Dick's Sporting Goods (DKS) -) shares plunged lower Tuesday after the biggest U.S. sporting-goods retailer reported its fiscal-second-quarter earnings were hammered by elevated levels of theft, prompting the company to slash its full-year forecast.
Dick's posted adjusted earnings of $2.82 a share for the three months ended in July, down 23% from the year-earlier period. The result missed Wall Street forecasts by nearly $1 a share.
Group revenue rose 3.7% from a year earlier to around $3.244 billion, narrowly topping analysts' estimates of a $3.236 billion tally.
Looking into the fiscal second half, which ends in February, Dick's sees diluted earnings in the region of $11.33 to $12.13 a share, down from its prior forecast of $12.90 to $13.80. Comparable sales are seen flat with to up 2% from 2022 levels.
Dick's CEO: Sales strong, theft 'increasingly serious'
"We are pleased with our strong sales performance for the second quarter, led by robust transaction growth and continued market-share gains," Chief Executive Lauren Hobart said. "Within the quarter, sales accelerated significantly in July, and we remain confident in delivering positive [comparable] sales for 2023."
"While we posted another double-digit [earnings before taxes] margin, our Q2 profitability was short of our expectations due in large part to the impact of elevated inventory shrink, an increasingly serious issue impacting many retailers," she added, using the industry term for theft.
"Despite moderating our 2023 EPS outlook, the enthusiasm we have for our business and the confidence we have in our long-term growth opportunities have never been stronger."
Dick's shares were marked nearly 24.1% lower in early afternoon trading following the earnings release, shedding just under $3 billion in market value, to change hands at $111.70 each.
Target: 'Unacceptable Amount of Theft'
The Coraopolis, Pa.-based group joined a growing chorus of companies -- including Target (TGT) -) and Walmart (WMT) -) -- that suggest the surge in inventory theft has developed into a major problem for the nation's retailers.
Last week, Target CEO Brian Cornell said the retailer "continues to face an unacceptable amount of retail theft and organized retail crime," with incidents more than doubling (up 120%) over the first five months from a year earlier.
Cornell said in May that theft from its U.S. stores would likely cost $500 million more than it did a year earlier.
Walgreen's (WBA) -), for its part, has taken an extreme step, launching a prototype store that locks up all but certain essentials. Customers order what they need on kiosks, and store staff brings them the items.
The National Retail Federation defines "organized retail crime" as "the large-scale theft of retail merchandise with the intent to resell the items for financial gain." The trade group said members suffered more than $94 billion in losses over the 2021 financial year as a result.
Senate lawmakers earlier this year introduced a bill to target so-called flash mobs that carry out large-scale theft. Lawmakers' move aims to "improve our federal response to organized retail crime and establishes new tools to recover goods and illicit proceeds, and deter future attacks on American retailers," according to co-sponsor Chuck Grassley (R-Iowa).
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