DKS changes
Pick any two versions below to diff them.
- Price
- $140.84 → $141.97(+0.8%)
- Discount
- 14% to 36% → 13% to 35%(−1.0 pts)
- Next earnings
- 2026-11-24 → 2026-11-25
- Thesis
- DICK'S trades at a discount because the market doubts that Foot Locker can be fixed, and it fears that the losses there will use up profit from the strong DICK'S stores. On August 25, 2026, DICK'S cut its 2026 outlook. Foot Locker now expects a segment loss of $40 million to $80 million for 2026, against a profit of $110 million to $150 million in May. Its pro forma comparable sales fell 3.6% in Q2 2026, because the athletic footwear market became more promotional and new shoe launches sold below plan. The company also lowered profit guidance for the DICK'S Business, although its comparable sales grew 4.9%. The stock fell about 31% that day. For the gap to close, Foot Locker comparable sales must turn positive in 2027, its segment loss must shrink each quarter, the DICK'S Business must keep comparable sales growth near its 2.5% to 4.0% range with a segment margin near 11%, and the new debt must fund growth without a large drop in cash. The first test is the Q3 2026 report, expected on about November 2425, 2026. The full-year report in March 2027 will give the 2027 outlook, the first full year with Foot Locker in comparable sales. If these results show Foot Locker near break-even, the gap can close over the next four to six quarters. The main risk is a long weak period for athletic footwear, which hits Foot Locker hardest.
- Risks
- The Foot Locker turnaround can take longer than planned. Foot Locker depends on shoe launches and older shoe styles from a few large brands. In Q2 2026, fewer launches came, and they sold below plan. DICK'S now expects a Foot Locker segment loss of $40 million to $80 million for 2026. The athletic footwear and apparel market became more promotional in Q2 2026. DICK'S cut prices to stay competitive, and this lowers margins in both businesses. The 2026 segment profit outlook for the DICK'S Business fell to $1.54 billion to $1.60 billion, from $1.60 billion to $1.68 billion in May. Spending on sports goods depends on household income. A weaker consumer can cut sales of higher-priced footwear, apparel and equipment, and leave more inventory to sell at lower prices. Inventory was $5.6 billion at August 1, 2026, with $2.0 billion at Foot Locker. Most products are made outside the US, so new tariffs can raise costs. The refunds of IEEPA tariffs helped profit in 2026, but these refunds are one-time income and will not continue. Debt is rising. DICK'S sold $1.0 billion of new notes in September 2026 and spends about $1.4 billion a year on stores and other capital projects. A securities class action in the US District Court for the Western District of Pennsylvania covers buyers of the stock from September 8, 2025 to August 24, 2026. It claims that DICK'S misled investors about Foot Locker's inventory and promotions. The case is at an early stage, and the lead plaintiff deadline is November 3, 2026.
- Checkpoints
- Nov 2425, 2026 (estimate): Q3 2026 results: Foot Locker losses and DICK'S comparable sales. Pending. Watch: A smaller Foot Locker loss, DICK'S Business comparable sales growth inside the 2.5% to 4.0% range and no new cut to the 2026 outlook pass; another outlook cut or a larger Foot Locker loss fails. Mar 2027 (estimate): Full-year 2026 results and 2027 outlook. Pending. Watch: A 2027 outlook with positive Foot Locker comparable sales and a Foot Locker segment near break-even or better passes; an outlook with another year of Foot Locker losses fails. May 2027 (estimate): Q1 2027 results: Foot Locker in comparable sales. Pending. Watch: Positive comparable sales for both businesses with stable gross margins pass; falling Foot Locker sales or deeper price cuts fail.