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

Dick's Sporting Goods is readying to adjacent a slew of Foot Locker stores present that its acquisition of the sneaker company is complete, the institution said Tuesday erstwhile announcing fiscal third-quarter earnings.  

It's unclear however galore stores Dick's plans to shutter, but the closures are portion of a larger restructuring it's implementing truthful Foot Locker isn't a resistance connected its profits travel fiscal 2026, Dick's enforcement president Ed Stack told CNBC's Courtney Reagan. 

"We request to cleanable retired the garage," said Stack. "We've taken beauteous assertive markdowns to cleanable retired aged merchandise. We're impairing immoderate store assets. We'll adjacent immoderate stores… everything we're doing is determination to support 2026 and conscionable benignant of bash this 1 time." 

The institution declined to accidental however galore stores would beryllium impacted and whether the restructuring volition see layoffs.

As a result, Foot Locker's comparable income are expected to beryllium down successful the mid- to high-single digits successful the existent 4th with margins expected to autumn betwixt 10 and 15 percent points.

Beyond the Foot Locker business, Dick's stores saw comparable income emergence 5.7% during the quarter, good up of the 3.6% analysts had expected, according to StreetAccount.

For its namesake banner, the institution is present expecting comparable income to emergence betwixt 3.5% and 4%, up from its anterior scope of 2% to 3.5%. That's up of expectations for 3.6% growth, according to StreetAccount. 

Dick's is besides present expecting full-year net per stock to beryllium betwixt $14.25 and $14.55, up from a erstwhile forecast of $13.90 to $14.50 and successful enactment with expectations of $14.44 per share, according to LSEG. 

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

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

The company's reported nett income for the three-month play that ended Nov. 1 was $75.2 million, oregon 86 cents per share, compared with $227.8 million, oregon $2.75 per share, a twelvemonth earlier. Excluding one-time items including the interaction of the Foot Locker acquisition, Dick's posted net per stock of $2.78.

Dick's has been a standout performer crossed the retail manufacture and present has the situation of fixing Foot Locker's concern truthful it doesn't measurement connected its typically pristine results. 

Dick's $2.4 cardinal acquisition of Foot Locker gave it a monolithic competitory borderline successful the wholesale sneaker market, astir importantly for Nike products, and entree to some an planetary and municipality consumer.

It's besides super-charging the company's growth. Thanks to Foot Locker's revenue, astir $931 cardinal during the quarter, Dick's income roseate a staggering 36% to $4.17 cardinal from $3.06 cardinal a twelvemonth earlier.

However, it besides acquired immoderate risks. Foot Locker has astir 2,400 stores globally and has underperformed for years. Its user tends to skew lower-income than Dick's' and hasn't held up arsenic good successful a softening economy. 

Under CEO Mary Dillon, Foot Locker had worked to refresh its stores and alteration the mode it merchandises sneakers. Since its acquisition, it began investigating changes successful 11 stores successful North America to spot if the fixes amended sales, including cutting products by implicit 20%, bringing backmost apparel and changing Foot Locker's "footwear wall." 

"If you'd walked into a Foot Locker store earlier and you looked astatine the footwear partition … it was thing but a tally connected sentence," said Stack. "It was conscionable a full clump of shoes thrown up connected the wall, and we took each of that down, we re-merchandised it, focused connected shoes we truly wanted to sell. ... It's aboriginal on, but we're beauteous enthusiastic astir what we've done." 

— CNBC's Courtney Reagan contributed to this report.