With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

The Pittsburgh-based retailer increased its revenues and its risks in 2025 by acquiring Foot Locker, the struggling sneaker seller. The $2.5 billion deal made Dick's one of the top distributors of brands like Nike and Adidas; efforts to turn around Foot Locker's underperforming stores have shown some promising signs this year.

Fortune 500

The 300 companies on this year’s list brought in over $12.5 trillion in revenue for the latest 12 months, with the median revenue figure at $24 billion.

America's Most Innovative Companies

See which workplaces made this year's list.

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Employees say:"The executive leadership present and perform as very normal individuals making themselves level with the entire team across the organization. This is how approachable and communicative they are to work with. That is exemplary in my opinion. There are zero barriers for any team member to ask questions, raise concerns, give suggestions, and work independently. This is the best place to work by far!"

Best Large Workplaces in Retail

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

Employees say:"The culture DSG is unlike any I've experienced before - welcoming, helpful, encouraging, positive - it really feels like I'm part of an actual sports team! There are plenty of opportunities, but no pressure, to join a multitude of groups from business-related to recreational sports. The total compensation package is generous and there are lots of other perks. I really appreciate the hybrid work schedule. Also, DSG gives back in spades to the communities we serve which I love!"

Industries included in the sector are automotive retail, general merchandisers, internet retail, and specialty retail.

Fortune Sector Leaders: Retailing

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 200 companies on this list are transforming industries from the inside out.

The 300 companies on this list are transforming industries from the inside out.

GPTW 2023 Best Workplaces Retail Large DICK'S Sporting Goods_4

Employees say: 
 
"Dick's Sporting Goods's focus on DE&amp;I efforts, and how we know the work is never done and continues to be a passion, along with our focus on sustainability."

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

Employees say: 
 
“What I appreciate about this place is the sense of a community feeling when you need it in addition to this just being a place where I work. We have chat groups about parenting and all things related or unrelated that we can get ideas/advice no matter where we live across the country and meet new co-workers. In addition we have resource groups of those interested helping each other throughout their career at work no matter who they are which also gives more opportunity to meet someone outside of their normal business interaction.”

This year’s Fortune 500 marks the 68th running of the list.

See which retailers made this year's list.

Best-Workplaces-Retail-2021-DICK'S-Sporting-Goods

Employees say: 
 
“It is a company that provides to those across all ages, races, and genders and I see that same in the workplace. Opportunities at all levels of the organization are for everyone who works hard.”

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-320-Dick's Sporting Goods

Dick's Sporting Goods, the country's largest athletics and fitness retailer, moved up 42 spots on the Fortune 500 this year, powered by a solid 9.5% increase in sales in 2020. In the first quarter of 2021, Dick's beat analyst estimates, reporting net income of $361.8 million compared to a loss of $143.4 million a year ago.

This year's Fortune 500 marks the 66th running of the list.

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The Pennsylvania-based sporting goods retailer operates hundreds of stores across the U.S.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

Best Workplaces In Retail

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Retailer Dick’s Sporting Goods offers a wide selection of sporting goods equipment, fitness gear, golf products, fishing gear, apparel, footwear, and accessories. The company’s portfolio includes specialty concept stores such as Golf Galaxy, Public Lands, Going Going Gone!, and Dick’s House of Sport. Dick’s Sporting Goods was founded in 1948.

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Dick's Sporting Goods (DKS): Company Profile, Stock Price, News, Rankings

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Dick's Sporting Goods

dick's sporting goods

Ladies and gentlemen, thank you for standing by. My name is Krista and I'll be your conference operator today. At this time, I would like to welcome you to the DICK'S Sporting Goods fourth quarter and full year 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question at that time, simply press star, then the number one on your telephone keypad. If you'd like to withdraw your question, again, press star one. Thank you. I would now like to turn the conference over to Nate Gilch, Vice President of Investor Relations. Nate, the floor is yours.

Good morning, everyone, and thank you for joining us to discuss our fourth quarter and full year 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 on our investor relations website located at investors.dicks.com for approximately 12 months. As a reminder, we'll 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 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, a couple of admin items. First, a quick reminder on our comparable sales reporting. Foot Locker will be included in our comp calculations beginning in Q4 2026, which will mark the start of their fourteenth full month of operations post-acquisition. Second, for future scheduling purposes, we are tentatively planning to publish our first quarter 2026 earnings results on May 27th, 2026. With that, well, I'll turn the call over to Ed.

Thanks, Nate. Good morning, everyone. As we shared this morning, we closed the year with another strong quarter for the DICK'S business, delivering comps over 3% and double-digit non-GAAP EPS growth. Our team's execution and our ability to consistently deliver a differentiated on-trend product assortment and best-in-class omni-channel athlete experience continue to produce strong results and market share gains. We believe these fundamentals position the DICK'S business for long-term profitable growth. Now I'd like to turn to the transformational opportunity we have with Foot Locker, where we continue to make significant progress in strengthening the business. We've now owned Foot Locker for about six months, and I'll tell you, our excitement and our conviction and the long-term opportunity here continue to grow. We've moved quickly to test and learn in North America through what we call our Fast Break initiative.

This is the evolution of the 11-store pilot we discussed last quarter. While it's still early, we're very encouraged by what we're seeing. During Q4, our Fast Break stores drove very strong positive comps, actually meaningfully exceeding the DICK'S business while also delivering strong gross margin improvement. The improvement is coming from the basics, clearer storytelling, better presentation, and a more focused assortment where we removed roughly 30% of the styles on the shoe wall that were unproductive and eliminated the run-on sentence that we've been talking about that was not showing the customer what product was important. Based on the strength of the pilot results, we've already expanded Fast Break to an additional 10 stores in L.A. before the NBA All-Star game, and we're very pleased with the strong early performance. Now looking ahead, we're excited to rapidly scale Fast Break by back-to-school 2026.

As discussed last quarter, our first priority was to clean out the garage, starting with addressing unproductive inventory. The team moved quickly and decisively to get this done, and we're pleased to report that the inventory cleanup is now essentially complete. That work drove the fourth quarter profitability results we told you to expect. As part of this process, we also leveraged DICK'S value chain to efficiently clear product. We're also pleased that Q4 sales came in better than expected. We believe that Foot Locker's inventory is now well-positioned. With this heavy lift behind us, we're set up to play offense and deliver the inflection point we expect to see in this business starting with back to school. Another key part of cleaning out the garage is our review of the global Foot Locker business store fleet.

We continue to assess underperforming locations, but we anticipate our closure list is now much smaller than we initially estimated. We've identified opportunities to reposition and improve profitability in a meaningful number of stores, informed in large part by the success we're seeing in our Fast Break locations. Importantly, one of the many things that gives us great confidence in the future of the Foot Locker business is what we're seeing from our brand partners. They're leaning in, aligned with our vision, and eager to support a thriving, growing Foot Locker. You can see that already in moments like our NBA All-Star activation with Nike, Jordan, Adidas, and others, where we partnered closely to bring a series of sought-after launches that drove exceptional sell-throughs. We also had NBA talent appearances and community experiences for the Foot Locker consumer throughout L.A.

Our team executed exceptionally well, and together with the support of our brand partners, we drove sales that meaningfully eclipsed last year's event. At DICK'S, we've built an industry-leading business by focusing on product, performance, innovation, and customer loyalty, always with a long-term view. We're applying that same proven playbook to the Foot Locker business and making the choices we believe will create the most long-term value for our shareholders. For 2026, we expect Foot Locker to deliver growth and comp sales of between 1%-3%, and operating income in the range of $100 million-$150 million. We continue to anticipate an inflection point for both sales and profitability beginning with the back-to-school season. Navdeep will share more details on our 2026 expectations in his remarks. In closing, we remain very confident that DICK'S and Foot Locker are stronger together.

This combination gives us more scale, deeper relationships with the most important brands in our industry, access to consumers we didn't reach before, and a global footprint. For Foot Locker, the benefits of our combination come through in very real ways. Brands matter, product matters, execution matters, and people matter. When those things come together, we believe Foot Locker will be restored to its rightful place in the industry. Before I turn it over to Lauren, I want to thank our more than 100,000 teammates across the globe for their commitment and their execution every day. With that, Lauren will walk you through the continued momentum across the DICK'S business. Lauren, I'll turn it over to you.

Thank you, Ed, and good morning, everyone. I want to emphasize Ed's comments and recognize the incredible work of our teams across our entire company who contributed to our success throughout this past year. I'm so proud of what we achieved together in 2025. Looking specifically at the DICK'S business, our teammates' passion, their commitment to our athletes, and a relentless focus on execution powered another strong quarter and holiday season and a terrific year overall. Their hard work continues to bring our four strategic pillars to life. A compelling omnichannel athlete experience, a differentiated on-trend product assortment, a deep engagement with the DICK'S brand, and the strength of our teammates and our culture. These pillars remain the foundation of our success and guide our strong performance.

For the full year, we are very pleased to have delivered record sales of $14.1 billion for the DICK'S business. Our comps increased 4.5% and exceeded the high end of our expectations, driven by growth in average ticket and transactions as we continued to gain market share. We drove gross margin expansion and achieved double-digit operating margin of 11.1%. We delivered non-GAAP EPS of $14.58, also above the high end of our outlook and up from $14.05 in 2024. Our fourth quarter marked a strong finish to the year for the DICK'S business. Our Q4 comps increased 3.1%, building on last year's 6.6% increase and delivering a two-year comp stack of nearly 10%.

We saw more athletes purchase from us, and they spent more each trip compared to the prior year. Our Q4 gross margin expansion accelerated sequentially, and we drove operating margin of 11%, a non-GAAP EPS of $4.05, both well ahead of last year. Today, the intersection of sport and culture has never been stronger, and excitement continues to build. This momentum kicked off with the expanded College Football Playoff, record-breaking interest in women's sports, and a strong Team USA performance in the recent Winter Olympics. With most of the 2026 World Cup matches on U.S. soil this June and July, the 2028 Summer Olympics in L.A. on the horizon, and the Ryder Cup returning to the U.S. in 2029, we're entering one of the most compelling multi-year periods for sport in this country's history. Our athletes are energized.

They're investing in the products and experiences that fuel their passions, and DICK'S sits squarely at the center of that intersection. With this position of strength, we enter 2026 with tremendous conviction in the opportunity ahead, and our priorities for the DICK'S business are clear. We continue to drive growth across our key categories. This is fueled by the powerful relationships that we have with our national brand partners, the energy from new and emerging brands, and the continued momentum of our vertical brands. We're also continuing to reposition and elevate our real estate and store portfolio through House of Sport and Field House. Now five years into this journey, our conviction in these innovative concepts has never been stronger. House of Sport and Field House have redefined the athlete experience, strengthened our relationships with existing brand partners, opened doors to new partnerships, and delivered strong financial performance.

This past year, we made tremendous progress on this front. We opened 16 new House of Sport locations, ending the year with 35 locations nationwide, and also opened 15 new Field House locations, bringing the total to 42 across the country. We are really excited to see the impact of scaling these powerful concepts. Looking ahead, landlord interest remains extremely strong, giving us access to some of the best retail locations in the country. In 2026, we plan to open approximately 14 House of Sport locations and approximately 22 Field House locations. In addition, our focus on serving athletes is very strong, and we're really accelerating our work here. Our common purpose is to make sure that athletes feel confident and excited before, during, and after they engage with our team, our products, and our experiences.

We're creating more consistency across channels in how we help our athletes find the right solutions. Whether they're using better search and reviews online, tapping into new digital tools in the store or in the app, or working directly with our teammates, their experience is becoming more personalized and more connected. In our stores, we're evolving our service and selling culture. We're putting a bigger emphasis on relationship building and giving teammates better training and tools. While this is very much an ongoing journey, the feedback has been incredibly encouraging. Lastly, as part of our broader digital strategy, we're harnessing the power of our athlete data and continue to be enthusiastic about the long-term opportunities we see with GameChanger and the DICK'S Media Network.

With all this in mind, for 2026, we expect to drive continued comp growth, strategic expansion of our square footage, and strong profitability for the DICK'S business. We anticipate our comp sales to be in the range of 2%-4%, which at the midpoint represents a 7.5% two-year comp stack. We expect operating margins for the DICK'S business to be approximately 11.1% at the midpoint. At the high end of our expectations, we expect to drive approximately 10 basis points of operating margin expansion on a non-GAAP basis. At the consolidated company level, we expect full-year non-GAAP earnings per diluted share in the range of $13.50-$14.50. In closing, we're entering 2026 with powerful momentum in the Dick's business, and our focus here is unwavering.

The opportunity ahead for DICK'S remains tremendous, and we are firmly positioned to capture it. With that, I'll turn it over to Navdeep to share more detail on our financial results and our 2026 outlook. Navdeep, over to you.

Thank you, Lauren, and good morning, everyone. To start, I want to echo Ed and Lauren's excitement as we enter 2026 with real strength and momentum. Now let's begin with some highlights for full-year 2025 results. Consolidated net sales increased 28.1% to $17.22 billion, driven by a $3.11 billion sales contribution from a partial year of owning the Foot Locker business and a 4.5% comp increase for the DICK'S business as we continued to gain market share. These strong comps were driven by a 4.2% increase in average ticket and a 0.3% increase in transactions. On a two-year and a three-year stacked basis, comps for the DICK'S business increased 9.7% and 12.3% respectively.

Consolidated non-GAAP operating income was $1.52 billion or 8.81% of net sales compared to $1.5 billion or 11.14% of net sales last year. This includes operating income of $1.57 billion or 11.12% of net sales for the DICK'S business, driven by strong comps and the gross margin expansion and a $52.2 million operating loss from a partial year of owning the Foot Locker business. Consolidated non-GAAP earnings per diluted share were $13.20, which included just over 20 weeks of results for the Foot Locker business and a diluted share count of 85.1 million.

Looking specifically at the DICK'S business, we delivered non-GAAP earnings per diluted share of $14.58 based on the share count of 81.2 million, which excludes the dilutive effect of the shares issued in connection to the acquisition of Foot Locker. That exceeded the high end of our guidance and is up 3.8% from our earnings per diluted share of $14.05 last year. Now moving to our results for Q4. Consolidated Q4 net sales increased 59.9% to $6.23 billion, driven by a $2.18 billion sales contribution from the newly acquired Foot Locker business and a 3.1% comp increase for the DICK'S business.

These strong Q4 comps were on top of last year's 6.6% comp and were driven by a 4.4% increase in average ticket, partially offset by a 1.3% decline in transactions. On a two-year and a three-year stack basis, comps for the DICK'S business increased 9.7% and 12.6% respectively. In terms of the category performance, we saw broad-based strength across our three primary categories of footwear, apparel, and hard lines. For reference, pro forma comp sales for the Foot Locker business in Q4 decreased 3.4%. On a non-GAAP basis, consolidated gross profit for the fourth quarter was $1.99 billion or 31.93% of net sales, down 303 basis points from last year.

For the DICK'S business, gross margin expansion accelerated sequentially, increasing 67 basis points, driven entirely by higher merchandise margin. Notably, the year-over-year decline in consolidated gross margin was driven entirely by the mix impact from the Foot Locker business. On a GAAP basis, in connection with cleaning out the garage, our actions to optimize Foot Locker's inventory that doesn't align with our go-forward vision. Unfavorably impacted gross profit by $218 million. This was in line with our expectations. On a non-GAAP basis, consolidated SG&A expenses for the fourth quarter increased 60.5% or $579.2 million-$1.54 billion and deleveraged 9 basis points compared to the last year's non-GAAP results. $549.5 million of this consolidated increase was driven by the Foot Locker business.

For the DICK'S business, SG&A expense dollars increased 3.1% and leveraged 22 basis points. Consolidated non-GAAP operating income for the fourth quarter was $438.6 million or 7.04% of net sales, compared to $393 million or 10.09% of net sales last year. For the DICK'S business, operating income was $444.5 million or 10.97% of net sales. This quarter's consolidated results included a $5.9 million operating loss from the Foot Locker business, which was in line with our expectations. Moving down the P&L, consolidated non-GAAP income tax expense was $114.8 million at a rate of 26.8%.

This was favorable to our expectations, largely due to the mix of earnings across jurisdictions resulting from investments we are making in Foot Locker's EMEA business to improve its future profitability. In total, we delivered consolidated non-GAAP earnings per diluted share of $3.45 for the quarter. These results included non-GAAP earnings per diluted share of $4.05 for the DICK'S business based on the share count of 81.2 million, which excluded the dilutive effect of the shares issued in connection with the Foot Locker acquisition. This is up 11.9% from earnings per diluted share of $3.62 for Q4 last Year.

At the consolidated level, the DICK'S business results were partially offset by the contribution from the Foot Locker business, which includes a $0.44 negative impact from higher share count due to the acquisition and a $0.16 negative impact from Foot Locker operations. On a GAAP basis, our earnings per diluted share were $1.41. This includes $235.5 million of pre-tax Foot Locker acquisition-related costs and a $13.4 million pre-tax asset write-down. For additional details, you can refer to the non-GAAP reconciliation tables from our press release that we issued this morning. Now looking to our balance sheet, we ended the year with approximately $1.35 billion of cash and cash equivalents and no borrowings on our $2 billion unsecured credit facility.

We ended the year with approximately $4.91 billion of inventory, which includes the Foot Locker business and represents a 47% increase compared to last year. For the DICK'S business, inventory levels increased 1% compared to last year. We believe our inventory is well-positioned to continue to fuel our sales momentum, which we expect to carry into 2026. Turning to fourth quarter capital allocation. Net capital expenditures were $302 million, and we paid $108 million in quarterly dividends. We also repurchased 218,000 shares of our stock for $43 million at an average price of $199.51. Before I move to our outlook, I wanna address a few key expectations surrounding the Foot Locker acquisition.

First, as we discussed last quarter, our immediate priority has been to clean out the garage and optimize the inventory assortment and store portfolio of the Foot Locker business. As part of these actions and broader merger and integration work, we previously estimated and continue to expect total pre-tax charges of between $500 million and $750 million. During 2025, we recognized $390 million of these charges. The remaining pre-tax charges will be incurred over 2026 and the medium term as we complete this work. Approximately $150 million of these remaining charges are expected in 2026 and are excluded from today's non-GAAP EPS outlook. Second, we remain confident in achieving the previously announced $100 million-$125 million of cost synergies over the medium term, primarily from procurement and direct sourcing efficiencies.

A portion of these synergy benefits are expected in 2026, which have been reflected in our outlook. Now moving to our outlook for full year 2026. Our guidance reflects continued strength and momentum of the DICK'S business and the turnaround efforts underway at Foot Locker, all within the context of the dynamic geopolitical and macroeconomic environment. Beginning with the DICK'S business in 2026, total sales are expected to be in the range of $14.5 billion-$14.7 billion. As Lauren mentioned, we anticipate comp sales growth of the DICK'S business in the range of 2%-4%. From a pacing standpoint, we expect slightly higher comps in the first half, driven in large part by the timing of the World Cup. Reopening expenses are expected to be approximately $90 million for the full year.

We expect operating margin for the DICK'S business to be approximately 11.1% at the midpoint. At the high end of our expectations, we expect to drive approximately 10 basis points of operating margin expansion on a non-GAAP basis. From a pacing standpoint, we expect operating margins for the DICK'S business to decline in the first half and expand in the second half due to the timing of the planned investments and synergy savings. Now turning to the Foot Locker business in 2026. As Ed discussed, we remain confident in the value creation of this business. Total sales are expected to be in the range of $7.6 billion-$7.7 billion. Pro forma comp sales for the Foot Locker business are expected to be in the range of 1%-3%.

We expect operating income for the Foot Locker business to be in the range of $100 million-$150 million. From a pacing standpoint, we expect operating income performance to be back-half weighted as the pro forma comps and gross margins start to strengthen from back-to-school onwards. At the consolidated company level, we expect full-year non-GAAP operating income in the range of $1.68 billion-$1.81 billion, and the non-GAAP earnings per diluted share in the range of $13.50-$14.50. Our earnings guidance is based on approximately 91 million average diluted shares outstanding, which includes the dilutive impact of 9.6 million shares issued in connection with the Foot Locker acquisition. We anticipate a consolidated company effective tax rate of approximately 25.5% for the full year.

We expect interest expense of approximately $70 million and interest income to be in the range of $20-$25 million. I'll now discuss our capital allocation priorities. For 2026, our capital allocation plan includes net capital expenditure of approximately $1.5 billion. Starting with the DICK'S business, as we continue to reposition our real estate and store portfolio, our investments will be concentrated in store growth, relocations, and improvements in our existing stores, plus some ongoing investments in technology and supply chain. As Lauren noted, we are very excited to open approximately 14 House of Sport locations and approximately 22 DICK'S Field House locations in 2026. In addition, we plan to begin construction on approximately 18 House of Sport locations that are expected to open in 2027.

House of Sport and DICK'S Field House remain two of our most powerful and long-term growth drivers, and we will continue expanding these formats with discipline. In 2026, we are also excited to grow the footprint of our Golf Galaxy business and plan to open approximately 15 Golf Galaxy Performance Center locations. Now turning to the Foot Locker business, capital expenditures in 2026 will be focused on re-energizing our store fleet, including the rapid expansion of our Fast Break initiative. We also remain committed to returning significant capital to our shareholders through our quarterly dividend and opportunistic share repurchases. Today, we announced a 3% increase in our quarterly dividend to an annualized payout of $5 per share, $1.25 on a quarterly basis. This marks the 12th consecutive year that our shareholders have benefited from a dividend increase.

Our 2026 plan includes our expectation for share repurchases to offset normal course dilution, the effect of which is included in our EPS guidance. In closing, we enter 2026 with a powerful momentum in DICK'S business and a clear path to improved performance at Foot Locker. We remain focused on execution, committed to creating durable value, and confident in the year ahead. This concludes our prepared remarks. Thank you for your interest in DICK'S Sporting Goods. Operator, you may now open the line for questions.

Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you'd like to withdraw that question, again, press star one. We kindly ask that you limit yourself to one question and one follow-up. Any additional questions, please re-queue. Your first question comes from the line of Brian Nagel with Oppenheimer. Please go ahead.

Hi. Good morning. Congratulations on a nice quarter. Nice progress here.

Again, I wanna ask a maybe a two-part question with both parts focused on the core DICK'S business. First, if you look at the guidance you laid out for sales growth for DICK'S, you know, it's very solid above, you know, the current published street forecast. Just the question I had there is you talked about this a little bit, but maybe elaborate further. Really, what's giving you that confidence in the underlying momentum? Then the follow-up question also on DICK'S, and if you look at the fourth quarter, I mean, not actually to get picky there, but obviously a very solid quarter, but there was a you know, modest deceleration within sales growth of the core DICK'S business from what we saw in the third quarter.

Maybe you can discuss, you know, what was behind that. Thanks.

Thanks, Brian. Appreciate the question. We had a fantastic quarter in Q4. We are really proud of the quarter we just put up. We had a 3.1% comp growth, and importantly, we were on top of the prior year's 6.6% comp. On a two-year stack basis, we actually exceeded our internal expectations, and we were close to 10%, so it was a really strong quarter from a comp standpoint. We also expanded gross margin and operating margin in the DICK'S business, so overall, really proud of how the team navigated through Q4.

I think why that gives me confidence as we look to the future is that the momentum in our business remains incredibly strong. In this past Q4, we saw growth across all of our key categories, footwear, apparel, hard lines, and we're finding that consumers are doing very, very well. We have seen growth across all income demographics. We haven't seen trade down, and we're finding that when a consumer sees something that's new or innovative or technically impactful, it's resonating with them, and they are coming. We think that's only gonna continue as we look to the year and the incredible excitement around sport and the influence it has on culture as we head into the World Cup coming up. Well, March Madness and then the World Cup. We're really, really confident.

The two-year stack going forward is a 7.5% comp, so 2-4 on top of our 4.5, and we are really thrilled with the momentum we have to deliver that.

Your next question comes from the line of Adrienne Yih with Barclays. Please go ahead.

Good morning, and I'll add my congratulations. Very well done. Great, great way to end the year and start the new one.

It sounds like there's a lot of exciting work underway at Foot Locker to reposition the business for its turn in 2026. On top of that, the Q4 results came in better than you thought, particularly sales and margins were in line. My question centers around the cleaning out of the garage, which you expressed last quarter as your top priority. Sounds like inventory's nice and clean. How would you characterize where you are? Is there more work to do, and how many stores will be in this Fast Break that you can touch this year? Then I'll have a follow-up. Thank you.

Okay. Thanks, Adrienne. I can tell you that the team did, across the globe, a great job to clean out the garage. There was a lot of excess inventory there, inventory that wasn't very productive. Like we said, in the Fast Break stores, we took out roughly 30% of the SKUs and kind of fixed that run-on sentence that was the Foot Locker shoe wall. The team across the globe, North America, Europe, Asia, really got behind this whole clean out the garage objective and did that. To be honest with you, that work is done. That's behind us. We cleaned out the garage with, you know, markdowns in the stores and moved product through the Foot Locker stores and the Champs stores. We also utilized.

I think this is one of the benefits of the acquisition between DICK'S and Foot Locker. We actually utilized the DICK'S value chain of Going, Gone! to clean out a lot of that inventory. We were able to recover a higher cash amount by putting it through the DICK'S value chain than if we sent that out through a jobber. We're really well-positioned. This inventory at Foot Locker is probably cleaner than it has ever been. That should bode well for our margins and our sales going forward, returning this chain to growth with a comp of 1%-3%. Should have margin expansion here. We're confident of that. All in all, to clean out the garage, the team did a great job, and we're done.

Fantastic. Follow-up. Lauren, as you look at the innovation pipeline throughout 2026, particularly in technical running and performance basketball, are you seeing a meaningful shift back toward, like, iconic must-have products from your biggest traditional partners? Or should we expect growth still to be driven by the addition and growth of new, smaller niche brands? Thank you.

Yes. Thanks, Adrienne. We are seeing growth across the board. We're seeing great growth from our strategic partners, and we're very excited about things like the running footwear, the innovation that we're seeing and the new run construct from Nike doing very well and across the board running is really doing well. Signature basketball is also doing really well, and that's true, of course, of DICK'S and Foot Locker. With DICK'S, we're particularly excited about the excitement around women's sports, and Sabrina and A'ja have done so well, and then we look forward and Caitlin coming is gonna be a lot of excitement. Team sports also driving incredible buzz in a way that it used to be footwear launches that used to drive this kind of excitement.

We're seeing that in team sports and all aspects of our business. Between new and emerging brands, we're adding through the House of Sport partnerships with really exciting brands. We've got Gymshark, where we are their first U.S. wholesale partner, and a lot of brands who have come in through the House of Sport who are now widening into Fieldhouse locations and then even beyond to the entire DICK'S format. I would say what's great about the growth is it's across the board in all categories, and it's also across the board between our strategic partners, our emerging partners, and our vertical brands.

If I could just add on to that, you know, as Lauren said, Nike's doing very well. We're really pleased with them. Adidas and we're leaning into the World Cup with Adidas, and we think the World Cup is gonna be great. With Fanatics, we've really partnered on the collectibles and the card side of the business, the trading card business, which we will have collectible shops in all House of Sport stores going forward, bringing those into some of the Fieldhouse concepts. This whole idea of collectibles and trading card business, which we haven't been in before, will certainly be accretive to our sales number.

Your next question comes from the line of Simeon Gutman with Morgan Stanley. Please go ahead.

Hey, good morning, everyone. The business is performing solidly. If we step back, call it three months ago, I would have suggested or thought that the core business, the margin might be a little stronger given some of the House of Sport penetration and the continued gross margin gains. Then Foot Locker, I would expect a little bit more, I guess, EBIT to get to that accretion number. Curious how you react to all of that. Is that fair and is that different versus the way you see it?

Well, let me jump in on the Foot Locker piece first, Simeon. We actually could have kind of guided Foot Locker to be higher if we had based on our original projections. What's happened is we've gone through this Fast Break process. We've got the original 11 Fast Break stores. We added 10 Fast Break stores in L.A. around the All-Star game. We've got a couple of Fast Break stores in Europe right now. What we found is some of those underperforming stores that are losing money or just marginally profitable right now, based on what we're seeing we can do from a Fast Break standpoint and renovating these stores, we can make these stores very profitable. We're closing less stores than we had originally anticipated.

If we had decided to close those stores, Foot Locker could have been a bit more profitable in Q1 and Q2. It's gonna take us a little time to get these Fast Break stores done and kinda get to all of them that we wanna get to. We will get to probably 250 of these stores by back-to-school, which is a Herculean effort, but we are really confident that we can do that. The reason the Foot Locker is where it is right now is because Fast Break and the optimism we have for Foot Locker is even greater than it was originally because some of these marginally profitable or stores that are not making money right now, if we feed them the right inventory, we can make them profitable, and we think that's the right thing to do on a longer term basis.

Yeah, I'll just build on quickly. Like, you know what? The guidance that we provide always balances the optimism and the confidence that we have against the overall macroeconomic and geopolitical situation. As you can see it's very dynamic, and so that was another thing that we factored into our guidance. Quickly touching on your gross margin expansion in Q4, we were very happy with the results we posted here. Like Lauren said, you know, 3.1% comp on top of a 6.6% comp. In an environment, in a quarter that is typically very promotional, we were very happy with the 67 basis points of margin expansion we posted here in Q4. Keep in mind, this 67 basis points of margin expansion all came from a merchandising margin.

Our merchants and the inventory management team did a phenomenal job to finish the year strong from a clean inventory and driving top-line momentum as well as gross margin expansion.

I think, Simeon, also it was more promotional out there than we had anticipated. I think the team did a fabulous job managing our margin rates and the profitability of the business and the operating margins in an environment that was as promotional as it was.

That's helpful. Just to clarify, I guess when I meant the margin, I was actually looking more towards 2026, like the full year. I think the fourth quarter was quite solid. I guess the follow-up is first half or second half. I don't know if you would share what you've thought about for World Cup, if there is an explicit top-line impact. Then is some of the investment spending related to core, or is there some spend even ahead of World Cup where the margin ends up ramping more in the second half than the first half?

Yeah. Simeon, in what we gave in my prepared comments today is that we expect the comps to be slightly higher in the DICK'S business in the first half because of the World Cup benefit. We didn't explicitly guide to the exact number associated with it, but that's what was assumed in our guidance that we have shared. We expected that the operating margins to decline in the first half due to two big reasons. One, we are making appropriate level of investments in the business to continue to position the business for the long term. Second, the synergy benefits that we are looking at will be more back half-weighted. That is the other benefit that kicks in more in the second half than in the first half.

Your next question comes from the line of Kate McShane with Goldman Sachs. Please go ahead.

Hi. Good morning. Thanks for taking our question. We wanted to ask about GameChanger and Retail Media. I know you mentioned it in the prepared comments a little bit, but we wondered if there was any way you could talk about any new initiatives maybe with either business and then just in terms of what we can expect from margin contribution from that this year.

Thanks, Kate. GameChanger and DMN are both really important, powerful new assets that we have in our portfolio, and I'll start with GameChanger. As you know, GameChanger is a leader in the market leader in the multi-billion dollar tech sport space, and it continues to drive really strong comps, like nearly 40% CAGR and strong profitability. It's a SaaS system, and it just continues to drive strength and profit. You can look at it that way and say GameChanger is fantastic. When you step out and say, look at the impact that GameChanger and DICK'S can have together.

The fact that we can be embedded in youth sports lives at the moment when they are preparing and playing, we can be involved with parents and grandparents, we can have kids get their, you know, their stats and their highlight reels and all of that, it just makes us really embedded in youth sports culture. The other thing, and it's related to your second part of your question, is that from a DICK'S Media Network standpoint, GameChanger is unique in the marketplace where it has live sports in a way that really nobody else can provide. It's a big asset for our DICK'S Media Network, and it's appealing to our brand partners as well as to our non-endemic partners who wanna be a part of youth sports.

In terms of newness, we did just unleash a bunch of features in GameChanger. The quality, for those of you who watch the video quality, its high definition video is incredible, really crisp, really clear. We are gonna continue to—we have coaches tools that we just launched, and with DMN, the tech team has done an amazing job really building automation so we can really attribute sales to our partners' investments. All in all, really exciting parts of the business.

Kate, I'll just build on what Lauren said. The underlying drivers of the gross margin that we have talked about for some time now continue to remain in place in terms of the product that we have access to, not only just in 2026, but what we see in the pipeline, the work that our vertical brands team is doing, as well as GameChanger and DMN. These are still the inherent drivers of the gross margin confidence that we have for 2026. We are balancing that in 2026 against we have the exciting opening of the sixth distribution center in early part of 2026, so that's contemplated in our guidance expectation.

Your next question comes from the line of Christopher Horvers with JPMorgan. Please go ahead.

Thanks. Good morning. My first question for you, Ed, is what did you learn from Foot Locker and this 11-store test? Can you talk about how applicable the changes are to the rest of the chain? The 11 stores, were they more city center locations like Times Square versus suburban-based mall locations that people tend to associate with Foot Locker? What was the receptivity to running and brands like Hoka and On to that core, you know, Foot Locker customer relative to basketball? And in the 200 locations that you're targeting by back to school, what's the commonality among these locations relative to the 11-store test that you targeted, and then the, you know, obviously much larger chain?

Sure. Thanks, Chris. The 11-store taste test was really a broad-based test. We did some more urban stores, we did suburban stores, we pulled some high-volume stores, we obviously pulled some lower volume stores, which is why we're not closing as many stores as we anticipated. It was really a broad-based test on that original 11. The 10 in L.A. would be more urban stores that we've done. They've been.

What was common to them is we put a common merchandising and merchandise presentation theme across all of these banners, which really was to take out a lot of the unproductive inventory that was sitting on the wall that the consumer didn't want, cleared up the wall, and as I've used the phrase, it was the footwear wall, it was a run-on sentence. We took that run-on sentence down, took roughly 30% of the choices out of the store, relaid out the wall with the key product, and the consumer can walk in and see what's important, whether it's an Air Force 1 in color, whether it's a New Balance launch, whatever it might possibly be.

We've got the ability to clearly communicate to the consumer what's new and what's the high heat product. When we did that, these comps have been extremely strong. Strong enough that this is the game plan that we're gonna roll out to roughly 250 stores by back to school. Those 250 stores, again, will be a cross-section of stores. There'll be urban stores, there'll be suburban stores, there'll be some mall stores, and we'll take a look at this on a store-by-store basis, and it'll be a great cross-section of the business again.

We're also gonna be doing this in Europe, and we've got a couple in Europe, and we've seen we're very pleased with the results we're seeing in Europe, and we'll be rolling out these the Fast Break stores in Europe. The 250 includes the U.S. and Europe. If you think about it, we're pretty conservative. If we weren't highly confident that this Fast Break concept wouldn't be highly successful, we wouldn't be rolling out 250 of them by back to school. What that should give everybody confidence that we've got a game plan here that we've proven that it will work.

Thank you. That's very helpful. I guess a two-part follow-up. You know, traffic is always a red flag in retail, and it did turn negative in the core DICK'S business in the fourth quarter. I get the two-year stack math, but you know, your ASP or your ticket's gonna get harder as the year progresses. Presumably there was some inflation from tariffs as well. How should we think about you know, looking at that traffic number and you know, going forward, as you think about sort of running that two-year stack, you know, how applicable is traffic headwinds earlier versus traffic rebounding later and ticket sort of moderating? Thanks so much.

Thanks, Chris. The transactions in Q4, again, on a two-year stack basis, if you look, they were positive. If you look at the full year, they were positive. We were up against such a strong comp from the year before that I just think you have to take that into consideration. We have been driving strong basket and AUR, and that's just speaks to our differentiated product assortment. It's really not due to inflation. It's due to the fact that we are increasingly getting access and allocation to you know, really great products that people are resonating with. If you look to the headwinds. Look at our guidance, we are projecting 2%-4% comps on top of the 4.5%, so we are not concerned about traffic or transactions.

Your next question comes from the line of Paul Lejuez with Citigroup. Please go ahead.

Hey, thanks guys. Curious on synergies, if you expect that number that you shared to grow past the medium term. Also curious how you're thinking about what is the medium term. Then second, kind of related perhaps on Foot Locker, that business used to achieve $700 million of operating income, if you look prior to 2020, $700 million plus. I'm curious how much progress you think you can make towards that level and over what period.

Paul, thanks for the question. Let me start with synergies. We have reiterated today that we continue to expect synergies to be $100 million-$225 million over the medium term, and we continue to remain very confident. As you can imagine, we are six months into this transaction. We are working cross-functionally across both the organization, and the level of detail that the teams have created is fantastic. As we learn more, we'll definitely share if there are any updated expectations. As of today, we'll reiterate the kind of the outlook that I had shared.

In terms of what does medium term mean, there is a portion that is definitely in 2026 for the synergies that has been included in the guidance, and I would say the medium term would be maybe couple of years after that. In terms of the $700 million of operating income for Foot Locker, I think so this is a little bit too early to be able to give a long-term outlook. We feel really confident in what Ed talked about, the momentum that we have built, the focus that we have in returning this business to growth from the 1%-3% comp that we have got it and returning this business back to profitability. Six months in, really enthusiastic about the underlying momentum as well as the team that is driving these results. We'll share more in a due course of time about the longer term outlook.

Your next question comes from the line of Mike Baker with D.A. Davidson. Please go ahead.

Great, thanks. Just on the Fast Break and improvement in Foot Locker and the profit trends, just a little more color on the pacing throughout the year. Presumably, Foot Locker profits. Well, I guess I shouldn't say presumably, but do we expect them to be negative in the first quarter and second quarter until the back-to-school improvement kicks in? Just wondering on the expectations of how Foot Locker progresses throughout the year.

Mike, I'll say that we expect both the sales and profitability to be back-half weighted. As you can imagine, we said that the real inflection in this business will come from when we were able to source the buys effectively the way we wanted it, and that happens from the back-to-school timeframe. As Ed referenced, you know, the Fast Break stores being in position, which will also be during the back-to-school timeframe. We expect comps to be back-half weighted, and we expect the profitability also to be second-half weighted. Keep in mind on profitability, we also will have the benefit of the synergies that will kick in into the second half of 2026.

Makes sense. Thanks. If I could completely switch gears for a follow-up. Maybe not really a follow-up. Talk to us about agentic commerce or how you're dealing with that. Do you think there's been any impact? Do you feel like you're well-suited in that kind of environment? Just curious your view on how that works.

Yeah. Thanks, Mike. We are absolutely looking into all aspects of artificial intelligence, including agentic. I think there's two opportunities in the way our teams are looking at it. There's the opportunity to make our teammates more efficient and to remove a lot of manual work, and examples of that, we have some MarTech technology that we're building that can just remove a lot of the manual work that they are doing and just productivity in general. We're using that AI right now in terms of store labor forecasting. We've got a new AI-enabled tool in our app, and we're able to make more custom recommendations. Across the board, inventory management and making sure regional relevancy is happening, all is factored with artificial intelligence.

However, if you look to the future and you look at agentic, I think the biggest unlock in terms of our athlete experience is for us to really lean into what we call our common purpose and find ways to bring the power of our expertise and all of our opinion and knowledge that we have of sports and enable that to be available to people as they're working in the new world. We're working on that. More to come. That is a big focus to take all of our data, all of our knowledge, our teammate, you know, all of the learnings that we've had over the years and make that available for consumers. More to come.

Dick's Sporting Goods (DKS) Q4 2026 Earnings Call Transcript

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