Dick’s Sporting Goods executive chairman Edward W. Stack sees long-term opportunity for growth of the Foot Locker banner.
“We’ve moved quickly to test and learn in North America through what we call our Fast Break initiative. This is the evolution of the 11-store pilot we discussed last quarter,” Stack said in the company’s fourth quarter conference call, adding that while it is still early stages, the company is “encouraged” by what it is seeing. “During Q4, our Fast Break stores drove very strong positive comps, actually meaningfully exceeding the Dick’s business while also delivering strong gross margin improvement,” he said.
Stack explained that the improvement is coming from clearer storytelling, better presentation and a more focused assortment that included the removal of 30 percent of the styles on the shoe wall that were deemed “unproductive.” Those moves enabled the ability to show the customers which products were important, he said.
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“Based on the strength of the pilot results, we’ve already expanded Fast Break to an additional 10 stores in L.A. before the NBA All Star Game, and we’re very pleased with the strong early performance,” he told investors during a conference call Thursday morning after the sports retailers posted fourth quarter and full-year earnings results. “Now looking ahead, we’re excited to rapidly scale Fast Break by back-to-school 2026.”
He reiterated that the priority in the third quarter was to “clean out the garage” by removing unproductive inventory. “We’re pleased to report that the inventory cleanup is now essentially complete. That work drove the fourth quarter profitability results we told you to expect,” Stark said.
The executive chairman said that with Foot Locker’s inventory issues in the rear-view mirror, “We’re set up to play offense and deliver the inflection point we expect to see in this business starting with back-to-school.”
And as part of the garage clean-out, Stark said the company continues to review Foot Locker’s global store fleet, and now believes that the number of stores to be closed is “much smaller” than initiated projected. “We’ve identified opportunities to reposition and improve profitability in a meaningful number of stores, informed by the large part of success we’re seeing in our Fast Break locations,” he said.
Stark also spoke about how brands are leaning into “our vision and eager to support a thriving, growing Foot Locker.” He cited the banner’s brand activations with Nike, Jordan, Adidas and others at its L.A. stores in connection with last month’s NBA All-star game, which Stark described as a “series of sought-after launches that drove exceptional sell-throughs.”
“At Dick’s, we’ve built an industry-leading business by focusing on product performance, innovation and customer loyalty, always with a long-term view. We’re applying that same proven playbook to the Foot Locker business and making the choices we believe will create the most long-term value for our shareholders,” the executive chairman said.
For 2026, Foot Locker is expected to deliver growth and comp sales of between 1 percent and 3 percent, and operating income in the range of $100 million to $150 million.
“We continue to anticipate an inflection point for both sales and profitability beginning with the back-to-school season,” Stark said. He said the Dick’s and Foot Locker banners are stronger together, as the combination provides more scale, deeper relationships with the most important brands in the industry, access to consumers not reached before, and a global footprint.
“For Foot Locker, the benefits of our combination come through in very real ways, brands matter, product matters, execution matters and people matter,” he said.
Dick’s executive vice president and CFO Navdeep Gupta reiterated prior cost estimates in the form of pre-tax charges for the Foot Locker clean-up in the range of $500 million to $750 million, with $350 million of those charges recognized during 2025. The balance will be recognized over 2026. Total sales for the Foot Locker business is expected in the range of $7.6 billion to $7.7 billion in 2026.
Dick’s president and CEO Lauren R. Hobart said fourth quarter comps gain of 3.1 percent for the Dick’s business was on top of last year’s 6.6 percent rise, bringing the two-year comp stack at up nearly 10 percent.
“We saw more athletes purchased from us and they spend more each trip compared to the prior year,” she said. “Today, the intersection of sport and culture has never been stronger, and excitement continues to build.”
With most of the 2026 World Cup matches on U.S. soil in June and July, the 2028 Summer Olympics in L.A. in the horizon, and the Ryder Cup returning to the U.S. in 2029, Hobart said the country is entering one of the most compelling multi-year periods for sport.”
“In our stores, we’re evolving our service and selling culture. We’re putting a bigger emphasis on relationship building and giving teammates better training and tools,” she said.
The pre-market jump in shares of Dick’s Sporting Goods saw after first posting fourth quarter results eased somewhat to just a gain of 2.0 percent to $199.51 in mid-day trading after investors digested the company’s outlook. Part of that was due to information from the conference call where Stark noted that the turnaround for the Foot Locker business won’t be until the back half of 2026, starting with the back-to-school selling season.
Baird analyst Jonathan R. Komp has an “Outperform” rating on Dick’s shares, noting that results “featured better-than-expected revenue and profit for both Dick’s and Foot Locker. And he noted that management’s acceleration of its “Fast Break” store re-merchandising actions should improve visibility to Foot Locker’s turnaround prospects.
Telsey Advisory Group’s (TAG) Cristina Fernández also has an “Outperform” rating on shares of Dick’s. She also said that the guidance of $7.6 billion to $7.7 billion in sales for the Foot Locker banner was above TAG’s $7.2 billion estimate.
But Jefferies analyst Jonathan Matuszewski said that while longer term, Foot Locker will see brighter days, he has a “Hold” rating on Dick’s shares because there could be lingering headwinds from prior merchandising decisions. “More important, it remains unclear whether the Dick’s banner can continue to execute at a high-caliber while this turnaround unfolds,” the analyst wrote in a research note, adding that the “Fast Break” pilot could see disappointment as the scope broadens to 250 doors.
Foot Locker shareholders approved Dick’s acquisition of its competitor back in August, and the transaction closed in in September. Following the close of the $2.5 billion deal, Stack’s team initiated its “clean out the garage” plan to transform the operation and make Foot Locker’s business accretive to Dick’s bottom line in 2026.
