Current:Home > StocksDick's Sporting Goods stock plummets after earnings miss blamed on retail theft-DB Wealth Institute B2 Expert Reviews
Dick's Sporting Goods stock plummets after earnings miss blamed on retail theft
View Date:2024-12-23 20:46:28
Dick’s Sporting Goods reported a steep drop in quarterly profit and lowered its earnings outlook on Tuesday, citing an uptick in theft for its lackluster results.
Net income for the second quarter was $244 million, down 23% from the year prior despite a 3.6 % uptick in sales. The company now expects to make $11.33 to $12.13 per diluted share this year, down from its previous outlook of $12.90 to 13.80 per share.
The company’s report was “much worse than imagined with sales, gross margin, and expenses missing,” reads a note from J.P. Morgan analyst Christopher Horvers. Dick’s shares plummeted more than 24% early Tuesday afternoon.
Second-quarter results were affected by “higher inventory shrink, organized retail crime and theft in general, an increasingly serious issue impacting many retailers,” President and CEO Lauren Hobart said during an earnings call, adding that the company is “doing everything we can to address the problem and keep our stores, teammates and athletes safe.”
The company also took a hit from slower sales in its outdoor category, which prompted the company to mark down prices to clear inventory.
Dick’s layoffs
Dick’s second-quarter earnings release follows reports of corporate layoffs.
Bloomberg on Monday reported that the company laid off about 250 employees, citing a person familiar with the matter. Dick's did not immediately respond to a request for comment from USA TODAY.
How big of an issue is retail theft?
Chief Financial Officer Navdeep Gupta said the "biggest impact in terms of the surprise" from Dick's second-quarter results was driven by shrink, an industry term for unexplained loss of inventory from theft or errors.
“We thought we had adequately reserved for it. However, the number of incidents and the organized retail crime impact came in significantly higher than we anticipated," Gupta said.
Other retailers – including Target and Home Depot – have also been reporting higher levels of shrink caused by retail theft in recent months.
“Part of it is due to the tighter economy, but some of it is also down to a laxer attitude towards shoplifting by authorities,” said Neil Saunders, a retail analyst and the managing director of GlobalData. (Other experts have downplayed the effect certain laws have on shoplifting, pointing to research that shows raising felony theft thresholds do not affect property crime or larceny rates.)
Stores are locking up products:How that's affecting paying customers
While organized retail crime and shoplifting are a serious concern for retailers, some analysts have said companies may be discounting other causes of shrink.
“We believe several factors have been responsible for the growing profit drag. This includes a growing impact of internal shrink, a lagged impact from the supply chain disruptions, and an increase in operational inefficiencies,” reads a June UBS note led by analyst Michael Lasser. “These factors have been accentuated by staffing shortages at retailers.”
Saunders said retailers have been “keen” to point to theft as the source of their problems, but “sometimes it is difficult to pinpoint the extent of the problem as they don’t provide detailed breakdowns of the impact.”
veryGood! (36)
Related
- 2 dead in explosion at Kentucky factory that also damaged surrounding neighborhood
- Yellowstone Cast Reveals “Challenging” Series End Without Kevin Costner
- Man accused of stabbing at least 5 people in Seattle ordered held on $2M bail
- Ice Age 6 Movie Sequel Is in the Works, So Prepare for an Avalanche of Fun
- The Daily Money: Mattel's 'Wicked' mistake
- Beware of flood-damaged vehicles being sold across US. How to protect yourself.
- Years of shortchanging elections led to Honolulu’s long voter lines
- Will Nico Collins play Week 10? Latest updates as Texans WR returns to practice
- Spurs coach Gregg Popovich had a stroke earlier this month, is expected to make full recovery
- 5 wounded in shooting at Virginia restaurant
Ranking
- New 'Yellowstone' is here: Season 5 Part 2 premiere date, time, where to watch
- James Van Der Beek 'went into shock' over stage 3 colorectal cancer diagnosis
- LGBTQ+ hotlines experience influx in crisis calls amid 2024 presidential election
- Longtime Blazers broadcaster Brian Wheeler dies at 62
- Inflation ticked up in October, CPI report shows. What happens next with interest rates?
- Democrat Andrea Salinas wins reelection in Oregon’s 6th District
- Man charged with participating in march with flaming torch has pleaded guilty to lesser charge
- 'Just a shock': NC State student arrested after string of 12 shootings damaging homes and vehicles
Recommendation
-
Vermont man is fit to stand trial over shooting of 3 Palestinian college students
-
MLB free agent predictions 2024: Where will Soto, Bregman and Alonso land?
-
Brianna LaPaglia Says Zach Bryan Freaked the F--k Out at Her for Singing Morgan Wallen Song
-
Historic winter storm buries New Mexico, Colorado in snow. Warmer temps ahead
-
15 new movies you'll want to stream this holiday season, from 'Emilia Perez' to 'Maria'
-
Board approves Arkansas site for planned 3,000-inmate prison despite objections
-
Rare Sephora Deals on Beauty Devices That Never Go On Sale: Dyson Airwrap, NuFace & More
-
Will Nico Collins play Week 10? Latest updates as Texans WR returns to practice