Dick’s Sporting Goods faces a significant setback less than a year after acquiring Foot Locker in a $2.4 billion deal aimed at expanding its footprint in the sneaker market. On Tuesday, the company issued a profit warning for the year, citing a slowdown in consumer spending on footwear—a core segment of Foot Locker’s business—prompting a more than 25 percent plunge in Dick’s shares, marking their largest single-day decline on record.
Ed Stack, Dick’s executive chairman, attributed the earnings warning to an oversupplied sneaker market and aggressive discounting by competitors, particularly in Europe and the Middle East. These tactics have forced Foot Locker to match heavy promotions to protect market share, creating margin pressures. “What changed is a number of brands got very promotional on their sites, and those promotions split into the broader marketplace,” Stack explained. He added that the company expects this pricing environment to persist for the remainder of the year.
The challenges were more pronounced at Foot Locker, which relies heavily on sales of both established and newly launched sneaker models that did not perform as expected in the second quarter. In contrast, Dick’s namesake sporting goods stores did not experience a comparable decline. Stack noted that fewer product launches took place during the quarter, and those introduced underperformed compared to industry averages and the company’s own projections.
The broader athletic retail sector has recently seen mixed results and cautious outlooks from major players. Nike reduced its full-year guidance in June amid weaker demand and elevated discounting, while Deckers Outdoor reported moderated growth in its Hoka running shoes brand last month. Shares of On Running and Under Armour have also declined more than 20 percent in the past month, with Nike down approximately 37 percent year to date.
When Dick’s acquired Foot Locker in 2025, the shoe retailer was grappling with excess inventory, eroding sales, and tariffs on imports from Asia, a key production region. At the time, Stack remained optimistic about turning the business around by investing in new stores, ramping up marketing efforts, and refreshing the product assortment. The company spent the latter half of last year closing underperforming Foot Locker locations and clearing out excess stock, targeting a return to growth by the 2026 back-to-school season.
Despite concerns from some investors over the high acquisition cost and turnaround risks, Stack reaffirmed his confidence in the long-term value of the purchase during Tuesday’s earnings call. Responding to an analyst’s question about changes since the optimistic guidance issued 90 days prior, Stack pointed to intensified discounting internationally, higher fuel costs, and consumer caution amid geopolitical uncertainty. He emphasized that Dick’s intends to maintain discount parity with competitors until the market recovers.
“Although I’m sure some of you are kind of scratching your head,” Stack said, “we absolutely believe long term was the right thing to do.”