Dick's Sporting Goods (DKS) Q2 2025 earnings call transcript

28-Aug-2025 Dick’s Sporting Goods, Inc. (DKS) Q2 2025 Earnings Call Dick’s Sporting Goods, Inc. (DKS) Q2 2025 Earnings Call 28-Aug-2025 CORPORATE PARTICIPANTS Nathaniel A. Gilch Senior Director-Investor Relations, Dick's Sporting Goods, Inc. Edward W. Stack Executive Chairman, Dick's Sporting Goods, Inc. Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. Navdeep Gupta Executive Vice President & Chief Financial Officer, Dick's Sporting Goods, Inc. OTHER PARTICIPANTS Brian Nagel Analyst, Oppenheimer & Co. , Inc. Simeon Ari Gutman Analyst, Morgan Stanley & Co. LLC Adrienne Yih Analyst, Barclays Capital, Inc. Robert F. OhmesAnalyst, BofA Securities, Inc. Michael Lasser Analyst, UBS Securities LLC Michael Baker Analyst, D. A. Davidson & Co. Christopher Horvers Analyst, JPMorgan Securities LLC Joseph Isaac Feldman Analyst, Telsey Advisory Group LLC John Kernan Analyst, TD Cowen Joseph Civello Analyst, Truist Securities, Inc. Paul Lejuez Analyst, Citigroup Global Markets, Inc. Justin E. Kleber Analyst, Robert W. Baird & Co. , Inc. Eric Cohen Analyst, Gordon Haskett Research Advisors Dick’s Sporting Goods, Inc. (DKS) Q2 2025 Earnings Call 28-Aug-2025 MANAGEMENT DISCUSSION SECTION Operator: Well, ladies and gentlemen, thank you for standing by.

Nathaniel A. GilchSenior Director-Investor Relations, Dick's Sporting Goods, Inc. Good morning, everyone, and thank you for joining us to discuss our second quarter 2025 results. On today's call will be Ed Stack, our Executive Chairman; Lauren Hobart, our President and Chief Executive Officer; and Navdeep Gupta, our Chief Financial Officer. A playback of today's call will be archived at our Investor Relations website located at investors. dicks. com for approximately 12 months. As a reminder, we will be making forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Any such statements should be considered in conjunction with cautionary statements in our earnings release and risk factor discussions in our filings with the SEC, including our last annual report on Form 10-K and our most recent quarterly report on Form 10-Q, as well as cautionary statements made during this call.

We assume no obligation to update any of these forward-looking statements or information. Please refer to our Investor Relations website to find the reconciliation of our non-GAAP financial measures referenced in today's call.

Finally, for future scheduling purposes, we are tentatively planning to publish our third quarter 2025 earnings results on November 25, 2025. With that, I will now turn the call over to Ed.

Edward W. StackExecutive Chairman, Dick's Sporting Goods, Inc. Thanks, Nate. Good morning, everyone. As announced earlier this morning, we delivered a very strong second quarter with comps of 5%. Our momentum continues to build, which is a clear reflection of the strength of our long-term strategies and investments. We're really in a great lane. The convergence of sport and culture has never been stronger, and we're seeing tremendous momentum and opportunity across our industry. As a company rooted in sport, DICK'S is uniquely positioned to seize this opportunity. We have a deep understanding of our athletes, and we execute with precision from our differentiated on-trend product assortment to our industry- leading omni-channel athlete experience. We're operating from a position of strength.

Before Lauren and Navdeep take you through the Q2 details, I'd like to provide a brief update on our pending acquisition of Foot Locker. Dick’s Sporting Goods, Inc. (DKS) Q2 2025 Earnings Call 28-Aug-2025 As previously shared, Foot Locker shareholders approved the transaction. We've also received all regulatory approvals, and we anticipate the transaction will close on September 8. We remain very enthusiastic about the strategic benefits from the deal. By bringing together DICK'S and Foot Locker's iconic brands, we will create a global leader in the sports retail industry to serve a broader set of consumers, strengthen our partnerships with the world's leading sports brands, and meaningfully expand our total addressable market. We look forward to providing more details on our plans for Foot Locker on our third quarter call.

I will now turn the call over to Lauren, who will go over our Q2 results and full-year outlook.

Lauren R. HobartPresident, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. Thank you, Ed, and good morning, everyone. We are very pleased with our strong Q2 results. As Ed said, our performance continues to show how well our long-term strategies are working, the strength and resilience of our operating model, and our team's consistent execution. Our sustained momentum is powered by our compelling omni-channel athlete experience, differentiated product assortment, best-in-class teammate experience, and our ability to create deep engagement with the DICK'S brand. Today, we're raising our full-year outlook. This updated guidance reflects our strong Q2 results and the ongoing confidence we have in our business, grounded in our team's execution of the four strategic pillars I just mentioned.

We now expect comp sales growth for the year to be in the range of 2% to 3.5%, and EPS to be in the range of $13.90 to $14.50. Now moving to our results. Our Q2 comps increased 5% with growth in average ticket and transactions. These strong comps were on top of a 4.5% increase last year and a 2% increase in 2023, and we continued to gain market share from online-only and from omni-channel retailers. Our second quarter gross margin expanded over 30 basis points, and we delivered non-GAAP EPS of $4.38. As we continue to execute against our strategic pillars, we're seeing strong momentum across the three growth areas that we are focusing on for this year.

First, we're making great progress repositioning our real estate and store portfolio. This past quarter, we opened one additional House of Sport location. And in Q3, we expect to open 13 more, marking our highest number of House of Sport openings within a single quarter. We continue to expect to open approximately 16 total House of Sport locations this year, which will bring our year-end total to approximately 35. We also added four new Field House locations in Q2. We expect to open 6 more in Q3 and are on track to open approximately 15 total for the year, taking us to approximately 42 by year end. These investments are driving powerful financial results, strong engagement with our athletes, brand partners, and communities.

And importantly, they're laying the foundation for sustainable, long-term, profitable growth. Second, supported by our differentiated product access and flagship vertical brands, our focus on driving growth in key categories is fueling significant athlete excitement and demand across our portfolio. In fact, during Q2, more athletes purchased from us, they purchased more frequently, and they spent more each trip compared to the same period last year. We remain encouraged by the strong product pipeline from our brand partners. Dick’s Sporting Goods, Inc. (DKS) Q2 2025 Earnings Call 28-Aug-2025 And third, our multibillion-dollar, highly profitable e-commerce business is standing out as a growth driver, once again growing faster this quarter than the company overall. Our app has been instrumental in creating a strong launch culture across key categories, driving energy and sell-through.

At the same time, our stores are executing at a very high level. They're building an athlete-centric service and selling culture and really bringing our differentiated product assortment to life for our athletes.

Lastly, as part of our broader digital strategy, we're harnessing the power of our athlete data and remain very enthusiastic about the long-term growth opportunities we see with GameChanger and the DICK'S Media Network. I want to close with a brief comment on how enthusiastic I am about the future growth potential of the DICK'S and Golf Galaxy businesses, as well as the compelling range of opportunities that we see in our acquisition of Foot Locker. We've talked a lot about the strategic and financial benefits of this transaction, and as we continue on a path to closing, we remain confident in those benefits and expect a really exciting future for both companies. Before concluding, I'd like to thank all of our teammates across the company for their outstanding efforts and continued commitment to DICK'S Sporting Goods.

Their passion and hard work are the driving force behind these results. With that, I'll turn it over to Navdeep to share more detail on our financial results and 2025 outlook. Navdeep, over to you.

Navdeep GuptaExecutive Vice President & Chief Financial Officer, Dick's Sporting Goods, Inc. Thank you, Lauren, and good morning, everyone. Let's begin with a brief review of our second quarter results. We are very pleased to deliver a consolidated sales increase of 5% to $3.65 billion. As Lauren said, our Q2 comps increased 5%, and we continued to gain market share from online-only and from omni-channel retailers. This growth represents a 9.5% two-year comp stack and 11.5% three-year comp stack. These strong comps were driven by a 4.1% increase in average ticket and a 0.9% increase in transactions. We saw broad-based strength across our key categories. Gross profit for the second quarter remained strong at $1.35 billion or 37.06% of net sales and increased 33 basis points from last year.

This increase was driven by a higher merchandise margin and leverage on occupancy costs due to higher sales. On a non-GAAP basis, SG&A expenses increased 9.9% to $864 million and deleveraged 105 basis points compared to last year's non-GAAP results. As we discussed previously, this year-over-year deleverage was expected and driven by strategic investments digitally, in-store, and in marketing to better position ourselves over the long term. Pre-opening expenses were $12.3 million, an increase of $3.4 million compared to the prior year. Non-GAAP operating income was $475 million or 13.02% of net sales. This compares to non-GAAP operating income of $480.5 million or 13.83% of net sales in Q2 of 2024. Non-GAAP EBT was $472.6 million or 12.96% of net sales.

This compares to EBT of $482.3 million or 13.89% of net sales in Q2 of last year. In total, we delivered non-GAAP earnings per diluted share of $4.38. This compares to earnings per diluted share of $4.37 last year. On a GAAP basis, our earnings per diluted shares was $4.71. This includes non-cash gains Dick’s Sporting Goods, Inc. (DKS) Q2 2025 Earnings Call 28-Aug-2025 from non-operating investment in Foot Locker stock as well as merger and integration and financing costs related to the pending Foot Locker acquisition. For additional details on this, you can refer to the non-GAAP reconciliation tables of our press release that we issued this morning. Now, looking to our balance sheet, we ended Q2 with approximately $1.2 billion of cash and cash equivalent and no borrowings on our new $2 billion unsecured credit facility.

Our quarter end inventory levels increased 7.1% compared to Q2 of last year. As we enter into Q3, we believe our inventory is well-positioned to continue fueling our sales momentum.

Turning to our second quarter capital allocation. Net capital expenditures were $213 million and we paid $96 million in quarterly dividends. Now, moving to our outlook for 2025, which does not include acquisition-related costs, investment gains, or results from previously announced Foot Locker acquisition. As Lauren said, we are raising our expectation for comp sales and EPS. Our updated guidance reflects our strong Q2 performance and includes the expected impact from all tariffs currently in effect. Our guidance balances our confidence in the outcomes we are driving through our strategic initiatives and our operational strength against the ongoing, complex, and dynamic macroeconomic environment. We now expect full year comp sales growth in the range of 2% to 3.5%, compared to our prior expectation of 1% to 3% growth.

Consolidated sales are expected to be in the range of $13.75 billion to $13.95 billion, compared to our prior expectation of $13.6 billion to $13.9 billion. Driven by the quality of our assortment, we expect to drive gross margin expansion for the full year. We anticipate this expansion to be offset by SG&A deleverage as we are making strategic investments digitally, in store, and in marketing to better position ourselves for the long term. We continue to expect full year pre-opening expenses to be in the range of $65 million to $75 million. For the back half, we expect most of the pre-opening expenses to be concentrated in third quarter to support our 13 planned House of Sport and 6 Field House openings.

We continue to expect operating margins to be approximately 11.1% at midpoint. And at the high end of our expectations, we continue to expect to drive approximately 10 basis points of operating margin expansion. We now expect EPS in the range of $13.90 to $14.50, compared to our prior expectation of $13.80 to $14.40. As contemplated in our 2025 annual plan, we expect EPS to decline year-over-year in Q3 and increase in fourth quarter. Our earnings guidance was based on approximately 81 million average diluted shares outstanding and an effective tax rate of approximately 25%, compared to our prior expectation of approximately 24%. We continue to expect net capital expenditures of approximately $1 billion for the full year.

In closing, we are very pleased with our second quarter performance and the success of our long-term strategies. We remain very enthusiastic about the future of our business. This concludes our prepared remarks. Thank you for your interest in the DICK'S Sporting Goods. Operator, you may now open the line for questions.

Edward W. Stack Executive Chairman, Dick's Sporting Goods, Inc. A Thank you. Brian Nagel Analyst, Oppenheimer & Co. , Inc. Q I want to focus – [ph] instead of comment (00:15:51) on the DICK'S business, I want to focus on your pending acquisition in Foot Locker.

Edward W. Stack Executive Chairman, Dick's Sporting Goods, Inc. A Sure, Brian. Thank you.

Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A Actually, it looks like we may have lost Ed. Ed is actually in Europe, visiting some Foot Locker stores. Ed, are you there? Edward W. Stack Executive Chairman, Dick's Sporting Goods, Inc. A I hear you.

Can you hear me?

Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A No, we can't hear you. So, I will answer the question, Brian, and we'll work to get Ed's line restored. Ed, try one more time.

Edward W. Stack Executive Chairman, Dick's Sporting Goods, Inc. A Hear me?

Dick’s Sporting Goods, Inc. (DKS) Q2 2025 Earnings Call 28-Aug-2025 Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A No. Okay. So, thank you for the question. We really appreciate it. We see a tremendous opportunity with the Foot Locker business. We think this acquisition is going to be great for our consumers, our employees, our vendor partners, and also our shareholders. And the more time that we spend in our – with the Foot Locker team, both at our various headquarters and also in the stores with the Stripers, we are increasingly optimistic. And this is a team that really, really wants to win. What we plan to do, we are going to be working with our brand partners who are very excited about the opportunity to turn the business around, who are already sharing really strong insights.

We plan to invest in stores, we plan to invest in marketing, and we know that there are opportunities from a core merchandising standpoint. We're excited about apparel opportunities, and also bringing in a new assortment of products. So, across the board, we're very excited. Brian, I would say, we haven't closed the transaction yet. So, we are on September 8, moving toward doing that. And we will be back to you at our Q3 call with more specific details. But rest assured, we are very excited about the opportunity that we see in Foot Locker, and we are moving forward with a lot of enthusiasm.

Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A Thanks, Brian. We actually – we come off a quarter where we had 5% comps, and we're feeling really strong about all aspects of our business. Our long-term strategies are clearly working. Everything from the differentiated assortment that we have in the stores; our athlete experience, which we continue to invest in and reinvent in our stores; our online business; our app; but also in our reinvention of our product – of our portfolio of stores with our House of Sport and our Field House concept. So, I would point to the execution of our team, which has just been absolutely extraordinary. And their passion to win and their passion to produce results are really driving so much of our business.

As you look to the back half, we just did take up our top line and bottom line guidance, and that includes all of the impact of tariffs that we see. We did also just come off of a Q2 where our gross margin expanded, and we are navigating very well through an uncertain tariff environment. We've seen some sporadic price increases, but they are surgical and not across the board, and we're seeing our consumer obviously with a 5% comp. We're seeing the consumer respond really well. So, I'm very pleased that we are navigating well and still increasing our guidance and our gross margin for the back half.

Dick’s Sporting Goods, Inc. (DKS) Q2 2025 Earnings Call 28-Aug-2025 Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A Thank you.

Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A Yes. Thanks for the question, Simeon. We are not seeing any signs of slowdown with the consumer. In fact, one of the most exciting things about the quarter that we just delivered is the broad-based nature of the growth that we saw. We saw growth across all of our key segments. So, footwear, apparel, team sports, and golf, all doing really, really well. So, we do not see signs that the consumer is slowing. I would say, if anything, if you look to the assortment and the partnership that we have with our key brands, there is a trend toward innovation and newness in the products that are coming down the pike that are keeping the consumer really, really energized.

And they're responding very well to some of that technicity that's all in the product, both, again, hard lines and soft lines. So, we're seeing with bat launches, as well as apparel, as well as technical running, and the new running constructs that are out in the market. So, we think we're going to be navigating really well. We did just take our comp assumptions up for the back half. So, we are confident we can deliver that guidance.

Simeon, now just to build on what Lauren said, as you can imagine, the overall macroeconomic situation continues to remain dynamic, and that's the reason we continue to have in the range of an outlook that we have provided. But the things that we control, the core strategy, the assortment that we have access to, how well our inventory is positioned for the back half, we're really excited about all the opportunities that we continue to see ahead of us.

Dick’s Sporting Goods, Inc. (DKS) Q2 2025 Earnings Call 28-Aug-2025 Navdeep Gupta Executive Vice President & Chief Financial Officer, Dick's Sporting Goods, Inc. A Yeah. So, Simeon, let me – I think – so, there are three questions there. And I'll try to answer all three of them, and let me know if I missed something. So, the first, starting with Q2, like Lauren indicated, we were very pleased with the business here in Q2. Not only did we deliver a 5% comp, 9.5% two-year stack, but we delivered that on strong gross margin and merch margin expansion. So, our margins expanded 33 basis points, gross margins, and the merch margin expanded by 18 basis points. The drivers of that expanded merch margin continues to be consistent with what we have been talking about, about the quality of our assortment, the favorable mix that we continue to see from the core categories that are performing exceedingly well, as well as some of the early benefits that we have started to see from GameChanger and DICK'S Media Network.

And as we look to the back half, those three drivers will continue to remain – to be the drivers of our expanded gross margin outlook that we have shared on a year-over-year basis for the full year as well. In terms of the leverage point, so we're not sharing the long-term rubric here. But the way we have consistently said in the past, we believe that we can deliver a kind of a leverage on the SG&A at a low single digits comp. And that will be balanced between the margin outlook that we share, as well as the SG&A investment opportunities. But what we have been saying is, you can continue to look to us to drive consistently the strong top line and the strong bottom line momentum on the top line and EPS basis.

We'll continue to balance that between the opportunity that we see to create long-term differentiating opportunities like GameChanger, DICK'S Media Network, some of the work that our technology team has been doing in personalization, RFID. These are the differentiating capabilities that we are investing in that are driving sustained top line results, as well as strong profitability growth.

Navdeep Gupta Executive Vice President & Chief Financial Officer, Dick's Sporting Goods, Inc. A Thank you, Adrienne.

Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A Okay. Adrienne, thanks for the question. So, starting with what we're seeing in the industry and overall, we are seeing, as I just mentioned, a growth across all aspects of our business. So, that's footwear and that's apparel, and it's also team sports, as well as golf. So, we are finding growth in all of those. And you're right. As we become a – Foot Locker becomes part of the DICK'S family, we are an even more important brand to our wholesale partners, and that's part of the thesis. And the strategy is that we want to be involved in that long term – just long-term insight sharing, trend identification, product development.

So, we're very, very, focused on that. I don't know why I would say the balance of power would shift. I think what I would say is, our strategic relationship is very, very strong. And as the consumer continues to vote with – into the categories that we serve, be it all – be it high – the high heat footwear, as well as the bats and all the newness and the innovation that are coming down the pike. we feel terrific. We are rooted in sport. Our brand partners are rooted in sport. And we are – yeah, we're very optimistic about the future. Navdeep, I'll turn it to you.

Navdeep Gupta Executive Vice President & Chief Financial Officer, Dick's Sporting Goods, Inc. A Yeah. Adrienne, in terms of just drivers of the business, when you look at the comp, almost 1% of our comp came from the increase in transaction, and the remaining came from the overall basket increase. As Lauren indicated, we are seeing really strong affinity towards the innovation, as well as newness that is available in the products. And so that continues to be a big driver of the overall basket selling. And the work that our teams are doing in stores and helping sell and much more comprehensive basket, and so that means more units for transaction, that is also a driver, in addition to the product mix as well.

So, it's combination of all three of those things that we are seeing a continued improvement in our basket selling, as well as continued increase in transactions. In terms of the outlook for 3Q and 4Q, we typically don't break that out between – at that level of detail. So, we – I won't do that right now. And then as far as the outlook for the spring season, we will share that in the new course of time. As you can imagine, we are working very closely with the national brand partners and our own vertical brands to come up with a plan for 2026.

Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A Dick’s Sporting Goods, Inc. (DKS) Q2 2025 Earnings Call 28-Aug-2025 Thank you.

Thanks for the question. We are seeing strength with our consumer across the board. Our consumer is responding to our assortment. They're responding to the athlete experience. And we're seeing growth. We've been saying that we are outperforming in e-commerce, but we're seeing incredibly strong growth in all of our channels. So, it's not a shift as much as it is just overall consumer demand. We feel terrific about back-to-school. A lot of those sales are in Q3, and so we will be reporting on back-to-school when we come back to you in a few months. But between the amazing footwear that we have, the apparel, the backpacks, the lunchboxes, we have a terrific, terrific assortment. And promotional activity hasn't been an enormous factor for us.

We are navigating, as we always do. We're surgical. And the differentiated assortment that we have enables us to really lean into newness and innovation rather than a deep promotional cycle. So, I just would point to, I think our consumer across the board is doing so well, and you see that in the fact that we're not seeing trade-down from best to better or better to good. We're seeing growth across all income demographics. We have products for absolutely every consumer, and that's taking us into the back half.

Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A Thank you.

So, A, what is the most realistic expectation you anticipate now for your gross margin?

So, we still expect the gross margin to expand on a full year basis, and that has been shared as part of the updated outlook. As you can imagine, we are balancing several puts and takes as we navigate the landscape that we have in front of us between tariffs, our consistent focus on keeping our inventory really vibrant, because that inventory and the assortment is what is driving this consistent top line momentum that we have been delivering six straight quarters of over 4% comp. And you can also imagine the pricing and the promotion landscapes always remains very dynamic. So, we're trying to balance all of those different drivers as we look to the back half and balance that against our SG&A expectations from an investment perspective, because what we have also reiterated is that at the high end of the guidance, we still expect our operating margins to expand by 10 basis points, which is very consistent with what we had been talking as we thought about the full year.

So, really excited about the overall outlook we have shared: expanded top line expectation, expanded bottom line expectation, and still continue to expect gross margin expansion driven by the new drivers like GameChanger, DMN, but predominantly driven by the differentiated product assortment and balancing that against the SG&A investment opportunities we see. Michael Lasser Analyst, UBS Securities LLC Q Thank you for that. My follow-up question is, given the performance of your stock price, it's likely that you'll have to issue more shares now for the Foot Locker deal than what was maybe previously anticipated. So, how does that impact the potential flow-through that you're going to get from the deal in the first year after you acquire it? And would you still expect it to be accretive, given those additional shares you may have to deliver?

Navdeep Gupta Executive Vice President & Chief Financial Officer, Dick's Sporting Goods, Inc. A Yeah. Michael, great question. As you know that the shareholder election is on the 29. So, based on the consideration mix between the stock and cash, that will determine the level of accretion. And all of that, we are working through right now. Once we are on the other side of September 8, we'll be having our own detailed evaluation of the opportunities that we see with the core business. We talked again about the synergies and the confidence we have of $100 million to $125 million of synergies, and balancing that against the consideration mix. So, good question. Much more to come as we share the outlook as part of the Q3 call.

Navdeep Gupta Executive Vice President & Chief Financial Officer, Dick's Sporting Goods, Inc. A Thanks, Michael.

Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A Yeah. Thanks, Mike. Great question. GameChanger continues to do incredibly well, highly profitable, fast-growing software-as-a-subscription business. And in Q2, that continued. So, we saw 7.4 million unique active users in Q2. And on average, 5.5 million monthly active users were in the app. That's up 16% year-over-year. We're still on track for the growth numbers. We hit over 100 million last year, and we're on track for almost a 50% revenue growth on that. And so everything is going great with GameChanger. I would say one of the more exciting things that's happening also is that the DICK'S and the GameChanger businesses are working closer than ever on things like what we're calling a live experience called Bat Lab, where we're rating with premium, top, top athletes, and rating all of the new equipment for the year.

GameChanger and DICK'S were working on sharing data so that we can be more personalized. And GameChanger is a huge piece of our DICK'S Media Network, where we have actually live sports, where we can tap into people who are fully engaged in the moment while they're watching their kids, their grandkids play sports in a highly personalized way. So, GameChanger is doing fantastic.

Navdeep Gupta Executive Vice President & Chief Financial Officer, Dick's Sporting Goods, Inc. A Yeah. Mike, I'll just build on what Lauren said. I think – so we want to give a shout-out to the GameChanger team as they have been driving some of the most sustained and differentiated results in overall youth sports industry. And in Q1, hopefully you all got a chance to see the first time that we actually did a brand advertising for GameChanger because we feel the brand awareness is another unique opportunity that we see with the GameChanger business. Couldn't be more excited about the results the team is driving and how sustained and differentiated those results are.

Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A No. Too soon for us to comment on all of that. We are not changing the synergy numbers. We had said $100 million to $125 million in synergies, and that is – we're still very much going after that. We will be diving in once we get past the transaction on September 8 and be back to you in Q3. So, you are right.

Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A Yes.

Navdeep Gupta Executive Vice President & Chief Financial Officer, Dick's Sporting Goods, Inc. A Yeah. Chris, all are great questions. As you can imagine, there are multiple moving pieces when you are trying to understand the accretion dilution. Share count just happens to be one of them. Like Lauren indicated, synergy expectation. The timing of synergy would be another driver. The core business performance would be another driver. So, there is definitely more work to be done. But what we continue to remain confident is that this would be a accretive. But level of accretion will be depending based on the consideration mix. But that is the work that is ahead of us. Once we are past September 8, we'll be working very closely as a collective company to refine those expectations and share a deeper outlook as part of our Q3 and Q4 call.

Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A Thanks, Chris. Yeah. We are balancing the incredible momentum that we have in the business with just some appropriate caution about the uncertain macroeconomic environment. We've now included tariffs and everything we know about tariffs. And keep in mind, we're also lapping second half comps that are aggressive, 50 basis points stronger than the first half. So, we are really confident. We never guide to the highest possible outcome, but we have a tremendous momentum and are just appropriately cautious as we guide.

Dick’s Sporting Goods, Inc. (DKS) Q2 2025 Earnings Call 28-Aug-2025 Navdeep Gupta Executive Vice President & Chief Financial Officer, Dick's Sporting Goods, Inc. A Yeah. So, Chris, just as a reminder, what Lauren is alluding to is the fact that we actually delivered a 6.4% comp in Q4. So, that has also been contemplated as we gave the second half outlook. And like you rightly pointed out, we raised our second half outlook versus our prior guidance based on the strength of the core strategies, strength of the assortment that we have, as well as how well our teams are executing.

Navdeep Gupta Executive Vice President & Chief Financial Officer, Dick's Sporting Goods, Inc. A Thanks, Chris.

Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A Yeah. Thank you. We are seeing, as I said, growth across the entire business. And we are absolutely seeing consumers lean into innovation and technical aspects of the product and performance. So, you see it in the running construct from Nike, for example, doing really well. You see it, as I've mentioned, in some of the hard line categories. We're actually having tremendous excitement in the license category, and we've got small tests going on with trading cards that are doing very well. There is excitement. I think it speaks to the fact that the consumer and sport and culture are intertwined in ways that have never been this powerful.

And the consumer is very, very interested in newness that is the lifestyle of sport and the performance of sport, and we're carrying those products. So, I could point to the entire portfolio and say there are areas of incredible excitement and things that we're very excited about coming down the pike.

Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A Dick’s Sporting Goods, Inc. (DKS) Q2 2025 Earnings Call 28-Aug-2025 Yeah.

Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A Yeah. That's a great question. As you know, we have been investing in SG&A for some time now. And a lot of that is in marketing, but also technical tools that are really enabling our business. And we've been investing in things like the digital businesses to make our e-commerce and the GameChanger business even stronger. We're investing in the marketing stack so that we can even be more personalized. We're investing in tools for our teammates so that they use RFID to help find products around the store and to be able to send products faster to athletes. And we have AI embedded in many of these tools.

We've got search function, supercharged search on e-comm that is based on AI enablement, and as is teammates scheduling and product and merch assortment planning. So, early innings with AI, but there are – the tools that we are building are powered by them, and will continue to be more so. And this is a very significant part of how we're driving productivity and also empowering our teammates to spend more time with athletes in a sales and service mode rather than on tasking.

Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A Thank you.

Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A Yes. Yes. Well, as I've said, the footwear business continues to be very, very strong. There have been some selective price increases, but we and our brand partners are very surgical about when, where, and how much we can bring in some minor price increases to offset some of the tariffs. But we are always conscious of what the consumer will be able to afford and the profitability of the business. So, with the 5% comp, we have not seen the consumer having any issue with the price increases – the small level of price increases that have gone in, and we're seeing incredible demand for footwear.

Navdeep Gupta Executive Vice President & Chief Financial Officer, Dick's Sporting Goods, Inc. A Yeah. John, minimal impact from tariffs in Q2. There is small impact in the second half that has been contemplated into our outlook that we shared for the margin, as well as the full year profitability. We'll share much more around the FY 2026 in due course. But as you can imagine, this is an active body of work between us, with our manufacturers, with the national brand partners, and also looking at the pricing and promotion opportunity that we see. So, plenty of work that is still ahead of us. Feel great about the outlook and how our teams have been managing through this situation.

Navdeep Gupta Executive Vice President & Chief Financial Officer, Dick's Sporting Goods, Inc. A Thank you.

Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A Thank you.

Navdeep Gupta Executive Vice President & Chief Financial Officer, Dick's Sporting Goods, Inc. A Yeah. Joe, we don't break that level of details out, so I'll not do that right now. As you can imagine, we've continued to remain really, really enthusiastic about the performance that we are seeing from House of Sport stores, the Field House Stores, not just from a traffic perspective, but overall basket building opportunity. The work that our teams are doing in fully servicing these athletes that are walking into these locations, the experiences that we are able to provide. So, traffic probably is a very – a niche way to look at it, and we are looking at the overall aggregate level of performance coming out of these stores.

And as we have shared, we are Dick’s Sporting Goods, Inc. (DKS) Q2 2025 Earnings Call 28-Aug-2025 very excited about the top line momentum, as well as the bottom line momentum. More importantly, how well these are resonating with our brand partners is a very differentiating capability that we are excited about. In terms of the dynamics in... Joseph Civello Analyst, Truist Securities, Inc. Q Right.

Navdeep Gupta Executive Vice President & Chief Financial Officer, Dick's Sporting Goods, Inc. A Yeah. Tickets and transaction, we won't guide at that level. As you can consistently see over the last several quarters, our growth in comp sales has been consistently coming from more transactions as well as ticket. And that goes back to continue to being the case where DICK's is seen as a right destination for sport and culture, and that's what gets us really excited as we look to the balance of the year this year.

Just wanted to ask about the recent retail media investments and how we should think about that business scaling, I guess, through this year, and then maybe how we're thinking about it in 2026 versus 2025. Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A Yeah. We are thrilled with our DICK's Media Network. We have been building it for some time now. It is getting increasingly more powerful as we leverage the automation of the data and the reporting. Our brand partners and non-endemic partners are very excited. But we are still in early innings. So, we haven't broken out exactly how much we are expecting from the retail media network this year, nor next year, but I would look to this as being a long-term growth profitability driver, margin driver and revenue.

We're very, very pleased. We have a unique network here where we have access to youth sports and actually live sports if you look at the GameChanger platform, and it's something that is being recognized as being very unique in the industry.

Navdeep Gupta Executive Vice President & Chief Financial Officer, Dick's Sporting Goods, Inc. A Yeah. Joe, I'll actually connect your last question and this question on DMN, because there is a very unique opportunity that exists at the intersection of Field House and House of Sport with DICK'S Media Network as well, where we are able to activate the brands, both endemic and non-endemic, and really, really showcase those brands in front of the athletes while they are visiting House of Sport and Field House. So, that's what the unique opportunity that we see between GameChanger, the retail location, as well as some of the online platforms that we have.

Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A Great, Paul. Thanks for the question. I'll start off. Our vertical brands continue to do very, very well. And I specifically would point to our flagship apparel brands, DSG, CALIA, and VRST doing very well and meeting a consumer need in our stores for product that is not being covered elsewhere. It's really – it's a great incremental opportunity. Our vertical brands also still have 700 to 900 basis points higher margin than the average national brand. And we are the number one or two vendor in a lot of key categories for ourselves: accessories, athletic apparel, fitness, golf, team sports. So, across the board, vertical brands is doing very well.

I'll turn it to Navdeep to answer the second part of your question.

Navdeep Gupta Executive Vice President & Chief Financial Officer, Dick's Sporting Goods, Inc. A Yeah. So, Paul, just to build on the tariff question as well as pricing, as you can imagine, we have seen some of the brand partners. As we manage our business, they are managing theirs, and there is a little bit of an increase in prices that we have seen both on the vertical brands side as well as from the national brand partners. However, consistent with what we have been doing for a few years now as well as if you look at in the prior cycles, we take a very surgical and a flexible approach to pricing. We are consistently working very closely with our manufacturers and our brand partners, trying to make the right decision that balances the needs of that athlete so that we continue to drive the top line momentum, at the same time, balance against the profitability of that aspect of the business.

And this all has been contemplated in the updated outlook that we provided for the second half.

Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A Dick’s Sporting Goods, Inc. (DKS) Q2 2025 Earnings Call 28-Aug-2025 Justin, it's too soon for us to talk about that. We have to immerse into the business. We haven't closed yet. We don't know. We think there is a lot of merchandising opportunities. We think there's apparel opportunities over in Foot Locker. But vertical brands, way too soon to tell.

Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A Yes. We did take up the second half assumptions modestly. Navdeep, do you want to give some specifics?

Navdeep Gupta Executive Vice President & Chief Financial Officer, Dick's Sporting Goods, Inc. A Yeah. Absolutely. Justin, like Lauren indicated, we flowed through the beat on Q2 against our own internal expectations, and we have modestly raised our second half comp expectations modestly also for the back half.

Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A Thank you.

Navdeep Gupta Executive Vice President & Chief Financial Officer, Dick's Sporting Goods, Inc. A Thanks, Justin.

Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A Thanks, Eric. Footwear is the engine that pulls the train. We always have said the outfit starts with the footwear. Footwear is key for performance. It's key for sport lifestyle. As sport and culture continue to intertwine, footwear is Dick’s Sporting Goods, Inc. (DKS) Q2 2025 Earnings Call 28-Aug-2025 the key product. So, we are quite confident. We're serving different consumers, both at DICK's and at the Foot Locker banners. And we are going to be delivering them what they need in a category that we think is very important, both long term – short term and long term.

Navdeep Gupta Executive Vice President & Chief Financial Officer, Dick's Sporting Goods, Inc. A Yeah. Eric, we are very happy with the performance that we are seeing. Actually excited also about the fact that even some of the smaller markets are able to support the House of Sport locations very, very productively. So, that actually expands the opportunities for us to think broadly about the House of Sport strategy as we look to the next few years.

Lauren R. Hobart President, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. A Thank you.

Lauren R. HobartPresident, Chief Executive Officer & Director, Dick's Sporting Goods, Inc. Thank you, all, for your time today and for your interest in DICK'S Sporting Goods. And a shout-out to our teams across the country, and a welcome to our new Foot Locker teammates. We're excited to get going after September 8.

Thank you, all, very much.