Dick’s Sporting Goods Restructures Foot Locker Business With Some Store Closures, Inventory Cleanup

• In September, Dick’s Sporting Goods acquired Foot Locker, another U.S.-based footwear and apparel retailer, in a $2.4 billion deal.
• Foot Locker's fourth-quarter gross margin is expected to be down by 1,000 to 1,500 basis points compared to the same period last year.
• Dick’s Sporting Goods raised its full-year 2025 forecast for comparable sales growth for the Dick’s Business to a range of 3.5% to 4.0%, up from 2.0% to 3.5% previously expected.

Dick’s Sporting Goods (DKS) said on Tuesday that it has initiated a review of unproductive assets, which includes cleaning up inventory, closing underperforming stores, and right-sizing assets that don't align with its strategy for the Foot Locker Business.

The company said that these actions, along with additional merger and integration costs, are expected to result in future pre-tax charges of $500 million to $750 million.

In September, Dick’s Sporting Goods acquired Foot Locker, another U.S.-based footwear and apparel retailer, in a $2.4 billion deal.

Shares of Dick’s Sporting Goods were down over 3% in early trading.

Details On The Foot Locker Restructuring Plan

Dick’s Sporting Goods said it believes these actions will lay the groundwork for the success of the Foot Locker business starting in 2026. As a result of actions to optimize inventory, the company believes the fourth-quarter gross margin for the Foot Locker business will be down by 1,000 to 1,500 basis points compared to Foot Locker's reported results in the same period last year.

The company also noted that Foot Locker’s pro forma comp sales are expected to be down in the mid- to high single digits. Excluding the one-time costs associated with the asset review, including inventory optimization and the closure of underperforming stores, the company expects fourth-quarter operating profit for Foot Locker to be slightly negative.

Dick’s Sporting Goods Annual Expectations

The company raised its full-year 2025 forecast for comparable sales growth for the Dick’s Business to a range of 3.5% to 4.0%, up from 2.0% to 3.5% previously expected.

Dick’s Sporting Goods now expects earnings per share between $14.25 and $14.55, up from the prior forecast of $13.90 to $14.50.

The company’s third-quarter adjusted earnings per share for the Dicks business were $2.78. This compares to Wall Street expectations of $2.71, according to data from Fiscal AI. Dick’s Sporting Goods' total net sales, including Foot Locker, for the quarter were $4.17 billion.

What Is Retail Thinking?

Dick’s Sporting Goods was gaining traction on Stocktwits. Retail sentiment on the stock improved to ‘extremely bullish’ territory compared to ‘bullish’ a day ago, with message volumes at ‘extremely high’ levels, according to data from Stocktwits.

Shares of Dick’s Sporting Goods have declined nearly 10% this year. 

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Also See: KSS Stock Soars Pre-Market After Turnaround Efforts Lift Profit Forecast

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