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The company earned $3.53 per share last quarter, missing the $3.76 analysts expected. While the core DICK’S stores grew sales by about 5 percent, the recently acquired Foot Locker business saw sales at established stores drop nearly 4 percent. Management said the market for athletic shoes and clothes has become more difficult, forcing them to lower their profit outlook for the rest of the year.
This is a major setback for the company’s plan to grow through footwear. To move inventory in a crowded market, the company is having to offer deeper discounts, which leaves less profit on each sale. The stock’s record one-day drop reflects concerns that the $2.4 billion Foot Locker deal is becoming a burden on the otherwise healthy core business.
Source: 8-K filing
Jefferies lowered its price target to $171 from $224, and Wells Fargo cut its target to $185. These moves follow a quarter where footwear weakness overshadowed growth at core DICK'S stores. The average analyst target now sits at $223, though the stock is currently trading well below that level at about $124.
Source: Jefferies
Management had a long streak of reliable beats until this quarter. This sudden miss and lowered outlook suggest they misjudged how quickly the sneaker market would cool off.
| Expectation | |
|---|---|
| EPS | $2.89 |
| Revenue | $5.15B |
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