Dick’s Sporting Goods’ third quarter was marked by a combination of robust results in its core business and underperformance from the newly acquired Foot Locker segment. While sales and comparable store growth at Dick’s banners continue to benefit from strong product assortment and omnichannel execution, management acknowledged that Foot Locker’s operational missteps and excess inventory weighed heavily on profitability. Executive Chairman Ed Stack described Foot Locker’s situation as “straying from retail 101,” emphasizing the need for aggressive cleanup and store portfolio optimization to stabilize the business.
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Dick's (DKS) Q3 CY2025 Highlights:
- Revenue: $4.17 billion vs analyst estimates of $4.64 billion (36.3% year-on-year growth, 10.2% miss)
- EPS (GAAP): $0.86 vs analyst expectations of $2.59 (66.8% miss)
- Adjusted EBITDA: $370.3 million vs analyst estimates of $459.2 million (8.9% margin, 19.4% miss)
- The company slightly lifted its revenue guidance for the full year to $13.98 billion at the midpoint from $13.85 billion
- EPS (GAAP) guidance for the full year is $14.40 at the midpoint, roughly in line with what analysts were expecting
- Operating Margin: 5.6%, down from 9.4% in the same quarter last year
- Locations: 3,480 at quarter end, up from 864 in the same quarter last year
- Same-Store Sales rose 1.7% year on year (4.2% in the same quarter last year)
- Market Capitalization: $16.68 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Dick's’s Q3 Earnings Call
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Robbie Ohmes (Bank of America) asked about the drivers of Dick’s comparable sales strength and management’s confidence for the holiday season; CEO Lauren Hobart cited differentiated product assortments and strong category performance as reasons for optimism.
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Simeon Gutman (Morgan Stanley) questioned how Foot Locker would achieve accretion to earnings by 2026 despite recent losses; Executive Chairman Ed Stack stressed the importance of “cleaning out the garage” and the role of a new leadership team and vendor support in achieving this goal.
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Kate McShane (Goldman Sachs) pressed on whether aggressive Foot Locker markdowns would impact Dick’s own pricing or consumer behavior; Stack responded that discounted inventory was isolated to Foot Locker and should not affect Dick’s core business.
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Adrienne Yih (Barclays) asked if Foot Locker’s turnaround hinged solely on operational fixes or required larger infrastructure investments; Stack and Hobart described capital-light merchandising improvements and store rationalization as primary levers for recovery.
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Michael Lasser (UBS) inquired about how Dick’s would prevent the Foot Locker integration from distracting its core operations; Hobart reassured that the Dick’s and Foot Locker teams were “ring-fenced” to maintain strategic focus on each business.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will closely monitor (1) the pace of Foot Locker’s inventory clearance and store closures, (2) evidence of renewed vendor partnerships translating into improved product assortments and access, and (3) Dick’s ability to maintain sales and margin momentum in its core banners despite integration complexity. Progress on digital initiatives and the impact of merchandising changes at Foot Locker will also be key signposts for long-term success.
Dick's currently trades at $208.41, up from $206.31 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).
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