DICK’S Sporting Goods (NYSE:DKS) executives highlighted continued momentum in the core business and early progress integrating Foot Locker during the company’s fourth quarter and full-year 2025 earnings call. Management pointed to market share gains, record annual sales for the DICK’S business, and what it described as encouraging initial results from “Fast Break,” a merchandising and presentation initiative being piloted at select Foot Locker locations.
Full-year 2025 results: record sales for the DICK’S business
CEO Lauren Hobart said the DICK’S business delivered record sales of $14.1 billion in 2025, with comparable sales up 4.5%, driven by growth in average ticket and transactions. She said the company expanded gross margin and achieved an operating margin of 11.1%, while delivering non-GAAP EPS of $14.58, up from $14.05 in 2024 and above the high end of the company’s outlook.
Fourth quarter: comp growth, margin expansion at DICK’S; Foot Locker cleanup costs
Hobart said the DICK’S business finished the year with a fourth-quarter comparable sales increase of 3.1%, following a 6.6% comp increase in the prior-year quarter. She noted the company saw more athletes purchasing and higher spend per trip versus the prior year, while gross margin expansion “accelerated sequentially” and operating margin for the DICK’S business was 11%. Non-GAAP EPS for the DICK’S business in the quarter was $4.05, up from $3.62 last year.
Gupta reported consolidated fourth-quarter net sales increased 59.9% to $6.23 billion, driven by a $2.18 billion Foot Locker sales contribution and the 3.1% comp increase in the DICK’S business. The DICK’S comp was driven by a 4.4% increase in average ticket, partially offset by a 1.3% decline in transactions, which management said should be viewed in the context of strong prior-year comparisons. Gupta also said the company saw “broad-based strength” across footwear, apparel, and hardlines.
On profitability, consolidated fourth-quarter gross margin declined 303 basis points year over year, which Gupta attributed “entirely” to the mix impact from Foot Locker. Within the DICK’S business, he said gross margin increased 67 basis points and was driven “entirely” by higher merchandise margin. He also noted that on a GAAP basis, actions to optimize Foot Locker inventory in connection with “cleaning out the garage” reduced gross profit by $218 million, in line with expectations.
Foot Locker posted a fourth-quarter operating loss of $5.9 million on a non-GAAP basis, which management said was expected. Gupta said pro forma comparable sales for Foot Locker in the quarter decreased 3.4%.
Foot Locker integration: “Fast Break” pilot and scaling plans
Executive Chairman Ed Stack said the company had owned Foot Locker for about six months and described “significant progress” strengthening the business. He said the “Fast Break” initiative—an evolution of an earlier 11-store pilot—produced “very strong positive comps” during the fourth quarter that “meaningfully” exceeded the DICK’S business, along with “strong gross margin improvement.” Stack said changes included clearer storytelling and better presentation, along with a more focused assortment in which Foot Locker removed about 30% of unproductive shoe wall styles.
Stack said the company expanded Fast Break to an additional 10 stores in Los Angeles before the NBA All-Star game and was “very pleased” with early performance. In response to analyst questions, he said the original pilot included a cross-section of urban and suburban locations and both high- and lower-volume stores.
Management also said the “inventory cleanup is now essentially complete.” Stack said the company used markdowns and leveraged DICK’S “Going, Gone!” value chain to clear product, which he said improved cash recovery compared to using a jobber. He added that Foot Locker’s inventory is now “well-positioned,” and management expects an inflection point in sales and profitability beginning with the back-to-school season.
Stack also said the company’s review of Foot Locker’s store fleet is ongoing, but the anticipated closure list is now “much smaller” than initially estimated, citing opportunities to reposition stores informed by Fast Break performance.
Outlook for 2026: comp growth expected for both businesses
For the DICK’S business, Hobart said the company expects 2026 comp sales growth of 2% to 4% and operating margins “approximately 11.1% at the midpoint.” She said consolidated non-GAAP EPS is expected to be $13.50 to $14.50.
Gupta provided additional details, including total sales expectations for the DICK’S business of $14.5 billion to $14.7 billion. He said comps are expected to be “slightly higher” in the first half, driven largely by the timing of the World Cup, while operating margins are expected to decline in the first half and expand in the second half due to planned investments and the timing of synergy savings.
For Foot Locker, Stack said the company expects 2026 comp sales growth of 1% to 3% and operating income of $100 million to $150 million, with an inflection beginning with back-to-school. Gupta said Foot Locker total sales are expected to be $7.6 billion to $7.7 billion and that both comps and profitability are expected to be back-half weighted.
Gupta reiterated expected medium-term cost synergies of $100 million to $125 million, primarily from procurement and direct sourcing efficiencies, and said some benefits are reflected in 2026 guidance. He also reiterated expected total pre-tax charges related to the acquisition, integration, and store/inventory actions of $500 million to $750 million, noting $390 million was recognized in 2025 and approximately $150 million of remaining charges are expected in 2026 (excluded from non-GAAP EPS guidance).
Capital allocation and store growth plans
On capital allocation, Gupta said the company ended the year with approximately $1.35 billion in cash and no borrowings on its $2 billion unsecured credit facility. Fourth-quarter capital spending totaled $302 million, and the company paid $108 million in dividends and repurchased 218,000 shares for $43 million at an average price of $199.51.
For 2026, Gupta said the company plans approximately $1.5 billion in net capital expenditures, focused on store growth, relocations, improvements, technology, and supply chain. Hobart said the company plans to open about 14 House of Sport locations and about 22 Field House locations in 2026. Gupta also said the company plans to begin construction on about 18 House of Sport locations expected to open in 2027 and plans to open about 15 Golf Galaxy Performance Center locations in 2026.
Gupta also announced a 3% increase in the quarterly dividend to an annualized payout of $5 per share ($1.25 quarterly), marking the 12th consecutive year of dividend increases, and said the company expects share repurchases to offset normal course dilution.
About DICK’S Sporting Goods (NYSE:DKS)
DICK’S Sporting Goods is a leading U.S.-based sporting goods retailer that sells a broad range of sports equipment, apparel, footwear and outdoor gear. The company operates an omnichannel business combining physical stores with digital sales, offering products for team sports, fitness, hunting and fishing, golf, and general active lifestyle categories. In addition to its flagship DICK’S stores, the company operates specialty formats such as Golf Galaxy and branded service offerings including team-sports sales and custom equipment solutions.
The company traces its roots to a single sporting goods outlet founded in 1948 and has since grown into a national retail chain serving customers across the United States.
