Dick's Sporting Goods on Tuesday revised its 2026 outlook and warned of weakening consumer demand for athletic apparel and footwear.
The sports apparel and footwear retailer's stock declined over 29% during Tuesday's trading session, on pace for a record one-day percentage drop if the losses hold, after it also missed second-quarter estimates and reversed expectations for annual comparable sales growth at Foot Locker.
Dick's acquired Foot Locker for $2.4 billion last year to boost its presence in the sneaker market and to get access to international markets.
Consumers in the U.S. have become more selective about discretionary purchases as more expensive gas and food squeeze household budgets, and are focusing discretionary spending on fresh launches in wellness and health categories.
"Not only were there fewer launches in the second quarter, but those launches performed below both industry and our expectations," Executive Chairman Ed Stack said, signaling a more cautious view of the rest of the year. "As a result, we are taking a more cautious view of the balance of the year."
Dick's Sporting Goods CEO Lauren Hobart added that while the company is taking a more cautious outlook, it remains "highly confident in the strength of Dick's Business and our long-term opportunity at Foot Locker."
The comments by Dick's executives on the call come after the company had raised its annual target in May and said that it saw encouraging "proof points" to return Foot Locker's comparable sales to growth.
Ticker Security Last Change Change % DKS DICK'S SPORTING GOODS 124.40 -55.15 -30.72%
Executives said on a post-earnings call Tuesday that lifestyle and legacy silhouettes were "simply not resonating the way they once did," which resulted in inflated inventory that led to heavy discounting.
Foot Locker bore the brunt of that trend due its exposure to legacy brands, as well as its presence in Europe and international markets that have struggled amid geopolitical uncertainties.
Neil Saunders, managing director at GlobalData, said that "does not bode well for the major sneaker brands, although they may have been able to offset some of the weakness by leaning more into apparel, especially around the World Cup."
"Even so, it will set alarm bells ringing for investors," Saunders added.
Dick's projected annual sales of $21.9 billion to $22.2 billion, revised lower from its earlier forecast of $22.1 billion to $22.4 billion.
The company's quarterly profit of $3.53 per share missed estimates of $3.76. It reported $5.59 billion in net sales for the 13 weeks ending on Aug. 1, which included the FIFA World Cup, which missed estimates of $5.65 billion, according to data compiled by LSEG.
Dick's also now expects Foot Locker's annual comparable sales to be flat to down 2%, and signaled that part of the $59 million in tariff refunds it received will be invested in promotions.
Reuters contributed to this report.
