Dick's Sporting Goods issues weak profit guidance as Foot Locker merger weighs on bottom line

Dick's Sporting Goods said Thursday it saw a better-than-expected holiday quarter, but the retailer issued weak profit guidance for the year ahead as its acquisition of Foot Locker continues to weigh on its bottom line. 

The company is expecting fiscal 2026 adjusted earnings per share to be between $13.50 and $14.50, weaker than the $14.67 analysts had expected, according to LSEG. 

Dick's said it expects Foot Locker to get back to both profit and sales growth during the year, but it's still doing the costly work of clearing through stale inventory and closing unproductive stores that it acquired during the merger last year.

The company expects those efforts, along with other expenses associated with the deal, to cost between $500 million and $750 million. It said around $390 million of those costs were recorded in fiscal 2025, with more expected in the current fiscal year. 

In an interview with CNBC's Sara Eisen, executive chairman Ed Stack said the company is "basically done" with its efforts to rightsize the Foot Locker business. 

"In retail you're never really done cleaning out the garage," said Stack. "Anything else going forward is normal course of business." 

Dick's beat Wall Street's expectations on the top and bottom lines for the three months ended Jan. 31. Here's how the company did in its fourth fiscal quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

Dick's posted a net income of $128.3 million, or $1.41 per share, a 57% decline from $299.97 million, or $3.62 per share, a year earlier. 

Sales rose to $6.23 billion, up from $3.89 billion a year earlier, when the business didn't include Foot Locker.

Six months ago, Dick's acquired Foot Locker in a $2.5 billion deal, and the combined entity is now one of the largest distributors of products from key athletic brands like Nike, Adidas and New Balance. The merger gave Dick's an in with a new type of customer, allowed it to expand its international presence and gave it more negotiating power with brands at a time when athleticwear companies are less reliant on wholesalers.

While the acquisition led to a 60% increase in sales during the fiscal fourth quarter, it also saddled Dick's with a business that's underperformed for years and earns most of its revenue from a sprawling store footprint heavily concentrated in malls. 

Since acquiring the business, Dick's has worked to clcose poor performing stores. In fisal 2025, it shuttered 57 stores globally across Foot Locker, Champs, Kids Foot Locker and WSS. 

It's started a pilot program with 11 Foot Locker stores dubbed "Fast Break" that'll test changes in products and the in-store presentation. So far, Dick's said the pilot has delivered "standout performance" through improved storytelling and presentation and a streamlined assortment. The retailer plans to expand the model later this year.

Prior to the acquisition, Foot Locker's former CEO Mary Dillon had been leading an aggressive store transformation strategy that sought to move shops to off-mall locations and renovate existing doors with a refreshed concept. It's unclear if Fast Break will be different from the strategy Foot Locker already had underway. 

Dick's said it expects to see an inflection in Foot Locker's comparable sales and profitability beginning with the back-to-school shopping season. For the full year, it expects Foot Locker comparable sales to grow between 1% and 3%.