Dick’s Sporting Goods is facing the financial heat after a disappointing third quarter and is turning to its newly acquired Foot Locker business to make up the difference. The company announced it will take up to $750 million in charges as it begins an aggressive overhaul of the sneaker retailer.
Despite purchasing Foot Locker for $2.4 billion just six months ago, Dick’s says it now plans to close underperforming locations and offload unproductive inventory. Executive Chairman Ed Stack put it bluntly, saying the company is “taking decisive actions to clean out the garage.”
These cleanup efforts will bring hefty costs, with projected pre-tax charges ranging from $500 million to $750 million. That includes expenses related to the merger, integration, and store closures. Foot Locker is expected to see a significant margin drop in the current quarter, as comparable sales are predicted to fall in the mid– to high-single-digit range.
While Foot Locker struggles with changing retail habits and declining mall traffic, sneakerheads may soon be forced to do their footwear shopping elsewhere.
