DICK’s Sporting Goods Q2 2025 Earnings Plunge Amid $100B Retail Theft Crisis; Shares Fall 24%

DICK's Sporting Goods Inc. (DKS), the leading U.S. sporting goods retailer, reported disappointing second-quarter results in 2024, marked by sluggish sales growth and a surge in inventory theft. This combination triggered a nearly 24% decline in the company’s stock price during Tuesday trading following the earnings announcement.

Highlights of the Q2 2024 Report

• Shares plummeted by almost a quarter after DICK’s revealed weaker-than-expected revenue and earnings figures for Q2.
• Net sales rose by less than 4%, while earnings per share (EPS) declined 13% year-over-year.
• The drop in earnings and gross margin is significantly linked to escalating inventory shrinkage, a widespread retail challenge involving product theft.
• Retail industry shrinkage losses reached an estimated $100 billion in 2021, underscoring the growing threat to profitability.

For the first time in decades, DICK's acknowledged inventory shrinkage as a material factor negatively affecting its financials. The company also announced workforce reductions globally in response to these pressures. Inflation’s dampening effect on consumer discretionary spending and weakened demand for outdoor merchandise further contributed to the tepid sales growth.

DICK’s reported diluted EPS of $2.82, down 13% from the previous year, while net sales increased modestly to $3.2 billion. Gross margins contracted from 36% to 34%, falling short of analyst forecasts, with roughly one-third of the margin decline attributable to theft-related inventory losses. Consequently, the company revised its full-year earnings guidance downward to a range of $11.50 to $12.30 per share, from a prior outlook of $12.90 to $13.80.

CEO Lauren Hobart emphasized in the earnings release that inventory shrinkage is an "increasingly serious issue impacting many retailers." Similar concerns were echoed by major retailers like Target Corp. and Home Depot, highlighting the pervasive nature of this challenge. Retail shrinkage costs have more than doubled since 2015, reaching approximately $100 billion annually by 2021.

Despite these headwinds, DICK's benefited from pandemic-driven momentum, with same-store sales rising nearly 2% year-over-year after a 5% decline in the previous year’s quarter. The company reaffirmed its outlook for up to 2% growth in comparable store sales for the full year. Additionally, DICK’s expanded its footprint by opening seven new House of Sport specialty stores in the last quarter.

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