Dick's Sporting shares slide as costs, inventory shrink slam annual profit outlook

Hibbett

22/08/2023 14:39

Aug 22 (Reuters) - Dick's Sporting Goods shares  DKS.N 
slumped as much as 24.5% on Tuesday as the footwear retailer
slashed its full-year profit target after missing expectations
for the second quarter.
    The company said its quarterly profit was short of its own
expectations due to an increase in inventory shrink, or retail
theft, that led to weaker margins.
    The retailer now expects annual profit per share in the
range of $11.33 to $12.13, below the prior forecast of
$12.90-$13.80.
    While Dick's Sporting did not specify whether the theft was
organized retail crime, the company like many other retailers in
the United States including big box retailer Target  TGT.N  has
seen profit and margins suffer due to inventory shrink.
    Dick's quarterly gross margin fell to 34.42% from 36.03% a
year earlier.
    Retailers including Dick's Sporting Goods have been trying
to find ways to cut costs as margins take a hit from soaring
supply chain and labor expenses.
    The company on Monday cut jobs at its customer support
center and said would incur a severance expense of around $20
million in the current quarter. 
    It also expects to take a one-time charge between $25
million to $50 million in the year as it streamlines its
operations.
    On an adjusted basis, the company expects to earn $11.50 per
share to $12.30 per share for the full year. Analysts were
expecting the company to earn $13.50 per share, according to
Refinitiv data.
    Dick's shares were trading at $111.14 and dragged shares of
rival retailers. 
    Shares of Hibbett  HIBB.O  were down about 5%, Nike  NKE.N 
down 1%, and Lululemon Athletica  LULU.O  down 3% and Under
Armour  UAA.N  was down about 2%, while Foot Locker  FL.N  was
down about 2%.
   

 (Reporting by Juveria Tabassum; editing by Eileen Soreng)
 ((Juveria.Tabassum@thomsonreuters.com;))