Dick’s Sporting Goods blames thefts for 23% profit plunge
Dick’s Sporting Goods has blamed theft for a 23% profit plunge in its second quarter figures. The 800-store retailer’s stock tumbled 24% after it reported a rare earnings miss.
It also announced a restructure that may incur additional charges of up to $50 million.
President and CEO Lauren Hobart said that ‘elevated inventory shrink’ is an increasingly serious issue impacting many retailers after the company reported net income of $244 million, down on the $319 million achieved in the corresponding period last year.
Net sales were $3,224 million, up from $3,112 million but short of the $3,340m expected. Comparable store sales showed a 1.8% improvement driven by transactions and market share gains.
“Within the quarter, sales accelerated significantly in July and we remain confident in delivering positive comparable sales for 2023,” said Hobart.
“Our Q2 profitability was short of expectations due in large part to the impact of elevated inventory shrink. Despite moderating our 2023 earnings per share outlook, the confidence we have in our long-term growth opportunities has never been stronger.”
Executive Chairman Ed Stack said the company’s new House of Sport concept and its new 50,000 square-foot stores were yielding ‘powerful’ results.
“We haven’t seen growth opportunities like these since we went public in the early 2000s.”
The company’s year-to-date results show net sales of $6,066m compared to $5,813m last year, with net income down from $579m to $549m.
Dick’s second quarter report also revealed that the company is conducting a business optimisation intended to better align its talent, its spend on critical strategies and is streamlining its overall cost structure.
“We eliminated certain positions primarily at our customer support centre for which we expect to incur approximately $20m of severance pay in the third quarter of 2023,” says the report.
The company expects the restructure to be completed this year and that it may result in additional charges of $25m to $50m.
• According the CBS News, Dick’s is among the first to blame a poor quarterly financial report primarily on theft.