Dick’s Sporting Goods plunged 30.7% after reporting Q2 (ended Aug. 1, 2026) adjusted EPS $3.53 versus $3.76 expected and revenue $5.59B versus $5.65B, with sales up over 50% year‑over‑year largely driven by its 2025 $2.4B Foot Locker acquisition while Foot Locker pro forma comps fell 3.6% and the segment lost about $32M, pushing consolidated operating margin down to 7.9% from 12.4%. Management cut full‑year sales guidance to $21.9–22.2B (from $22.1–22.4B) and operating income to $1.45–1.55B, forecast Foot Locker comps flat to -2%, kept $100–125M synergy targets, and raised investor concerns about turnaround costs that could weigh on broader risk appetite including crypto and DeFi markets.

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Dick’s Sporting Goods stock suffered its sharpest selloff in years on Tuesday after the retailer missed Wall Street’s second-quarter expectations and slashed its full-year outlook.

Shares of Dick’s Sporting Goods (NYSE: DKS) closed 30.7% lower at $124.31, which made the company one of the biggest decliners on Wall Street for the session.

Dick’s Sporting Goods stock price (Source: Google Finance)

Foot Locker Emerges as the Main Problem

Dick’s reported adjusted earnings of $3.53 per share on revenue of $5.59 billion for the quarter ended Aug. 1. Analysts expected earnings of $3.76 per share and $5.65 billion in revenue.

The headline revenue increase looks impressive as sales were up more than 50% year over year, but much of that growth reflects Dick’s acquisition of Foot Locker rather than organic expansion. Foot Locker was acquired in 2025 in a deal valued at roughly $2.4 billion.

Q2 2026 earnings

The contrast between the two businesses was stark. Comparable sales at Dick’s rose 4.9%, supported by broad-based category growth and demand surrounding the World Cup. Foot Locker’s pro forma comparable sales fell 3.6%, while the Foot Locker segment recorded a loss of roughly $32 million. Consolidated operating margin also dropped to 7.9%, compared with 12.4% a year earlier.

Foot Locker’s challenges are not entirely new. During the previous fiscal year, its pro forma comparable sales declined 3.3%, including an 8.1% drop internationally. Dick’s has been testing redesigned merchandise assortments and presentation through its “Fast Break” initiative while reviewing underperforming inventory and stores.

Dick’s Cuts 2026 Forecast

Management now expects full-year sales of $21.9 billion to $22.2 billion, down from its previous $22.1 billion to $22.4 billion forecast. Consolidated operating income guidance was cut to $1.45 billion to $1.55 billion.

Foot Locker comparable sales are now expected to range from flat to down 2%, while Dick’s maintained its forecast for comparable-sales growth of 2.5% to 4%.

The company originally projected that the Foot Locker acquisition could eventually generate $100 million to $125 million in cost synergies.

That long-term opportunity is still there, but Tuesday’s selloff suggests investors are concerned about how much time and money will be required to turn Foot Locker around.

Read the article at Coinpaper