Dick's Sporting Goods announced financial results that surpassed analyst expectations for its holiday quarter, which ended on January 31. However, the retailer provided weaker-than-anticipated profit guidance for the upcoming fiscal year, largely due to ongoing costs associated with its acquisition of Foot Locker.
The company anticipates adjusted earnings per share for fiscal 2026 to be between $13.50 and $14.50. This projection falls below the $14.67 per share analysts had forecasted. Dick's stated its expectation for Foot Locker to achieve both profit and sales growth during the year. Currently, the company is engaged in significant efforts to clear existing inventory and close underperforming stores acquired as part of the merger last year.
The revised outlook for fiscal 2026 is largely attributed to ongoing costs associated with its acquisition of Foot Locker.
The Cost of Integration
Expenses related to these efforts and other acquisition costs are projected to range from $500 million to $750 million. Approximately $390 million of these costs were recognized in fiscal 2025, with additional expenses anticipated in the current fiscal year. Executive Chairman Ed Stack indicated that the process of restructuring the Foot Locker business is largely complete.
Q4 Results Surpass Expectations
For the fiscal fourth quarter, Dick's Sporting Goods surpassed Wall Street's predictions. The company reported adjusted earnings per share of $3.45, exceeding the $2.87 expected by analysts. Revenue reached $6.23 billion, higher than the $6.07 billion analysts predicted.
Net income for the quarter was $128.3 million, or $1.41 per share, representing a 57% decrease from $299.97 million, or $3.62 per share, in the prior year. Excluding one-time items related to the Foot Locker acquisition, adjusted earnings were $3.45 per share. Total sales increased to $6.23 billion from $3.89 billion year-over-year, largely reflecting the inclusion of Foot Locker's business.
Strategic Acquisition with Challenges
The $2.5 billion acquisition of Foot Locker six months prior established Dick's as a leading distributor for major athletic brands such as Nike, Adidas, and New Balance. This merger expanded Dick's customer base, enhanced its international presence, and provided increased negotiating power with athleticwear companies.
While the acquisition contributed to a 60% rise in sales during the fiscal fourth quarter, it also integrated a business that has historically underperformed and heavily relies on a vast network of mall-based stores. Since the acquisition, Dick's has closed 57 stores globally across the Foot Locker, Champs, Kids Foot Locker, and WSS brands in fiscal 2025.
Foot Locker's Path to Revival
Dick's has initiated a pilot program called "Fast Break" across 11 Foot Locker stores, focusing on product changes and in-store presentation. The company reported "standout performance" from this pilot and plans for broader expansion later this year.
The company expects Foot Locker's comparable sales and profitability to show an improvement starting with the back-to-school shopping season. Dick's projects full-year comparable sales growth of 1% to 3% for Foot Locker.