- Dick's Sporting Goods plunged 25% on Tuesday after the company revealed weak second-quarter earnings.
- The retailer said it saw a decline in profits due to increased shrinkage, which is code for retail theft.
- "Organized retail crime and theft in general is an increasingly serious issue impacting many retailers," Dick's CEO Lauren Hobart said.
The $4 has spread $4 to big-box stores like $4, and now to sporting retailer $4
The company specifically blamed an increase in retail theft, also called "shrink" or "shrinkage" in the retail industry, as reason why it saw $4 And it doesn't expect the problem to end anytime soon, as it warned investors that profits could be weighed down for the remainder of the year due to the uptick in retail thefts.
"Organized retail crime and theft in general is an increasingly serious issue impacting many retailers," Dick's CEO $4 on Tuesday. "The impact of theft on our shrink was meaningful to both our Q2 results and our go forward expectations for the balance of the year."
Earlier this year, Target said $4 Videos of mobs of people crashing and dashing retail stores with stolen goods has proliferated the internet in recent years, and any present security guards are usually overwhelmed with the amount of people participating in the blatant theft.
"We think we're doing the best we can to try to curtail it [theft] with the security that we have in the stores, working with local authorities," Dick's Sporting Goods Chairman $4
The company reported adjusted earnings per share of $2.82 in the second-quarter, missing analyst estimates of $3.81, and reported revenue of $3.22 billion, representing year-over-year growth of 3.6%. For the full year, the company revised its profit guidance lower to a range of $11.50 to $12.30, which was well below analyst expectations.
The mention of theft hurting its business was a first for Dick's Sporting Goods, and it took analysts by surprise.
"We note the company's commentary on shrink being an issue in the quarter is new for Dick's as it was not flagged as a meaningful headwind last quarter," $4 analyst Kate McShane said in a Tuesday note.
Dick's Sporting Goods was a darling retail stock that has seen strong performance since the COVID-19 pandemic began in March 2020. The stock was up 992% from its March 2020 low through yesterday, before the earnings report.
Part of the strength in Dick's Sporting Goods stock in recent years was driven by an increase in business as consumers got out of their house and more active as the pandemic subsided. A string of earnings beats from the company put it in Wall Street's good fortune. But that has changed after today's report.
"This is Dick's first hiccup in a number of quarters and puts them in the penalty box," $4 analyst Will Gaertner said in a note on Tuesday.