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Dick's Sporting Goods Shares Slide Despite Revenue Beat and Raised Guidance

MarketDash Editorial Team
13 days ago
Dick's Sporting Goods tumbled in early trading as a massive profit miss and shrinking margins overshadowed strong sales growth, highlighting the integration headaches and costs from its recent Foot Locker acquisition.

Dick's Sporting Goods Inc. (DKS) shares dropped in early trading Tuesday as investors wrestled with a head-scratching combination: blowout revenue growth paired with a painful earnings miss. The culprit? Integration costs from the Foot Locker deal, slimmer margins, and a debt load that's making everyone a bit nervous.

The sporting goods retailer reported third-quarter adjusted earnings of $2.07 per share, falling well short of the $2.71 analyst consensus. That's a miss you can't ignore, even when the rest of the story looks decent.

Strong Sales, Weak Margins

On the revenue side, Dick's crushed expectations with quarterly sales hitting $4.168 billion, up a robust 36.3% year-over-year and comfortably ahead of the $3.546 billion Street estimate. The core Dick's business delivered 5.7% comparable sales growth, fueled by steady customer demand and better in-store performance.

The company continues expanding aggressively, opening 13 new House of Sport locations and six Dick's Field House locations during the quarter alone.

But here's where things get messy: adjusted operating margin collapsed 366 basis points to 5.8% from 9.5% in the prior-year period. That's a significant compression, and it reflects the reality of digesting a major acquisition while navigating higher costs.

The Foot Locker Factor

Dick's completed its acquisition of Foot Locker this year, aiming to establish itself as a global sports retail powerhouse. Management has installed what it calls a "world-class" team and launched a strategic review of underperforming assets. The catch? Integration and restructuring costs are expected to generate pre-tax charges between $500 million and $750 million down the road.

Meanwhile, the balance sheet tells a story of its own. Cash and equivalents dropped to $821.3 million from $1.458 billion a year ago, while total long-term liabilities more than doubled to $7.229 billion from $4.170 billion. That's the price of doing a transformative deal.

Looking Ahead

Despite the quarterly stumble, Dick's raised its full-year 2025 GAAP EPS guidance to $14.25–$14.55 from $13.90–$14.50, topping the $14.36 analyst estimate. The company also lifted its 2025 sales outlook to $13.95 billion–$14 billion from $13.75 billion–$13.95 billion, though that still trails the Street's $15.169 billion expectation.

On November 24, the company declared a quarterly dividend of $1.2125 per share, payable December 26.

Price Action: DKS shares traded down 3.52% to $199.00 in premarket activity Tuesday.

Back to News

Dick's Sporting Goods Shares Slide Despite Revenue Beat and Raised Guidance

MarketDash Editorial Team
13 days ago
Dick's Sporting Goods tumbled in early trading as a massive profit miss and shrinking margins overshadowed strong sales growth, highlighting the integration headaches and costs from its recent Foot Locker acquisition.

Dick's Sporting Goods Inc. (DKS) shares dropped in early trading Tuesday as investors wrestled with a head-scratching combination: blowout revenue growth paired with a painful earnings miss. The culprit? Integration costs from the Foot Locker deal, slimmer margins, and a debt load that's making everyone a bit nervous.

The sporting goods retailer reported third-quarter adjusted earnings of $2.07 per share, falling well short of the $2.71 analyst consensus. That's a miss you can't ignore, even when the rest of the story looks decent.

Strong Sales, Weak Margins

On the revenue side, Dick's crushed expectations with quarterly sales hitting $4.168 billion, up a robust 36.3% year-over-year and comfortably ahead of the $3.546 billion Street estimate. The core Dick's business delivered 5.7% comparable sales growth, fueled by steady customer demand and better in-store performance.

The company continues expanding aggressively, opening 13 new House of Sport locations and six Dick's Field House locations during the quarter alone.

But here's where things get messy: adjusted operating margin collapsed 366 basis points to 5.8% from 9.5% in the prior-year period. That's a significant compression, and it reflects the reality of digesting a major acquisition while navigating higher costs.

The Foot Locker Factor

Dick's completed its acquisition of Foot Locker this year, aiming to establish itself as a global sports retail powerhouse. Management has installed what it calls a "world-class" team and launched a strategic review of underperforming assets. The catch? Integration and restructuring costs are expected to generate pre-tax charges between $500 million and $750 million down the road.

Meanwhile, the balance sheet tells a story of its own. Cash and equivalents dropped to $821.3 million from $1.458 billion a year ago, while total long-term liabilities more than doubled to $7.229 billion from $4.170 billion. That's the price of doing a transformative deal.

Looking Ahead

Despite the quarterly stumble, Dick's raised its full-year 2025 GAAP EPS guidance to $14.25–$14.55 from $13.90–$14.50, topping the $14.36 analyst estimate. The company also lifted its 2025 sales outlook to $13.95 billion–$14 billion from $13.75 billion–$13.95 billion, though that still trails the Street's $15.169 billion expectation.

On November 24, the company declared a quarterly dividend of $1.2125 per share, payable December 26.

Price Action: DKS shares traded down 3.52% to $199.00 in premarket activity Tuesday.