Dick's Sporting Goods' Q2 Earnings Reset Tied to Excess Inventory, Increased Promotions and Projected Foot Locker Loss, UBS Says

MT Newswires Live08-28 01:03

Dick's Sporting Goods' (DKS) Q2 earnings reset was mainly tied to excess legacy footwear inventory, increased promotional activity and a projected loss at Foot Locker, UBS Securities said Wednesday in a note.

UBS said Dick's shares can rise over the next 12 months as investors become more confident that current margin pressure reflects a temporary inventory and product-cycle adjustment rather than a permanent decline in earnings power.

UBS lowered its 2026 EPS estimate to $11.50 from $13.96, its 2027 estimate to $12.95 from $16.75 and its 2028 estimate to $14.25 from $19.17, reflecting lower Foot Locker sales, increased promotional pressure, and a slower operating-margin recovery, the note added.

Foot Locker operates about 1,600 North American stores, generating annual sales of about $3 million per location. For every 100 stores closed, recapturing 30% of the associated sales could shift $90 million to $100 million to Dick's stores, add 60 to 80 basis points to core growth and contribute about $0.30 to EPS at a 40% or higher incremental margin, UBS said.

UBS kept a buy rating on Dick's Sporting Goods and lowered its price target to $178 from $275.

Price: 131.12, Change: +1.46, Percent Change: +1.13

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