Dick's Sporting Goods Reports Weak Profit Outlook Due to Impact of Foot Locker Acquisition

Special Report: Focus on U.S. Stocks Q4 2025 Earnings Reports

Key Highlights

Dick’s Sporting Goods holiday shopping season outperformed expectations, but profit plunged by 57% due to the acquisition of Foot Locker.

According to London Stock Exchange Group (LSEG) data, the company expects adjusted earnings per share for fiscal 2026 to be between $13.50 and $14.50, below analysts’ forecast of $14.67.

CEO Ed Stack told CNBC that although acquisition-related costs will continue to increase this fiscal year, the business optimization of Foot Locker has been largely completed, and the brand is expected to return to growth.

Dick’s Sporting Goods announced on Thursday that its holiday quarter results exceeded expectations, but ongoing challenges from the Foot Locker acquisition led to a weak full-year profit outlook.

Based on LSEG data, the company projects adjusted earnings per share for fiscal 2026 to be $13.50 to $14.50, below the previous analyst estimate of $14.67.

Dick’s Sporting Goods stated that it expects Foot Locker to recover profits and sales within the year, but currently bears high costs related to clearing unsold inventory from last year’s merger and closing underperforming stores.

The company estimates that these initiatives and other transaction-related expenses will total $500 million to $750 million, with about $390 million already accounted for in fiscal 2025, and additional costs expected this year.

In an interview with CNBC reporter Sara Eisen, CEO Ed Stack said that the business optimization of Foot Locker has mostly been completed.

“In retail, you can never fully clear all issues,” Stack said. “Future work will be part of normal operations.”

In the three months ending January 31, Dick’s Sporting Goods exceeded Wall Street expectations in both revenue and profit. Here is a comparison of the company’s Q4 results with analyst estimates (LSEG summary):

• Adjusted EPS: $3.45, expected $2.87
• Revenue: $6.23 billion, expected $6.07 billion

The company reported net income of $128.3 million, or $1.41 per share, a significant decline of 57% from $299.97 million, or $3.62 per share, in the same period last year.

Sales rose to $6.23 billion, up from $3.89 billion in the same period last year (before acquiring Foot Locker).

Six months ago, Dick’s Sporting Goods completed the acquisition of Foot Locker for $2.5 billion, making the combined entity one of the largest distributors of core sports brands like Nike, Adidas, and New Balance.

This acquisition brought new customer segments, helped expand internationally, and, amid a decline in wholesale dependence among sports apparel brands, improved bargaining power with brand partners.

Although the acquisition drove a 60% increase in Q4 sales, it also meant taking on a business with long-standing poor performance—most of Foot Locker’s revenue relies heavily on stores located in shopping malls.

Post-acquisition, Dick’s Sporting Goods has begun closing underperforming stores. In fiscal 2025, it closed a total of 57 stores across Foot Locker, Champs, Kids Foot Locker, and WSS brands globally.

The company has launched a pilot program called “Fast Break” at 11 Foot Locker stores to test product mixes and store displays.

Dick’s Sporting Goods states that, through optimizing brand storytelling, display methods, and streamlining product categories, the pilot stores are performing very well, and plans to expand this model later this year.

Before the acquisition, former Foot Locker CEO Mary Dillon implemented aggressive store transformation strategies, including relocating stores outside malls and rebranding existing stores. It is unclear whether the “Fast Break” initiative differs from these previous strategies.

Dick’s Sporting Goods expects that starting from the back-to-school shopping season, Foot Locker’s same-store sales and profitability will reach an inflection point. The company forecasts a 1% to 3% increase in same-store sales for Foot Locker for the full year.