Dick's Sporting Goods (NYSE:DKS) shares plunged more than 27% on Tuesday after the retailer's second-quarter results missed profit estimates, as weakness at its Foot Locker unit offset solid growth at its namesake stores and pushed the company to cut its full-year outlook.
Adjusted earnings per share came in at $3.53, below the Street's $3.76 estimate. Pretax margin of 7.9% and SG&A of 25.5% of sales also missed consensus of 8.1% and 25.0%, respectively, even as gross margin of 34.1% topped the Street's 33.8% forecast.
Comparable sales rose 4.9%, ahead of the Street's 4.1% estimate, driven entirely by the core Dick's business, which posted comp growth of 4.9%. Foot Locker, acquired last year, saw comps fall 3.6%.
Executive chair Ed Stack said pricing across the sporting goods sector has become "increasingly promotional" as the footwear industry contends with a slower buying cycle and cost-conscious consumers.
For fiscal 2026, Dick's now expects consolidated revenue of $21.9 billion to $22.2 billion, down from a prior range of $22.1 billion to $22.4 billion and below the Street's $22.34 billion estimate. Non-GAAP operating income guidance was cut to $1.46 billion to $1.56 billion from $1.71 billion to $1.83 billion, well short of the Street's $1.81 billion forecast. Full-year EPS guidance was lowered to a range of $11 to $12, from $13.50 to $14.50 previously, versus a Street estimate of $14.31.
The company reiterated its guidance for the core Dick's business, with comps expected at 2.5% to 4% and revenue of $14.5 billion to $14.7 billion, though it trimmed its segment profit margin outlook to 10.6% to 10.9% from 11% to 11.4%.
Foot Locker's outlook saw steeper cuts. The company now expects comps of negative 2% to flat, down from prior guidance of 1.5% to 3% growth, with revenue guidance lowered to $7.4 billion to $7.5 billion from $7.6 billion to $7.7 billion. Foot Locker's segment profit margin is now expected to be negative 1.1% to negative 0.5%, compared with prior guidance of 1.4% to 1.9%.