Dick’s Sporting Goods to shutter some Foot Locker stores to protect profits

Dick’s Sporting Goods is planning to close a slew of Foot Locker stores now that its acquisition of the sneaker company is complete, the company said Tuesday when announcing fiscal third-quarter earnings.  

It’s unclear how many stores Dick’s plans to shutter, but the closures are part of a larger restructuring it’s implementing so Foot Locker isn’t a drag on its profits come fiscal 2026, Dick’s Executive Chairman Ed Stack told CNBC’s Courtney Reagan. 

“We need to clean out the garage,” said Stack. “We’ve taken pretty aggressive markdowns to clean out old merchandise. We’re impairing some store assets. We’ll close some stores … everything we’re doing is there to protect 2026 and just kind of do this one time.” 

The company declined to say how many stores would be impacted and whether the restructuring will include layoffs.

As a result, Foot Locker’s comparable sales are expected to be down in the mid- to high-single digits in the current quarter with margins projected to fall between 10 and 15 percentage points.

Beyond the Foot Locker business, Dick’s stores saw comparable sales rise 5.7% during the quarter, well ahead of the 3.6% analysts had expected, according to StreetAccount.

For its namesake banner, the company is now expecting comparable sales to rise between 3.5% and 4%, up from its prior range of 2% to 3.5%. That’s ahead of expectations for 3.6% growth, according to StreetAccount. 

Dick’s is also now expecting full-year earnings per share to be between $14.25 and $14.55, up from a previous forecast of $13.90 to $14.50 and in line with expectations of $14.44 per share, according to LSEG. 

Here’s how the big-box sporting goods store performed compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

• Earnings per share: $2.78 adjusted vs. $2.71 expected
• Revenue: $4.17 billion vs. $3.59 billion expected

The company’s reported net income for the three-month period that ended Nov. 1 was $75.2 million, or 86 cents per share, compared with $227.8 million, or $2.75 per share, a year earlier. Excluding one-time items including the impact of the Foot Locker acquisition, Dick’s posted earnings per share of $2.78.

Dick’s has been a standout performer across the retail industry and now has the challenge of fixing Foot Locker’s business so it doesn’t weigh on its typically pristine results. 

Dick’s $2.4 billion acquisition of Foot Locker gave it a massive competitive edge in the wholesale sneaker market, most importantly for Nike products, and access to both an international and urban consumer.

It’s also supercharging the company’s growth. Thanks to Foot Locker’s revenue, almost $931 million during the quarter, Dick’s sales rose a staggering 36% to $4.17 billion from $3.06 billion a year earlier.

However, it also acquired some risks. Foot Locker has about 2,400 stores globally and has underperformed for years. Its consumer tends to skew lower income than Dick’s’ and hasn’t held up as well in a softening economy. 

Under CEO Mary Dillon, Foot Locker had worked to refresh its stores and change the way it merchandises sneakers. Since its acquisition, it began testing changes in 11 stores in North America to see if the fixes improve sales, including cutting products by more than 20%, bringing back apparel and changing Foot Locker’s “footwear wall.” 

“If you’d walked into a Foot Locker store before and you looked at the footwear wall … it was nothing but a run on sentence,” said Stack. “It was just a whole bunch of shoes thrown up on the wall, and we took all of that down, we re-merchandised it, focused on shoes we really wanted to sell. … It’s early on, but we’re pretty enthusiastic about what we’ve done.” 

— CNBC’s Courtney Reagan contributed to this report.