Dick’s Sporting Goods’ earnings plummeted by 23% due to a sharp rise in retail theft.

Dick’s ‌Sporting Goods experienced a significant setback in‍ the second quarter, with earnings plummeting by 23 percent. The company attributes this decline⁢ to a surge in organized retail theft and ⁣its ‌efforts ⁢to‌ sell off excess inventory.

This unexpected turn of events has forced the‌ company to revise its ⁣earnings guidance for the year, as it anticipates⁤ lower ‍annual profits due to ‌the ‌impact of retail theft on its business.

The ‌release of Dick’s Sporting Goods’ second-quarter‌ earnings report⁤ on Aug. 22 fell short ​of Wall Street investor expectations, causing a 24 ⁢percent drop in shares ⁢and erasing the⁣ 22⁣ percent year-to-date gains.

This marks the first time in nearly‍ 20 years that⁣ Dick’s has reported losses in ​a‍ press‌ release.

Dick’s Sees‌ Lower Results in Second Quarter

The company’s ‍net income for ⁣the second quarter, which ended on July ‌29, was ‍$244 ‌million, or $2.82 per share, compared to $318.5 million, or $3.25 per share, in the previous‌ year.

Analysts surveyed ​by Refinitiv had expected earnings per share of $3.81, but the actual figure came in at $2.82. Similarly,⁤ revenue fell ⁣slightly ‌short of earlier estimates, reaching $3.22 billion ‍instead ‍of $3.24 ⁣billion. However, ⁤sales did increase from $3.11 billion to $3.22 billion compared ⁢to⁤ the previous year.

The company experienced a ⁢1.8 percent ​growth in second-quarter comparable-store sales, driven by a 2.8 percent increase in transactions and continued market share gains.

“While we posted ⁣another double-digit EBT [earnings before taxes] margin, our [second-quarter] ⁤ profitability was short of our expectations due in large part to the impact of elevated inventory ⁣shrink, an increasingly serious issue impacting many⁢ retailers,” ⁢said Dick’s CEO and president, ‌Lauren Hobart.

Despite the setback, Hobart expressed confidence in the company’s long-term growth ‍opportunities, citing positive sales in⁢ July. She stated, “The‌ enthusiasm we have for our business and ⁣the confidence we have in‌ our long-term growth‍ opportunities have never been ‍stronger.”

Massive Losses⁤ From Theft Behind Lower Earnings

The‌ company ⁢attributes a significant portion of its poor earnings ⁣growth to shrink, which includes losses from theft, fraud, and damaged inventory.

Retail chains across the United States have been grappling with a rise in theft over the past three years. In fact, retailers have experienced a 26.5 ⁢percent increase in large-scale ⁣theft ​compared⁣ to ‍the previous year. ‍Target⁤ alone‍ is projected to lose half ‌a⁣ billion dollars due to ⁤theft.

Dick’s ⁣Sporting Goods ​is the first major national retailer to primarily attribute its financial struggles to theft. Retailers nationwide are struggling to combat both petty shoplifting and organized sprees of large-scale theft that have resulted in empty shelves.

In May,⁣ Target warned investors about the rising theft in its‍ stores, projecting a loss of half⁤ a billion dollars.‌ Dick’s CEO, Lauren Hobart, acknowledged the ‌impact of theft on the‌ company’s shrink⁤ and⁣ emphasized the need for ‍decisive action to address the ⁣issue.

The company’s ⁣Chief Financial Officer, Mr. Gupta, revealed that a⁢ physical inventory count conducted ⁢before the‍ school season uncovered the extent of the elevated shrink ​levels. The unexpected increase in shrink significantly impacted the second-quarter results.

Despite the⁤ challenges‍ posed‌ by theft, ‍Dick’s⁢ remains committed to finding solutions. The company is ⁢considering ⁣revisiting ⁣its inventory recording methods⁣ to better ⁤track and address‍ the issue.

Company Also Faces Losses From​ Excess Inventory

However, the⁣ company’s losses⁤ were not solely attributed to theft. The clearance⁣ of excess ⁢store inventories‍ through aggressive markdowns also contributed to the decline in​ earnings.