File photo: People queue in front of the Foot Locker shoe store in Zurich, Switzerland, on November 27, 2020, during the Black Friday sale.
Arndt Wiegmann | Reuters
dicks sporting goods announced Thursday that its holiday quarter beat expectations, but the retailer issued a weak profit outlook for the year ahead as the Foot Locker acquisition continues to weigh on revenue.
The company expects adjusted earnings per share of $13.50 to $14.50 in fiscal 2026, below analysts’ expectations of $14.67, according to LSEG.
Dick’s said it expects Foot Locker to return to both profit and sales growth this year, but it is still in the costly process of clearing obsolete inventory and closing low-productivity stores acquired during last year’s merger.
The company expects these efforts and other costs associated with the transaction to be between $500 million and $750 million. Approximately $390 million of these costs will be recorded in fiscal 2025, with further increases expected this fiscal year, the company said.
In an interview with CNBC’s Sarah Eisen, board chairman Ed Stack said efforts to right the Foot Locker business are “basically over.”
“In retail, you never really finish cleaning your garage,” Stack says. “Everything else going forward is normal course of business.”
Dick’s beat Wall Street expectations for sales and bottom line profits for the three months ended Jan. 31. Here’s how the company’s fiscal fourth quarter performance compared to Wall Street expectations, based on a survey of analysts by LSEG:
Earnings per share: $3.45 adjusted vs. $2.87 expected Revenue: $6.23 billion vs. $6.07 billion expected
Dick’s net income was $128.3 million, or $1.41 per share, down 57% from $299.97 million, or $3.62 per share, in the year-ago period. Excluding one-time items related to the Foot Locker acquisition, Dick’s adjusted earnings were $3.45 per share.
Sales rose to $6.23 billion from $3.89 billion in the same period last year, which did not include Foot Locker.
Six months ago, Dick’s acquired Foot Locker in a $2.5 billion deal, and the combined company is now one of the largest distributors of products from major sports brands, including: nike, adidas And New Balance. The merger allowed Dick’s to reach new types of customers, expand its international presence, and give it greater bargaining power with brands at a time when sportswear companies are becoming less dependent on wholesalers.
The acquisition boosted sales by 60% in the fiscal fourth quarter, but left Dick’s on the back of a business that had been underperforming for years and derived most of its revenue from large storefronts concentrated in malls.
Since acquiring the business, Dick’s has been working to close underperforming stores. In fiscal 2025, we closed 57 Foot Locker, Champs, Kids Foot Locker, and WSS stores worldwide.
Foot Locker has launched a pilot program dubbed “Fast Break” in 11 stores to test changes to product and in-store presentation. So far, Dix said the pilot has delivered “outstanding performance” with improved storytelling and presentation, as well as a streamlined assortment. The company plans to expand this model later this year.
Prior to the acquisition, Foot Locker’s former CEO Mary Dillon led an aggressive store transformation strategy that included relocating stores to off-mall locations and renovating existing doors with new concepts. It’s unclear whether Fast Break will be different from the strategy Foot Locker was already pursuing.
Dix said he expects Foot Locker’s similar sales and profitability changes starting with the back-to-school shopping season. For the full year, the company expects Foot Locker’s comparable sales to increase 1% to 3%.
