Dick’s Sporting Goods (DKS) has announced plans to close several Foot Locker outlets following its $2.4 billion U.S. acquisition of the retail chain.
News of the store closures was announced along with Dick Sporting Goods’ third-quarter financial results.
The sporting goods retailer reported earnings per share (EPS) of $2.78 U.S., which beat the $2.71 U.S. that had been forecast on Wall Street.
Revenue in the quarter totaled $4.17 billion U.S., which was ahead of the $3.59 billion U.S. consensus expectation among analysts.
Management said comparable sales increased 5.7% during Q3, well ahead of the 3.6% that analysts had anticipated.
In terms of guidance, Dick’s now expects comparable sales to rise between 3.5% and 4% this year, up from its previous range of 2% to 3.5%.
The revenue outlook is ahead of Wall Street expectations for 3.6% growth.
Dick’s also expects full-year earnings per share to be between $14.25 U.S. and $14.55 U.S., up from a previous forecast of $13.90 U.S. to $14.50 U.S.
The profit outlook is in line with analyst expectations of $14.44 U.S. per share.
It’s unclear how many Foot Locker locations Dick’s plans to close, but they are part of a larger restructuring it’s implementing to ensure that Foot Locker isn’t a drag on future profits.
But due to the closures, Foot Locker’s comparable sales are expected to be down in the mid- to high-single digits in the current quarter with margins expected to fall between 10% and 15%.
Long-term, Dick’s acquisition of Foot Locker is expected to give it a competitive edge in the wholesale sneaker market, most importantly for Nike (NKE) products.
DKS stock has declined about 10% this year to trade at $206.31 U.S. per share.
