6.06%—and maintains stronger balance sheet metrics, including $2.1 billion in liquidity post-credit facility amendments. Macy's, meanwhile, faces a debt load of $2.8 billion, with a narrower margin of safety.

Operational Adaptability: Where Dick's Shines

The true distinction lies in strategic execution. Dick's has embraced two critical initiatives:
1. The Foot Locker Acquisition: Closing in late 2025, this $2.5 billion deal adds 2,363 Foot Locker stores globally, instantly transforming Dick's into a multi-market sports retail leader. The merger diversifies its customer base—combining Dick's suburban, family-oriented shoppers with Foot Locker's urban “sneakerhead” demographic—and creates $100–$125 million in cost synergies.

1. Store Innovation: Dick's is redefining its footprint with concepts like House of Sport (premium outdoor gear hubs) and Field House (team-sports destinations). These formats boast 9% higher sales per square foot than traditional stores, reflecting a focus on experiential retail. Meanwhile, Macy's “Reimagine 125” initiative—a plan to revamp underperforming stores—has delivered only 0.8% comparable sales declines in those locations, outperforming the broader Macy's fleet's 2.1% drop. Yet this pales against Dick's broader momentum.

Valuation and Risk Considerations

While both face tariff pressures (Dick's cites 30–70 basis points of margin contraction in 2025), Dick's has clearer growth levers:
- Global Expansion: Foot Locker's international presence (20 countries) opens new markets for Dick's, reducing reliance on U.S. consumer trends.
- Diversified Revenue Streams: Dick's generates 26% of revenue from non-merchandise sources (e.g., its Media Network and credit card programs), compared to Macy's 4% contribution from similar activities.
- Debt Management: Dick's has no debt maturities until 2027, while Macy's faces tighter liquidity with a $2.8 billion debt load.

Investors should also note valuation multiples. Though both trade at low P/E ratios, Dick's 6.8% dividend yield and $12.49 stock price (vs. Dick's $35.50) suggest Macy's is undervalued only if its turnaround succeeds—a risky bet given its 2025 sales guidance cut.

Investment Thesis: Dick's Outperforms on Resilience

Dick's Sporting Goods is the clear choice for investors seeking resilience and growth in retail:
- Strong Balance Sheet: Amended credit facilities and $2.1 billion in liquidity provide flexibility.
- Strategic Acquisitions: The Foot Locker deal creates a global sports retail giant, mitigating geographic risk.
- Operational Focus: Store innovations and synergies position Dick's to weather tariffs better than its peers.

Macy's, meanwhile, remains hamstrung by 150 planned store closures and a reliance on price hikes to offset declining foot traffic. Its 2025 EPS guidance of $1.60–$2.00 is a 22% drop from 2024 levels, underscoring its struggles.

Final Recommendation

Buy Dick's Sporting Goods (DKS) for its superior operational adaptability, dividend yield, and global expansion potential. While tariffs and consumer caution pose risks, Dick's has the scale and strategy to outperform. Macy's (MACY), despite its low P/E, is a riskier bet given its reliance on store closures and uncertain turnaround.

For investors prioritizing stability and growth in retail, Dick's is the safer, smarter play.

Disclosure: This analysis is for informational purposes only and not a recommendation to buy or sell securities.