**Dick’s Sporting Goods reported a rise in second-quarter sales, driven by comparable store growth, while profits took a hit due to inventory shrinkage.**
**Key Highlights:**
* Net sales increased by 7.3% to $3.15 billion, exceeding analyst estimates of $3.09 billion.
* Comparable store sales grew by 6.9%, fueled by strength in team sports, golf, and athletic apparel.
* Gross margin contracted by 100 basis points to 30.7%, impacted by higher freight and promotional costs, as well as inventory shrinkage.
* Net income fell by 26.5% to $245.4 million, resulting in diluted earnings per share of $2.46, below analyst expectations of $2.54.
**Inventory Challenges:**
Dick’s faced inventory shrinkage issues during the quarter, leading to a loss of approximately $100 million in merchandise. The company attributed this to increased theft, organized retail crime, and supply chain disruptions.
**Outlook:**
Despite the profit decline, Dick’s remains optimistic about its long-term prospects. The company expects comparable store sales growth in the mid-single digits for the full year and plans to mitigate inventory shrinkage through enhanced security measures and vendor partnerships.
**Analyst Commentary:**
Analysts noted that while the sales growth was positive, the profit decline and inventory challenges were concerning. They expect Dick’s to face ongoing margin pressure due to rising costs and competition.
**Stock Performance:**
Following the earnings announcement, Dick’s Sporting Goods shares initially declined but later recovered to close slightly higher. The stock has been under pressure in recent months due to broader market weakness and concerns about the company’s profitability.
**Conclusion:**
Dick’s Sporting Goods delivered solid sales growth in the second quarter, but its profits were impacted by inventory shrinkage. The company’s outlook remains cautious amid ongoing cost pressures and inventory challenges. Investors will be watching closely to see how Dick’s addresses these issues and maintains its profitability in the coming quarters..
