ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (including information incorporated herein by reference) contains, and future oral and written statements of the Company and its management may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified as those that may predict, forecast, indicate or imply future results or performance and by forward-looking words such as “believe”, “anticipate”, “expect”, “estimate”, “predict”, “intend”, “plan”, “project”, “goal”, “will”, “will be”, “will continue”, “will result”, “could”, “may”, “might” or any variations of such words or other words with similar meanings. Any statements about our plans, objectives, expectations, strategies, beliefs, or future performance or events constitute forward-looking statements. These statements are subject to known and unknown risks, uncertainties, assumptions, estimates, and other important factors that change over time, many of which may be beyond our control. Our future performance and actual results may differ materially from those expressed or implied in such forward-looking statements. Forward-looking statements should not be relied upon as a prediction of actual results. Forward-looking statements include statements regarding, among other things, the benefits of the Transaction, future financial and operating results and our plans, objectives, expectations, intentions, growth strategies and culture and other statements that are not historical facts.
Factors that could cause the Company’s actual results, performance or achievements to differ materially from those expressed or implied in any forward-looking statements include, but are not limited to:
▪Macroeconomic conditions, including inflation and/or prolonged inflationary pressures, elevated interest rates and recessionary pressures, adverse changes in consumer disposable income, consumer confidence and perception of global economic conditions, including as a result of new and shifting economic policies, geopolitical conflicts (including the conflicts in Ukraine and the Middle East) and the threat or outbreak of further conflicts, war, terrorism or public unrest; wage and unemployment levels; consumer debt and the cost of basic necessities and other goods; pandemics, epidemics, contagious disease outbreaks and other public health concerns and the effectiveness of measures to mitigate such impact;
▪The dependence of our business on consumer discretionary spending, the impact of a decrease in discretionary spending due to inflation or otherwise on our business, and our ability to predict or effectively react to changes in consumer demand or shopping patterns;
▪Intense competition in the sporting goods industry and in retail, including competition for talent and the level of competitive promotional activity and technological innovation;
▪That our strategic plans and initiatives may initially result in a negative impact on our financial results, or that such plans and initiatives may not achieve the desired results within the anticipated time frame or at all;
▪Our ability to grow our DICK’S House of Sport, DICK’S Field House and Golf Galaxy Performance Center stores and execute our overall real estate strategy for DICK’S and Foot Locker, including the projected range of capital expenditures and associated costs;
▪Fluctuations in product costs and availability due to tariffs, currency exchange rate fluctuations, inflationary pressures, fuel price uncertainty, supply chain constraints, increases in commodity prices, labor shortages and other factors;
▪Organized retail crime and our ability to effectively manage inventory shrink;
▪Disruptions to our eCommerce platform, including interruptions, delays or downtime caused by high volumes of users or transactions, deficiencies in design or implementation, or platform enhancements;
▪Vendors continuing to sell or increasingly selling their products directly to customers or through broadened or alternative distribution channels;
▪Our dependence on our suppliers, distributors and manufacturers to provide us with sufficient quantities of quality products in a timely fashion;
▪That our investments in omni-channel growth, DICK’S Media Network, or other business transformation initiatives may not produce the anticipated benefits within the expected time frame or at all;
▪The impact of an increase to corporate tax rates or other changes in tax laws and regulations;
▪Risks associated with our brick-and-mortar retail store model, including our ability to optimize our store portfolio and our distribution and fulfillment network;
▪Unauthorized use or disclosure of sensitive or confidential athlete, teammate, vendor or Company information;
▪Risks associated with our vertical brand offerings, including product safety and labeling, product liability and product recalls, and specialty concept stores;
▪Our athlete experiences and associated costs, innovation, liability and competition associated with our specialty stores and vertical brands;
▪Disruptions or other problems with our information systems, including GameChanger, our sports technology platform;
▪Risks and costs relating to changing laws, regulations, interpretations and other guidance affecting our business, including consumer products; firearms and ammunition; tax; cash repatriation; foreign trade and tariff structures; labor; data protection; privacy; eCommerce (including AI and machine learning); and environmental, social, and governance issues;
▪Compliance and litigation risks for which we may not have sufficient insurance or other coverage;
▪Our ability to secure and protect our trademarks and other intellectual property and defend claims of intellectual property infringement;
▪Our ability to protect the reputation of our Company and our brands, which may include managing negative reactions from our customers, stockholders or vendors regarding changes to our policies or positions related to social and political issues;
▪Our ability to attract, train, engage and retain key teammates and to adequately respond to teammate organizing efforts;
▪The impact of wage increases on our financial results, including those related to supply chain disruptions and labor challenges;
▪Disruptions to our Customer Support Center and/or distribution and fulfillment network (including supply chain delays), including our ability to optimize our distribution and fulfillment networks to efficiently deliver merchandise to our stores;
▪Weather-related risks and seasonal influences and the overall seasonality of certain categories of our business;
▪The effects of the performance of professional sports teams within our core regions of operations;
▪Our ability to meet market expectations;
▪Our pursuit of strategic alliances, investments or acquisitions, including the timing and costs of such investments and acquisitions as well as the potential failure of an alliance, investment or acquisition to produce the anticipated results or inability to successfully integrate acquired companies;
▪We are controlled by the holders of our Class B common stock, which includes our Executive Chairman and his relatives, whose interests may differ from those of our other stockholders;
▪Obligations and other provisions related to our indebtedness, including the senior notes due 2029 (the “2029 Notes”), the senior notes due 2032 (the “2032 Notes”) and senior notes due 2052 (the “2052 Notes” and together with the 2029 Notes and the 2032 Notes, collectively, the “Senior Notes”);
▪Our charter’s current anti-takeover provisions, which could prevent or delay a change in control of the Company;
▪The issuance of quarterly cash dividends and our repurchase activity, if any, pursuant to our share repurchase programs;
▪The availability of adequate capital;
▪Our future results of operations and financial condition; and
▪Risks related to the Transaction, including the ability to promptly and effectively integrate the businesses of DICK’S Sporting Goods and Foot Locker, the dilution caused by the issuance of shares of our common stock as part of the Transaction, the risk that the benefits from the Transaction, including anticipated cost synergies, may not be fully realized or may take longer to realize than expected, potential adverse reactions of DICK’S Sporting Goods’ or Foot Locker’s customers, employees, or other business partners and/or the risk of litigation, and the diversion of Company management’s attention and time from ongoing business operations and opportunities due to integration efforts.
The foregoing and additional risk factors are described in more detail in Item 1A. “Risk Factors” of this Quarterly Report and other reports or filings filed or furnished by us with the Securities and Exchange Commission (the “SEC”), including our Annual Report on Form 10-K for the year ended February 1, 2025, filed on March 27, 2025 (our “2024 Annual Report”) and our Quarterly Reports on Form 10-Q filed on June 9, 2025 and August 28, 2025. In addition, we operate in a highly competitive and rapidly changing environment; therefore, new risk factors can arise, and it is not possible for management to predict all such risk factors, nor to assess the impact of all such risk factors on our business or the extent to which any individual risk factor, or combination of risk factors, may cause results to differ materially from those contained in any forward-looking statement. The forward-looking statements included in this Quarterly Report on Form 10-Q are made as of the date hereof. We do not assume any obligation and do not intend to update or revise any forward-looking statements whether as a result of new information, future developments or otherwise except as may be required by securities laws.
NON-GAAP FINANCIAL MEASURES
In this Quarterly Report on Form 10-Q, the Company has reported forward-looking information for certain financial measures that differ from what is reported under generally accepted accounting principles ("GAAP"). These non-GAAP financial measures include earnings per diluted share for the DICK’S Business and gross margin and operating margin for the Foot Locker Business, which management believes provides investors with useful supplemental information to evaluate the Company’s ongoing operations and to compare with past and future periods. Management also uses these non-GAAP measures internally for forecasting, budgeting, and measuring its operating performance. These measures should be viewed as supplementing, and not as an alternative or substitute for, the Company's financial measures prepared in accordance with GAAP. The methods used by the Company to calculate its non-GAAP financial measures may differ significantly from methods used by other companies to compute similar measures. As a result, any non-GAAP financial measures presented herein may not be comparable to similar measures provided by other companies.
Information reconciling certain forward-looking GAAP measures to non-GAAP measures related to: (i) the DICK'S Business full year 2025 outlook and guidance, including earnings per diluted share; and (ii) the Foot Locker Business fourth quarter fiscal 2025 outlook and guidance, including gross margin and operating margin, in each case presented herein on a non-GAAP basis due to the exclusion of investment gains, merger and integration costs and costs associated with actions to address unproductive assets related to the Foot Locker acquisition, is not available without unreasonable effort due to high variability, complexity and uncertainty involved in forecasting and quantifying certain amounts with respect to and resulting from the acquisition that are necessary for such reconciliations. For those reasons, we are unable to address the probable significance of the unavailable information, which could have a potentially unpredictable, and potentially significant, impact on our future GAAP financial results.
OVERVIEW
We are a leading omni-channel sporting goods retailer offering an extensive assortment of authentic, high-quality sports equipment, apparel, footwear and accessories. Our banners include DICK’S Sporting Goods, Golf Galaxy, Public Lands and Going Going Gone! stores in addition to the experiential retail concepts DICK’S House of Sport and Golf Galaxy Performance Center. As owner and operator of Foot Locker, including Foot Locker, Kids Foot Locker, Champs Sports, WSS and atmos, we serve the global sneaker community across North America, Europe, Asia, and Australia, plus a licensed store presence in Europe, the Middle East and Asia. We also own and operate GameChanger, a youth sports mobile platform for live streaming, scheduling, communications and scorekeeping. When used in this Quarterly Report on Form 10-Q, unless the context otherwise requires or specifies, any reference to “year” is to our fiscal year.
When we refer to the “DICK’S Business” in this Quarterly Report on Form 10-Q (this “10-Q Report”), we are describing the results of existing DICK’S Sporting Goods operations, encompassing the DICK’S Sporting Goods, Golf Galaxy, Going Going Gone! and Public Lands banners, as well as GameChanger. When we refer to the “Foot Locker Business” we are describing the results of our newly acquired operations, including the Foot Locker, Kids Foot Locker, Champs Sports, WSS and atmos banners.
Through our strategic pillars of athlete experience, differentiated product, brand engagement and teammate experience, we have transformed our business to drive sustained profitable growth. As part of our strategy, we have meaningfully improved our merchandise assortment through our vertical brands and strong relationships with our key brand partners, which provide access to highly differentiated products. We have also enhanced our store selling culture and service model and incorporated additional experiential elements and technology into our stores to further engage our athletes. We continue to innovate our omni-channel athlete experience through our DICK’S House of Sport stores, Golf Galaxy Performance Centers and our DICK’S Field House stores, and believe that a key driver of our future omni-channel growth will include repositioning our store portfolio to grow these stores. In addition to these strategies and foundational improvements, consumers have also made what we believe will be lasting lifestyle changes in recent years, prioritizing sport and maintaining healthy, active lifestyles, which has increased demand for our products.
We believe there is strength and momentum in the sports industry in the United States and expect this trend to continue in the near term, with continued excitement around women’s sports, the 2026 World Cup and the 2028 Olympics. We believe that the convergence of sport and culture has never been stronger and that we are well-positioned for this opportunity. From this position of strength, we plan to continue to make investments in digital and in-store opportunities to further grow our market share through repositioning our store portfolio, driving continued growth across our key categories and accelerating our eCommerce channel.
Acquisition of Foot Locker
On September 8, 2025, we completed the acquisition of Foot Locker, a leading footwear and apparel retailer, for total purchase consideration of $2.5 billion, pursuant to the Merger Agreement dated May 15, 2025. The acquisition of Foot Locker is a transformative step towards creating a global platform that serves a broader set of athletes through differentiated iconic concepts and robust digital experiences, which we believe will deepen our brand partnerships as a combined company in a way that will redefine sports retail. Foot Locker delivered sales of $8 billion in fiscal 2024 and encompasses a portfolio of brands including Foot Locker, Kids Foot Locker, Champs Sports, WSS and atmos. Refer to Part I. Item 1. Financial Statements, Note 2 – Acquisition of Foot Locker for further information.
The Foot Locker Business contributed net sales of $930.9 million and net loss of $45.1 million during the third quarter of 2025. These results reflect the operations from the September 8, 2025 acquisition date through the end of the third quarter, which does not include the peak back-to-school selling season in August. Pro forma comparable sales for the Foot Locker Business, which assume Foot Locker had been acquired at the beginning of the following respective periods, decreased 4.7% and 3.2% for the 13 and 39 weeks ended November 1, 2025, respectively. These declines in Foot Locker’s proforma comparable sales include Foot Locker International comparable sales decreases of 10.2% and 9.9% for the 13 and 39 weeks ended November 1, 2025, respectively, which represent operations of the Foot Locker Business in Europe and Asia Pacific. Additionally, we incurred $154.4 million of pre-tax acquisition-related costs during the year-to-date period, consisting of $146.6 million in merger and integration costs, which include legal and regulatory fees, other professional services, employee retention and severance costs related to the acquisition, as well as $7.9 million of interest expense related to bridge financing fees.
In the time subsequent to the closing date, we believe we have assembled a world-class leadership team to lead the Foot Locker Business and initiated a strategic review of the business to identify underperforming assets across its inventory assortment and store portfolio. We expect to take future actions to optimize the inventory assortment and store portfolio of the Foot Locker Business, as well as incur other merger and integration charges, which will result in estimated pre-tax charges of $500 million to $750 million. Additionally, we expect the acquisition to deliver between $100 million to $125 million in cost synergies in the medium-term, to be primarily achieved through procurement and direct sourcing efficiencies.
Business Environment
The macroeconomic environment in which we operate remains dynamic as a result of numerous factors, including ongoing elevated interest rates, inflationary pressures and changes to international trade policies from taxation and tariffs, all of which could impact pricing, consumer discretionary spending behavior and the promotional landscape in which we operate.
Despite this increasingly complex and dynamic macroeconomic environment, we continue to drive comparable sales growth in our DICK’S Business through execution of our core strategies, and with our strong vendor relationships and operational strength, we believe we are well-positioned for long-term growth.
Overview of 2025 Outlook for our DICK’S Business:
As a result of our strong performance, confidence in our strategic initiatives, and our operational strength against the macroeconomic environment, we have raised our full year 2025 outlook for the DICK’s Business and expect comparable sales growth for the year to be in the range of 3.5% to 4.0% and earnings per diluted share to be in the range of $14.25 to $14.55, which does not include investment gains, merger and integration costs or the dilutive effect of the 9.6 million shares issued as part of the Foot Locker acquisition.
•Driven by the quality of our assortment, we continue to expect to drive gross margin expansion for fiscal 2025.
•We anticipate selling, general and administrative expenses to deleverage in fiscal 2025, driven by strategic investments digitally, in-store and in marketing to better position our business for long-term growth based upon the strength of our business. We expect this deleverage to continue to moderate in the fourth quarter.
Overview of Fourth Quarter 2025 Outlook for our Foot Locker Business:
As a result of our anticipated actions to optimize Foot Locker’s inventory, we expect gross margin rates as a percentage of sales to decline 1,000 to 1,500 basis points for the fourth quarter of fiscal 2025 compared to Foot Locker’s reported results in the same period last year, and pro forma comparable sales to decrease mid to high single digits as compared to the same period last year. We expect operating income to be slightly negative, which excludes the impact of strategic actions to address unproductive assets, including the optimization of inventory and the closure of underperforming stores.
Recent Tax Legislation
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”), which includes several measures affecting corporations and other business entities, was signed into law. These measures include modifications and permanent extension of certain expiring provisions of the 2017 Tax Cuts and Jobs Act (“TCJA”). We anticipate that the OBBBA will reduce our federal income tax liability and related tax payments for the current and future years, but will not have a significant impact to our annual effective tax rate for fiscal 2025.
The Company’s current expectations described above are forward-looking statements. Please see the section entitled “Forward-Looking Statements” in this Form 10-Q for information regarding important factors that may cause the Company’s actual results to differ from those currently projected and/or otherwise materially affect the Company.
How We Evaluate Our Operations
Senior management focuses on certain key indicators to monitor our performance, including:
▪Comparable sales performance – Our management considers comparable sales, which includes digital revenue, to be an important indicator of our current performance. Comparable sales results are important to leverage our costs, which include occupancy costs, store payroll and other store expenses. Comparable sales also have a direct impact on our total net sales, net income, cash and working capital. A store is included in the comparable sales calculation during the fiscal period that it commences its 14th full month of operations. Relocated stores are included in the comparable sales calculation from the open date of the original location. Stores that were permanently closed during the applicable period have been excluded from comparable sales results. Our digital revenue includes all eCommerce sales, including omni-channel transactions which are fulfilled by our stores, GameChanger subscriptions as well as revenue from our DICK’S Media Network. The Foot Locker Business will be included in our comparable sales calculation beginning in the fourth quarter of fiscal 2026, which is when these stores will commence their 14th full month of operations following the date of acquisition. For further discussion of our comparable sales refer to the “Results of Operations and Other Selected Data” section herein.
▪Earnings before taxes and the related operating margin – Our management views operating margin and earnings before taxes as key indicators of our performance. The key drivers of earnings before taxes are comparable sales, gross profit and our ability to control selling, general and administrative expenses.
▪Cash flows from operating activities – Cash flow generation supports our general liquidity needs and funds capital expenditures for our omni-channel platform, which include investments in new and existing stores and our eCommerce channel, distribution and administrative facilities, continuous improvements to information technology tools, potential strategic acquisitions or investments that may arise from time-to-time and stockholder return initiatives, including cash dividends and share repurchases. We typically experience lower operating cash flows in our first and third fiscal quarters due to the timing of inventory purchases in advance of our peak selling periods and anticipated higher cash flows during our second and fourth fiscal quarters. For further discussion of our cash flows refer to the “Liquidity and Capital Resources” section herein.
▪Quality of merchandise offerings – To measure effectiveness of our merchandise offerings, we monitor sell-throughs, inventory turns, gross margins and markdown rates at the department and style level. This analysis helps us manage inventory levels to reduce working capital requirements and deliver optimal gross margins by improving merchandise flow and establishing appropriate price points to minimize markdowns.
▪Store productivity – To assess store-level performance, we monitor various indicators, including sales per square foot, store operating contribution margin and store cash flow.
CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES
As discussed in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s 2024 Annual Report, we consider our policies on inventory obsolescence, inventory shrink, goodwill and intangible assets, and impairment of long-lived assets to be the most critical in understanding the judgments that are involved in preparing our consolidated financial statements. There have been no significant changes to the Company’s critical accounting policies and estimates from those disclosed in the Company’s 2024 Annual Report, except resulting from the Foot Locker acquisition, as set forth below.
Business Combinations
In the third quarter of 2025, we completed the acquisition of Foot Locker which required application of the acquisition method of accounting. In accounting for business combinations, we allocate the purchase price of an acquired business to its identifiable assets and liabilities based on estimated fair values and the excess of the purchase price over the amount allocated to the assets and liabilities, if any, is recorded as goodwill. The determination of fair value requires significant judgment by management and involves the use of estimates and assumptions which we believe provides a reasonable basis for determining fair value. Accordingly, we engaged outside appraisal firms to assist in the fair value determination of long-lived assets, income taxes and any other significant assets or liabilities. We may adjust the preliminary purchase price allocation, as necessary, up to one year after the acquisition closing date as we obtain more information regarding asset valuations and liabilities assumed. Refer to Part I. Item 1. Financial Statements, Note 2 – Acquisition of Foot Locker for further information.
Valuation Allowance for Deferred Tax Assets
We record income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled. We evaluate the likelihood that our deferred tax assets will be realized based on expected future taxable income, which requires management to apply significant judgment . In making this assessment, we evaluate all available positive and negative evidence to determine whether it is more likely than not that our deferred tax assets will be recovered, including historical and projected operating results, the expected timing and source of future taxable income, the anticipated reversal of existing temporary differences, and the availability of prudent and feasible tax-planning strategies. Because this analysis involves forward-looking estimates and the weighting of evidence that varies across jurisdictions—particularly in regions with cumulative losses, limited visibility into near-term profitability, or recent acquisition-related changes—the determination of whether a valuation allowance is required involves significant judgment. When the weight of the evidence indicates that realization is not more likely than not, we record a valuation allowance.
In connection with the Foot Locker acquisition, we recorded valuation allowances in the amount of approximately $288.5 million as of the acquisition date. These allowances relate to deferred tax assets that are not more likely than not to be realized, primarily those associated with net operating loss carryforwards in certain foreign jurisdictions, along with other net deferred tax assets.
These valuation allowances may be released in future years when it becomes more likely than not that some portion or all of the deferred tax assets will be realized. We will periodically reassess available evidence including projected income, reversal of temporary differences, tax planning actions, and recent results of operations to determine whether positive evidence outweighs any other negative indicators. Any required release or addition of valuation allowance will be reflected as a tax benefit or expense in our Consolidated Statements of Income. Refer to Part I. Item 1. Financial Statements, Note 2 – Acquisition of Foot Locker and Note 10 – Income Taxes for further information.
RESULTS OF OPERATIONS AND OTHER SELECTED DATA
Executive Summary
▪Net sales increased 36.3% to $4.17 billion in the current quarter from $3.06 billion during the third quarter of 2024, which includes $930.9 million of net sales for the Foot Locker Business and a 5.7% increase in comparable sales for the DICK’S Business. Comparable sales increased 4.3% in the third quarter of 2024 compared to same period in the previous year.
▪In the current quarter, we reported net income of $75.2 million, or $0.86 per diluted share, compared to $227.8 million, or $2.75 per diluted share, during the third quarter of 2024.
▪Earnings per diluted share in the current quarter includes a $45.1 million net loss from the Foot Locker Business and the dilutive effect of 9.6 million shares of the Company’s common stock issued in connection with the Foot Locker acquisition, which together decreased earnings per diluted share by $0.71.
▪Net income also includes $121.1 million, net of tax, or $1.39 per diluted share, of acquisition-related costs, which includes merger and integration costs and bridge financing fees related to the Foot Locker acquisition, partially offset by non-cash gains from our investment in Foot Locker equity securities of $6.4 million and the favorable tax impact from previously recognized gains that are not taxable following completion of the acquisition, net of tax, or $0.18 per diluted share.
▪During the third quarter of 2025, we:
▪Declared and paid a quarterly cash dividend in the amount of $1.2125 per share of our common stock and Class B common stock.
▪As of November 1, 2025, we operated 3,230 store locations across the DICK’S and Foot Locker Businesses. The following tables summarize store activity in fiscal 2025:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Store Count Information | | Gross Square Footage (9) (10) (in millions) |
| Beginning Stores | | New Stores | | Closed Stores | | Relocated / Converted (8) | | Ending Stores | | Beginning | | Ending |
| | | | | |
| DICK’S | | | | | | | | | | | | | |
DICK’S (1) | 677 | | — | | (3) | | (25) | | 649 | | 36.3 | | 34.6 |
DICK’S Field House (1) | 27 | | 2 | | — | | 12 | | 41 | | 1.6 | | 2.3 |
| DICK’S House of Sport | 19 | | 3 | | — | | 13 | | 35 | | 2.2 | | 3.8 |
| Total DICK’S | 723 | | 5 | | (3) | | — | | 725 | | 40.1 | | 40.8 |
| | | | | | | | | | | | | |
| Other Specialty Concepts | | | | | | | | | | | | | |
Golf Galaxy (2) | 109 | | 3 | | — | | — | | 112 | | 2.4 | | 2.5 |
Going Going Gone! (3) | 50 | | 7 | | (6) | | — | | 51 | | 2.2 | | 2.3 |
| Other | 3 | | — | | — | | — | | 3 | | 0.1 | | 0.1 |
| Total Other Specialty Concepts | 162 | | 10 | | (6) | | — | | 166 | | 4.8 | | 4.9 |
| Total DICK’S Business | 885 | | 15 | | (9) | | — | | 891 | | 44.8 | | 45.7 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Store Count Information | | Gross Square Footage (4) (10) (in millions) |
| Beginning Stores (4) | | New Stores | | Closed Stores | | Relocated / Converted (8) | | Ending Stores | | Beginning | | Ending |
| | | | | |
| Foot Locker North America | 745 | | | 1 | | | (2) | | | — | | | 744 | | | 4.3 | | | 4.3 | |
| Champs Sports | 376 | | | — | | | — | | | — | | | 376 | | | 2.2 | | | 2.2 | |
| Kids Foot Locker | 365 | | | 1 | | | (3) | | | — | | | 363 | | | 1.3 | | | 1.3 | |
| WSS | 151 | | | — | | | — | | | — | | | 151 | | | 1.9 | | | 1.9 | |
Total North America (5) | 1,637 | | | 2 | | | (5) | | | — | | | 1,634 | | | 9.7 | | | 9.7 | |
| | | | | | | | | | | | | |
Foot Locker Europe (6) | 585 | | | 1 | | | (5) | | | — | | | 581 | | | 2.3 | | | 2.3 | |
| Foot Locker Asia Pacific | 95 | | | — | | | (1) | | | — | | | 94 | | | 0.4 | | | 0.4 | |
| atmos | 30 | | | — | | | — | | | — | | | 30 | | | — | | | — | |
| Total International | 710 | | 1 | | (6) | | | — | | | 705 | | 2.8 | | 2.7 |
| Total Owned Stores | 2,347 | | | 3 | | | (11) | | | — | | | 2,339 | | | 12.5 | | 12.5 |
Licensed stores (7) | 246 | | | 8 | | | (4) | | | — | | | 250 | | | 1.1 | | | 1.1 | |
| Total Foot Locker Business | 2,593 | | | 11 | | | (15) | | | — | | | 2,589 | | | 13.6 | | | 13.6 | |
(1)Beginning store count and square footage were updated to reflect one DICK’S Field House location that opened in fiscal 2024, which was previously reflected as a DICK’S store.
(2)As of November 1, 2025, includes 31 Golf Galaxy Performance Centers, with seven new openings during fiscal 2025, four of which were conversions of prior Golf Galaxy store locations.
(3)Beginning store count and square footage were updated to reflect Warehouse Sale locations as described in the Company’s Current Report on Form 8-K, filed with the SEC on March 11, 2025. As of February 2, 2025, beginning amounts now include 29 Warehouse Sale locations and 1.3 million of related square footage.
(4)Beginning stores and square footage reflect acquired Foot Locker stores as of September 8, 2025.
(5)Represents store locations in the United States and Canada and related square footage.
(6)Represents Foot Locker store locations in Europe, including five Kids Foot Locker stores and related square footage, as of November 1, 2025.
(7)Reflects licensed stores operating in the Middle East, Asia and Europe.
(8)Reflects stores converted between concept or prototype through store relocations or remodels as part of the Company's strategy to reposition its store portfolio. In addition to stores that converted between concepts, the Company relocated or remodeled seven stores during the current year period, consisting of four Golf Galaxy and three Going Going Gone! store locations.
(9)Includes square footage as of November 1, 2025 related to a Public Lands store closure as we plan to convert it into a DICK’S Field House store during early fiscal 2026.
(10)Columns may not recalculate due to rounding.
Consolidated Operating Results
The following table presents selected information from the unaudited Consolidated Statements of Income as a percentage of net sales and the changes in the percentage of net sales from the comparable 2024 period, and other data, and is provided to facilitate a further understanding of our business. Results herein for the 13 and 39 weeks ended November 1, 2025 reflect Foot Locker operations from the September 8, 2025 acquisition date through the end of the third quarter, which does not include the peak back-to-school selling season in August. This table should be read in conjunction with Part II, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q Report and the accompanying unaudited Consolidated Financial Statements and related notes thereto.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Basis Point Change in Percentage of Net Sales from Prior Year 2024-2025 (A) | | | | | | Basis Point Change in Percentage of Net Sales from Prior Year 2024-2025 (A) | |
| | 13 Weeks Ended | | | | 39 Weeks Ended | |
| | November 1, 2025 (A) | | November 2, 2024 | | | | November 1, 2025 (A) | | November 2, 2024 | |
Net sales (1) | 100.00 | % | | 100.00 | % | | | N/A | | 100.00 | % | | 100.00 | % | | N/A | |
Cost of goods sold, including occupancy and distribution costs (2) | 66.87 | | | 64.23 | | | | 264 | | 64.54 | | | 63.72 | | | 82 | |
| Gross profit | 33.13 | | | 35.77 | | | | (264) | | 35.46 | | | 36.28 | | | (82) | |
Selling, general and administrative expenses (3) | 26.84 | | | 25.86 | | | | 98 | | 25.32 | | | 24.41 | | | 91 | |
Merger and integration costs (4) | 3.32 | | | — | | | | 332 | | 1.33 | | | — | | | 133 | |
Pre-opening expenses (5) | 0.73 | | | 0.55 | | | | 18 | | 0.51 | | | 0.49 | | | 2 | |
| Income from operations | 2.23 | | | 9.36 | | | | (713) | | 8.29 | | | 11.38 | | | (309) | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Interest expense | 0.44 | | | 0.42 | | | | 2 | | 0.42 | | | 0.42 | | | — | |
| Other income | (0.71) | | | (0.78) | | | | 7 | | (0.88) | | | (0.79) | | | (9) | |
| Income before income taxes | 2.51 | | | 9.72 | | | | (721) | | 8.75 | | | 11.75 | | | (300) | |
| Provision for income taxes | 0.70 | | | 2.27 | | | | (157) | | 2.19 | | | 2.69 | | | (50) | |
| Net income | 1.80 | % | | 7.45 | % | | | (565) | | 6.56 | % | | 9.06 | % | | (250) | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Other data: | | | | | | | | | | | | | |
Comparable sales increase (6) | 5.7 | % | | 4.3 | % | | | | | 5.0 | % | | 4.7 | % | | | |
(A) Column does not add due to rounding.
(1)Revenue from retail sales is recognized at the point of sale, net of sales tax. Revenue from eCommerce sales, including vendor-direct sales arrangements, is recognized upon shipment of merchandise. A provision for anticipated merchandise returns is provided through a reduction of sales and cost of goods sold in the period that the related sales are recorded. Revenue from gift cards and returned merchandise credits (collectively the “cards”) is deferred and recognized upon the redemption of the cards. The cards have no expiration date. Subscription revenue from our GameChanger platform is recognized ratably over the subscription period with our customers.
(2)Cost of goods sold includes: the cost of merchandise and services (inclusive of vendor allowances, inventory shrinkage and inventory write-downs for the lower of cost or net realizable value and GameChanger costs); freight; distribution; shipping; and store occupancy costs. We define merchandise margin as net sales less the cost of merchandise and services sold. Store occupancy costs include rent, common area maintenance charges, real estate and other asset-based taxes, general maintenance, utilities, depreciation and certain insurance expenses.
(3)Selling, general and administrative expenses include payroll and fringe benefits for our stores, field support, administrative and our GameChanger platform, advertising, bank card charges, operating costs associated with our internal eCommerce platform, technology, other store expenses and all expenses associated with operating our customer support center.
(4)Merger and integration costs include legal and regulatory fees, other professional services, employee retention and severance costs related to the acquisition of Foot Locker.
(5)Pre-opening expenses, which consist primarily of rent, marketing (including grand opening advertising costs), payroll, recruiting and other store preparation costs are expensed as incurred. Rent is recognized within pre-opening expense from the date the Company takes possession of a site through the date of store opening and during periods when stores are closed for remodeling.
(6)Foot Locker will be included in the quarterly comparable store base beginning in the fourth quarter of fiscal 2026, which is when these stores will commence their 14th full month of operations following the date of acquisition. Additionally, beginning in fiscal 2025, we revised our method for calculating comparable sales to include Warehouse Sale locations beginning in the stores’ 14th full month of operations, similar to our other store locations. Prior year information has been revised to reflect this change for comparability purposes. See additional details as furnished in Exhibit 99.2 of the Company’s Current Report on Form 8-K, filed with the SEC on March 11, 2025.
13 Weeks Ended November 1, 2025 Compared to the 13 Weeks Ended November 2, 2024
Net Sales
Net sales increased 36.3% to $4,167.8 million in the current quarter from $3,057.2 million for the quarter ended November 2, 2024, which includes $930.9 million of Foot Locker net sales since the acquisition date and a $171.3 million, or 5.7%, increase in comparable sales for the DICK’S Business. The remaining increase in net sales was primarily attributable to new stores, including DICK’S Field House, DICK’S House of Sport and Golf Galaxy Performance Center locations. The increase in comparable sales for the DICK’S Business includes a 4.4% increase in sales per transaction and a 1.3% increase in transactions, and reflects growth in footwear, golf, athletic apparel, licensed merchandise and team sports, partially offset by declines in outdoor equipment.
Income from Operations
Income from operations decreased to $93.1 million in the current quarter compared to $286.0 million for the quarter ended November 2, 2024.
Gross profit increased to $1,380.9 million in the current quarter from $1,093.4 million for the quarter ended November 2, 2024, but decreased as a percentage of net sales by 264 basis points primarily due to lower gross margin in the Foot Locker Business, which reflects the impact of promotional actions taken to manage healthy inventory levels. Gross profit increased 27 basis points as a percentage of net sales for the DICK’S Business, driven primarily by the quality of our assortment and leverage on fixed occupancy costs. Occupancy costs, which after the cost of merchandise represents the largest item within our cost of goods sold, are generally fixed on a per store basis and fluctuate based on the number of stores that we operate.
Selling, general and administrative expenses increased 41.5% to $1,118.6 million in the current quarter from $790.6 million for the quarter ended November 2, 2024, and increased as a percentage of net sales by 98 basis points. The $328.0 million increase in current quarter expense includes $259.9 million from the Foot Locker Business since the acquisition date. The remaining increase is primarily due to strategic digital and in-store investments across technology and talent, partially offset by lower incentive compensation expenses compared to the quarter ended November 2, 2024. The current quarter also includes a $7.1 million expense increase related to changes in the investment values of our deferred compensation plans, which is fully offset in Other Income.
Merger and integration costs were $138.5 million in the current quarter ended November 1, 2025. These costs include legal and regulatory fees, other professional services, employee retention and severance costs related to the acquisition of Foot Locker.
Pre-opening expenses increased to $30.6 million in the current quarter from $16.8 million for the quarter ended November 2, 2024. Pre-opening expenses in any period typically fluctuate depending on the timing and number of new store openings and relocations. The current quarter includes pre-opening expenses to support the opening of 13 new DICK’S House of Sport stores compared to three in the prior year quarter.
Other Income
Other income totaled $29.6 million in the current quarter compared to $24.0 million for the prior year quarter. The $5.6 million increase was primarily driven by non-cash gains from an investment in Foot Locker equity securities prior to the acquisition of $6.4 million and a $7.1 million expense decrease compared to the prior year from changes in our deferred compensation plan investment values driven by performance in equity markets. The Company recognizes investment income or investment expense to reflect changes in deferred compensation plan investment values with an offsetting charge or reduction to selling, general and administrative costs for the same amount. Increases in other income were partially offset by a $8.5 million decrease in interest income primarily as a result of lower average cash and cash equivalents and lower average interest rates during the current quarter.
Income Taxes
Our effective tax rate increased to 28.0% in the current quarter from 23.3% for the quarter ended November 2, 2024. The effective tax rate for the current quarter was unfavorably impacted by losses in certain foreign jurisdictions where tax benefits cannot be recognized and certain non-deductible acquisition-related costs associated with the Foot Locker acquisition, partially offset by a $10.8 million favorable tax impact from the gains on the Company’s pre-existing Foot Locker investment that are not taxable following completion of the acquisition.
39 Weeks Ended November 1, 2025 Compared to the 39 Weeks Ended November 2, 2024
Net Sales
Net sales increased 15.1% to $10,989.1 million in the current period from $9,549.2 million for the prior year period ended November 2, 2024, which includes $930.9 million of Foot Locker net sales since the acquisition date and a $473.3 million, or 5.0%, increase in comparable sales for the DICK’S Business. The remaining increase in net sales was primarily attributable to new stores, including DICK’S Field House, DICK’S House of Sport and Golf Galaxy Performance Center locations. The increase in comparable sales for the DICK’S Business includes a 4.1% increase in sales per transaction and a 0.9% increase in transactions, and reflects growth in footwear, golf, athletic apparel, licensed merchandise and team sports, partially offset by declines in outdoor equipment.
Income from Operations
Income from operations decreased to $911.4 million in the current period, compared to $1,086.9 million for the prior year period.
Gross profit increased to $3,897.2 million in the current period from $3,464.4 million for the prior year period, but decreased as a percentage of net sales by 82 basis points primarily due to lower gross margin in the Foot Locker Business. Gross profit increased 34 basis points as a percentage of net sales for the DICK’S Business, driven primarily by the quality of our assortment and leverage on fixed occupancy costs.
Selling, general and administrative expenses increased 19.4% to $2,782.9 million in the current period from $2,330.7 million for the prior year period, and increased as a percentage of net sales by 91 basis points. The $452.2 million increase in current period expense includes $259.9 million from the Foot Locker Business since the acquisition date. The remaining increase is primarily due to strategic digital and in-store investments across technology and talent, and marketing, offset by lower incentive compensation expenses compared to the period ended November 2, 2024. The current period also includes a $2.0 million expense increase related to changes in the investment values of our deferred compensation plans, which is fully offset in Other Income.
Merger and integration costs were $146.6 million in the current period ended November 1, 2025. These costs include legal and regulatory fees, other professional services, employee retention and severance costs related to the acquisition of Foot Locker.
Pre-opening expenses increased to $56.4 million in the current period from $46.8 million for the prior year period. Pre-opening expenses in any period typically fluctuate depending on the timing and number of new store openings and relocations. The current period includes pre-opening expenses to support the opening of 16 new DICK’S House of Sport stores, compared to five in the prior year period.
Other Income
Other income totaled $97.1 million in the current period compared to $75.1 million for the period ended November 2, 2024. The $22.0 million increase was primarily driven by non-cash gains from an investment in Foot Locker equity securities prior to the acquisition of $42.2 million, partially offset by a $27.8 million decrease in interest income primarily as a result of lower average cash and cash equivalents and lower average interest rates during the current period and a $2.0 million expense decrease compared to the prior year period from changes in our deferred compensation plan investment values driven by performance in equity markets. The Company recognizes investment income or investment expense to reflect changes in deferred compensation plan investment values with an offsetting charge or reduction to selling, general and administrative costs for the same amount.
Income Taxes
Our effective tax rate increased to 25.1% in the current period from 22.9% for the same period last year. The effective tax rate for the current period was unfavorably impacted by losses in certain foreign jurisdictions where tax benefits cannot be recognized and certain non-deductible acquisition-related costs associated with the Foot Locker acquisition. In addition, the effective tax rate for the prior year period was favorably impacted by a higher number of employee equity awards exercised, which resulted in $15.7 million of higher excess tax benefits in the prior year period compared to the current period. These increases were partially offset by a $10.8 million favorable tax impact from the gains on the Company’s pre-existing Foot Locker investment that are not taxable following completion of the acquisition.
Operating Results by Business Segments
The following section includes certain financial information related to the operating results for our DICK’S Business and Foot Locker Business during the periods presented.
13 Weeks Ended November 1, 2025 Compared to the 13 Weeks Ended November 2, 2024
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 13 Weeks Ended |
| (dollars in thousands) | | November 1, 2025 | | % of Sales | | November 2, 2024 | | % of Sales | | % Increase (Decrease) | | Basis Point Change (A) |
| Net sales | | | | | | | | | | | | |
| DICK’S Business | | $ | 3,236,860 | | | 100.00 | % | | $ | 3,057,181 | | | 100.00 | % | | 5.9% | | |
| Foot Locker Business | | 930,913 | | | 100.00 | % | | — | | | —% | | * | | |
| | | | | | | | | | | | |
| Total net sales | | $ | 4,167,773 | | | 100.00 | % | | $ | 3,057,181 | | | 100.00 | % | | 36.3% | | |
| | | | | | | | | | | | |
| Gross profit | | | | | | | | | | | | |
| DICK’S Business | | $ | 1,166,573 | | | 36.04 | % | | $ | 1,093,444 | | | 35.77 | % | | 6.7% | | 27 bps |
| Foot Locker Business | | 214,287 | | | 23.02 | % | | — | | | —% | | * | | * |
| | | | | | | | | | | | |
| Total gross profit | | $ | 1,380,860 | | | 33.13 | % | | $ | 1,093,444 | | | 35.77 | % | | 26.3% | | (264) bps |
| | | | | | | | | | | | |
| Business segment profit (loss) | | | | | | | | | | | | |
| DICK’S Business | | $ | 288,571 | | | 8.92 | % | | $ | 289,520 | | | 9.47 | % | | (0.3)% | | (55) bps |
| Foot Locker Business | | (46,328) | | | (4.98) | % | | — | | | — | % | | * | | * |
| Total business segment profit | | 242,243 | | | 5.81 | % | | 289,520 | | | 9.47 | % | | (16.3)% | | (366) bps |
| Corporate and other expenses | | 149,146 | | | | | 3,476 | | | | | | | |
| Total income from operations | | $ | 93,097 | | | | | $ | 286,044 | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
* Calculation not meaningful.
(A) Column may not recalculate due to rounding.
DICK’S Business
Net sales for the DICK’S Business increased 5.9% to $3,236.9 million in the current quarter from $3,057.2 million for the quarter ended November 2, 2024, due primarily to a 5.7% increase in comparable sales, which reflects growth in footwear, golf, athletic apparel, licensed merchandise and team sports, partially offset by declines in outdoor equipment. The 5.7% increase in comparable sales includes a 4.4% increase in sales per transaction and a 1.3% increase in transactions.
Gross profit for the DICK’S Business increased to $1,166.6 million in the current quarter from $1,093.4 million for the quarter ended November 2, 2024 and increased as a percentage of net sales by 27 basis points. Merchandise margins as a percentage of net sales increased five basis points as a result of the quality of our assortment. Occupancy costs increased $13.8 million and leveraged ten basis points as a percentage of net sales. The remaining increase in gross profit as a percentage of net sales was driven by leverage on eCommerce shipping and fulfillment costs due to the increase in net sales.
Segment profit for the DICK’S Business decreased 0.3%, or 55 basis points as a percentage of net sales, to $288.6 million for the current quarter compared to $289.5 million for the quarter ended November 2, 2024. Gross profit expansion of 27 basis points was offset by 45 basis points of deleverage in selling, general and administrative expenses and 38 basis points from preopening expenses compared to the prior year quarter ending November 2, 2024. Selling, general and administrative expenses increased $60.9 million in the current quarter due to our strategic digital and in-store investments across technology and talent, partially offset by lower incentive compensation expenses compared to the quarter ended November 2, 2024. Preopening expenses increased $13.1 million in the 13 weeks ended November 1, 2025, due primarily to the opening of 13 new DICK’S House of Sport stores in the current quarter compared to three in the prior year quarter.
Foot Locker Business
The acquisition of Foot Locker was completed on September 8, 2025; therefore, there is no comparative prior period. Financial results for the 13 weeks ended November 1, 2025 include Foot Locker’s operations from the acquisition date.
Corporate and other expenses
Corporate and other expenses for segment reporting purposes represent costs not specifically related to the operations of our segments. Corporate and other expenses for the 13 weeks ended November 1, 2025, consisted of $138.5 million in merger and integration costs related to the acquisition of Foot Locker and a $7.1 million expense increase related to changes in the investment values of our deferred compensation plans, which is fully offset in other income on the Consolidated Statements of Income.
39 Weeks Ended November 1, 2025 Compared to the 39 Weeks Ended November 2, 2024
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 39 Weeks Ended |
| (dollars in thousands) | | November 1, 2025 | | % of Sales | | November 2, 2024 | | % of Sales | | % Increase (Decrease) | | Basis Point Change (A) |
| Net sales | | | | | | | | | | | | |
| DICK’S Business | | $ | 10,058,153 | | | 100.00 | % | | $ | 9,549,200 | | | 100.00 | % | | 5.3% | | |
| Foot Locker Business | | 930,913 | | | 100.00 | % | | — | | | —% | | * | | |
| | | | | | | | | | | | |
| Total net sales | | $ | 10,989,066 | | | 100.00 | % | | $ | 9,549,200 | | | 100.00 | % | | 15.1% | | |
| | | | | | | | | | | | |
| Gross profit | | | | | | | | | | | | |
| DICK’S Business | | $ | 3,682,930 | | | 36.62 | % | | $ | 3,464,438 | | | 36.28 | % | | 6.3% | | 34 bps |
| Foot Locker Business | | 214,287 | | | 23.02 | % | | — | | | —% | | * | | * |
| | | | | | | | | | | | |
| Total gross profit | | $ | 3,897,217 | | | 35.46 | % | | $ | 3,464,438 | | | 36.28 | % | | 12.5% | | (82) bps |
| | | | | | | | | | | | |
| Business Segment profit (loss) | | | | | | | | | | | | |
| DICK’S Business | | $ | 1,123,932 | | | 11.17 | % | | $ | 1,104,562 | | | 11.57 | % | | 1.8% | | (40) bps |
| Foot Locker Business | | (46,328) | | | (4.98) | % | | — | | | — | % | | * | | * |
| Total business segment profit | | 1,077,604 | | | 9.81 | % | | 1,104,562 | | | 11.57 | % | | (2.4)% | | (176) bps |
| Corporate and other expenses | | 166,205 | | | | | 17,622 | | | | | | | |
| Total income from operations | | $ | 911,399 | | | | | $ | 1,086,940 | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
* Calculation not meaningful.
(A) Column may not recalculate due to rounding.
DICK’S Business
Net sales for the DICK’S Business increased 5.3% to $10,058.2 million in the current period from $9,549.2 million for the 39 weeks ended November 2, 2024, due primarily to a 5.0% increase in comparable sales, which reflects growth in footwear, golf, athletic apparel, licensed merchandise and team sports, partially offset by declines in outdoor equipment. The 5.0% increase in comparable sales includes a 4.1% increase in sales per transaction and a 0.9% increase in transactions.
Gross profit for the DICK’S Business increased to $3,682.9 million in the current period from $3,464.4 million for the 39 weeks ended November 2, 2024 and increased as a percentage of net sales by 34 basis points. Merchandise margins as a percentage of net sales increased 20 basis points as a result of the quality of our assortment, while occupancy costs increased $41.0 million and leveraged four basis points as a percentage of net sales during the current period. The remaining increase in gross profit as a percentage of net sales was driven by leverage on eCommerce shipping and fulfillment costs due to the increase in net sales.
Segment profit for the DICK’S Business increased 1.8%, but decreased by 40 basis points as a percentage of net sales, to $1,123.9 million for the current period compared to $1,104.6 million for the period ended November 2, 2024. Gross profit expansion of 34 basis points was offset by 67 basis points of deleverage in selling, general and administrative expenses and six basis points from preopening expenses compared to the prior year period ending November 2, 2024. Selling, general and administrative expenses increased $190.2 million in the 39 weeks ended November 1, 2025 due to our strategic digital and in-store investments across technology and talent, and marketing, partially offset by lower incentive compensation expenses compared to the period ended November 2, 2024. Preopening expenses increased $8.9 million in the 39 weeks ended November 1, 2025, due primarily to the opening of 16 new DICK’S House of Sport stores in the current period compared to five in the prior year period.
Foot Locker Business
The acquisition of Foot Locker was completed on September 8, 2025; therefore, there is no comparative prior period. Financial results for the 39 weeks ended November 1, 2025 include Foot Locker’s operations from the acquisition date.
Corporate and other expenses
Corporate and other expenses for segment reporting purposes represent costs not specifically related to the operations of our segments. Corporate and other expenses for the 39 weeks ended November 1, 2025, consisted of $146.6 million in merger and integration costs related to the acquisition of Foot Locker and a $2.0 million expense increase related to changes in the investment values of our deferred compensation plans, which is fully offset in other income on the Consolidated Statements of Income.
LIQUIDITY AND CAPITAL RESOURCES
Our cash on hand as of November 1, 2025 was $0.8 billion. We believe that our current cash position, and cash flows from operations, supplemented by funds available under our unsecured $2.0 billion Credit Facility and access to long-term debt capital markets, if necessary, are sufficient to operate our business for the next twelve months. In addition, we believe that we have the ability to obtain alternative sources of financing, if necessary.
The following sections describe the potential short and long-term impacts to our liquidity and capital requirements.
Acquisition of Foot Locker
On September 8, 2025, we completed the acquisition of Foot Locker, pursuant to the terms in our previously announced Merger Agreement dated May 15, 2025, for a total consideration of $2.5 billion primarily consisting of $2.1 billion in share consideration for the issuance of 9.6 million shares of the Company’s common stock, $223.0 million in cash consideration and $111.6 million from the Company’s pre-existing equity ownership in Foot Locker. Refer to Part I. Item 1. Financial Statements, Note 2 – Acquisition of Foot Locker for further information.
In connection with the Foot Locker acquisition, we completed an offer to exchange any and all outstanding 4.000% senior notes due 2029 issued by Foot Locker (the “Foot Locker Notes”) for up to $400 million aggregate principal amount of new 4.000% senior notes due 2029 issued by DICK’S Sporting Goods (the “DICK’S Notes”). The completion of the exchange offer resulted in the issuance of $381.9 million of DICK’S Notes, with the remaining $18.1 million in aggregate principal amount of Foot Locker Notes as an outstanding obligation of Foot Locker (collectively, the DICK’S Notes and Foot Locker Notes are the “2029 Notes”). Refer to Part I. Item 1. Financial Statements, Note 7 – Senior Notes for further information.
Leases
We lease substantially all of our stores, an administrative office for the Foot Locker segment, ten of our distribution centers including three for the DICK’S Business and seven for the Foot Locker Business, and certain equipment under non-cancellable operating leases that expire at various dates through 2043. Approximately three-quarters of our DICK’S Sporting Goods and Foot Locker stores will be up for lease renewal at our option over the next five years, and we plan to leverage the significant flexibility within our existing real estate portfolio to capitalize on future real estate opportunities. Refer to Part I. Item 1. Financial Statements, Note 5 – Leases for further information.
Revolving Credit Facility
During the current year, we terminated our $1.6 billion Existing Credit Facility and entered into a new $2.0 billion Credit Facility, of which $75 million is available for letters of credit. Loans under the Credit Facility bear interest at an alternate base rate or an adjusted SOFR plus, in each case, an applicable margin percentage. We had no revolving Credit Facility borrowings at any point during the third fiscal quarter of 2025, and as of November 1, 2025, there were no borrowings outstanding under the Credit Facility. We have total remaining borrowing capacity, after adjusting for $26.1 million of standby letters of credit, of $1.97 billion. We were in compliance with all covenants under the Credit Facility agreement at November 1, 2025. Refer to Part I. Item 1. Financial Statements, Note 6 – Revolving Credit Facility for further information.
Senior Notes
As of November 1, 2025, we have $750 million principal amount of senior notes due 2032 (the “2032 Notes”) and $750 million principal amount of senior notes due 2052 (the “2052 Notes”) outstanding. Cash interest accrues at a rate of 3.15% per year on the 2032 Notes and 4.10% per year on the 2052 Notes, each of which are payable semi-annually in arrears on January 15 and July 15.
As of November 1, 2025, we also have $400 million principal amount of 2029 Notes (the 2029 Notes together with the “2032 Notes” and the “2052 Notes”, collectively, the “Senior Notes”) outstanding. Cash interest accrues at a rate of 4.000% per year on the 2029 Notes, which is payable semi-annually in arrears on April 1 and October 1.
As of November 1, 2025, our Senior Notes have long-term credit ratings by Moody’s and Standard & Poor’s rating agencies of Baa2 and BBB, respectively.
Capital Expenditures
Our capital expenditures are primarily allocated toward the development of our omni-channel platform, including investments in new and existing stores and eCommerce technology, while we have also invested in our supply chain and corporate technology capabilities. Capital expenditures for the 39 weeks ended November 1, 2025 totaled $793.3 million on a gross basis and $673.8 million on a net basis, inclusive of construction allowances provided by landlords.
We anticipate fiscal 2025 capital expenditures for the DICK’S Business to be approximately $1.0 billion, net of construction allowances provided by landlords. As we continue to reposition our store portfolio, these investments will be concentrated in store growth, relocations and improvements in our existing stores, including the opening of 16 DICK’S House of Sport locations in 2025 and beginning construction on approximately 15 locations scheduled to open throughout 2026. By the end of 2027, we expect to have between 75 to 100 DICK’S House of Sport locations across the country. We also plan to open approximately 15 DICK’S Field House and approximately eight Golf Galaxy Performance Center locations in 2025. By leveraging our real estate flexibility, we expect approximately two-thirds of our 2025 store openings for the DICK’S Business will be relocations or remodels of existing store locations, which will increase our square footage in 2025 by approximately 2% to 3%.
Share Repurchases
From time-to-time, we may opportunistically repurchase shares of our common stock under our current $2.0 billion five-year share repurchase program authorized by our Board of Directors on December 16, 2021. During the 39 weeks ended November 1, 2025, we repurchased 1.4 million shares of our common stock at a cost of $298.7 million. As of November 1, 2025, the available amount remaining under the December 2021 share repurchase program is $212.9 million. On March 10, 2025, our Board of Directors authorized an additional five-year share repurchase program of up to $3.0 billion of our common stock. The Company plans to continue to purchase under the 2021 program until it is exhausted or expired.
Any future share repurchase programs are subject to authorization by our Board of Directors and will be dependent upon future earnings, cash flows, financial requirements and other factors.
Dividends
During the 39 weeks ended November 1, 2025, we paid $305.5 million of dividends to our stockholders. On November 24, 2025, our Board of Directors authorized and declared a quarterly cash dividend in the amount of $1.2125 per share of common stock and Class B common stock, payable on December 26, 2025 to stockholders of record as of the close of business on December 12, 2025.
The declaration of future dividends and the establishment of the per share amount, record dates and payment dates for any such future dividends are subject to authorization by our Board of Directors and will be dependent upon multiple factors including future earnings, cash flows, financial requirements and other considerations.
Supply Chain Financing
We have entered into supply chain financing arrangements with certain third-party financial institutions, whereby suppliers have the opportunity to settle outstanding payment obligations early at a discount. We do not have an economic interest in suppliers’ voluntary participation and we do not provide any guarantees or pledge assets under these arrangements. Supplier invoices are settled with the third-party financial institutions in accordance with the original supplier payment terms and our rights and obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted by these arrangements. Liabilities associated with the funded participation in these arrangements, which are presented within accounts payable on the Consolidated Balance Sheets, were $33.0 million, $49.6 million and $46.4 million as of November 1, 2025, February 1, 2025 and November 2, 2024, respectively.
Cash Flows
Changes in cash and cash equivalents are as follows (in thousands): | | | | | | | | | | | |
| | 39 Weeks Ended |
| November 1,
2025 | | November 2,
2024 |
| Net cash provided by operating activities | $ | 487,277 | | | $ | 680,307 | |
| Net cash used in investing activities | (661,287) | | | (557,245) | |
| Net cash used in financing activities | (692,487) | | | (465,437) | |
| Effect of exchange rate changes on cash and cash equivalents | (2,112) | | | (190) | |
| Net decrease in cash and cash equivalents | $ | (868,609) | | | $ | (342,565) | |
Operating Activities
Cash flows provided by operating activities decreased $193.0 million for the 39 weeks ended November 1, 2025 compared to the same period in the prior year, primarily driven by year-over-year changes in incentive compensation accruals and corresponding payments and other accrued expenses for severance and transaction costs related to the Foot Locker acquisition, along with lower earnings due to Foot Locker’s operating results since the acquisition date. These decreases in cash flows provided by operating activities were partially offset by the timing of income tax deductions following the enactment of provisions in the OBBBA.
Investing Activities
Cash used in investing activities increased $104.0 million for the 39 weeks ended November 1, 2025 compared to the same period in the prior year. Gross capital expenditures increased $227.7 million, primarily driven by investments in new and future DICK’S House of Sport stores and DICK’S Field House stores, as well as the construction of our sixth DICK’S Sporting Goods distribution facility and higher investments in remodels or other store enhancements. Cash used in investing activities for the current period also includes cash acquired from the acquisition of Foot Locker of $257.1 million, net of cash paid. The remaining increase in cash used in investing activities is driven by $119.5 million in purchases of investments, which included $69.5 million of Foot Locker equity securities. Refer to Part I. Item 1. Financial Statements, Note 2 – Acquisition of Foot Locker and Note 4 – Fair Value Measurements for further information.
Financing Activities
Financing activities have historically consisted of capital return initiatives, including share repurchases and cash dividend payments, cash flows generated from stock option exercises and cash activity associated with our Credit Facility or other financing sources. Cash used in financing activities increased $227.1 million for the 39 weeks ended November 1, 2025, compared to the same period in the prior year, primarily due to higher share repurchases, dividends and cash payments for minimum tax withholding requirements as a result of the vesting of employee equity awards compared to the prior year.