Dick's cuts outlook, stock plunges

Dick's Sporting Goods on Tuesday revised its 2026 outlook and warned of weakening consumer demand for athletic apparel and footwear. The company's stock declined over 29% during Tuesday's trading session, on pace for a record one-day percentage drop if the losses hold, according to Fox Business. Yahoo News New Zealand reported shares fell 27.1% in the morning session, citing the company's press release.

The retailer missed second-quarter estimates and reversed expectations for annual comparable sales growth at Foot Locker, which it acquired for $2.4 billion last year. Dick's reported second-quarter revenue of $5.59 billion and adjusted earnings of $3.53 per share, missing Wall Street expectations of about $5.64–$5.65 billion in sales and $3.76–$3.78 EPS, as reported by both Fox Business and Yahoo News New Zealand.

Foot Locker drags results

Foot Locker comparable sales were down 3.6% in the second quarter, amid fewer and underperforming product launches, while Dick's namesake stores rose 4.9% on comparable sales, according to Yahoo News New Zealand. Management turned more cautious on athletic footwear and apparel promotions, and lowered full-year revenue guidance to $21.9–$22.2 billion, with adjusted EPS at a midpoint of about $11.50. Fox Business reported the annual sales forecast was cut from an earlier range of $22.1–$22.4 billion.

Executives said on a post-earnings call that lifestyle and legacy silhouettes were "simply not resonating the way they once did," leading to inflated inventory and heavy discounting, according to Fox Business. Foot Locker was more affected by the trend due to its exposure to legacy brands and its presence in Europe and international markets that have struggled amid geopolitical uncertainties.

Executives respond

"Not only were there fewer launches in the second quarter, but those launches performed below both industry and our expectations," Executive Chairman Ed Stack said, as reported by Fox Business. "As a result, we are taking a more cautious view of the balance of the year."

CEO Lauren Hobart added that while the company is taking a more cautious outlook, it remains "highly confident in the strength of Dick's Business and our long-term opportunity at Foot Locker," according to Fox Business.

The cautious comments come after the company had raised its annual target in May and said it saw encouraging "proof points" to return Foot Locker's comparable sales to growth, as reported by Fox Business.

Consumer pressures and market reaction

Consumers in the U.S. have become more selective about discretionary purchases as more expensive gas and food squeeze household budgets, and are focusing discretionary spending on fresh launches in wellness and health categories, according to Fox Business. Dick's received $59 million in tariff refunds, part of which will be invested in promotions, the outlet reported.

Neil Saunders, managing director at GlobalData, said the weakness does not bode well for major sneaker brands, although they may offset some weakness by leaning more into apparel, especially around the World Cup, as quoted by Fox Business. The outlet noted that Dick's now expects Foot Locker's annual comparable sales to be flat to down 2%.

Yahoo News New Zealand observed that Dick's shares are not very volatile and have had only 9 moves greater than 5% over the last year, indicating the news significantly impacted the market's perception of the business. The outlet also noted that big price drops can present good opportunities to buy high-quality stocks, though it did not make a specific recommendation.

The second quarter for Dick's included the FIFA World Cup, as reported by Fox Business, which added context to the promotional environment.