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DKS
Earnings call · Jul 2026 (Q2 FY27)

DICK'S SPORTING GOODS Q2 FY27 earnings call DKS

Aug 25, 2026 Source

Executive summary

DICK'S Sporting Goods Q2 FY27 — Strong Core Business Amidst Promotional Headwinds

DICK'S Sporting Goods delivered a robust quarter for its core business, with strong comparable sales and gross margin expansion, driven by strategic investments and diversified offerings. However, the company faced significant headwinds from an increasingly promotional athletic footwear and apparel market, particularly impacting the Foot Locker segment and leading to a downward revision of full-year earnings guidance. Management views current pricing investments as critical for long-term market share protection.

Highlights

5

  • DICK'S business delivered a strong 4.9% comparable sales gain, outpacing the broader industry by nearly 200 basis points.

  • DICK'S business gross margin expanded 79 basis points year-over-year, driven by DICK'S Media Network, GameChanger, and tariff refunds.

  • Opened 5 new House of Sport and 8 Field House locations in Q2, with these concepts performing extremely well and driving athlete engagement.

  • Received approximately $59 million in tariff refunds, with $21 million included in non-GAAP results, helping offset promotional pressures.

  • Surpassed back-to-school goal of approximately 250 Fast Break stores globally, with plans for further expansion ahead of the holiday season.

Concerns

5

  • Consolidated non-GAAP gross profit declined 300 basis points to 34.06% of net sales, primarily due to the mix impact from the Foot Locker business.

  • Foot Locker pro forma comparable sales declined 3.6% for the quarter, impacted by challenging athletic footwear market conditions and weaker launch product response.

  • Foot Locker business recorded an operating loss of $31.9 million, reflecting promotional environment and continued challenges in EMEA.

  • Full-year non-GAAP EPS guidance reduced from $13.50-$14.50 to $11-$12, reflecting marketplace pressures and a higher effective tax rate.

  • Consolidated non-GAAP operating income was $453.3 million or 8.11% of net sales, down from $475 million or 13.02% last year.

Guidance & targets

CategoryTargetConfidence
DICK'S Business Full Year Comparable Sales Growth
2.5% to 4%
high materiality
High
DICK'S Business Full Year Operating Margin
10.6% to 10.9%
high materiality
Medium
DICK'S Business Full Year Gross Margin
decline slightly
medium materiality
Medium
DICK'S Business Q3 SG&A Deleverage
nearly 50 basis points
medium materiality
High
Foot Locker Business Full Year Pro Forma Comparable Sales
negative 2% to flat
high materiality
Medium
Foot Locker Business Full Year Operating Income/Loss
operating loss in the range of $80 million to $40 million
high materiality
Medium
Consolidated Full Year Non-GAAP Earnings Per Diluted Share
$11 to $12
high materiality
Medium
Consolidated Full Year Effective Tax Rate
approximately 29%
medium materiality
High
Consolidated Full Year Net Capital Expenditures
approximately $1.4 billion
medium materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
DICK'S Business
Strong performance driven by growth in average ticket and transactions, with broad-based growth across footwear, apparel, and hardlines, including strong World Cup results. Gross margin expansion was driven by DICK'S Media Network, GameChanger, and tariff refunds, offsetting promotional pressure and higher costs.
Comparable Sales Growth: 4.9%Average Ticket Increase: 3.6%Transactions Increase: 1.3%2-Year Comp Sales Growth: 9.9%3-Year Comp Sales Growth: 14.4%Operating Margin: 12.6%Gross Margin Expansion: 79 bps YoY
—5.6%—$485.2 million
Foot Locker Business
Impacted by challenging athletic footwear marketplace conditions, fewer launches, and weaker consumer response to key launches. Results reflect both the challenging promotional environment and continued investments in the business, including brand marketing initiatives.
Pro Forma Comparable Sales Decline: 3.6%
$1.74 billion——($31.9 million)

DKS operating KPIs by quarter

DKS operating KPIs stated on its earnings calls, by fiscal quarter
KPI Jan 2026 Q4 FY26 Apr 2026 Q1 FY27This call Jul 2026 Q2 FY27Change vs prior quarter
Employees
100K+ Before I turn it over to Lauren, I want to thank our more than 100,000 teammates across the globe for their commitment and their execution every day. Source transcript
100K+ We delivered a very strong first quarter, and I want to thank our more than 100,000 teammates around the globe for their commitment and execution. Source transcript
100K+ Before I turn it over to Lauren, I'd like to thank our more than 100,000 teammates across the globe for their commitment and their execution every day. Source transcript
—
New stores opened House of Sport—
1 In Q1, we opened one House of Sport location and 2 field house locations, and our plans are on track to open approximately 13 and 20 more, respectively, for this year. Source transcript
5 During Q2, we opened 5 House of Sport locations and 8 Field House locations. Source transcript
+400%
New stores opened Field House—
2 In Q1, we opened one House of Sport location and 2 field house locations, and our plans are on track to open approximately 13 and 20 more, respectively, for this year. Source transcript
8 During Q2, we opened 5 House of Sport locations and 8 Field House locations. Source transcript
+300%

Operating figures the company states on every call, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Deals & partnerships

Michael Rubin and his company (Fanatics) Partnership on trading cards and collectibles

Building Collectors Clubhouse in House of Sports stores and Field House locations. Expect to market trading card business more aggressively and be a main distribution point.

Risks & headwinds

Increasingly aggressive promotional environment in athletic footwear and apparel At least through the fourth quarter FY27

Consolidated non-GAAP gross profit down 300 bps YoY to 34.06% of net sales; DICK'S business operating margin guidance reduced from 11-11.4% to 10.6-10.9%.

Mitigation:Deliberate decision to invest in price to protect leadership position and market share; shifting mix toward in-demand brands; leveraging diversified business model at DICK'S.

Industry inventory build-up, particularly in legacy footwear silhouettes and apparel franchises At least through the fourth quarter FY27

Foot Locker pro forma comp sales declined 3.6%; Foot Locker operating loss of $31.9 million.

Mitigation:Taking action to shift mix toward in-demand brands; expecting more favorable launch calendar in back half of year; leveraging DICK'S broad category mix.

Challenging conditions in Foot Locker's EMEA business Expected to persist through the end of FY27

Contributed to Foot Locker operating loss of $31.9 million; full-year Foot Locker operating loss guidance of $80M-$40M; 200 bps higher effective tax rate for consolidated company.

Mitigation:Turnaround efforts underway; continued investment in the business, including brand marketing initiatives.

Higher fuel, supply chain, and healthcare costs Balance of the year FY27

DICK'S business SG&A deleveraged 96 bps in Q2; full-year gross margin expected to decline slightly.

Mitigation:Offset by contributions from DICK'S Media Network, GameChanger, and tariff refunds; reinvesting tariff benefits.

Weaker consumer response to key launches and fewer launches in Q2 Q2 FY27, with expectation for more favorable launch calendar in back half

Foot Locker pro forma comp sales declined 3.6%.

Mitigation:Taking action to shift mix toward in-demand brands; focusing on quality of launches.

What to watch in Q3 FY27

Foot Locker Pro Forma Comparable Sales

next quarter (Q3 FY27)
Current declined 3.6% in Q2
Target improvement towards negative 2% to flat full-year guidance

Why it matters

Foot Locker's performance is a key driver of consolidated earnings and the success of the acquisition; improvement is critical for overall company outlook.

We are reducing our full year outlook to reflect the same footwear marketplace pressures, which are having a more significant impact on Foot Locker as well as continued challenges in EMEA. We now expect full year pro forma comp sales to be in the range of negative 2% to flat compared to our prior expectation of 1.5% to 3% growth.

Q&A highlights

What specifically changed in the last 90 days that led to the revised guidance, given prior optimism?

Ed Stack explained that while the DICK'S business remains strong (4.9% comp), the market became much more promotional, especially in athletic footwear, due to inventory build-up by several brands. This impacted margins. Foot Locker was hit harder due to its reliance on footwear and legacy silhouettes, and disappointing Q2 launch products. EMEA also proved more challenging than expected. Management views current pricing investments as crucial for long-term market share.

“A number of brands got very -- what changed is the number of brands got very promotional on their sites, and those promotions spilled into the broader marketplace.”

asked by Simeon Gutman · answered by Edward Stack

2 min read 5 chapters

Detailed narrative

Marketplace Dynamics and Promotional Environment

The athletic footwear and apparel market experienced a significant shift in Q2, with inventory levels building up across the industry, particularly in certain legacy footwear silhouettes and apparel franchises. This led to an increasingly aggressive promotional environment, impacting overall company earnings. Management made a deliberate decision to invest in pricing to maintain its leadership position and market share, viewing this as a long-term investment.

DICK'S Business Resilience

Despite the challenging market, the core DICK'S business demonstrated strong performance, delivering a 4.9% comparable sales gain and outperforming the broader industry. Its diversified business model, broad category mix, and balanced brand portfolio helped navigate pressures, with Team Sports, licensed products, new apparel brands, running footwear, and outdoor categories showing particular strength. Gross margin expanded due to contributions from DICK'S Media Network, GameChanger, and tariff refunds.

Foot Locker Turnaround Challenges

The Foot Locker business was more significantly impacted due to its higher reliance on footwear, especially legacy silhouettes, and disappointing launch product performance in Q2. The EMEA region proved particularly challenging with aggressive promotions, excess inventory, and cautious consumers. While turnaround efforts are underway, these marketplace dynamics have delayed the expected pace of improvement, leading to a revised outlook for Foot Locker.

Strategic Investments for Long-Term Growth

DICK'S continues to invest in key growth initiatives, including the expansion of House of Sport (5 opened in Q2) and Field House (8 opened in Q2) locations, which are performing well and driving athlete engagement. The company also relaunched its ScoreCard loyalty program, introducing a paid tier for engaged athletes. Investments in Foot Locker include its first major brand campaign in over a decade and expansion of Fast Break stores (surpassing 250 globally).

Impact of Tariff Refunds and Cost Pressures

The company received approximately $59 million in tariff refunds during Q2, with $21 million included in non-GAAP results, which helped offset some promotional and cost pressures. However, macroeconomic and geopolitical concerns, along with higher fuel, supply chain, and healthcare costs, continued to weigh on profitability, contributing to the revised full-year outlook.

AI-generated summary of the company's earnings call. Not investment advice.