Current:Home > BackDick's Sporting Goods stock plummets after earnings miss blamed on retail theft-InfoLens
Dick's Sporting Goods stock plummets after earnings miss blamed on retail theft
View Date:2024-12-23 17:38:38
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! (74224)
Related
- Why have wildfires been erupting across the East Coast this fall?
- Endangered North Atlantic right whale found dead off Virginia was killed in collision with ship, NOAA says
- What to know about the $30 million cash heist in Los Angeles
- Get Deals on Calista Hair Stylers, 60% Off Lilly Pulitzer, Extra Discounts on Madewell Sale Items & More
- Human head washes ashore on Florida beach, police investigating: reports
- Suki Waterhouse confirms birth of first baby with Robert Pattinson, shares first photo
- Missing 1923 Actor Cole Brings Plenty Found Dead in Woods at 27
- 3 retired Philadelphia detectives to stand trial in perjury case stemming from 2016 exoneration
- Kirk Herbstreit berates LSU fans throwing trash vs Alabama: 'Enough is enough, clowns'
- Horoscopes Today, April 4, 2024
Ranking
- Trump’s economic agenda for his second term is clouding the outlook for mortgage rates
- $1.23 billion lottery jackpot is Powerball's 4th largest ever: When is the next drawing?
- Lawsuit naming Sean ‘Diddy’ Combs as co-defendant alleges his son sexually assaulted woman on yacht
- Black student group at private Missouri college rallies after report of students using racial slurs
- NBC's hospital sitcom 'St. Denis Medical' might heal you with laughter: Review
- Tourist from Minnesota who was killed by an elephant in Zambia was an adventurer, family says
- Emergency operations plan ensures ‘a great day’ for Monday’s eclipse, Ohio Gov. Mike DeWine says
- A sweltering summer may be on the way. Will Americans be able to afford AC to keep cool?
Recommendation
-
GreenBox Systems will spend $144 million to build an automated warehouse in Georgia
-
Earthquake rattles NYC and beyond: One of the largest East Coast quakes in the last century
-
Sen. Jacky Rosen places $14 million ad reservation in key Nevada Senate race
-
Small Illinois village preps for second total eclipse in 7 years
-
Pentagon secrets leaker Jack Teixeira set to be sentenced, could get up to 17 years in prison
-
Foul play suspected in the disappearance of two Kansas women whose vehicle was found in Oklahoma
-
Nickelodeon Host Marc Summers Says He Walked Off Quiet on Set After “Bait and Switch” Was Pulled
-
What causes earthquakes? The science behind why seismic events like today's New Jersey shakeup happen