Dick’s Sporting Goods (DKS) hiked its FY outlook as Q2 results easily topped analyst targets and DKS management stressed to analysts that the 5 percent quarterly same-store comp shows it’s gaining market share. However, Dick’s shares still fell on Thursday, August 28, as the updated 2025 guidance was weaker than expected, given the quarter’s strong beat amid concerns over tariffs and the Foot Locker merger.

The updated guidance calls for:

  • EPS in the range of $13.90 to $14.50, up from $13.80 to $14.40 previously.
  • Net sales are expected to range between $13.75 billion to $13.95 billion, up from prior guidance of $13.6 billion to $13.9 billion.
  • Comparable sales are expected to increase in the range of 2.0 percent to 3.5 percent compared to previous guidance calling for growth between 1 percent and 3 percent.

Dick’s has also pulled its guidance for gross margins for the year, given the tariff uncertainty. In its first-quarter analyst call, Dick’s said it expected gross margins to improve by approximately 75 basis points at the midpoint. On its second-quarter call Thursday, Navdeep Gupta, EVP and CFO, only indicated that Dick’s expects gross margins to increase.

On an analyst call, Gupta said, “As you can imagine, we are balancing several puts and takes as we navigate the landscape that we have in front of us between tariffs, our consistent focus on keeping our inventory really vibrant because that inventory and the assortment is what is driving this consistent top line momentum that we have been delivering six straight quarters of over 4 percent comp. And you can also imagine that the pricing and the promotion landscape always remain very dynamic. So, we’re trying to balance all of those drivers as we look to the back half.”

Analysts were also seeking more details on plans going forward with Foot Locker, with the merger expected to close on September 8. One analyst noted that Foot Locker on Wednesday, August 27 reported “much weaker” results than the Dick’s results, as they probed some key initiatives to revitalize the Foot Locker business.

DKS Executive Chairman Ed Stack said in his formal comments, “We remain very enthusiastic about the strategic benefits from the deal. By bringing together Dick’s and Foot Locker’s iconic brands, we will create a global leader in the sports retail industry to serve a broader set of consumers, strengthen our partnerships with the world’s leading sports brands, and meaningfully expand our total addressable market.

Asked about potential Foot Locker changes in the Q&A session, Lauren Hobart, CEO, provided a few fresh details. She said, “We are going to be working with our brand partners who are very excited about the opportunity to turn the business around, who are already sharing really strong insights. We plan to invest in stores, we plan to invest in marketing, and we know that there are opportunities from a core merchandising standpoint. We’re excited about apparel opportunities and bringing in a new assortment of products. So, across the board, we’re very excited.”

Asked about the potential of adding Dick’s strong private brands to Foot Locker banners, Hobart said, “It’s too soon for us to talk about that. We have to immerse into the business. We haven’t closed yet. We don’t know. We think there are a lot of merchandising opportunities. We think there’s apparel opportunities over in Foot Locker, but vertical brands way too soon to tell.”

Dick’s officials did confirm that it still expects synergies from the merger between at $100 million to $125 million.

Shares of Dick’s fell $10.82, or 4.8 percent, on August 28, to close at $215.08 per share. Shares have recovered strongly in recent months after collapsing $30.56, or 14.6 percent, to $179.05 on May 15, following the retailer’s announcement of plans to acquire Foot Locker.

Consumer Spending Remains Strong
DKS otherwise delivered a strong second quarter that handily surpassed analyst targets. Same-store sales jumped 5 percent, eclipsing analysts’ consensus target of 3.1 percent. Hobart indicated that the consumer spending at the chain remains strong across categories.

“We are not seeing any signs of slowdown with the consumer,” said Hobart. “In fact, one of the most exciting things about the quarter that we just delivered is the broad-based nature of the growth that we saw. We saw growth across all our key segments. So, footwear, apparel, team sports, and golf. All doing really well.”

Stack said DKS is benefiting from the broadening appeal of sports.

“We are in a great lane,” said Stack. “The convergence of sport and culture has never been stronger, and we are seeing tremendous momentum and opportunity across our industry. As a company rooted in sport, Dick’s is uniquely positioned to seize this opportunity. We have a deep understanding of our athletes, and we execute with precision. From our differentiated on-trend product assortment to our industry-leading omnichannel athlete experience, we are operating from a position of strength.”

She added that she’s upbeat about the innovation coming from brand partners to drive growth in the second half. Hobart said, “There is a trend toward innovation and newness in the products that are coming down the pike that are keeping the consumer really energized, and they’re responding very well to some of that technicity that’s all in the product. Both, again, hardlines and softlines. We’re seeing with those launches as well, as apparel as well as technical running and the new running constructs that are out in the market. We think we’re going to be navigating really well.”

She said DKS feels “terrific about back to school,” with most of those sales landing in the third quarter and implied Dick’s is seeing minimal promotional pressures. Hobart said, “Promotional activity hasn’t been an enormous factor for us. We are navigating as we always do. We’re surgical. And the differentiated assortment that we have enables us to really lean into newness and innovation rather than a deep promotional cycle. I think our consumer across the board is doing well, and you see that in the fact that we’re not seeing trade down from best to better or better to good. We’re seeing growth across all income demographics.”

Finally, Hobart said the strong second-quarter results show DKS is managing the tariff pressures despite some price increases at the retailer.

“We are navigating very well through an uncertain tariff environment,” said Hobart. “We’ve seen some sporadic price increases, but they are surgical and not across the board. And we’re seeing our consumer, obviously, with a 5 percent comp, we’re seeing the consumer respond well. So I’m very pleased that we are navigating well and still increasing our guidance and our gross margin for the back half.”

Q2 Comps Jump 5 Percent
In the quarter, sales rose 5.0 percent to $3.65 billion, topping analysts’ consensus estimate of $3.6 billion. The same-store sales gain of 5.0 percent was on top of a 4.5 percent increase a year ago and a 2 percent increase in the 2023 second quarter.

“We continue to gain market share from online-only and from omnichannel retailers,” said Hobart.

Comps were driven by a 4.1 percent increase in average ticket and a 0.9 percent increase in transactions. Gupta said, “We saw broad-based strength across our key categories.”

Gross margins improved 33 basis points to 37.06, reflecting higher merchandise margin and leverage on occupancy costs due to higher sales.

SG&A expenses increased to 24.1 percent of sales from 22.9 percent a year ago. On a non-GAAP basis, SG&A expenses increased 9.9 percent to $864 million and deleveraged 105 basis points compared to year-ago non-GAAP results. Gupta said the higher costs, as expected, reflected strategic investments digitally, in-store, and marketing to support long-term growth expectations. Preopening expenses were $12.3 million, an increase of $3.4 million compared to the prior year.

On an adjusted basis, non-GAAP operating income dipped 1.1 percent to $475 million, or 13.0 percent of sales, from $480.5 million, or 13.8 percent, in 2024. Non-GAAP EBT was $472.6 million, or 12.96 percent of net sales. Adjusted figures exclude merger and integration costs of $8.0 million related to the pending Foot Locker acquisition.

On a reported basis, operating earnings declined 3.8 percent to $452.2 million, or 12.4 percent of sales, from $470.1 million, or 13.5 percent, a year ago.

Non-GAAP EBT (earnings before taxes) were $472.6 million, or 12.96 percent of net sales, down 2.0 percent from $482.3 million, or 13.89 percent of net sales, in Q2 of last year.

Net income rose 5.2 percent to $381 million, or $4.71 a share, from $362 million, or $4.37, a year ago. Adjusted earnings slipped 1.9 percent to $355 million, or $4.38 a share, from $362 million, or $4.37, a year ago, but still exceeded analysts’ consensus target of $4.29

Adjustments exclude non-cash gains from non-operating investments in Foot Locker stock, as well as merger and integration costs, and financing costs.

Three Growth Priorities
Hobart, in her formal remarks, provided an update on Dick’s three growth priorities this year, including “great progress” seen in repositioning its real estate and store portfolio.

During the quarter, Dick’s opened one additional House of Sport location, and the company expects to open 13 in the current quarter, the most in a single quarter. It is expected to open 16 House of Sports this year, bringing the total to 35 by year’s end.

Dick’s also added four new Fieldhouse locations in Q2. The Fieldhouse concept incorporates elements of a House of Sport experience into a smaller footprint, with many locations representing conversions of existing Dick’s locations. Six more are expected to open in the third quarter, bringing the total for the year to 15, and ultimately bringing the Fieldhouse concept to 42 locations by year’s end.

“These investments are driving powerful financial results, strong engagement with our athletes, brand partners, and communities, and importantly, they’re laying the foundation for sustainable long-term profitable growth,” said Hobart.

Hobart also said Dick’s focus on gaining greater access from vendors to “differentiated” products as well as its own proprietary brands is “fueling significant athlete [consumer] excitement and demand across our portfolio.”

She added, “In fact, during Q2, more athletes purchased from us. They purchased more frequently, and they spent more each trip compared to the same period last year. We remain encouraged by the strong product pipeline from our brand partners.”

Finally, Hobart said Dick’s “highly profitable” e-commerce once again grew faster this quarter than the company overall.

“Our app has been instrumental in creating a strong launch call across key categories, driving energy and sell-through,” said Hobart. “At the same time, our stores are executing at a very high level. They’re building an athlete-centric service and selling culture and really bringing our differentiated product assortment to life for our athletes. Lastly, as part of our broader digital strategy, we’re harnessing the power of our athlete data and remain very enthusiastic about the long-term growth opportunities we see with Game Changer and the Dick’s Media Network.”

Image courtesy Dick’s Sporting Goods/Sports Matter/Katina Mercadante