FILE PHOTO: People queue during Black Friday sales outside a Foot Locker shoe store, in Zurich, Switzerland, November 27, 2020.
Arnd Wiegmann | Reuters
Dick’s Sporting Goods said Thursday it had a better-than-expected holiday quarter, but the retailer issued weak profit guidance for the coming year as its acquisition of Foot Locker continues to weigh on its bottom line.
The company expects adjusted earnings per share for fiscal 2026 to be between $13.50 and $14.50, lower than the $14.67 expected by analysts, according to LSEG.
Dick’s said it expects Foot Locker to return to profit and sales growth during the year, but it continues to do the costly work of clearing out expired inventory and closing unproductive stores it acquired in the merger last year.
The company expects these efforts, as well as other expenses associated with the transaction, to cost between $500 million and $750 million. About $390 million of those costs were recorded in fiscal 2025, with more expected in the current fiscal year.
In an interview with CNBC’s Sara Eisen, Executive Chairman Ed Stack said the company has “essentially completed” its efforts to right-size the Foot Locker business.
“In retail, you’re never really done cleaning out the garage,” Stack said. “Everything else is in the ordinary course of business.”
Dick’s beat Wall Street’s earnings and results expectations for the quarter ended Jan. 31. Here’s how the company performed in its fiscal fourth quarter compared to what Wall Street expected, based on a survey of analysts by LSEG:
- Earnings per share: $3.45 adjusted vs. $2.87 expected
- Income: $6.23 billion versus $6.07 billion expected
Dick’s posted net income of $128.3 million, or $1.41 per share, a 57% decline from $299.97 million, or $3.62 per share, a year earlier.
Sales reached $6.23 billion, up from $3.89 billion a year earlier, when the business did not include Foot Locker.
Six months ago, Dick’s acquired Foot Locker in a $2.5 billion deal, and the combined entity is now one of the largest distributors of products from major sports brands like Nike, Adidas and New Balance. The merger gave Dick’s access to a new type of customer, allowed it to expand its international presence and gave it more negotiating power with brands at a time when sportswear companies are less dependent on wholesalers.
Although the acquisition led to a 60% sales increase in the fiscal fourth quarter, it also saddled Dick’s with a business that has been underperforming for years and which derives most of its revenue from a large network of stores heavily concentrated in malls.
Since acquiring the company, Dick’s has worked to close underperforming stores. In fiscal 2025, it closed 57 stores globally across Foot Locker, Champs, Kids Foot Locker and WSS.
A pilot program has been launched with 11 Foot Locker stores, called “Fast Break”, which will test changes to products and in-store presentation. So far, Dick’s said the pilot has delivered “remarkable performance” thanks to improved storytelling and presentation and streamlined assortment. The retailer plans to expand the model later this year.
Prior to the acquisition, Mary Dillon, former CEO of Foot Locker, led an aggressive store transformation strategy aimed at moving stores out of malls and renovating existing doors with a refreshed concept. It is unclear whether Fast Break will be different from the strategy Foot Locker already has in place.
Dick’s said it expects to see an inflection in Foot Locker’s comparable sales and profitability starting with the back-to-school shopping season. For the full year, he expects Foot Locker’s comparable sales to increase between 1% and 3%.