Dick’s Sporting Goods Lays Off 250 Employees after Blaming 23% Drop in Profits on Theft

DICK’S Sporting Goods announced a new “business optimization plan” that includes laying off corporate employees as a result of net income falling 23 percent to $244 million and operating income decreasing 32 percent to around $312 million. The company said these declines are due to its “decisive action” on excess inventory and theft.

The company delivered 1.8 percent growth in second quarter comparable store sales driven by a 2.8 percent increase in transactions and continued market share gains.

“We are pleased with our strong sales performance for the second quarter led by robust transaction growth and continued market share gains,” said DICK’S President and CEO Lauren Hobart. “Within the quarter, sales accelerated significantly in July, and we remain confident in delivering positive comp sales for 2023. While we posted another double-digit EBT margin, our Q2 profitability was short of our expectations due in large part to the impact of elevated inventory shrink, an increasingly serious issue impacting many retailers. Despite moderating our 2023 EPS outlook, the enthusiasm we have for our business and the confidence we have in our long-term growth opportunities have never been stronger.”

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A press release from the company said the business optimization plan would “better align talent, organizational design, and spending in support of the most critical strategies while also streamlining overall cost structure.” It continued, saying DICK’S eliminated certain positions, primarily at the customer support center, on Aug. 21. Because of this, the company expects to incur approximately $20 million of severance expenses in Q3. Related cost savings are expected to be largely offset by strategic talent investments over the next twelve months. Bloomberg cited unnamed sources in reporting that the job cuts would affect 250 corporate employees.

While the company said it has not committed to specific additional actions at this time, it currently expects the business optimization to be completed during fiscal 2023 and may result in additional one-time charges of $25 million to $50 million.

This is the first time DICK’S has made a reference to shrink in an earnings call or press release in nearly 20 years, according to FactSet. And while shrink is surely up, DICK’S now joins a long list of retailers blaming reduced profits on theft while other factors—such as the company’s slowdown in its outdoor category—are at play.

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