It turns out Wall Street had it right in their concerns about the headwinds ahead for the Foot Locker business after JD Sports Fashion reported softening in its U.S. sneaker business amidst a promotional environment in athletic footwear.

Dick’s Sporting Goods, Inc. (DKS) reported second quarter results on Tuesday, August 25 in an earnings release that immediately sent DKS shares down in the high-teens in pre-market trading. By midday, DKS shares were down 30 percent, eventually closing for the day ay at $124.31, or down 30.7 percent. The share price decline comes as the retailer has already suffered a low-teens decline over the last month.

Dick’s Executive Chairman Ed Stack said the company is taking a more cautious view of the balance of the year after a more promotional second quarter ended August 1 affected the Foot Locker Business.

“The Dick’s Business delivered a strong second quarter with broad-based growth across categories,” Stack shared. “As the quarter progressed, conditions across portions of the athletic footwear and apparel marketplace became increasingly promotional, and we took action to remain competitively priced to protect and grow our leadership position. This environment had a more significant impact on the Foot Locker Business given its greater exposure to legacy footwear silhouettes and greater dependence on footwear launch and retro product. Not only were there fewer launches in the second quarter, but those launches performed below both industry and our expectations.”

DKS reported earnings per diluted share of $3.50 and non-GAAP earnings per diluted share of $3.53 in the second quarter,  compared to earnings per diluted share of $4.71 and non-GAAP earnings per diluted share of $4.38 in the prior-year quarter. The problem was that analysts were expecting EPS of $3.80 per share.

Current year results include the dilutive impact of the 9.6 million shares issued in connection with the Foot Locker acquisition.

The company’s sales of $5.59 billion for the consolidated business in the quarter, compared to analysts’ expectations for $5.65 billion in revenue.

DKS is now defining the “Dick’s Business” as the existing Dick’s Sporting Goods operations, which includes the Dick’s Sporting Goods, Dick’s House of Sport, Golf Galaxy, Going Going Gone! and Public Lands banners, as well as GameChanger. The “Foot Locker Business” includes the acquired operations, including the Foot Locker, Kids Foot Locker, Champs Sports, WSS and Atmos banners.

Consolidated Operations Financial Summary
Profitability for the Dick’s and Foot Locker Businesses represents segment profit, or operating income, for a respective segment.

Corporate and other income (expense) within gross profit includes IEEPA tariff refunds received attributable to tariff costs incurred in the prior year and charges to write down and liquidate inventory from the company’s review of the Foot Locker Business.

Corporate and other expense (income) includes IEEPA tariff refunds received attributable to tariff costs incurred in the prior year and income from litigation and other settlements, offset by Foot Locker acquisition-related costs, charges incurred to redesign the store operating model for the Dick’s Business and changes in the fair value of employee deferred compensation plan investments held in rabbi trusts.

DKS reported that it received $59.0 million in tariff refunds and $2.1 million in related interest income. The company said it has applied a gain contingency model in accordance with Accounting Standards Codification 450-30, “Gain Contingencies”, to account for potential recoveries of costs previously incurred for IEEPA tariffs. Under this model, a gain contingency is not recognized in the financial statements until the gain is realized or realizable. The tariff refunds were recorded as a reduction to cost of goods sold and the related interest income was recorded within other (income) expense on the Consolidated Statements of Income. Of the total $59.0 million of IEEPA tariff refunds received during the 13 weeks ended August 1, 2026, $38.1 million is attributable to tariff costs incurred in the prior year and along with the $2.1 million of interest income, is excluded from non-GAAP earnings per diluted share for the 13 and 26 weeks ended August 1, 2026. The company reported that it has now received substantially all of the tariff refunds and does not have any material additional refund claims outstanding.

Pro Forma Comparable Sales
Dick’s Business delivered 4.9 percent comp sales growth, driven by broad-based growth across categories, including strong results from the 2026 FIFA World Cup, and growth in average ticket and transactions. Pro forma comps for the Foot Locker Business declined 3.6 percent (on top of a 2.2 percent decline in the year-ago quarter), said to be “impacted by challenging conditions in the athletic footwear marketplace.”

Pro forma comparable sales are calculated as if Foot Locker had been acquired at the beginning of the periods presented. Sales have been adjusted to conform to the company’s method of reporting comparable sales. Comparable sales are calculated on a constant currency basis, which translates the current year’s results using the prior year periods’ exchange rates.

Includes Foot Locker International pro forma comparable sales decreases of 3.3 percent and 10.3 percent for the 13 weeks ended August 1, 2026 and August 2, 2025, respectively, and decreases of 2.6 percent and 9.6 percent for the 26 weeks ended August 1, 2026 and August 2, 2025, respectively,  which represents operations of the Foot Locker Business in Europe and Asia Pacific.

Outlook
DKS is maintaining the Dick’s Business comparable sales outlook of 2.5 percent to 4.0 percent growth for the year but lowered the pro forma comparable sales outlook for the Foot Locker Business to a range of negative 2.0 percent to flat.

The 2026 net sales guidance of $21.9 billion to $22.2 billion was cut from the prior guide of $22.1 billion to $22.4 billion.

The company lowered the operating income outlook for both the Dick’s Business and the Foot Locker Business.

DKS cut its full-year outlook for diluted earnings per share to $10.94 to $11.94, down from its previous forecast of $13.27 to $14.27 per diluted share.

Segment Outlook
The company said it provided a segment outlook for the individual segment businesses to provide visibility into segment-level performance that is included in the consolidated outlook. This information does not include corporate and other activities, which for fiscal 2026, primarily include income received as part of tariff refunds, litigation and other settlements, partially offset by Foot Locker acquisition-related costs and charges incurred to redesign the store operating model for the Dick’s Business.

Comparable sales outlook for the Foot Locker Business is on a pro forma basis, as Foot Locker will be included in the quarterly comparable store calculation beginning in the fourth quarter of fiscal 2026, which is when these stores will commence their 14th full month of operations following the date of acquisition.

Segment profit represents operating income for a respective segment. Corporate and other activities, which are said to represent costs or income not specifically related to the recurring operations of the segments, are not included in these results as they are not used by the company to evaluate segment performance.

Quarterly Dividend
On August 24, 2026, the company’s Board of Directors authorized and declared a quarterly dividend in the amount of $1.25 per share on the company’s common stock and Class B common stock. The dividend is payable in cash on September 25, 2026 to stockholders of record at the close of business on September 11, 2026.

Acquisition of Foot Locker
On September 8, 2025, the company acquired all of the issued and outstanding shares of Foot Locker, Inc. (Foot Locker), a leading footwear and apparel retailer, pursuant to the definitive merger agreement executed on May 15, 2025. Total consideration exchanged for the acquisition was $2.5 billion, which primarily consisted of $2.1 billion in share consideration for the issuance of 9.6 million shares of Dick’s Sporting Goods common stock, $223.0 million in cash consideration and $111.6 million from the company’s pre-existing equity ownership in Foot Locker. The company’s current period results reflect Foot Locker’s operations for the entire 26-week period ended August 1, 2026.

As previously announced, the company has initiated a review of unproductive assets, which includes optimizing inventory, closing underperforming stores, and right-sizing assets that do not align with the company’s go-forward vision for the Foot Locker Business. The company incurred $125.8 million of pre-tax charges during the 26 weeks ended August 1, 2026, totaling $515.8 million to-date. DKS currently expects total pre-tax charges up to $750 million, including $200 million in fiscal 2026, with the remaining charges to be incurred over the medium term.

See below for additional in-depth coverage and details from the Dick’s Sporting Goods conference call with analysts:

EXEC: Top Dick’s SG Brass Make Case for Staying the Course Amidst Q2 Market Shift