Dick's Sporting Goods Inc. (DKS) stock climbed Wednesday after the company reported better-than-expected third-quarter results for its core operations and boosted its full-year outlook. But the acquisition everyone's watching—Foot Locker—is posting numbers that look more like a fixer-upper than a finished product.
The retailer reported third-quarter sales of $4.168 billion on Tuesday, up 36.3% year over year and well ahead of the Street's $3.546 billion estimate. That's the good news. The more complicated story involves what Dick's just bought and what it's going to take to turn it around.
Management raised 2025 GAAP EPS guidance to a range of $14.25 to $14.55, up from the prior forecast of $13.90 to $14.50. The company also lifted its 2025 sales outlook to $13.95 billion to $14 billion from $13.75 billion to $13.95 billion previously. So Dick's itself is firing on all cylinders. Foot Locker? Not so much.
The Foot Locker Problem
Here's where things get interesting. Foot Locker's pro forma last-twelve-months adjusted EBIT is tracking toward essentially zero by the end of 2025, according to Guggenheim analyst Steven Forbes. That compares with about $200 million in 2024. In other words, profitability didn't just decline—it practically evaporated.
Forbes, who maintained his Neutral rating on the stock, pointed out that this creates some messy math. Dick's issued 9.6 million new shares as part of the deal, which dilutes existing shareholders. Then there's the $380 million senior note Dick's assumed in the transaction, which brings higher interest expense. Add in the lost interest income on cash outlays spread over 12 to 15 months, and you've got multiple sources of drag on earnings.
The analyst trimmed his consolidated EPS estimates and now sees buy-side cases ranging from $13 to $15.50. Translation: there's less visibility on when—or if—the Foot Locker acquisition stops being a headwind.
But Dick's Has a Track Record
Not everyone's worried. Telsey Advisory analyst Cristina Fernández reiterated her Outperform rating, though she did lower her price target from $255 to $245. She acknowledged that Foot Locker is creating near-term noise and that results are softer than anticipated, but she thinks Dick's is uniquely positioned to fix the problem.
Why? Sector expertise and strong relationships with brands. Dick's knows how to run sporting goods retail, and it's proven it can execute turnarounds. Fernández highlighted the core Dick's business as a testament to that capability—diversified merchandising, consistently strong full-price selling, and an omnichannel model supported by off-mall locations that drive both traffic and profitability.
She now estimates 2025 EPS of $12.95, down from $14.50 and below the $14.32 FactSet consensus. Her 2025 comparable sales growth forecast ticked up to 4% from 3.6%, while her 2026 EPS estimate came down slightly to $15 from $15.50.
Management Sounds Confident
Despite tougher one-year comparable sales in the fourth quarter, management described its 0% to 1.5% outlook as conservative. The company also reiterated that second-half 2025 gross margin gains for the core segment should exceed the improvement seen in the first half.
Forbes took those comments as a signal that fourth-quarter 2025 operating performance for Dick's core business should be solid, which led him to raise his underlying expectations for that segment heading into next year. So even with the Foot Locker weight, the foundation looks sturdy.
At last check Wednesday, DKS shares were trading up 2.19% to $211.26. Investors seem willing to give Dick's the benefit of the doubt—for now. The question is whether the company can work its magic on Foot Locker before patience runs out.
