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By Brian Nelson, CFA
Dick’s Sporting Goods (DKS) reported second quarter results August 25 that missed the consensus mark for revenue and non-GAAP earnings per share. Though DICK’S Business delivered 4.9% comp sales growth thanks to “broad-based growth across categories, including strong results from the 2026 FIFA World Cup, and growth in average ticket and transactions,” non-GAAP earnings per diluted share fell to $3.53 in the quarter from $4.38 in the prior year quarter (consensus was $3.76).
Management had the following to say about the results:
The DICK’S Business delivered a strong second quarter with broad-based growth across categories. As the quarter progressed, conditions across portions of the athletic footwear and apparel marketplace became increasingly promotional, and we took action to remain competitively priced to protect and grow our leadership position. This environment had a more significant impact on the Foot Locker Business given its greater exposure to legacy footwear silhouettes and greater dependence on footwear launch and retro product. Not only were there fewer launches in the second quarter, but those launches performed below both industry and our expectations. As a result, we are taking a more cautious view of the balance of the year. While these near-term dynamics have led us to revise our expectations for 2026, our confidence in the long-term opportunities ahead for both DICK’S and Foot Locker remains unchanged.
We’re proud of our second quarter performance in the DICK’S Business, where we delivered comp sales growth of 4.9% and gained market share despite growing pressure across portions of the athletic footwear and apparel marketplace. Our Q2 results reflect the strength of our athlete-focused strategy, broad differentiated assortment, strong brand partnerships and continued focus on profitable growth opportunities such as House of Sport, GameChanger and DICK’S Media Network. We invested significantly around the FIFA World Cup, and our team delivered outstanding results. While we are taking a more cautious view of the balance of the year, we remain highly confident in the strength of the DICK’S Business and our long-term opportunity at Foot Locker.
Its recent acquisition of Foot Locker faced a particularly difficult quarter. Proforma comps for the Foot Locker Business declined 3.6% as a result of challenging conditions in the athletic footwear marketplace. Dick’s Sporting Goods maintained its comparable sales outlook for the DICK’S Business calling for 2.5%-4% growth, but it lowered its Foot Locker Business proforma comparable sales outlook to a range of negative 2% to 0.0%. Management lowered the outlook for operating income for both its DICK’S and Foot Locker Businesses.
Looking to its consolidated full year outlook for 2026, net sales are expected to be between $21.9-$22.2 billion (consensus was at $22.3 billion) with non-GAAP operating income of $1.46-$1.56 billion. Non-GAAP earnings per diluted share for the year is targeted in the range of $11-$12 (consensus was at $14.28 per share), with the company expected to spend $1.6 billion in capital expenditures on a gross basis. Though the news wasn’t great, sending shares of Dick’s markedly lower, we still believe in the company’s long-term strength in the sporting goods sector, despite surprisingly disappointing sales performance at Foot Locker. We didn’t like the report, but Dick’s remains a core holding in the Dividend Growth Newsletter portfolio.
Tickerized for NKE, ADDYY, PMMAF, ONON, DECK, WWW, CROX, BIRK, SHOO, RCKY, SHOE, DBI, ASO, JDSPY
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Brian Nelson owns shares in SPY, SCHG, QQQ, QQQM, DIA, VOT, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, QQQM, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, RSP, SCHG, QQQ, QQQM, and VOO. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.
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