DKS Q1 Earnings Call: Acquisition Strategy and Category Growth Dominate Focus

Sporting goods retailer Dick’s Sporting Goods (NYSE:DKS) fell short of the market’s revenue expectations in Q1 CY2025, but sales rose 5.2% year on year to $3.17 billion. Its GAAP profit of $3.24 per share decreased from $3.30 in the same quarter last year.

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StockStory’s Take

Dick's Sporting Goods' Q1 results showed continued momentum from key product categories and omni-channel investments. Management cited transaction growth and higher average ticket for positive comparable sales, noting the company saw growth across all income demographics and in segments like footwear, apparel, and team sports. CEO Lauren Hobart emphasized Dick’s differentiated product assortment and upgraded in-store experiences as central to these outcomes. She highlighted that “more athletes purchased from us, they purchased more frequently, and they spent more each trip,” marking five consecutive quarters of over 4% comp growth. Strong sell-through on launches and performance from vertical brands DSG, CALIA, and VRST also contributed.

Looking ahead, Dick’s leadership maintains a cautious stance amid macroeconomic uncertainty but reaffirmed their full-year outlook. Hobart signaled guidance incorporates all known tariffs, explaining, “We are able to affirm our guidance... and 75 basis points of gross margin improvement.” Key growth priorities include repositioning real estate, focusing on key categories, and accelerating e-commerce. Investments in technology and marketing will bolster their digital business, with long-term potential seen in Game Changer and Dick’s Media Network. CFO Navdeep Gupta stated the company is prepared for volatility: “We have navigated similar environments before, and we are confident we have the team, tools, and relationships to manage through this.”

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to differentiated inventory, continued market share gains, and targeted investments in store and digital experiences, while also highlighting the proposed Foot Locker acquisition as a long-term strategic move.

• Foot Locker acquisition announced: Executive Chairman Ed Stack detailed the rationale for acquiring Foot Locker, citing the creation of a global sports retail leader and operational synergies. The deal is expected to be accretive to Dick’s EPS in the first full fiscal year post-close, expanding combined reach to over 3,200 stores.
• Category strength and product launches: CEO Lauren Hobart credited growth in footwear, apparel, and team sports, with “strong sell-through on launches” and premium experiences. Vertical brands (DSG, CALIA, VRST) outperformed, boosting merchandise margin.
• Omni-channel and e-commerce focus: E-commerce growth outpaced total company growth, driven by tech and marketing investments improving online engagement. Hobart highlighted in-app capabilities and digital launches, especially in “diamond sport.”
• Game Changer and Media Network scaling: Game Changer saw a 28% YoY increase in unique active users. Management views this and Dick’s Media Network as key long-term growth drivers for customer engagement and advertising.
• Tariff management and pricing strategy: All known tariffs are factored into guidance. Management described advanced, real-time pricing capabilities. CFO Navdeep Gupta confirmed “no impact from tariffs in Q1,” with ongoing partner collaboration to mitigate future pressures.

Drivers of Future Performance

Dick’s outlook for the rest of the year hinges on category momentum, real estate expansion, ongoing investments, and the integration of recent acquisitions amid tariff and consumer headwinds.

• Store network and real estate: Expansion of House of Sport and Fieldhouse concepts continues with new openings planned for 2025 and 2026, supporting modest square footage growth and enhanced athlete experiences.
• Digital and platform investments: Dick’s is accelerating investments in technology, marketing, and proprietary platforms (Game Changer, Dick’s Media Network) to drive online sales, boost customer engagement, and capture advertising revenue, countering potential macroeconomic uncertainty.
• Tariffs and cost management: All effective tariffs are included in the outlook. Management focuses on pricing flexibility and direct sourcing diversification for cost pressures. Strategic SG&A investments will moderate in H2 as prior high investment levels are lapped.

Catalysts in Upcoming Quarters

Key areas to monitor in upcoming quarters include: (1) the pace of new House of Sport and Fieldhouse openings and their impact on traffic and sales, (2) the rollout and adoption of digital initiatives like Game Changer and the Dick’s Media Network, and (3) initial progress toward realizing synergies from the Foot Locker acquisition. Execution on cost control and inventory management will also be important markers of success.

Dick's currently trades at a forward P/E ratio of 11.9×. In the wake of earnings, is it a buy or sell? Find out in our full research report (it’s free).

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