Dick’s Sporting Goods raised its full-year guidance after a strong third-quarter performance, even as it begins the task of turning around its newly acquired Foot Locker business.
Senior executives detailed plans to overhaul the struggling footwear retailer, which will include closing underperforming stores and clearing out unproductive inventory under the leadership of Foot Locker International President Matt Barnes, who was announced today, and North America President Ann Freeman, who was announced earlier this year.
The company completed its $2.5 billion acquisition of Foot Locker on September 8, a move intended to create a global leader in sports retail. Now, Dick’s is focused on what Executive Chairman Ed Stack called “cleaning out the garage” at Foot Locker, initiating a review of the business that is expected to result in pre-tax charges between $500 million and $750 million.
“We look forward to working to stabilize and ultimately accelerate that business with targeted turnaround strategies to meet the evolving needs of consumers globally,” Stack said.
Overhauling the Foot Locker Business
The newly acquired Foot Locker division faces significant headwinds. Proforma comparable sales for Foot Locker declined 4.7% in the third quarter, dragged down by a 10.2% drop in its international business.
“Foot Locker strayed from retail 101 and did not execute the fundamentals,” Stack said, adding that the brand failed to react when its largest brand partner (Nike), pivoted to a direct-to-consumer strategy, leaving it with the wrong inventory mix.
Despite the challenges, Dick’s leadership is confident in its ability to steer a turnaround.
“After looking even deeper under the hood as the owners of Foot Locker, our conviction that we can turn this business around is only growing,” Stack said. “We will bring our operational excellence, our supplier relationships, and our merchandise expertise to return Foot Locker to its rightful place as a top player in the specialty athletic channel.”
Photo by HJBC for stock.adobe.com.
The strategy involves several key steps:
- New leadership: Dick’s has appointed a new management team, including Anne Freeman, a former Nike executive, as Foot Locker North America President, and Matthew Barnes, former UK CEO of Tesco, as president of the international business.
- Store and inventory cleanup: The company is closing underperforming stores and liquidating unproductive inventory to reset the business. This process is expected to weigh heavily on margins in the near term. For the fourth quarter, Dick’s expects gross margin for the Foot Locker business to be down between 1,000 and 1,500 basis points compared to the prior year.
- Vendor alignment: Dick’s leadership has met with key brand partners, who are reportedly aligned with the new vision for Foot Locker.
Executives have pinpointed the back-to-school 2026 season as a potential inflection point, when new strategies and product assortments are expected to drive meaningful progress. The acquisition is expected to become accretive to earnings per share in fiscal 2026, excluding one-time costs.
Dick’s Sporting Goods Shines in Q3
The Dick’s Sporting Goods business delivered strong results in the third quarter, with comparable store sales growing 5.7%, driven by increases in both customer transactions and average ticket size. The company reported non-GAAP earnings per diluted share for the Dick’s business of $2.78, slightly ahead of the $2.75 from the same period last year.
“The effectiveness of our long-term strategies and the best-in-class execution by our team are driving outstanding results for our Dick’s business,” said Lauren Hobart, president and CEO, on the call. “Reflecting these strong results and our continued confidence, we are again raising our full-year 2025 outlook.”
The company now expects comparable sales growth for the Dick’s business to be in the range of 3.5% to 4%, up from its previous forecast of 2% to 3.5%. Full-year earnings per diluted share guidance for the core business was also raised to a range of $14.25 to $14.55. Consolidated net sales for the quarter reached $4.17 billion, which includes a contribution of approximately $931 million from the Foot Locker acquisition. However, the overall results fell short of analysts’ expectations, with a reported consolidated non-GAAP EPS of $2.07 against a forecasted $2.71.
The company also expects to achieve $100 million to $125 million in cost synergies over the medium term, primarily from procurement and sourcing efficiencies gained through the acquisition.
Kate Robertson can be reached at kate@shop-eat-surf-outdoor.com.
