Dick’s Sporting Goods, Inc. (DKS) reported same-store sales at its legacy Dick’s business climbed 6 percent in the first quarter while its Foot Locker segment returned to profitability and posted its first positive comps in five quarters. However, DKS shares fell about 6 percent due to mixed guidance.

Dick’s officials raised the lower portion of its full-year guidance for both businesses on the improving trends in the quarter:

  • Foot Locker is expected to generate comp growth of 1.5 percent to 3 percent in 2026, up from previous guidance of 1 percent to 3 percent. Foot Locker’s operating margin is now expected to range between 1.4 percent to 1.9 percent, up from 1.3 percent to 1.9 percent under its previous guidance.
  • The legacy Dick’s SG business is expected to show full year comp sales growth in the range of 2.5 percent to 4 percent, up from a prior growth expectation of 2 percent to 4 percent. Dick’s is expected to show operating profit as a percent of sales in the range of 11.2 percent to 11.4 percent, up from 11.0 percent to 11.4 percent previously.

Dick’s’ also raised its full-year 2026 consolidated non-GAAP operating income guidance to a range of $1.71 to 1.83 billion, up from $1.68 to 1.81 billion previously.

However, Dick’s said it still expects full-year 2026 non-GAAP EPS to be in the range of $13.50 to 14.50 despite the better-than-expected first quarter and improved outlooks at both the Dick’s and Foot Locker businesses.

On a conference call with analysts, Dick’s SG EVP and CFO Navdeep Gupta said the retailer now anticipates a consolidated company effective tax rate of approximately 27 percent for the full year, approximately 150 basis points higher than original expectation, reflecting the effect of purchase accounting adjustments for international businesses. Last year’s purchase of Foot Locker gave the company 800 international locations, marking its first stores outside the U.S. in addition to 1,600 domestic locations.

Gupta said the negative treatment of purchase accounting adjustments is particularly evident in Europe, “where losses do not come currently generate a tax benefit due to valuation allowances.”

On a GAAP basis, guidance was lowered. DKS now expects 2026 consolidated operating income in the range of $1.69 billion to 1.81 billion ($1.71 billion to 1.83 billion previously) and EPS between $13.27 to 14.27 per share ($13.70 to 14.70 previously).

Gupta indicated that the lower targets on a GAAP-basis reflects expectations that Dick’s will now absorb $200 million in “clean out of the garage actions,”  or inventory reductions, as well as broader M&A expenses tied to the Foot Locker merger in 2026, up from $150 under previous guidance.  Gupta said Foot Locker still expects total pre-tax charges tied to the Foot Locker merger to range between $500 million and $750 million.

Otherwise, DKS officials on the call were upbeat about the quarter’s performance, including accelerating momentum being sign for the legacy Dick’s Sporting Goods business and signs that recovery efforts are paying off for Foot Locker, including a 6.4 percent comp sales gain delivered by the U.S. Foot Locker banner.

DKS Executive Chairman Ed Stack said the company delivered a “very strong” quarter, benefiting from strong interest in sports that is expected to be boosted by several upcoming major sporting events in the U.S. this year, including the World Cup and the 2028 Summer Olympics in LA.

“Sport is one of the hottest categories in the country today,” Stack commented. “We’re in the middle of a real sports moment and the intersection of sport and culture has never been stronger. You see it everywhere, from rising valuations, professional sports teams, to the level of investment from streaming platforms and networks, and the strong demand from advertisers to be a part of live sports.”

He further said DKS is “connecting with athletes in more ways and with more relevance than at any point in our history,” citing its newer House of Sport and Field House concepts within the Dick’s SG business, the GameChanger youth-sports platform, Golf Galaxy, and now Foot Locker.

Stack added, “That’s why the best and most exciting sports brands in the world want to partner with us. Not just to sell product, but to launch ideas, tell stories and scale concepts globally during the most important moments in sports. And that’s why athlete engagement with us continues to grow.”

Shares on Wednesday fell $13.92, or nearly 6.0 percent, to close at $219.21 for the day. Shares are still comfortably up from $197.97 at the start of 2026 and hav recovered smartly after sinking as low as $167.22 in May 2025 after the company first announced intentions to acquire Foot Locker. The deal closed in September 2025. DKS shares were rebounding in low-singles in pre-market trading on Thursday, May 28.

First-Quarter Review
In the quarter, consolidated sales jumped 62.7 percent to $5.16 billion, topping the average analyst estimate of $5.04 billion. The gains were driven by a $1.7 billion contribution from the Foot Locker business.

A 6 percent comp at Dick’s SG reflected a 5.5 percent increase in average ticket and a 0.5 percent increase in transactions with a broad-based strength across footwear, apparel and hardlines. On a two-year and a three-year basis, the Dick’s SG business comp climbed 10.5 percent and 15.8 percent, respectively.

Pro-forma comps for the Foot Locker business accelerated, increasing 0.6 percent for the quarter, driven by a 1.4 percent increase in North America that was led by the 6.4 percent comp growth at the U.S. Foot Locker banner.

Gross margins on an adjusted basis companywide eroded 328 basis points to 33.42 percent, primarily driven by mix impact from the Foot Locker business. On a non-GAAP basis, consolidated SG&A expenses increased 68.4 percent due to the Foot Locker addition and increased as a percent of sales by 88 basis points to 25.8 percent. As expected for the Dick’s business, SG&A deleveraged 31 basis points, driven by investments digitally and in-store.

Consolidated non-GAAP operating income improved 5.0 percent to $378.4 million.

For the Dick’s SG business, operating income was about flat, at $361 million or 10.7 percent of sales, up from $360.4 million a year ago. Gross margins were 36.3 percent against  36.7 percent. The flat earnings despite the strong top-line growth were attributed to investments ahead of the World Cup, with expense leverage expected in the second half.

Foot Locker delivered operating income of $17.5 million, or about 0.98 percent of sales, marking its return to profitability.

Net income on a non-GAAP basis slid 4.7 percent to $262 million, or $2.90 per share, reflecting an increase in the tax rate in the quarter to 28.8 percent from 24.1 percent due to the effect of purchase accounting adjustments for the international segment. Results were in line with analyst targets. FactSet’s consensus estimate was at $2.89, while Zacks was at $2.91.

Foot Locker Recovery On Track
Stack, who is overseeing transformation efforts at the Foot Locker business, said Foot Locker saw “encouraging proof points for the global Foot Locker business” in the quarter, including the 0.6 percent comp, marking its first positive comp since the third quarter of 2024.

The highlight was the 6.4 percent comp at the U.S. Foot Locker banner that drove the 1.4 percent comp growth in North America. Stack said pointed to the improved U.S. Foot Locker banner as evidence that the Foot Locker turnaround plan is finding some success.

“The Foot Locker banner is our largest and most critical part of the Foot Locker business,” said Stack. “So, it’s where we focused first and the results we’re seeing reinforce our turnaround approach. We have a clear plan and it’s working.”

He said the key driver of the improving U.S. Foot Locker banner business are store associates that are being “energized by the renewed momentum and investment in our stores.”

He also said the Fast Break refurbishment program is “performing exceptionally well,” with retrofitted storesdelivering “double digit comps in Q1 and meaningful merchandise margin improvement.”

The program removes clutter from footwear walls and reduces the total number of SKUs by roughly 30 percent. Stacks said the program is enabling a “more focused shoe wall, improved storytelling and the reintroduction of apparel with curated and complementary offerings.”

During the first quarter, the Fast Break initiative was expanded to 100 doors from 10, with plans to reach 250 renovations across Foot Locker, Kids, Foot Locker and Champs stores globally by back-to-school selling season, with further expansion ahead of holiday selling.

Stack noted that BTS be the first time Dick’s teams has had “full control over the buys and we feel great about the product that will be in the stores” at the Foot Locker business. BTS selling across Foot Locker’s banners will be supported by “bold brand relaunch designed to bring consumers back to the Foot Locker brand in a meaningful way,” he added.

Stack also noted that Dick’s is making investments at Foot Locker within the supply chain to help in “moving product faster and getting into the right stores,” as well as better using data in pricing decisions.

Stack finally said vendors “remain fully engaged” in Foot Locker’s recovery plan. Stack said, “They want a strong growing Foot Locker and they are leaning in with us as their largest global partner.”

Stack concluded on Foot Locker, “The early results we’re seeing reinforce our conviction in both the opportunity and our approach. We have the right plan, the right team and the right partnerships in place to unlock the full potential of the Foot Locker business.”

Dick’s Legacy Business Seeing from Broad-Based Category Strength
Discussing the performance of the legacy Dick’s business, Lauren Hobart, president and CEO, said Dick’s continues to gain share with the 6 percent comp gain, building on a 4.5 percent increase last year and a 5.3 percent increase in 2024.

She said that similar to recent quarters, customers continue to increase the frequency of purchases and their overall spend per trip compared to the prior year. Hobart  said, “We continue to see a healthy consumer across income demographics with no signs of trading down alongside particularly strong engagement from our younger athletes.”

She added that Dick’s consumer is “really responding to newness and innovation, which is showing up throughout the Dick’s business, with broad-based growth across footwear, apparel and hardlines.”

She cited progress being seen at Dick’s across strategic priorities, including driving growth in key categories that’s being supported by “access, allocation and marketing support” from national and emerging brands. Said Hobart , “Our partnerships span leading global brands like Nike, Adidas and Fanatics as well as fast-growing emerging brands such as Vuori and Gymshark. These relationships are deeply collaborative, and they continue to bring the best product and innovation to our athletes.

She also said Dick’s business is benefiting from its newer formats, House of Sport and Field House, that are “redefining the athlete experience in physical retail and strengthening how our brand partners show up in our stores.”

In the quarter, one House of Sport location and two Field House locations opened, and Dick’s remains on track to open 13 and 20 more, respectively, for the year. The concepts continue to receive “extremely strong interest” from landlords, providing Dick’s with access to “some truly iconic retail locations, including Palm Beach Gardens, Cerritos and Tyson’s Corner.”

Hobart also Dick’s is placing a “greater focus on elevated service and selling” at the store level while investing in online, including on its website and app. The retailer just announced the summer launch of Coach by Dick’s, an AI-powered digital agent. She said, “Coach extends the expertise of our teammates into a personalized conversational experience, helping athletes make more competent decisions across product, training and services.”

Other new developments include the opening of a Fort Worth Distribution center that will support the chain’s further expansion into Texas.

She said Dick’s Media Network remains a “high growth asset” that enables brand partners to reach consumers  “in very relevant ways” online and in-store. Finally, she described GameChanger as “a key driver of engagement and innovation within the Dick’s ecosystem.”

She noted that GameChanger earlier this year introduced its “most comprehensive product update” in its history while noting that approximately half of all games covered on the platform were streamed live in the first quarter, a record for the platform. Hobart said, “At scale, the reach is significant. In the last month alone, more games were streamed on Game Changer than have been played in the entire history of Major League Baseball.”

Image courtesy Dick’s Sporting Goods, Inc.