This issue has prompted the retailer to revise its full-year outlook.
Dick’s Sporting Goods (DKS) has fallen short of sales and earnings expectations, attributing its disappointing results to the increasingly severe challenge of inventory theft
The company’s stock plummeted by over 20% in response to this news, reflecting investors’ inventory theft concerns. For the second quarter ending on July 29, Dick’s reported a 3.6% growth in net sales, reaching $3.22 billion. However, non-GAAP earnings per share (EPS) dropped by 23% to $2.82, failing to meet analysts’ projections. Net income also experienced a 23% decline, totaling $244 billion. While comparable-store sales showed a 1.8% increase, driven by a 2.8% rise in transactions and market share gains, the retailer attributed these results to inventory theft, often known as “shrink” within the industry.
CEO Lauren Hobart expressed disappointment with the Q2 profitability due to elevated inventory theft
This led the company to adjust its full-year earnings forecast, now projecting earnings per diluted share between $11.33 and $12.13, down from the previous estimate of $12.90 to $13.80. Despite this, Hobart emphasized the company’s enduring enthusiasm for its business and confidence in long-term growth prospects.
The problem of inventory theft has also affected other major retailers like Target, with CEO Brian Cornell revealing a 120% surge in theft incidents involving violence or threats of violence in the second quarter. Target expects inventory theft-related issues to impact its profitability significantly, estimating a reduction of $1.3 billion for fiscal 2023, up from $800 million in the previous fiscal year.
A recent survey by the National Retail Federation highlighted the severity of retail inventory theft, pegging it as a nearly $100 billion industry-wide issue that continues to worsen.
READ ALSO: 3 Most Dangerous Places In Los Angeles