DICK’S Sporting Goods (NYSE:DKS) Q3 2026 Earnings Call November 25, 2025 08:00 AM ET Company ParticipantsLauren Hobart - President and CEONavdeep Gupta - CFOMike Baker - Managing DirectorAdrienne Yih - Managing DirectorEd Stack - Executive ChairmanPaul Lejuez - Managing DirectorSteve Forbes - Senior Managing DirectorKate McShane - Managing DirectorCristina Fernández - Managing DirectorNate Gilch - Head of Investor RelationsConference Call ParticipantsRobbie Ohmes - AnalystMichael Lasser - Equity Research An ...

Financial Data and Key Metrics Changes - Consolidated net sales increased by 36.3% to $4.17 billion, driven by approximately $931 million from the Foot Locker acquisition and a 5.7% comp increase for the DICK'S business [26][27] - Non-GAAP EPS for the DICK'S business was $2.78, up from $2.75 in the prior year's quarter [30] - Consolidated gross profit was $1.38 billion, or 33.13% of net sales, down 264 basis points from last year, primarily due to the lower gross margin from the Foot Locker business [27][30] Business Line Data and Key Metrics Changes - DICK'S business comp sales increased by 5.7%, with growth in average ticket and transactions, on top of a 4.3% increase last year [17][26] - Foot Locker's proforma comp sales for Q3 declined by 4.7%, with a 10.2% decline internationally [8][27] - DICK'S opened 13 new House of Sport locations in Q3, the highest number in a single quarter, bringing the total to 35 [18] Market Data and Key Metrics Changes - DICK'S business saw broad-based strength across footwear, apparel, and hard lines categories [26] - Foot Locker's comparable sales in North America decreased by 2.6%, while international sales decreased by 10.2% [27] Company Strategy and Development Direction - The acquisition of Foot Locker is seen as a transformative opportunity to build a global platform at the intersection of sport and culture [7][9] - The immediate priority for Foot Locker is to clean out underperforming assets, including inventory and stores, to reset the business for long-term success [10][34] - DICK'S is focused on leveraging its operational excellence and supplier relationships to return Foot Locker to profitability [9][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the turnaround of Foot Locker, emphasizing the need for operational improvements and inventory management [55][81] - The back-to-school season in 2026 is expected to be an inflection point for Foot Locker's recovery [13][38] - DICK'S raised its full-year outlook for comp sales growth to 3.5%-4% and EPS to $14.25-$14.55 [16][36] Other Important Information - The company expects Q4 margin rates for Foot Locker to decline between 1,000 and 1,500 basis points due to aggressive inventory clean-up [11][38] - Future pre-tax charges related to the Foot Locker acquisition are anticipated to be between $500 million and $750 million [34] Q&A Session Summary Question: How is DICK'S driving strong comp growth and confidence going into the holiday season? - Management highlighted the differentiated product assortment and engaging athlete experience as key drivers of growth, with strong performance across key categories [42][44] Question: What assumptions were made about Foot Locker's inventory cleanup and store closures? - Management indicated that they are still assessing which stores to close and expect significant markdowns on unproductive inventory [45][46][48] Question: Can you walk through the building blocks for Foot Locker to be accretive to EPS in 2026? - Management emphasized the need for cleaning out old inventory and underperforming assets, along with confidence in the new management team [52][55] Question: How will markdowns at Foot Locker be managed, and will they impact DICK'S sales? - Management expressed confidence that markdowns on older products will not affect the ability to sell new products at full price [66][68] Question: Is Foot Locker's underperformance due to historical issues, and what is the plan for improvement? - Management acknowledged historical underperformance and emphasized the importance of inventory management and merchandising improvements [73][81]

Financial Data and Key Metrics Changes - Consolidated net sales increased by 36.3% to $4.17 billion, driven by approximately $931 million from the Foot Locker acquisition and a 5.7% comp increase for the DICK'S business [25] - Non-GAAP EPS for the DICK'S business was $2.78, up from $2.75 in the prior year's quarter [30] - Consolidated gross profit was $1.38 billion, or 33.13% of net sales, down 264 basis points from last year, primarily due to the lower gross margin from the Foot Locker business [26] Business Line Data and Key Metrics Changes - DICK'S business comp sales increased by 5.7%, with growth in average ticket and transactions, following a 4.3% increase last year [17] - Foot Locker's proforma comp sales for Q3 declined by 4.7%, with a 10.2% decline internationally [7][26] - DICK'S opened 13 new House of Sport locations in Q3, the highest number in a single quarter, bringing the total to 35 [18] Market Data and Key Metrics Changes - DICK'S business saw broad-based strength across footwear, apparel, and hard lines categories [25] - Foot Locker's comparable sales in North America decreased by 2.6%, while international sales decreased by 10.2%, primarily due to softness in Europe [26] Company Strategy and Development Direction - The acquisition of Foot Locker is viewed as a transformative opportunity to redefine sports retailing and expand the total addressable market [6] - The immediate priority for Foot Locker is to clean out underperforming assets, including inventory and stores, to position the business for future success [9][33] - DICK'S is focused on maintaining momentum through a differentiated product assortment and an industry-leading omnichannel athlete experience [6][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the turnaround of Foot Locker, emphasizing the need for operational excellence and strong supplier relationships [8][49] - The back-to-school season in 2026 is anticipated to be an inflection point for Foot Locker's recovery [12][38] - DICK'S raised its full-year outlook for comp sales growth to 3.5%-4% and EPS to $14.25-$14.55 [36] Other Important Information - The company expects Q4 margin rates for Foot Locker to decline between 1,000 and 1,500 basis points due to aggressive inventory clean-up [10][38] - Future pre-tax charges related to the Foot Locker acquisition are expected to be between $500 million and $750 million [33] Q&A Session Summary Question: How is DICK'S driving strong comp growth and confidence going into the holiday season? - Management highlighted the differentiated product assortment and engaging athlete experience as key drivers of growth, with strong performance across all key categories [41][43] Question: What assumptions were made about Foot Locker's inventory cleanup and store closures? - Management indicated that they are still assessing which stores to close and expect significant markdowns on unproductive inventory [45][46] Question: What are the building blocks for Foot Locker to be accretive to EPS in 2026? - Management emphasized the importance of cleaning out unproductive inventory and optimizing the store portfolio as foundational steps for future profitability [47][49] Question: How will markdowns at Foot Locker impact the market and DICK'S sales? - Management expressed confidence that markdowns on older inventory will not negatively impact DICK'S sales, as new, innovative products will be introduced [54][55] Question: Is Foot Locker's expected accretion based on current EPS guidance? - Management confirmed that the expectation for Foot Locker to be accretive is based on the current EPS guidance for DICK'S business [62]

Dick's Sporting Goods raised its outlook for its namesake banner, which continues to log higher sales, though profit slipped in part due to higher costs tied to the turnaround of its recently acquired... ...

Dick's Sporting Goods Business Performance and Strategy - DICK'S Business is a leading U S sports retailer with growth potential, holding approximately 9% market share within a ~$140 billion total addressable market[14] - The company achieved strong FY24 results, including a 52% increase in comparable sales and net sales of $1344 billion, a 3590% non-GAAP gross margin (+89 bps year-over-year), a $152 billion non-GAAP EBT (+83% year-over-year), and a $1405 non-GAAP EPS (+88% year-over-year)[20] - DICK'S Business is focused on three growth areas: driving growth in key categories, accelerating eCommerce, and repositioning real estate and store portfolio[32] - The company is expanding its House of Sport locations, aiming for 75 to 100 stores by the end of FY27, with each location generating approximately $35 million in Y1 Omni sales and ~$7 million in Y1 4-Wall Omni EBITDA[37, 45] - DICK'S Business is also growing its Golf Galaxy footprint, including Performance Centers, with 112 Golf Galaxy locations, including 32 Performance Centers as of FY25[47, 53] Acquisition of Foot Locker and Future Outlook - DICK'S Sporting Goods acquired Foot Locker, Inc to create a global platform within the growing sports retail industry with a ~$300 billion total addressable market and ~65% market share[7, 16] - Foot Locker, Inc has approximately 23K global stores across North America, Europe, and Asia Pacific, with FY24 revenue of $8 billion and adjusted EBIT of $193 million[113] - The company expects to achieve $100 million to $125 million in cost synergies from the Foot Locker acquisition over the medium-term and expects the acquisition to be accretive to EPS in FY26, excluding one-time costs[117] - DICK'S Business Q3 2025 comparable sales grew 57%, and the company is raising its full-year 2025 outlook for the DICK'S Business, expecting net sales of $1395 billion to $140 billion and diluted EPS of $1425 to $1455[133, 135] Capital Allocation and Shareholder Returns - The company has returned approximately $22 billion to shareholders over the past three years, representing approximately 110% of free cash flow, including ~$13 billion in share repurchases and ~$880 million in dividends[126, 127] - DICK'S Sporting Goods announced authorization of a new five-year share repurchase program of up to $3 billion[130]

Core Viewpoint - The sporting goods retailer has faced challenges in attracting investors this year [1] Group 1 - The company has struggled to win over investors [1]

Core Viewpoint - Dick's Sporting Goods is restructuring Foot Locker following its acquisition to enhance profitability by fiscal 2026, which includes plans to close several stores [1][2][6]. Group 1: Acquisition and Restructuring - Dick's acquisition of Foot Locker for $2.4 billion aims to strengthen its position in the wholesale sneaker market, particularly for Nike products, and to access a broader consumer base [7]. - The company is implementing aggressive markdowns and impairing store assets as part of the restructuring process to protect future profits [2][6]. - Specific details on the number of store closures and potential layoffs have not been disclosed [2]. Group 2: Financial Performance - Dick's reported a net income of $75.2 million, or 86 cents per share, for the quarter ending Nov. 1, a decrease from $227.8 million, or $2.75 per share, a year earlier [5]. - Excluding one-time items related to the Foot Locker acquisition, adjusted earnings per share were $2.78, surpassing the expected $2.71 [10]. - The company's revenue increased by 36% to $4.17 billion from $3.06 billion year-over-year, driven by Foot Locker's contribution of nearly $931 million [7]. Group 3: Sales Expectations - Foot Locker's comparable sales are projected to decline in the mid- to high-single digits for the current quarter, with margins expected to drop by 10 to 15 percentage points [3]. - Dick's anticipates comparable sales growth for its own stores to rise between 3.5% and 4%, an increase from the previous forecast of 2% to 3.5% [4].

Sales Performance - DICK'S Business reported a comparable sales growth of 5.7% in the third quarter, driven by increases in both average ticket and transactions [2]. - The company raised its full-year 2025 guidance for comparable sales growth to a range of 3.5% to 4.0%, up from the previous range of 2.0% to 3.5% [6]. - DICK'S Business achieved comparable sales growth of 5.7% for the 13 weeks ended November 1, 2025, compared to 4.3% for the same period in 2024 [21]. - Net sales for the 13 weeks ended November 1, 2025, were $4,167,773, a significant increase from $3,057,181 for the same period in 2024, representing a growth of 36.3% [34]. - For the 39 weeks ended November 1, 2025, net sales reached $10,989,066, up from $9,549,200 in 2024, marking an increase of 15.0% [36]. Financial Guidance - DICK'S Business earnings per diluted share guidance for 2025 was increased to a range of $14.25 to $14.55, up from $13.90 to $14.50 [6]. - DICK'S Business expects earnings per diluted share for full year 2025 to be between $14.25 and $14.55, based on approximately 81 million diluted shares outstanding [16]. - Net sales for DICK'S Business are projected to be between $13.95 billion and $14.0 billion, with comparable sales growth estimated at positive 3.5% to positive 4.0% [16]. Acquisitions and Expansion - The company completed the acquisition of Foot Locker for a total consideration of $2.5 billion, which included $2.1 billion in share consideration [12]. - DICK'S Sporting Goods opened 13 new House of Sport locations and 6 new DICK'S Field House locations during the third quarter [6]. - The company initiated a review of unproductive assets, expecting future pre-tax charges of $500 to $750 million related to the Foot Locker acquisition [14]. Financial Results - The company reported net sales of $4.168 billion for the third quarter, a 36.3% increase from $3.057 billion in the prior year [8]. - DICK'S Business net income for the third quarter was $226 million, a slight decrease of 1% compared to $228 million in the prior year [8]. - Total gross profit for DICK'S Sporting Goods for the 39 weeks ended November 1, 2025, was $3,682.9 million, up from $3,464.4 million in the same period last year [21]. - DICK'S Sporting Goods reported a business profit of $288.6 million for the 13 weeks ended November 1, 2025, compared to $289.5 million for the same period in 2024 [21]. - Net income for the 13 weeks ended November 1, 2025, was $75,212, down from $227,813 in the same period last year, reflecting a decline of 66.9% [34]. - The company reported an income from operations of $93,097 for Q3 2025, a decrease of 67.5% from $286,044 in Q3 2024 [34]. Expenses and Liabilities - Selling, general and administrative expenses increased to $1,118,600, representing 26.84% of net sales, compared to 25.86% in the prior year [34]. - Total current liabilities rose to $4.68 billion in November 2025, compared to $3.22 billion in November 2024, marking an increase of 45.4% [38]. - Long-term debt and financing lease obligations increased to $1.90 billion in November 2025, up from $1.48 billion in November 2024, reflecting a rise of 28.2% [38]. Cash Flow and Capital Expenditures - Cash and cash equivalents decreased by 44% to $821 million compared to $1.459 billion in the prior year [9]. - The company experienced a net cash provided by operating activities of $487.3 million, down from $680.3 million in the previous year, a decrease of 28.4% [40]. - Capital expenditures for DICK'S Business are anticipated to be approximately $1.2 billion on a gross basis and $1.0 billion on a net basis [16]. - Capital expenditures for the 39 weeks ended November 1, 2025, were $793.3 million, an increase of 40.3% compared to $565.6 million in the prior year [40]. Tax and Margins - The effective tax rate for consolidated Q4 2025 is projected to be approximately 29% [18]. - Gross profit margin decreased to 33.13% in Q3 2025 from 35.77% in Q3 2024, indicating rising costs in goods sold [34]. - The company reported a gross profit margin of 33.13% for the 13 weeks ended November 1, 2025 [42]. Non-GAAP Measures - The company reported a non-GAAP net income of $180.6 million for the 13 weeks ended November 1, 2025, translating to diluted earnings per share of $2.07 [42]. - The non-GAAP net income for the same period was $810,062, with earnings per diluted share at $9.74 [43]. - The company’s provision for income taxes for non-GAAP adjustments was calculated at 26%, reflecting the consolidated blended tax rate [45].

Retail earnings take center stage this week as several holdings in the Direxion Daily Retail Bull 3X Shares (RETL) prepare to report results just days before the Thanksgiving and Black Friday shopping weekend. Six companies from the ETF's roster will release quarterly results between Monday and Tuesday. The group includes Burlington Stores, Inc. (BURL), Best Buy Co., Inc. (BBY), Kohl's Corp. (KSS), Dick's Sporting Goods, Inc. (DKS), Urban Outfitters, Inc. (URBN), and Abercrombie & Fitch Co. (ANF). These six ...

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