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YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.10pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.25pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.06pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
adversely+21
expose+5
failure+4
harm+4
penalties+4
Positive rising
successfully+5
innovation+4
favorable+3
enhanced+2
enhance+2
Risk Factors (Item 1A)
9,716 words
ITEM 1A. RISK FACTORS
Risks Related to Our Industry and Macroeconomic Conditions
Macroeconomic conditions may adversely affect consumer discretionary spending and our business, operations, liquidity, and financial results.
Our business depends on consumer discretionary spending, and are sensitive to changes in global macroeconomic conditions outside of our control, including inflation, prolonged inflationary pressures and measures taken to curb inflation; elevated interest rates and recessionary pressures; changes in consumer disposable income consumer confidence and debt burdens; perceptions of global economic stability (including in response to shifts in government policies); and wage and unemployment levels. These conditions can cause consumers to reduce or postpone discretionary purchases, resulting in lower traffic, reduced comparable sales, and decreased average value per transaction across our business.
Geopolitical developments may also adversely affect our business and financial results. Ongoing conflicts and tensions —such as those in the Middle East (particularly the recent U.S. military operations in Iran), Ukraine and Venezuela—and the or outbreak of additional , war, terrorism, or public may create economic , supply chains, increase fuel and transportation costs, or elevate cybersecurity risks. Such developments continue to introduce uncertainty regarding long‑term trade and economic conditions in the European Union and other markets, which may particularly affect our Foot Locker Business given its international footprint.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
markdowns+5
loss+3
decline+2
shrinkage+2
losses+2
Positive rising
profitability+3
gains+3
effective+2
positive+2
opportunities+1
MD&A (Item 7)
9,383 words
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements and related notes appearing elsewhere in this Annual Report on Form 10-K. This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Refer to “Forward-Looking Statements” and Part I, Item 1A. “Risk Factors”.
Business Overview
We are a leading global sports retailer offering an extensive assortment of authentic, high-quality sports equipment, apparel, footwear and accessories. Our banners include DICK’S Sporting Goods, Golf Galaxy, Public Lands and Going Going Gone! stores in addition to the experiential retail concepts DICK’S House of Sport and Golf Galaxy Performance Center which are all located across the United States. Additionally, as owner and operator of Foot Locker, which includes Foot Locker, Kids Foot Locker, Champs Sports, WSS and atmos banners, we serve the global sneaker community across North America, Europe, Asia and Australia, plus a licensed store presence in Europe, the Middle East and Asia. We also own and operate GameChanger, a youth sports mobile platform for live streaming, scheduling, communications and scorekeeping. When used in this Annual Report on Form 10-K, unless the context otherwise requires or specifies, any reference to “year” is to our fiscal year, which ends on the Saturday closest to the end of January each year.
In response to reduced demand, we may need to increase promotional activity or adjust pricing strategies, which could negatively impact our planned sales levels and gross margins. A sustained reduction in consumer spending or an extended period of economic instability could adversely affect our business, operations, liquidity, financial condition, and results of operations.
Intense competition in the sporting goods and retail industries could limit our growth and reduce our profitability.
We operate in a highly fragmented, intensely competitive and rapidly evolving global marketplace. We operate a number of different store formats and compete with an expanding set of retailers and other potential competitors across multiple formats and channels—including large-format, specialty and traditional retailers; mass merchants; department stores; and online and direct‑to‑consumer sellers, including vendors. Many of our competitors have significant international, national, regional, or local market presence, and their name recognition, and financial, marketing, technological, and other resources allow them to meaningfully compete with our business across various channels. Our ability to effectively and successfully respond to competitive pressures may adversely affect our results of operations, profitability or reputation.
Consumers can compare prices and product offerings in real time, increasing pressure on us to maintain competitive pricing, differentiated assortments and compelling marketing programs. If our varied marketing and advertising strategies, particularly across digital and social media channels, are unsuccessful, we could lose customers and experience declining sales. In addition, the retail industry is undergoing continued technological innovation and disruption—including increased use of artificial intelligence (“AI”) and machine learning. If we cannot innovate, enhance our platforms or adopt new technologies at a pace consistent with consumer expectations and industry developments, our business could be harmed.
Fluctuations in product costs and availability could adversely affect our business, financial condition, and results of operations.
Our product costs depend in part on the cost and availability of raw materials and component inputs. Significant increases in those costs—whether due to trade tensions, shifting tariff policies in key sourcing countries like China, Mexico, and Canada (including recently enacted tariffs and potential additional shifts in tariff policies in the future), currency fluctuations, material shortages, supply chain disruptions, or other factors—could increase manufacturing and other costs for both our own private brand merchandise and the products we purchase from our vendors. These factors could also compel us to seek alternative suppliers, take pricing actions, modify operations, or take other actions that may not fully mitigate the associated cost increases, and our sales, margins, and profitability could be adversely affected.
Our business also depends heavily on third‑party transportation providers to move products (including those manufactured overseas). Transportation availability and other sourcing costs are influenced by fuel price volatility, extreme weather conditions, geopolitical conflicts and tensions as discussed above, acts of war or terrorism, port congestion, government shutdowns, labor disputes, regulatory changes, inspections, and other disruptions to global trade routes, shortages of qualified transportation personnel, and limited availability of aircraft, ships, trucks, and rail equipment. In particular, the military conflict recently launched in Iran has had, and may continue to have, adverse impacts on global trade with respect to goods passing through the Strait of Hormuz and material supply chain disruptions resulting in significant increases in oil and fuel prices
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globally. Increased demand for transportation services and spikes in fuel prices have resulted in higher transportation costs for us and our vendors, and continued volatility could further pressure our operating results. Any inability by us or our vendors to secure adequate and timely transportation resources at competitive rates or to otherwise obtain sufficient quantities of merchandise at acceptable cost on a timely basis could delay product flow, result in shipment delays, disrupt inventory levels, and negatively impact our ability to serve customers, any of which may adversely affect our sales, profitability, and customer experience.
Our reliance on products manufactured outside the United States and our significant international operations expose us to numerous global economic, political, regulatory, and supply‑chain risks that could materially and adversely affect our sales, profitability, results of operations, and financial condition.
A substantial portion of our merchandise, including most of our vertical brand merchandise, is manufactured abroad. As a result, our business is subject to a broad range of risks inherent in international sourcing and global retail operations, including changes in import duties, quotas, tariffs, and other trade restrictions; the potential introduction or expansion of taxes on imported goods; the loss of favorable trade status; trade remedy actions; geopolitical tensions; and other trade restraints affecting the countries where our vendors and manufacturers operate. Heightened political and economic uncertainty may further disrupt global trade flows, limit access to vital trade routes, or affect the availability and cost of imported goods.
In addition, imported products are often subject to excise duties, sales taxes, and value‑added taxes, and our international retail operations are subject to various taxes in foreign jurisdictions. Changes in duty structures, tax rates, or tax legislation—including indirect‑tax reforms, digital services taxes, or customs‑valuation rules—could increase the cost of goods sold or operating expenses. Foreign manufacturers’ pricing may also be affected by local currency movements relative to the U.S. dollar, as well as changes in the cost of raw materials, which could further increase our product costs and negatively impact our margins.
Risks Related to Our Operations and Reputation
If we are unable to anticipate or respond effectively to changes in consumer demand, preferences, fashion trends or shopping patterns, our sales and profitability may be adversely affected.
Our success depends on our ability to anticipate and respond in a timely manner to changing consumer demand, preferences and fashion, and cultural trends, as well as evolving shopping patterns across digital and in‑store channels of our business and international markets. We operate a fully omni‑channel business model and must meet customers’ expectations for appealing and consistent online experiences; localized and differentiated assortments; premium products; elevated customer service; fast, accurate and reliable delivery and pickup options; and convenient returns. Consumer expectations and shopping behaviors continue to evolve rapidly and vary across geographic and demographic groups, and these factors could be particularly pronounced within the global multi-cultural nature of our customer base with respect to the Foot Locker Business. If we do not provide an omni‑channel experience that aligns with customer expectations, our results of operations could be adversely affected. Our need to make advanced merchandise purchase commitments can limit our ability to adjust quickly to changes in demand or fashion trends. If we misjudge consumer preferences or the market for our merchandise, we may experience significant markdowns, lower margins, missed sales opportunities and inventory write‑downs.
The athletic footwear and apparel industry, particularly at the premium end of the market, is driven by fashion and cultural trends, changing consumer preferences and product innovation. We rely on our suppliers to maintain product innovation and to anticipate shifts in consumer tastes across the various geographic regions of our operations. We cannot guarantee that our merchandise selection will accurately reflect consumer preferences when offered for sale or that we will be able to identify and respond quickly to changes in fashion trends, especially given the long lead times required to source much of our product. Failure by us—or by our suppliers—to anticipate, identify or react appropriately to changes in fashion trends or consumer preferences could materially adversely affect our business, financial condition and results of operations.
Our vertical brand offerings and specialty concept stores expose us to potential increased costs, risks related to innovation and prediction of consumer trends and demand, customer experiences, third party liability and proprietary rights, competition and certain additional risks.
We develop and offer our customers exclusive vertical brand products, particularly within our DICK’S Business, which generally carry higher margins than equivalent third-party products. Our vertical brand products represent approximately 13% of our overall sales within the DICK’S Business. We expend considerable resources to develop new brands and continually seek to improve and expand our vertical brand offerings. Unexpected or increased costs or delays in development of a brand, excessive demands on management resources, legal or regulatory constraints, and changes in consumer demands and shopping patterns could cause us to curtail or abandon any of our vertical brand products, which could result in asset impairments and inventory write-downs. Additional risks relating to our vertical brand offerings include increased potential product liability and
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product recalls for which we do not have third-party indemnification or other contractual rights or remedies (including product safety concerns); increased reputational risks related to responsible domestic and international sourcing; increased costs for labor or raw materials used to manufacture products; our ability to successfully protect our proprietary rights (e.g., defendingagainstcounterfeit or unauthorized goods); our ability to successfully navigate and avoid claims related to the proprietary rights of third parties; our ability to anticipate consumer trends and styles; and our ability to utilize talent and other generational advertising techniques to reach the relevant market specific to each vertical brand.
We have also developed and introduced new store concepts and formats, including with respect to our DICK’S House of Sport stores, DICK’S Field House stores and Golf Galaxy Performance Centers within our DICK’S Business, as well as expanding or making improvements within our existing stores, including the pilot of a more focused product assortment within our Foot Locker Business which we’re referring to as our Fast Break initiative, which require considerable resources, and there is no assurance that these initiatives will be successful. We have also included a variety of experiential opportunities in our current store concept offerings for our DICK’S Business, such as climbing walls, batting cages, fields, ice rinks, group fitness activities and other in-person activations. Issues that may pose potential risks for our new store concepts, formats and enhanced experiential opportunities include: increased potential liability for bodily injury to customers or employees; increased liability for property damage; increased costs for implementing, installing, building, repairing, and maintaining our experiential concepts or creating new concepts; our ability to attract and retain employees with specific skill sets as it relates to experiential concepts; our ability to anticipate consumer trends or engaging activities across segments and international markets; increased reputational risks related to community involvement, giving, and other activations at a localized level; increased risk related to competitors attempting to create similar concepts to gain market share; and our ability to successfully administer and comply with obligations under license agreements that we have with third-party licensors of certain brands.
Harm to our reputation could adversely impact our ability to attract and retain customers and employees.
Negative publicity or perceptions involving us, our brands, products, or individuals or entities associated with us, or failure to detect, prevent, mitigate or address issues giving rise to reputational risk, could adversely impact our reputation, business, results of operations, and financial condition, and may adversely impact our ability to attract and retain customers and employees. Issues that might pose a reputational risk include any of the risks enumerated in these risk factors. Furthermore, the prevalence of social media and potential misinformation may accelerate and in the short-term increase the potential scope of any negative publicity we or others might receive and could increase the negative impact of these issues on our reputation, business, results of operations, and financial condition.
Our strategic plans and initiatives may initially result in a negative impact on our financial results, and such plans and initiatives may not achieve the desired results within the anticipated time frame or at all.
Our ability to successfully implement and execute our strategic plans and initiatives, including the ongoing integration of the Foot Locker Business, depends on many factors, some of which are out of our control. For additional risks related to the integration of the Foot Locker Business, see the risk factor captioned “We may not realize the anticipated benefits of the Foot Locker transaction or other strategic alliances, acquisitions or investments, and integration challenges or other risks associated with such transactions could adversely affect our business” below.
Our focus on long-term strategic investments, including investments in our technology and other digital capabilities (such as AI and machine learning), our eCommerce and GameChanger platforms, DICK’s Media Network, improvements to the customer experience in our stores and online, our supply chain, enhancements to our ScoreCard loyalty program, the continued development of our vertical brands and specialty store concepts, expansion and re-positioning of our real estate portfolio (including grand openings, store remodels, experiential concepts and relocations), continued enhancements to our product assortment across our business, including the Fast Break initiative in the Foot Locker Business, and improving employee productivity through strategic talent investments, organizational re-alignment and otherwise may require higher short-term expenditures, changes to our existing cost structure and/or significant capital investment and management attention at the expense of other business initiatives and may take longer than anticipated to achieve the desired return or fail to achieve the desired return at all. Additionally, any new initiative is subject to certain risks, including customer and employee acceptance, competition, product differentiation, our ability to successfully implement technological initiatives, and the ability to attract and retain qualified personnel to support the initiative.
An inability to execute our real estate strategy could adversely affect our financial results.
Our financial performance depends, in part, on our ability to execute our real estate strategies across our business, which are varying and multi-faceted. For our DICK’S Business, this includes growing and optimizing larger-format specialty store concepts and to repositioning and optimizing our existing store portfolio over time, and for our Foot Locker Business, includes maintaining and acquiring locations in highly productive urban retail corridors, high streets, and enclosed regional and
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neighborhood malls. There can be no assurance that we will be able to locate and obtain control of adequate desirable real estate that meets the criteria of our business or that such locations will continue to be available on favorable terms.
Our ability to negotiate favorable lease, purchase, or operating terms depends on conditions in the real estate, capital, and construction markets and other factors outside of our control, including competition for desirable properties; our relationships with current and prospective landlords, property owners, and shopping center or mall operators; construction costs; the availability of labor and materials; access to sufficient capital and/or financing vehicles, such as sale-leasebacks; local regulations; private restrictions; third-party or political opposition; and broader market conditions. Additionally, several large landlords control many prime properties, and further consolidation or deterioration in their financial condition could reduce our ability to obtain and retain desirable locations on favorable terms. If we are unable to secure suitable sites or negotiate appropriate terms, we may incur excessive costs, and our operating margins and/or return on investment may fall below acceptable levels.
Because a meaningful portion of our stores, particularly within our Foot Locker Business, are located in shopping centers or malls, our performance is influenced by the volume of mall traffic and the sustained success and relevance of those locations. Mall traffic may be adversely affected by economic downturns; the closing or decline of anchor tenants and specialty retailers; vacancies or closures; shifts in consumer shopping habits, including increased online shopping; singular material events, such as a public health emergency, or decline in the popularity of mall shopping among our target customers. Our DICK’S Business may also be affected by changes in traffic patterns in the regional shopping areas and off-mall retail nodes where many of our stores are located. Declines in traffic or conversion rates may require us to increase markdowns, promotions, or marketing spend, which could adversely impact our financial results. Additionally, the growth of our business is dependent on our ability to open and operate our various store concepts synergistically in geographic regions where multiple store concepts may exist in close proximity to one another.
If particular stores become unprofitable, we may be required to record impairment charges and may not be able to terminate related leases or sell associated real estate. Store closures may result in short-term economic consequences, such as ongoing rent or other lease-related obligations for the remainder of the lease term, termination charges, default risks, or, if a property is owned, costs, expenses, and losses associated with a sale or other disposition. We may also remain liable for certain post‑assignment or sublease obligations if an assignee, sublessee, or tenant fails to perform. Any of these factors could adversely affect our business, financial condition, and results of operations. These risks may be more prevalent within our Foot Locker segment as we continue our review of the global Foot Locker business store fleet and evaluate closure of certain underperforming stores.
Our business relies on our global distribution and fulfillment network, and disruptions in or failures to optimize this network, could cause us to lose merchandise, be unable to effectively and efficiently deliver merchandise to our stores and customers, and could adversely affect our financial condition and results of operations.
The ability to optimize our global distribution and fulfillment network, which includes multiple distribution centers worldwide, our eCommerce fulfillment centers, and our stores that serve as forward distribution points, to avoid disruptions and maximize efficiencies, depends on a variety of factors including severe weather conditions, natural disasters, public health emergencies or other catastrophic events, problems with our information technology systems or our warehouse management systems, labor or employee disagreements, supply chain disruptions or other shipping problems, and general geopolitical, economic and real estate conditions. An inability to optimize our distribution and fulfillment network might impair our ability to adequately stock our stores, process returns and fulfill eCommerce orders at the speed expected by customers, increase costs associated with shipping and delivery, damage a material portion of our inventory, and otherwise negatively affect our operations, sales, profitability, and reputation.
In addition, we rely on independent third-party transportation providers for substantially all of our merchandise shipments. If we change shipping companies, we could face logistical difficulties that could adversely impact deliveries, and we would incur costs and expend resources in connection with such change. Moreover, we may not be able to obtain terms as favorable as those received from the independent third-party transportation providers we currently use, which could have a material adverse impact on our business.
Unauthorized access to, or disclosure of, sensitive or confidential information could result in substantial costs, operational disruption, legal exposure, and reputational harm, and evolving privacy and cybersecurity regulations may increase our compliance obligations and related risks.
The protection of customer, employee, vendor, and Company data is critical to our business. In the normal course of operations, we collect, receive, store, manage, transmit, and delete confidential and sensitive information, including payment card data, personally identifiable information, employee and vendor information, and other proprietary or confidential Company data, and rely on numerous third‑party vendors and service providers in this regard. Although we have established cybersecurity
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governance processes, implemented security measures, and conduct regular training and system updates, cyber threats continue to evolve rapidly accelerated by emerging technologies such as advanced artificial intelligence and machine learning. We may be unable to anticipate, prevent, or fully mitigate new or sophisticated cyberattacks or insider threats, whether intentional or inadvertent.
While we and our third-party providers have experienced non‑material data security issues from time-to-time, and in the future may continue to experience cyberattacks or threats of varying degrees in the conduct of our business, we are not aware of any material data breach to date. Nevertheless, any actual or perceived compromise of data security could interrupt our operations; result in loss, theft, or misuse of sensitive information; harm our reputation; undermine customer trust; discourage participation in our loyalty program; and require significant remediation costs, including investments in additional technology, system upgrades, or personnel. A material compromise could also expose us to substantial legal, regulatory, and financial consequences beyond the scope or limits of our insurance coverage.
In addition, the data privacy and cybersecurity regulatory environment is becoming increasingly complex, with new, more rigorous, and often inconsistent requirements emerging at the federal, state, and global levels. We are subject to numerous laws and regulations, including the EU General Data Protection Regulation (GDPR), the United Kingdom GDPR, the California Consumer Privacy Act (CCPA), and other U.S. state and international privacy laws. We are also subject to payment card industry compliance and other regulatory requirements. These laws impose strict requirements regarding the collection, use, storage, transfer, deletion, and protection of personal data, and grant enhanced rights to individuals. Regulatory scrutiny from international regulatory authorities, U.S. federal agencies, U.S. state attorneys general, and newly created U.S. state privacy regulators continues to increase, and we have received inquiries from government authorities from time-to-time regarding our data practices.
Maintaining compliance with these obligations may require significant resources, ongoing enhancements to our privacy and cybersecurity programs, and changes to our business practices. Evolving regulations may limit our ability to collect and use data to enhance and personalize our customer experience, support marketing and advertising activities, or execute strategic initiatives. Failure to comply with applicable laws or regulations, or to respond appropriately to a data‑security incident, could result in severepenalties, sanctions, governmental investigations, consumer litigation, and reputational harm.
Problems with our information systems could disrupt our operations and negatively impact our financial results and materially adversely affect our business operations.
We utilize and depend on information systems for core system needs of our business, including our use of an independent service provider for electronic payment processing. We rely on these systems to make operational decisions, manage inventory, operate our websites, track, record and analyze the merchandise we sell, process and deliver shipments of goods, and maintain normal business activities. Additionally, we have adopted a hybrid remote work environment which relies on the efficiency and functionality of our information systems. If any of these systems (including our back-up systems, third party systems or systems upon which any of these systems rely) are damaged, breached, or fail to function properly, whether from natural, accidental or malicious events, it could disrupt our operations, we may sufferloss of critical data, and we may have to undertake significant investments to repair or replace these systems, which could negatively impact our financial results and materially adversely affect our business operations. If independent service providers become unwilling or unable to provide such services to us or if the cost of using these providers increases, our business could be harmed.
In addition, the development, adoption, and use of generative AI technologies and machine learning are progressing rapidly; ineffective or inadequate AI and machine learning development or deployment practices by us or by third parties, including vendors, could result in unintended consequences. For example, AI or machine learning algorithms that we use may be flawed or based on datasets that are biased, incomplete or insufficient. In addition, any latency, disruption, or failure in our AI or machine learning systems or infrastructure could result in operational delays or errors. Developing, testing, and deploying resource-intensive AI and machine learning systems may require additional investment and increase our costs.
We may be unable to attract, train, engage and retain key employees and to adequately respond to employee organizing efforts.
Our long-term success and ability to implement our strategic goals and initiatives depends on our ability to attract, retain, train and develop key and qualified employees in all areas of the organization. Our ability to meet our labor needs while controlling labor costs is subject to numerous external factors, including market pressures with respect to prevailing wage rates, equity compensation, unemployment levels and labor availability, particularly in key geographic regions, and employee benefit costs; adoption of new work models and policies regarding on-site and remote work; immigration compliance, and international wage and labor standards and other global regulatory factors; changing demographics; and our reputation within the labor market. If we are unable to attract and retain a global workforce that meets our needs, our operations, service levels, support functions, and competitiveness could suffer, and our results could be adversely affected.
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We also cannot predict whether any unionization or other organizing efforts could occur with our employees within one or more of our domestic or international markets. Any such efforts could increase our costs and negatively impact our operational flexibility. Our response to any such efforts could be perceived negatively and harm our business and reputation.
The loss of one or more of our key executives or the inability to successfully attract and retain executive officers or implement effective succession planning strategies could have a material adverse effect on our business.
Our long-term success and ability to implement our strategic and business planning processes depends in large part on our ability to continue to attract and retain executive management, including recent hiring and appointments of key executives within our Foot Locker Business. All employees, including members of our executive management and key personnel, are at-will employees, and we generally do not maintain key-person life insurance policies on our employees. The loss of any one of the members of our executive management team, including our President & Chief Executive Officer, Lauren Hobart, and our Executive Chairman Edward W. Stack, who began operating the Company in 1984, continues to oversee our merchandising group and key strategic growth initiatives, including the Foot Locker Business, could seriouslyharm our business. Effective succession planning for executive management and key personnel, including Ms. Hobart and Mr. Stack, is vital to our long-term continued success. Failure to ensure effective transfer of knowledge, maintenance of our culture, setting of strategic direction, and smooth transitions involving executive management and key personnel could hinder our long-term strategies and success.
The seasonality of certain categories of our operations, along with the current geographic concentrations of our stores, exposes us to certain seasonal influences and weather-related risks.
Our business is subject to seasonal influences and certain holidays and sports seasons during the year. Many of our stores are in geographic areas that experience seasonally cold weather, and we sell a significant amount of cold weather sporting goods and apparel. Within the DICK’S Business, our highest sales and operating income results have historically occurred during our second and fourth fiscal quarters, which is due in part to golf and team sports sales and the back-to-school season during the second quarter, and in part to the winter holiday season, and our historically strong sales of cold weather sporting goods and apparel in the fourth quarter. Results for any quarter are not necessarily indicative of the results that may be achieved for the fiscal year. However, poor performance during a quarter because of slow holiday or back-to-school seasons or unseasonable weather conditions, including unusually warm weather in the winter months or abnormally wet or cold weather in the spring or summer months, could have a material adverse effect on our business, financial condition, and operating results for the entire fiscal year.
Furthermore, extreme weather conditions and natural disasters caused by changing climate conditions or otherwise and other catastrophic events in the areas in which our stores, distribution centers and/or eCommerce fulfillment centers are located could negatively impact consumer shopping patterns, consumer confidence and disposable income, create interruptions to our business, damage or destroy key facilities, or otherwise could have a negative effect on our financial performance.
We cannot provide any guaranty of future dividend payments or that we will continue to repurchase our common stock pursuant to our stock repurchase program.
Any determination to pay cash dividends or change the amount of our cash dividend on our common stock in the future will be based upon our financial condition, results of operations, business requirements, and the continuing determination from our Board of Directors that the declaration of dividends is in the best interests of our stockholders and complies with all laws and agreements applicable to the dividend. Furthermore, although our Board of Directors has authorized share repurchase programs, we are not obligated to make any purchases under these programs, and the Board may discontinue these programs at any time.
If we do not successfully manage our inventory levels and protect against inventory shrink, our business, financial condition, and results of operations could be materially and adversely affected.
Our ability to maintain appropriate inventory levels is a key component of our operating performance. We must carry sufficient inventory to meet customer demand while avoiding excess or slow‑moving merchandise. If we fail to accurately forecast demand, consumer buying patterns, or shifts in product trends, we may be required to take markdowns or run promotional activity to clear excess inventory, negatively affecting our gross margins and overall financial performance. We have and are continuing to implement key strategic initiatives designed to optimize inventory levels, enhance supply‑chain efficiency, and improve product‑to‑market processes, including expansion of our capabilities in data science, demand forecasting, and customer‑behavior analytics to better localize assortments and increase store‑level allocation accuracy, as well as deploying technology intended to improve in‑season responsiveness. We’ve also taken and are continuing to take strategic actions with respect to historically unproductive inventory in our Foot Locker Business to optimize our assortment. Because these initiatives require significant changes to our inventory management systems, processes, and organizational capabilities, any failure to
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implement, integrate, or fully utilize these initiatives could prevent us from realizing the expected benefits and could adversely affect our operating results.
In addition, our business is exposed to risks related to inventory shrinkage—losses from damage, theft (including organized retail crime), and other causes. Although some level of inventory shrink is inherent in the retail business and our inventory shrink generally stabilized in 2025, we have experienced elevated levels of inventory shrink in the past, which could return or worsen. We must also maintain a safe store environment for our employees and customers. Elevated levels of shrink or an unsafe store environment can negatively affect profitability, result in asset impairments at affected stores, and may require strategic changes in operational procedures or security measures that could increase our costs and adversely impact our reputation and the employee or customer in-store experience.
Our future growth may depend on the Foot Locker Business’s ability to expand its market share in international markets, including through licensed or franchise arrangements, and failure to do so could adversely affect our business, financial condition, and results of operations.
Future growth within our Foot Locker Business will depend, in part, on our ability to expand our presence and market share in international regions where we currently operate as well as in new markets where we may have limited operating experience. In certain countries, we rely—and may increasingly rely—on third‑party partners through licensing or franchise arrangements to operate stores or digital platforms under our banners. Our ability to grow internationally therefore depends not only on our own execution but also on the capabilities, financial stability, operational discipline, and brand stewardship of these foreign business partners.
Our Foot Locker Business has retail operations in 20 countries across North America, Europe, Asia, and Australia, plus a licensed store presence in Europe, the Middle East, and Asia. These international operations expose us to retail‑market and regulatory risks unique to non‑U.S. jurisdictions, including distinct consumer behaviors and preferences and shifts related thereto; political or social instability; changes in local economic conditions; fluctuations in real estate and occupancy costs and variations in real estate conditions generally; foreign tax structures; and labor, employment, data‑protection and other regulatory and compliance requirements that differ significantly from those in the United States. Because these businesses primarily conduct transactions in their local currencies, fluctuations in foreign currency exchange rates—especially the euro, British pound, Canadian dollar, Australian dollar and the Japanese yen—may materially affect our reported results when translated into U.S. dollars. In some markets, local business practices and regulatory frameworks may be unfamiliar or more complex than those in our historical footprint for the DICK’S Business. In addition, expansion into new geographies may require significant capital investment, adjustments to our store formats or digital platforms, enhanced supply‑chain capabilities, and increased management attention.
If we or our licensed or franchised partners are unable to successfully execute expansion strategies, adapt our banners to new market dynamics, comply with local regulatory requirements, or maintain consistent brand standards, our international growth may not materialize as expected. Any failure to expand profitably—or at all—in targeted international markets could adversely affect the Foot Locker Business’s future growth trajectory and could have a material adverse effect on our overall business, financial condition, and results of operations.
Risks Related to Our Common Stock, Class B Common Stock and Other Anti-Takeover Mechanisms
Failure to meet market expectations has caused, and could in the future cause, a decline in our common stock price.
As a publicly-traded company, various securities analysts follow our financial results and issue reports about our historical financial results as well as analysts’ opinions of our future performance, including estimates or projections on future results, which may, in part, be based upon any guidance we have provided. If our operating results differ from the estimates or expectations of public market analysts and investors, our stock price could decline (which has happened in the past and could happen in the future). We are currently subject to securities class action and shareholder derivative lawsuits, books and records demands and Section 220 actions relating to a temporary decline in our stock price and could become involved in additional litigation of this type in the future. Any litigation could result in reputational damage, substantial costs (directly or indirectly, such as potential insurance cost increases) and a diversion of management’s attention and resources needed to successfully run our business. See Item 3. “Legal Proceedings” for more information regarding the pending securities class action, shareholder derivative lawsuits, books and records demands and Section 220 actions.
We are controlled by holders of our Class B common stock, whose interests may differ from other stockholders.
Holders of our Class B common stock, consisting of our Executive Chairman, Mr. Edward W. Stack, his relatives, and various trusts established for the benefit of their families, control a majority of the combined voting power of our common stock and Class B common stock and would control the outcome of a vote on any corporate transaction or other matter submitted to our
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stockholders for approval. The interests of the holders of Class B common stock may differ from the interests of our other stockholders and they may take actions with which our other stockholders disagree. Further, activist investors and other public pressures have recently applied greaterscrutiny to listed companies with such dual class share structures. Similar efforts or enhancedscrutiny with respect to our Class B common stock could adversely impact perceptions of our common stock value, divert management attention from our core business operations and strategic initiatives, and/or cause our stock price to decline.
The issuance of Class B common stock and other anti-takeover mechanisms could prevent or delay a change in control of our Company or certain other transactions, even if such a change in control transaction could be beneficial to our stockholders.
Provisions of our Amended and Restated Certificate of Incorporation, as amended, and our Second Amended and Restated Bylaws as well as provisions of Delaware law could discourage, delay, or prevent a merger, acquisition, or other change in control of our Company, even if such change in control would be beneficial to our stockholders. These provisions include: authorizing the issuance of Class B common stock; authorizing the issuance of “blank check” preferred stock that could be issued by our Board of Directors to increase the number of outstanding shares and thwart a takeover attempt; prohibiting the use of cumulative voting for the election of directors; prohibiting stockholder action by partial written consent and requiring all stockholder actions to be taken at a meeting of our stockholders or by unanimous written consent if our Class B common stock is no longer outstanding; and establishing advance notice requirements for nominations for election to the Board of Directors or for proposing matters to be acted upon by stockholders at stockholder meetings.
Risks Related to Third Parties and Legal and Regulatory Requirements
We depend on key suppliers, distributors and manufacturers to provide us with sufficient quantities of quality, innovative and competitively priced products, and any disruption in these relationships could adversely affect our business.
Our ability to provide a compelling merchandise assortment depends on maintaining strong relationships with a large but concentrated group of suppliers. We purchased merchandise from approximately 1500 vendors in fiscal 2025, with Nike, our largest vendor, representing approximately 31% of total merchandise purchases. Because of this concentration, any adverse development in a key supplier’s brand power, reputation, financial condition, product innovation, or manufacturing capability—or its decision to change its distribution or allocation strategies—could materially adversely affect our business.
We generally do not have long‑term written contracts with our suppliers that would require them to continue supplying us with merchandise or providing us with customary incentives we’ve historically received in the DICK’S Business such as return privileges, volume purchasing allowances, cooperative advertising and markdown allowances. Key vendors may fail to deliver on their commitments or fail to supply us with sufficient products that comply with our safety and quality standards or fail to continue to develop new products that create consumer demand.
Any inability to obtain merchandise in a timely manner, secure adequate product allocations, or maintain favorable supplier terms could have a material adverse effect on our business, financial condition, results of operations or profit margins.
We are subject to significant costs and risks associated with an extensive and evolving set of global laws and regulations that affect our business, operations, and workforce.
Our business is subject to a broad, increasingly complex and sometimes conflicting array of U.S. federal, state, local, and foreign laws and regulations. As regulatory expectations increase globally, we are required to devote substantial resources to develop and maintain internal compliance programs, monitoring systems, reporting structures, and controls. Failure to comply with applicable laws and regulations, or alleged non‑compliance, could result in governmental investigations, enforcement actions, fines, penalties, injunctions, civil litigation, reputational harm, and operational disruptions.
We are also subject to numerous domestic and foreign labor and employment laws governing wages, minimum hours, overtime, paid leave, scheduling, unemployment insurance, workers’ compensation, and workplace safety. Potential changes to these laws—including increases in minimum wage or overtime obligations, or reforms such as the Protecting the Right to Organize Act—could significantly increase our labor costs. Shifts in regulatory priorities at agencies such as the National Labor Relations Board or analogous international regulators may also affect our employee‑relations practices and expose us to additional administrative or litigation risks.
Complying with new or amended legislation, changes in regulatory interpretations, or reversals of previously implemented rules can be time‑consuming and costly, requiring adjustments to policies, systems, and staffing. Any failure to effectively manage these evolving global compliance obligations could negatively impact our business, financial condition, or results of operations.
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Our sales and operating results could be adversely affected by product safety and labeling concerns.
Failure to meet applicable safety or labeling standards or our customers’ expectations regarding safety or labeling of products, could result in decreased sales, increased costs, and/or expose us to legal and reputational risk. Our vendors must comply with applicable product safety and labeling laws, and we are dependent on them to ensure that the products we buy comply with all safety and labeling standards. Negative customer perceptions regarding the safety, sourcing and labeling of the products we sell, and events that give rise to actual, potential, or perceived product safety or labeling concerns could expose us to government enforcement action and/or private litigation. Furthermore, reputational damage caused by real or perceived product safety or labeling concerns could have a negative impact on our sales and operating results.
We may be subject to various types of litigation and other claims, and our insurance may not be sufficient to cover damages related to those claims.
From time-to-time the Company or its subsidiaries may be involved in lawsuits or other claims arising in the ordinary course of business, including those related to federal, state or multi-jurisdictional wage and hour laws, product liability, consumer protection, advertising, employment, intellectual property, tort, privacy and data protection, disputes with property owners, landlords and vendors, company policies, workplace injuries and other matters. We may incur losses relating to claims filed against us, including costs associated with defendingagainst such claims, and there is risk that any such claims or liabilities will exceed our insurance coverage, or affect our ability to retain adequate or cost-effective liability or workers’ compensation insurance in the future. Even if a claim is unsuccessful or is not fully pursued, the negative publicity surrounding any such assertions could adversely affect our reputation. Due to the inherent uncertainties of litigation and other claims, we cannot accurately predict the ultimate outcome of any such matters.
Although no longer sold in any of our stores, we remain subject to certain risks relating to the historical sale of firearms and ammunition by the DICK’S Business to the extent it remains in circulation. Due to the highly regulated nature of these products and the increased risk of injury or related lawsuits stemming from their use, any improper or illegal use by our customers of ammunition or firearms previously sold by us could have a negative impact on our reputation and business – including losses due to lawsuits (including class actions) relating to our historic background check processes, compliance obligations, or the improper use of firearms or ammunition, whether brought by private litigants, municipalities, or third-party organizations.
Our inability to protect our intellectual property rights, or claims that we infringe the intellectual property rights of others, could adversely affect our brand, reputation, and operating results.
Our intellectual property, trade secrets, domain names, and exclusive licensing rights are valuable assets that are critical to our brand strength. Effective intellectual property protection may not be available in every country in which we operate or manufacture products. Certain countries may not provide protections comparable to those available in the United States, and operating in these regions increases the risk that our proprietary designs, content, technology, or brand assets may be counterfeited, copied, misused, or otherwise misappropriated. Enforcement measures may be costly and not always successful.
Unauthorized use, reproduction or other misappropriation of our intellectual property can diminish the value of our brands or goodwill and negatively impact our revenues and competitive position. In addition, infringement or other third-party intellectual property claims—regardless of their merit—could be time‑consuming, result in litigation, product delays or modifications monetary damages, or require us to enter into royalty, licensing, or settlement agreements or result in our loss of ownership or use of the intellectual property rights, which could adversely affect our business, financial condition, and results of operations.
Changes to tax laws and regulations, or their interpretation and application, could adversely affect our financial results and condition.
As a U.S.-based multinational company subject to tax in multiple U.S. and foreign jurisdictions, our effective income tax rate and overall tax liability are affected by a variety of factors, including changes in applicable tax laws, regulations, treaties, administrative interpretations and guidance, including the possibility of retroactive effect; changes in transfer pricing rules; shifts in the mix of pretax earnings by jurisdiction; and the valuation of deferred tax assets and liabilities. Significant judgment is required in determining our provision for income taxes and in evaluating our tax positions on a worldwide basis.
We are also subject to routine income tax audits in various jurisdictions, and the final outcomes of these audits may differ from the amounts recorded in our financial statements. Adverse developments, including assessments of additional taxes, interest or penalties, could materially affect our tax expense and profitability.
In addition, many jurisdictions are considering or have adopted new tax regimes, such as digital services taxes and the Organization for Economic Co‑operation and Development’s Pillar Two global minimum tax framework, which countries are in the process of implementing. Future changes in tax laws or related interpretations, including at the federal level in the United
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States, could increase our effective tax rate, impose new taxes or reporting requirements, or otherwise adversely impact our financial results, cash flows and overall financial condition.
Poor performance of professional sports teams within our core regions of operations, as well as league-wide lockouts, strikes or cancellations, retirement of or seriousinjury to key athletes or scandals involving such athletes could adversely affect our financial results.
We sell a significant amount of professional sports team merchandise across our business segments, the success of which may be subject to fluctuations based on the success or failure of such teams or their key players. Poor performance by the professional sports teams within regions with high customer concentration and demand; league-wide lockouts or strikes; and disruptions to, cancellations of, or negative publicity regarding sports leagues and major sporting events could cause our financial results to fluctuate year-over-year. In addition, to the extent we use individual athletes to market our products and advertise our stores or we sell merchandise branded by one or more athletes, the retirement or injury of such athletes, negative publicity or scandals in which they might be implicated could negatively impact our financial results.
Evolving environmental, social and governance (“ESG”) standards, regulatory requirements, stakeholder expectations and related political and social dynamics may increase our costs, subject us to additional risks and adversely affect our business, reputation and financial performance.
We are subject to rules and regulations related to ESG matters imposed by governmental and self‑regulatory organizations, including the SEC, the New York Stock Exchange, California’s Climate Corporate Data Accountability Act and Climate‑Related Financial Risk Act, and the European Sustainability Reporting Standards. Failure to comply could result in fines, penalties or other regulatory consequences, as well as reputational harm.
In addition, some third‑party organizations, institutional investors, proxy advisory firms and customers evaluate companies on ESG performance using differing, and evolving, criteria. These assessments can influence investor sentiment, capital allocation decisions and consumer preferences. Reduced access to or increased cost of capital may result if we do not meet stakeholder expectations related to ESG matters. Developing, implementing and reporting on ESG initiatives, including environmental sustainability, human rights and labor practices, worker safety, materials traceability, packaging and textile waste reduction, and diversity and inclusion initiatives, is complex, costly and subject to evolving reporting standards, internal controls and methodologies. Our ESG disclosures, goals and progress may rely on assumptions, data and measurement frameworks that continue to develop. We could be criticized for the accuracy, adequacy or completeness of our disclosures, the pace of our progress, the scope or ambition of our goals, or for modifying or abandoning previously announced goals. Any such criticism or perceived shortcomings could result in reputational harm, loss of customer or investor confidence, or adverse business impacts.
At the same time, “anti‑ESG” and “anti‑DEI” sentiment has gained momentum in parts of the U.S., leading to proposed or enacted policies, legislation, litigation, legal opinions, investigations and other actions that challenge certain ESG‑related or DEI‑related practices. These developments may conflict with other regulatory requirements, create uncertainty, increase compliance obligations and expose us to additional scrutiny, enforcement actions, litigation risk or reputational harm. They may also influence investor behavior or reduce demand from certain customers.
If we fail to meet applicable ESG‑related regulatory requirements or standards, or if our ESG initiatives, disclosures or performance fall short of expectations of regulators, investors, customers, employees or other stakeholders, we could experience adverse publicity, loss of investor or customer confidence, reduced access to or increased cost of capital, increased compliance costs, or other negative impacts on our business, results of operations, financial condition and liquidity.
Risks Related to Our Strategic Transactions, Indebtedness and Investments
We may not realize the anticipated benefits of the Foot Locker transaction or other strategic alliances, acquisitions or investments, and integration challenges or other risks associated with such transactions could adversely affect our business.
From time-to-time, we may enter into strategic alliances, make acquisitions, or invest in complementary companies or businesses. In particular, although we expect to achieve $100 million to $125 million in cost synergies over the medium term and other longer term synergies and significant benefits from the acquisition of Foot Locker (the “Transaction”), there can be no assurance that we will realize any such synergies or benefits within the anticipated timeframe, or at all. Our ability to achieve the anticipated benefits of the Transaction—and of any future alliances, acquisitions or investments—depends on our ability to make accurate assumptions regarding valuation, operations, growth potential, integration and other factors, and to operate and integrate the relevant businesses successfully.
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We expect to continue to operate Foot Locker as a standalone business segment within our portfolio, maintain the Foot Locker brands, and grow the business by applying our operational expertise. Achieving the anticipated cost synergies and other benefits will depend, in part, on our ability to operate Foot Locker’s Business successfully and efficiently integrate certain operations, which are complex and time consuming, and include, among others:
• preserving operational and other important relationships of Foot Locker and attracting new business and operational relationships;
• operating multiple banners, a differentiated store concept and successfully addressing the challenges facing Foot Locker’s business;
• integrating financial forecasting and controls, procedures and reporting cycles;
• consolidating and integrating corporate, information technology, finance and administrative infrastructures, including enterprise resource planning systems;
• coordinating sales and marketing efforts to effectively position our and Foot Locker’s capabilities;
• coordinating operations in countries in which we have not previously operated; and
• integrating employees and related HR systems and benefits, maintaining employee morale and retaining and attracting key employees.
Strategic alliances, acquisitions and investments (including the Transaction) may also result in the diversion of capital and significant management attention from other business issues and opportunities, both before and after completion, which could adversely affect our ongoing operations. We may not be able to successfully integrate acquired operations, including personnel, financial systems, supply chain and other processes, or successfully operate an acquired business, which could negatively affect revenue, increase expenses, and impair operating results.
In addition, acquisitions may result in dilutive issuances of equity securities, the incurrence of debt, contingent liabilities, amortization expenses, or write-offs, including with respect to historically unproductive inventory in the context of the Transaction, any of which could harm our financial condition. If we do not successfully manage the challenges inherent in strategic alliances, acquisitions and investments, we may not achieve the anticipated benefits on the anticipated timeframe or at all, and our revenue, expenses, operating results, financial condition and common stock price could be materially adversely affected.
Our indebtedness and the terms of our debt instruments, together with potential constraints in the capital markets, could adversely affect our business, financial condition and results of operations, and may limit our flexibility to respond to changing business and economic conditions.
We require adequate capital to operate and expand our business and to respond to changing business and economic conditions. Weakness or volatility in the credit and public capital markets, or deterioration in our financial condition due to internal or external factors, could restrict or limit our access to capital and increase the cost of financing. If we are unable to generate sufficient cash flows from operations and if availability under our revolving credit facility (the “Revolving Credit Facility”) is not sufficient to meet our capital needs, we may be required to seek additional financing, which may not be available on favorable terms or at all. Our liquidity and access to capital could also be adversely affected by unforeseen changes in financial markets and the global economy. In the event of insolvency, liquidation, dissolution or reorganization, the lenders under our Revolving Credit Facility and the holders of our senior notes would be entitled to payment in full from our assets before any distributions were made to our stockholders.
We have outstanding 4.00% senior notes due 2029 (the “2029 Notes”), 3.15% senior notes due 2032 (the “2032 Notes”) and 4.10% senior notes due 2052 (the “2052 Notes,” and together with the 2029 Notes and the 2032 Notes, the “Senior Notes”). Our ability to make scheduled payments on, or to refinance, our indebtedness, including the Senior Notes and borrowings under the Revolving Credit Facility, depends on our financial and operating performance. The interest rates applicable to our Revolving Credit Facility may be affected by our credit ratings, and any downgrade—particularly to below investment grade—could increase our interest expense. If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets or operations, seek additional capital, or restructure or refinance our indebtedness, including the Senior Notes and the Revolving Credit Facility. A failure to generate sufficient operating results and resources could lead to substantial liquidity challenges and might require the disposition of material assets or operations; we may be unable to consummate such dispositions or obtain sufficient proceeds to meet our obligations when due.
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Our current and future indebtedness could have important negative consequences, including, among other things:
• increasing our vulnerability to adverse economic and industry conditions;
• limiting our ability to obtain additional financing on acceptable terms;
• requiring the dedication of a substantial portion of our cash flow from operations to service debt, reducing cash available for other purposes;
• limiting our flexibility to plan for, or react to, changes in our business; and
• placing us at a possible competitive disadvantage relative to competitors that are less leveraged or have better access to capital.
In addition, our debt documents contain restrictive covenants, including among other things, limitations on certain of our subsidiaries’ ability to incur additional indebtedness and our ability to sell all or substantially all of our assets, in each case subject to a number of exceptions and qualifications. Any future indebtedness could include additional or more restrictive covenants that limit our ability to operate our business, raise capital, or make payments under other indebtedness. Failure to comply with these covenants, or to make payments when due, could result in a default under the applicable instrument and, in some circumstances, could lead to the acceleration of amounts outstanding and cross‑defaults under other indebtedness.
Furthermore, certain provisions in the indentures governing the Senior Notes could increase the cost of, delay or prevent a transaction that might otherwise be beneficial to our stockholders. For example, if a takeover results in a change of control triggering event under those indentures, noteholders will have the right to require us to repurchase their Senior Notes for cash at 101% of the aggregate principal amount of such notes. These and other obligations under the indentures could increase the cost of acquiring us or otherwise discourage a third party from pursuing an acquisition or from removing incumbent management, including in a transaction that noteholders or holders of our common stock may view as favorable.
Material changes in the value or liquidity of the securities and other investments we hold may adversely affect our business, financial condition, results of operations, and future capital requirements.
On January 31, 2026, we held $1.4 billion in cash and cash equivalents, the majority of which was invested in short‑term deposits with highly rated banking institutions. We regularly monitor counterparty credit risk and mitigate exposure by limiting the amount invested with any single institution. Although all such investments were in investment‑grade institutions as of that date, the value or liquidity of these investments could decline due to general market conditions, bank‑specific credit issues, or broader financial system stress. Any such decline could adversely affect our liquidity and our ability to fund operations or capital needs.
In addition, our U.S. and Canadian pension plans’ trusts held $408.4 million in assets on January 31, 2026. The fair values of these assets are compared to the plan’s projected benefit obligations to determine the funded status of the plan. We seek to mitigate funding risk through asset diversification and ongoing monitoring of investment risk, including quarterly portfolio reviews and periodic asset‑liability studies. Despite these measures, changes in market conditions, interest rates, credit quality, or other external factors could reduce the value of our pension assets, negatively affect the funded status of the plan, and increase future required contributions.
We currently hold non-controlling minority investments and may make additional minority investments in the future. Because we do not control the operations or strategic decisions of these investees, these investments inherently involve greater financial, operational, governance, and compliance risks. Other investors may have interests that differ from ours or may exercise their rights in ways that impair our ability to realize the anticipated benefits of these investments, including causing delays, disputes, or litigation. If our investees pursue additional financing to fund growth, such transactions may dilute our ownership and could occur at valuations below those at which we initially invested, thereby reducing the fair value of our holdings. Conversely, if our investees are unable to obtain needed financing, they may be forced to reduce spending, alter their business strategies, or face insolvency, each of which could significantly reduce the value of our investments in those entities.
When we refer to the “DICK’S Business” in this Annual Report on Form 10-K (this “10-K Report”), we are describing our existing DICK’S Sporting Goods operations, encompassing the DICK’S Sporting Goods, Golf Galaxy, Going Going Gone! and Public Lands banners, as well as GameChanger. When we refer to the “Foot Locker Business” we are describing our newly acquired Foot Locker operations, including the Foot Locker, Kids Foot Locker, Champs Sports, WSS and atmos banners.
Through our strategic pillars of athlete experience, differentiated product, brand engagement and teammate experience, we have transformed our DICK’S Business to drive sustained profitable growth. As part of our strategy, we have meaningfully improved our merchandise assortment through our vertical brands and strong relationships with our key brand partners, which provide access to highly differentiated products. We have also enhanced our store selling culture and service model and incorporated additional experiential elements and technology into our stores to further engage our athletes. We continue to innovate our omni-channel athlete experience through our DICK’S House of Sport stores, Golf Galaxy Performance Centers and our DICK’S Field House stores, and believe that a key driver of our future omni-channel growth will include repositioning our store portfolio to grow these stores. In addition to these strategies and foundational improvements, consumers have also made what we believe will be lasting lifestyle changes in recent years, prioritizing sport and maintaining healthy, active lifestyles, which has increased demand for our products.
We believe there is strength and momentum in the sports industry in the United States and expect this trend to continue in the near term, with continued excitement around women’s sports, the 2026 FIFA World Cup and the 2028 Olympics. We believe that the convergence of sport and culture has never been stronger and that we are well-positioned for this opportunity. From this position of strength, we plan to continue to make investments in digital and in-store opportunities to further grow our market share through repositioning our store portfolio, driving continued growth across our key categories and accelerating our eCommerce channel.
Acquisition of Foot Locker
On September 8, 2025, we completed the acquisition of Foot Locker, a leading footwear and apparel retailer, for total purchase consideration of $2.5 billion, pursuant to the Merger Agreement dated May 15, 2025. The acquisition of Foot Locker is a transformative step towards creating a global platform that serves a broader set of athletes through differentiated iconic concepts and robust digital experiences, which we believe will deepen our brand partnerships as a combined company in a way that will redefine sports retail. Foot Locker delivered sales of $8 billion in fiscal 2024 and encompasses a portfolio of banners including Foot Locker, Kids Foot Locker, Champs Sports, WSS and atmos. Refer to Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 2 – Acquisition of Foot Locker for further information.
The Foot Locker Business contributed net sales of $3.1 billion and a net loss of $60.0 million during fiscal 2025. These results reflect the operations from the September 8, 2025 acquisition date through the end of fiscal 2025, which does not include the peak back-to-school selling season in August. Pro forma comparable sales for the Foot Locker Business, which assume Foot Locker had been acquired at the beginning of the current fiscal year, decreased 3.3% for the year ended January 31, 2026. This decline in Foot Locker’s pro forma comparable sales includes a decrease in Foot Locker’s International comparable sales of 8.1% for the year ended January 31, 2026, which represents operations of the Foot Locker Business in Europe and Asia Pacific.
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Following the acquisition, we assembled a new leadership team to lead the Foot Locker Business and started an eleven-store pilot in North America, referred to as our “Fast Break” initiative, to test improved merchandise presentation and assortment, which we have subsequently expanded to ten additional stores in Los Angeles. Additionally, we initiated a review of unproductive assets across Foot Locker’s inventory assortment and store portfolio. We expect that actions to optimize the inventory assortment and store portfolio of the Foot Locker Business, as well as other merger and integration and financing costs, will result in total estimated pre-tax acquisition-related charges of $500 to $750 million. We incurred $390.0 million of acquisition-related charges during fiscal 2025, including $217.9 million of charges from the write-down and liquidation of inventory, $164.2 million of merger and integration costs, which includes legal and regulatory fees, other professional services and other costs related to the Foot Locker acquisition, and $7.9 million of bridge financing costs. We expect approximately $150 million of acquisition-related costs in fiscal 2026. Additionally, we anticipate the acquisition to deliver between $100 million to $125 million in cost synergies in the medium-term, to be primarily achieved through procurement and direct sourcing efficiencies.
Business Environment
The macroeconomic environment in which we operate remains dynamic as a result of numerous factors, including ongoing elevated interest rates, inflationary pressures, changes to international trade policies from taxation and tariffs, and geopolitical conflicts, tensions and events, all of which could impact pricing, consumer discretionary spending behavior and the promotional landscape in which we operate.
Despite this increasingly complex and dynamic macroeconomic environment, we continued to drive comparable sales growth in fiscal 2025 for our DICK’S Business through execution of our core strategies, and with our strong vendor relationships and operational strength, we believe we are well-positioned for long-term growth. As a result of our continued strength and momentum of the DICK’S Business and the turnaround efforts underway at Foot Locker, balanced against the dynamic geopolitical and macroeconomic environment, we have provided our full year outlook for 2026 and expect total net sales of $22.1 billion to $22.4 billion and earnings per diluted share in the range of $13.70 to $14.70, which includes approximately $150 million of Foot Locker acquisition-related costs anticipated in 2026, offset by income related to litigation and other settlements expected in the first quarter of fiscal 2026. Refer to Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 19 – Subsequent Events for further information.
Overview of 2026 Outlook for our DICK’S Business:
For 2026, we expect to drive continued comparable sales growth, strategic expansion of square footage, and strongprofitability for the DICK’S Business and expect comparable sales growth for the year to be in the range of 2% to 4% and segment profit to be in the range of $1.58 billion to $1.66 billion, or 11.0% to 11.2% as a percentage of net sales. Other trends expected in fiscal 2026 for the DICK’S Business are as follows:
• We expect slightly higher comparable sales in the first half of 2026, primarily due to the FIFA World Cup.
• We expect segment profit as a percentage of net sales to decline in the first half of 2026, but expand in the second half of 2026 due to the timing of planned investments and synergy savings.
Overview of 2026 Outlook for our Foot Locker Business:
We are targeting to return the Foot Locker Business to profitability in 2026 and remain confident in the value creation opportunities of this business. For fiscal 2026, we expect pro forma comparable sales growth to be in the range of 1% to 3% and segment profit to be in the range of $100 to $150 million. We also expect pro forma comparable sales and segment profit performance to be weighted towards the second half of 2026, with back to school being the inflection point for the Foot Locker Business.
Recent Tax Legislation
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”), which includes several measures affecting corporations and other business entities, was signed into law. These measures include modifications and permanent extension of certain expiring provisions of the 2017 Tax Cuts and Jobs Act (“TCJA”). We have recognized the impacts of the OBBBA into the current and deferred income tax provision for fiscal 2025, which resulted in reduced federal income tax liability and related tax payments, but no significant impact to the annual effective tax rate. We will continue to evaluate future provisions and do not anticipate any significant impact to the financial statements.
The Company’s current expectations described above include forward-looking statements. Please see the “Forward-Looking Statements” section in this Annual Report on Form 10-K for information regarding important factors that may cause the Company’s actual results to differ from those currently projected and/or otherwise materially affect the Company.
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How We Evaluate Our Operations
Senior management focuses on certain key indicators to monitor our performance, including the following for the DICK’S and Foot Locker Businesses:
• Comparable sales performance – Our management considers comparable sales, which includes digital revenue, to be an important indicator of our current performance. Comparable sales results are important to leverage our costs, which include occupancy costs, store payroll and other store expenses. Comparable sales also have a direct impact on our total net sales, net income, cash and working capital. A store is included in the comparable sales calculation during the fiscal period that it commences its 14th full month of operations. Relocated stores are included in the comparable sales calculation from the open date of the original location. Stores that were permanently closed during the applicable period have been excluded from comparable sales results. Our digital revenue includes all eCommerce sales, including omni-channel transactions which are fulfilled by our stores, GameChanger subscriptions as well as revenue from our DICK’S Media Network. The Foot Locker Business will be included in our comparable sales calculation beginning in the fourth quarter of fiscal 2026, which is when these stores will commence their 14th full month of operations following the date of acquisition. For further discussion of our comparable sales refer to the “Consolidated Operating Results” section herein.
• Operating income, or segment profit, and related margin – Our management views operating income, or segment profit, and related margin as key indicators of our performance. The key drivers of operating income or segment profit are comparable sales, gross profit and our ability to control selling, general and administrative expenses.
• Cash flows from operating activities – Cash flow generation supports our general liquidity needs and funds capital expenditures for our omni-channel platform, which include investments in new and existing stores and our eCommerce channel, distribution and administrative facilities, continuous improvements to information technology tools, potential strategic acquisitions or investments that may arise from time-to-time and stockholder return initiatives, including cash dividends and share repurchases. We typically experience lower operating cash flows in our first and third fiscal quarters due to the timing of inventory purchases in advance of our peak selling periods and anticipated higher cash flows during our second and fourth fiscal quarters. For further discussion of our cash flows refer to the “Liquidity and Capital Resources” section herein.
• Quality of merchandise offerings – To measure effectiveness of our merchandise offerings, we monitor sell-throughs, inventory turns, gross margins and markdown rates at the department and style level. This analysis helps us manage inventory levels to reduce working capital requirements and deliver optimal gross margins by improving merchandise flow and establishing appropriate price points to minimize markdowns.
• Store productivity – To assess store-level performance, we monitor various indicators, including sales per square foot, store operating contribution margin and store cash flow.
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Executive Summary
• Net sales increased 28.1% to $17.22 billion during fiscal 2025 from $13.44 billion during fiscal 2024, which includes $3.1 billion of net sales for the Foot Locker Business and a 4.5% increase in comparable sales for the DICK’S Business. Comparable sales for the DICK’S Business increased 5.2% in fiscal 2024 compared to the previous year.
• In fiscal 2025 , we reported net income of $849.2 million, or $9.97 per diluted share, compared to $1.17 billion, or $14.05 per diluted share, during fiscal 2024 .
◦ Earnings per diluted share in the current year includes a $60.0 million net loss from the Foot Locker Business and the dilutive effect of 9.6 million shares of the Company’s common stock issued in connection with the Foot Locker acquisition, which together decreased earnings per diluted share by $1.38.
◦ Net income also includes $307.3 million, net of tax, or $3.61 per diluted share, of acquisition-related costs, which include actions to optimize the Foot Locker inventory assortment, merger and integration costs and bridge financing fees related to the Foot Locker acquisition. In addition, net income includes $9.9 million, net of tax, or $0.12 per diluted share, related to an asset impairment charge. These charges were partially offset by non-cash gains from our investment in Foot Locker equity securities of $42.2 million, or $0.50 per diluted share, which are not taxable following the completion of the acquisition.
• In addition, during fiscal 2025, we:
◦ Declared and paid aggregate cash dividends on a quarterly basis for a total amount of $4.85 per share on our common stock and Class B common stock; and
◦ Repurchased 1.6 million shares of common stock under our share repurchase program for a total cost of $342.1 million.
• The following table summarizes store activity in fiscal 2025:
Store Count Information
Gross
Square Footage (10) (11)
(in millions)
Beginning Stores
New Stores
Closed Stores
Relocated / Converted (9)
Ending Stores
Beginning
Ending
DICK'S (1)
DICK'S Field House (1)
DICK'S House of Sport
Total DICK'S
Other Specialty Concepts
Golf Galaxy (2)
Going Going Gone! (3)
Public Lands
Total Other Specialty Concepts
Total DICK’S Business
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Store Count Information
Gross
Square Footage (4) (11)
(in millions)
Beginning Stores (4)
New Stores
Closed Stores (8)
Relocated / Converted (8)
Ending Stores
Beginning
Ending
Foot Locker North America
Champs Sports
Kids Foot Locker
WSS
Total North America (5)
Foot Locker Europe (6)
Foot Locker Asia Pacific
atmos
Total International
Total Owned Stores
Licensed stores (7)
Total Foot Locker Business
(1) Beginning store count and square footage were updated to reflect one DICK’S Field House location that opened in fiscal 2024, which was previously reflected as a DICK’S store.
(2) As of January 31, 2026, includes 33 Golf Galaxy Performance Centers, with nine new openings during fiscal 2025, five of which were conversions of prior Golf Galaxy store locations.
(3) Beginning store count and square footage were updated to reflect Warehouse Sale locations as described in the Company’s Current Report on Form 8-K, filed with the SEC on March 11, 2025. As of February 2, 2025, beginning amounts now include 29 Warehouse Sale locations and 1.3 million of related square footage.
(4) Beginning stores and square footage reflect acquired Foot Locker stores as of September 8, 2025.
(5) Represents store locations in the United States and Canada and related square footage.
(6) Represents Foot Locker store locations in Europe, including three Kids Foot Locker stores and related square footage, as of January 31, 2026.
(7) Reflects licensed stores operating in the Middle East, Asia and Europe.
(8) Store closures for the Foot Locker Business during fiscal 2025 include seven WSS stores identified as part of the Company's review of unproductive assets. Additionally, the Foot Locker Business relocated 35 stores during the current year period consisting of 15 Foot Locker and 15 Kids Foot Locker store locations in North America and five international store locations.
(9) Reflects stores converted between concept or prototype through store relocations or remodels as part of the Company's strategy to reposition its store portfolio. In addition to stores that converted between concepts, the Company relocated or remodeled eight stores for the DICK'S Business during the current year period, consisting of five Golf Galaxy and three Going Going Gone! store locations.
(10) Includes square footage as of January 31, 2026 related to a Public Lands store closure as we plan to convert it into a DICK’S Field House store during early fiscal 2026.
(11) Columns may not recalculate due to rounding.
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Consolidated Operating Results
The following table presents, for the fiscal years indicated, selected items in the Consolidated Statements of Income as a percentage of net sales, as well as the basis point change in percentage of net sales from fiscal 2025 to fiscal 2024. Results herein for fiscal 2025 reflect Foot Locker operations from the September 8, 2025 acquisition date through the end of the fiscal year, which does not include the peak back-to-school selling season in August.
Fiscal Year
Basis Point Change in Percentage of Net Sales from Prior Year 2024 - 2025 (A)
Net sales (1)
Cost of goods sold, including occupancy and distribution costs (2)
Gross profit
Selling, general and administrative expenses (3)
Merger and integration costs (4)
Pre-opening expenses (5)
Operating income
Interest expense
Other income
Income before income taxes
Provision for income taxes
Net income
Other Data:
Comparable sales increase (6)
(A) Column does not add due to rounding.
(1) Revenue from retail sales is recognized at the point of sale, net of sales tax. Revenue from eCommerce sales, including vendor-direct sales arrangements, is recognized upon shipment of merchandise. A provision for anticipated merchandise returns is provided through a reduction of sales and cost of goods sold in the period that the related sales are recorded. Revenue from gift cards and returned merchandise credits (collectively the “cards”) is deferred and recognized upon the redemption of the cards. The cards have no expiration date. Subscription revenue from our GameChanger platform is recognized ratably over the subscription period with our customers.
(2) Cost of goods sold includes: the cost of merchandise and services (inclusive of vendor allowances, inventory shrinkage and inventory write-downs for the lower of cost or net realizable value and GameChanger costs); freight; distribution; shipping; and store occupancy costs. We define merchandise margin as net sales less the cost of merchandise and services sold. Store occupancy costs include rent, common area maintenance charges, real estate and other asset-based taxes, general maintenance, utilities, depreciation and certain insurance expenses.
(3) Selling, general and administrative expenses include payroll and fringe benefits for our stores, field support, administrative and our GameChanger platform, advertising, bank card charges, operating costs associated with our internal eCommerce platform, technology, other store expenses and all expenses associated with operating our customer support center.
(4) Merger and integration costs include legal and regulatory fees, other professional services, employee retention and severance costs related to the acquisition of Foot Locker.
(5) Pre-opening expenses, which consist primarily of rent, marketing (including grand opening advertising costs), payroll, recruiting and other store preparation costs are expensed as incurred. Rent is recognized within pre-opening expense from the date the Company takes possession of a site through the date of store opening and during periods when stores are closed for remodeling.
(6) Foot Locker will be included in the quarterly comparable store calculation beginning in the fourth quarter of fiscal 2026, which is when these stores will commence their 14th full month of operations following the date of acquisition. Additionally, beginning in fiscal 2025, we revised our method for calculating comparable sales to include Warehouse Sale locations beginning in the stores’ 14th full month of operations, similar to our other store locations. Prior year information has been revised to reflect this change for comparability purposes. See additional details as furnished in Exhibit 99.2 of the Company’s Current Report on Form 8-K, filed with the SEC on March 11, 2025.
Note - As retailers vary in how they record costs of operating their stores and supply chain between cost of goods sold and selling, general and administrative expenses, our gross profit rate and selling, general and administrative expenses rate may not be comparable to other retailers. For additional information regarding the types of costs classified within cost of goods sold, selling, general and administrative expenses or any other financial statement line items presented herein, refer to Note 1 – Basis of Presentation and Summary of Significant Accounting Policies included in Part IV. Item 15. Exhibits and Financial Statement Schedules of this Annual Report on Form 10-K.
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A discussion regarding our financial condition and results of operations for the year ended January 31, 2026 (Fiscal 2025) compared to the year ended February 1, 2025 (Fiscal 2024) is presented below. A discussion regarding our financial condition and results of operations for Fiscal 2024 compared to the year ended February 3, 2024 (Fiscal 2023) can be found under Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended February 1, 2025, filed with the SEC on March 27, 2025.
Fiscal 2025 Compared to Fiscal 2024
Net Sales
Net sales increased 28.1% to $17.22 billion in 2025 from $13.44 billion in 2024, which includes $3.1 billion of Foot Locker net sales since the acquisition date and a $592.8 million, or 4.5%, increase in comparable sales for the DICK’S Business. The remaining increase in net sales was primarily attributable to new stores, including DICK’S House of Sport, DICK’S Field House and Golf Galaxy Performance Center locations. The increase in comparable sales for the DICK’S Business includes a 4.2% increase in sales per transaction and a 0.3% increase in transactions, and reflects growth in footwear, golf, athletic apparel, licensed merchandise and team sports, partially offset by declines in outdoor equipment.
Operating Income
Operating income decreased to $1,095.9 million in 2025 from $1,473.9 million in 2024.
Gross profit increased to $5,667.3 million in 2025 from $4,825.7 million in 2024, but decreased as a percentage of net sales by 298 basis points primarily due to a 127 basis point decrease, or $217.9 million, to write-down and liquidate Foot Locker inventory as part of our Foot Locker acquisition-related charges and 215 basis points from lower gross margin in the Foot Locker Business. Gross profit increased 44 basis points as a percentage of net sales for the DICK’S Business, driven primarily by the quality of our assortment.
Selling, general and administrative expenses increased to $4,338.2 million in the current year from $3,294.3 million in 2024, and increased as a percentage of net sales by 69 basis points. The $1.0 billion increase in the current year includes $809.4 million from the Foot Locker Business since the acquisition date. The remaining increase is primarily due to strategic digital and in-store investments across technology and talent, and marketing, partially offset by lower incentive compensation expenses compared to fiscal 2024. The current period also includes a $13.4 million asset write-down following the abandonment of a technology service contract and a $1.2 million expense increase related to changes in the investment values of our deferred compensation plans, which is fully offset in Other Income.
Merger and integration costs were $164.2 million in fiscal 2025. These costs include legal and regulatory fees, other professional services, employee retention and severance costs related to the acquisition of Foot Locker.
Pre-opening expenses increased to $69.0 million in the current year from $57.5 million in 2024. Pre-opening expenses in any period fluctuate depending on the timing and number of new store openings and relocations. The current year period includes pre-opening expenses to support the opening of 16 DICK’S House of Sport stores, compared to seven in the prior year period.
Other Income
Other income totaled $110.3 million in 2025 compared to $98.1 million in 2024. The $12.2 million increase was primarily driven by non-cash gains from an investment in Foot Locker equity securities prior to the acquisition of $42.2 million and a $1.2 million expense decrease compared to the prior year from changes in our deferred compensation plan investment values driven by performance in equity markets. The Company recognizes investment income or investment expense to reflect changes in deferred compensation plan investment values with an offsetting charge or reduction to selling, general and administrative costs for the same amount. Increases in other income were partially offset by a $36.0 million decrease in interest income primarily as a result of lower average cash and cash equivalents and lower average interest rates during the current year.
Income Taxes
Our effective tax rate increased to 25.6% in the current year from 23.3% in 2024. The effective tax rate for the current year was unfavorably impacted by losses in certain foreign jurisdictions where tax benefits cannot be recognized and certain non-deductible acquisition-related costs associated with the Foot Locker acquisition. In addition, the effective tax rate for the prior year was favorably impacted by a higher number of employee equity awards exercised, which resulted in $15.9 million of higher excess tax benefits in the prior year compared to the current year. These increases were partially offset by a $10.8 million favorable tax impact from the gains on the Company’s pre-existing Foot Locker investment that were not taxable following completion of the acquisition.
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Operating Results by Business Segment
The following section includes certain financial information related to the operating results for our DICK’S Business and Foot Locker Business during the periods presented.
Fiscal 2025 Compared to Fiscal 2024
(dollars in thousands)
Fiscal 2025
% of Sales
Fiscal 2024
% of Sales
% Increase (Decrease)
Basis Point Change (A)
Net sales
DICK’S Business
Foot Locker Business
Total net sales
Gross profit
DICK’S Business
44 bps
Foot Locker Business
Corporate and other expenses
Total gross profit
(298) bps
Business Segment profit (loss)
DICK’S Business
(2) bps
Foot Locker Business
Reconciliation to operating income
Corporate and other expenses
Total operating income
* Calculation not meaningful.
(A) Column may not recalculate due to rounding.
DICK’S Business
Net sales for the DICK’S Business increased 5.0% to $14,108.9 million in 2025 from $13,442.8 million in 2024, due primarily to a $592.8 million, or 4.5%, increase in comparable sales. The remaining increase in net sales was primarily attributable to new stores, including DICK’S House of Sport, DICK’S Field House and Golf Galaxy Performance Center locations. The 4.5% increase in comparable sales includes a 4.2% increase in sales per transaction and a 0.3% increase in transactions, and reflects growth in footwear, golf, athletic apparel, licensed merchandise and team sports, partially offset by declines in outdoor equipment.
Gross profit for the DICK’S Business increased to $5,126.3 million in fiscal 2025 from $4,825.7 million in 2024 and increased as a percentage of net sales by 44 basis points. Merchandise margins as a percentage of net sales increased 36 basis points as a result of the quality of our assortment. The remaining increase in gross profit as a percentage of net sales was driven by leverage on eCommerce shipping and fulfillment costs due to the increase in net sales. Our occupancy costs, which after the cost of merchandise represents the largest expense item within our cost of goods sold, are generally fixed in nature and fluctuate based on the number of stores that we operate. Occupancy costs increased $57.6 million and remained flat as a percentage of sales in fiscal 2025 as compared to 2024.
Segment profit for the DICK’S Business increased 4.7%, but decreased by two basis points as a percentage of net sales, to $1,568.4 million in fiscal 2025 compared to $1,497.6 million in fiscal 2024. Gross profit expansion of 44 basis points was offset by 41 basis points of deleverage in selling, general and administrative expenses and five basis points from preopening expenses compared to the prior year. Selling, general and administrative expenses increased $219.9 million in fiscal 2025 due to our strategic digital and in-store investments across technology and talent, and marketing, partially offset by lower incentive compensation expenses compared to fiscal 2024. Preopening expenses increased $9.8 million in fiscal 2025, due primarily to the opening of 16 new DICK’S House of Sport stores in the current period compared to seven in the prior year period.
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Foot Locker Business
The acquisition of Foot Locker was completed on September 8, 2025; therefore, there is no comparative prior period. Financial results for fiscal 2025 include Foot Locker’s operations from the acquisition date.
Corporate and other expenses
Corporate and other expenses for segment reporting purposes represent costs not specifically related to the recurring operations of our segments. Corporate and other expenses for fiscal 2025 include $217.9 million to write down and liquidate inventory, merger and integration costs of $164.2 million, which includes legal and regulatory fees, other professional services and other costs related to the Foot Locker acquisition, $13.4 million for an asset impairment charge and a $24.8 million expense increase related to changes in the investment values of our deferred compensation plans, which is fully offset in other income on the Consolidated Statements of Income.
Liquidity and Capital Resources
Our cash on hand as of January 31, 2026 was $1.4 billion. We believe that our current cash position, and cash flows from operations, supplemented by funds available under our unsecured $2.0 billion Credit Facility and access to long-term debt capital markets, if necessary, are sufficient to operate our business for the next twelve months. In addition, we believe that we have the ability to obtain alternative sources of financing, if necessary. We may require additional funding should we pursue strategic acquisitions, undertake share repurchases, pursue other investments or engage in store expansion rates in excess of historical levels. We had no revolving credit facility borrowings at any point during 2025.
The following sections describe the potential short and long-term impacts to our liquidity and capital requirements.
Acquisition of Foot Locker
On September 8, 2025, we completed the acquisition of Foot Locker, pursuant to the terms in our Merger Agreement dated May 15, 2025, for total consideration of $2.5 billion primarily consisting of $2.1 billion in share consideration for the issuance of 9.6 million shares of the Company’s common stock, $223.0 million in cash consideration and $111.6 million from the Company’s pre-existing equity ownership in Foot Locker. Refer to Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 2 – Acquisition of Foot Locker for further information.
In connection with the Foot Locker acquisition, we completed an exchange offer of outstanding 4.00% senior notes due 2029 issued by Foot Locker (the “Original 2029 Notes”) for up to $400 million aggregate principal amount of new 4.00% senior notes due 2029 issued by DICK’S Sporting Goods (the “Exchanged 2029 Notes”). The completion of the exchange offer resulted in the issuance of $381.9 million of Exchanged 2029 Notes, with the remaining $18.1 million in aggregate principal amount of Original 2029 Notes as an outstanding obligation of Foot Locker (collectively, the Exchanged 2029 Notes and Original 2029 Notes are the “2029 Notes”). Refer to Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 10 – Long-Term Debt and Financing Lease Obligations for further information.
Leases
We lease substantially all of our stores, administrative offices for the Foot Locker segment, nine of our distribution centers including three for the DICK’S Business and six for the Foot Locker Business, and certain equipment under non-cancellable operating leases that expire at various dates through 2043. Approximately three-quarters of our DICK’S Sporting Goods stores will be up for lease renewal at our option over the next five years, and we plan to leverage the significant flexibility within our existing real estate portfolio to capitalize on future real estate opportunities. Refer to Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 8 – Operating Leases for further information.
Revolving Credit Facility
During fiscal 2025, we terminated our $1.6 billion Existing Credit Facility and entered into a new $2.0 billion Credit Facility, of which $75 million is available for letters of credit. Loans under the Credit Facility bear interest at an alternate base rate or an adjusted SOFR plus, in each case, an applicable margin percentage. We had no revolving Credit Facility borrowings at any point during fiscal 2025, and as of January 31, 2026, there were no borrowings outstanding under the Credit Facility. We have total remaining borrowing capacity, after adjusting for $26.7 million of standby letters of credit, of $1.97 billion. We were in compliance with all covenants under the Credit Facility agreement at January 31, 2026. Refer to Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 9 – Revolving Credit Facility for further information.
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Commercial Paper
During December 2025 we initiated a commercial paper program, which is supported by the Credit Facility. Under this program, we may issue unsecured commercial paper notes with a maximum aggregate amount outstanding of $500.0 million, with individual maturities that may vary but not exceed 397 days from the date of issuance. The Credit Facility serves as a liquidity backstop for our commercial paper program. There were no commercial paper borrowings at any point during fiscal 2025, and as of January 31, 2026, there were no borrowings outstanding under the Company’s commercial paper program. Refer to Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 9 – Revolving Credit Facility for further information.
Senior Notes
As of January 31, 2026, we have $750 million principal amount of senior notes due 2032 (the “2032 Notes”) and $750 million principal amount of senior notes due 2052 (the “2052 Notes”) outstanding. Cash interest accrues at a rate of 3.15% per year on the 2032 Notes and 4.10% per year on the 2052 Notes, each of which are payable semi-annually, in arrears, on January 15 and July 15.
As of January 31, 2026, we also have $400 million principal amount of 2029 Notes (the 2029 Notes together with the “2032 Notes” and the “2052 Notes”, collectively, the “Senior Notes”) outstanding. Cash interest accrues at a rate of 4.00% per year on the 2029 Notes, which is payable semi-annually, in arrears, on April 1 and October 1.
As of January 31, 2026, our Senior Notes have long-term credit ratings by Moody’s and Standard & Poor’s rating agencies of Baa2 and BBB, respectively. Refer to Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 10 – Long-Term Debt and Financing Lease Obligations for further information.
Capital Expenditures
Our capital expenditures are primarily allocated toward the development of our omni-channel platform, including investments in new and existing stores and eCommerce technology, while we have also invested in our supply chain and corporate technology capabilities. In fiscal 2025, capital expenditures totaled $1,137.2 million on a gross basis and $975.5 million on a net basis, inclusive of construction allowances provided by landlords.
We anticipate fiscal 2026 capital expenditures of approximately $1.5 billion, net of construction allowances provided by landlords. As we continue to reposition our store portfolio for the DICK’S Business, these investments will be concentrated in store growth, relocations and improvements in our existing stores. We plan to open approximately 14 DICK’S House of Sport locations in 2026 and expect to begin construction on approximately 18 locations scheduled to open throughout 2027. We also plan to open approximately 22 DICK’S Field House and 15 Golf Galaxy Performance Center locations in 2026. By leveraging our real estate flexibility, we expect over 75% of our 2026 store openings for the DICK’S Business will be relocations or remodels of existing store locations, which will increase our square footage in 2026. Additionally, we plan to invest in the Foot Locker Business as we look to rapidly expand the Fast Break store initiative in 2026, with the goal to have approximately 250 locations ahead of the back-to-school season.
Our fiscal 2026 capital expenditures plan also includes ongoing investments in our supply chain and technology, including the construction of a new regional distribution center in Fort Worth, Texas, which is expected to open in 2026, and investments in technology to enhance our store fulfillment, in-store pickup and other foundational capabilities to drive efficiencies and enhance the omni-channel athlete experience. Additionally, we plan to invest in emerging growth opportunities with our GameChanger platform and DICK’S Media Network.
Share Repurchases
From time-to-time, we may opportunistically repurchase shares of our common stock under our current $2 billion share repurchase program authorized by our Board of Directors on December 16, 2021. In fiscal 2025, we repurchased 1.6 million shares of our common stock at a cost of $342.1 million. As of January 31, 2026, the available amount remaining under the December 2021 share repurchase program is $169.4 million. On March 10, 2025, our Board of Directors authorized an additional five-year share repurchase program of up to $3 billion of the Company's common stock. The Company plans to continue to purchase under the 2021 program until it is exhausted or expired.
Any future share repurchase programs are subject to authorization by our Board of Directors and will be dependent upon future earnings, cash flows, financial requirements and other factors.
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Dividends
In fiscal 2025, we paid $413.9 million of dividends to our stockholders. On March 11, 2026, our Board of Directors declared a 3% increase in our quarterly cash dividend compared to the previous quarterly per share amount. The dividend of $1.25 per share of common stock and Class B common stock is payable on April 10, 2026 to stockholders of record as of the close of business on March 27, 2026.
The declaration of future dividends and the establishment of the per share amount, record dates and payment dates for any such future dividends are subject to authorization by our Board of Directors and will be dependent upon multiple factors including future earnings, cash flows, financial requirements and other considerations.
Supply Chain Financing
We have entered into supply chain financing arrangements with certain third-party financial institutions, whereby suppliers have the opportunity to settle outstanding payment obligations early at a discount. We do not have an economic interest in suppliers’ voluntary participation, and we do not provide any guarantees or pledge assets under these arrangements. Supplier invoices are settled with the third-party financial institutions in accordance with the original supplier payment terms and our rights and obligations to our suppliers, including amounts due and scheduled payment terms, are not impacted by these arrangements. Liabilities associated with the funded participation in these arrangements, which are presented within accounts payable on the Consolidated Balance Sheets, were $33.2 million and $49.6 million as of January 31, 2026 and February 1, 2025, respectively.
Cash Flows
Changes in cash and cash equivalents for the last three fiscal years are as follows (in thousands):
Fiscal Year Ended
January 31, 2026
February 1, 2025
February 3, 2024
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Operating Activities
Cash flows provided by operating activities increased $225.5 million in 2025 compared to 2024, which is primarily due to year-over-year changes in inventory levels and accounts payable, which increased operating cash flows by $374.5 million and reflects investments in key categories to support our sales growth last year and this year’s write-down and liquidation of Foot Locker inventory. Additionally, the current year increase in cash flows from operating activities includes lower income tax payments following the enactment of provisions in the OBBBA and higher cash flows received from landlords, as we continue to reposition our chain and invest in our store portfolio within our DICK’S Business. These increases in cash flows provided by operating activities were partially offset by year-over-year changes in incentive compensation accruals and corresponding payments and other accrued expenses for severance and transaction costs related to the Foot Locker acquisition, along with lower earnings due to Foot Locker’s operating results since the acquisition date.
Investing Activities
Cash used in investing activities increased $257.9 million to $1,054.5 million in 2025 compared to 2024. Gross capital expenditures increased $334.6 million primarily driven by investments in new and future DICK’S House of Sport stores and DICK’S Field House stores, higher investments in remodels or other store enhancements as well as the construction of our sixth DICK’S Sporting Goods distribution facility. Cash used in investing activities for the current year also includes cash acquired from the acquisition of Foot Locker of $257.1 million, net of cash paid. The remaining increase in cash used in investing activities is driven by the purchase of a corporate aircraft and $119.5 million in purchases of investments, which included $69.5 million of Foot Locker equity securities.
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Financing Activities
Financing activities have historically consisted of capital return initiatives, including share repurchases and cash dividend payments, cash flows generated from stock option exercises and cash activity associated with our Credit Facility or other financing sources. Cash used in financing activities increased $195.2 million during 2025 compared to 2024, primarily due to higher share repurchases, dividends and cash payments for minimum tax withholding requirements as a result of the vesting of employee equity awards compared to the prior year.
Contractual Obligations and Commercial Commitments
We are party to contractual obligations that involve commitments to make payments to third parties in the ordinary course of business. Our future contractual obligations primarily consist of payments for operating leases, long-term debt and related interest payments, and other purchase obligations. Refer to Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 8 – Operating Leases and Note 10 – Long-Term Debt and Financing Lease Obligations for amounts outstanding as of January 31, 2026 related to operating leases, long-term debt and financing leases.
Other purchase obligations are for marketing commitments to promote our brand and products, including media and naming rights, technology-related commitments, licenses for trademarks and other ordinary course commitments. In the ordinary course of business, we enter into many contractual commitments, including purchase orders and commitments for products or services, but generally, such commitments represent annual or cancellable commitments. The amount of non-cancellable purchase commitments as of January 31, 2026 were approximately $450 million.
Critical Accounting Policies and Use of Estimates
Our significant accounting policies are described in Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 1 – Basis of Presentation and Summary of Significant Accounting Policies. Critical accounting policies and estimates are those that we believe are both (1) most important to the portrayal of our financial condition and results of operations and (2) require our most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Judgments and uncertainties affecting the application of such policies may result in materially different amounts being reported under different conditions or using different assumptions.
We consider the following policies to be the most critical in understanding the judgments that are involved in preparing our Consolidated Financial Statements.
Inventory Valuation
The Company determines inventory cost using different valuation methods across the DICK’S and Foot Locker Businesses. For the DICK’S Business, inventory cost is determined using the weighted average cost method and consists of the direct costs of merchandise including freight, net of shrinkage, obsolescence, other valuation accounts and vendor allowances. For the Foot Locker Business, inventory cost is primarily determined using the retail inventory method, and includes freight, distribution center and sourcing costs. Additionally, inventory cost for the Foot Locker Business is net of shrinkage and valuation reserves when current selling prices have not been marked down to market. Merchandise inventories for the WSS and atmos banners are determined using the weighted average cost method. Inventories valued under the weighted average cost method are stated at the lower value between cost and net realizable value, while inventories valued using the retail inventory method are stated at the lower value between cost and their market value.
For inventories valued using the weighted average cost method, we regularly review these inventories to determine if the carrying value of the inventory exceeds net realizable value and, when determined necessary, record a reserve to reduce the carrying value to net realizable value. Our reserve requires management to make assumptions and apply judgment related to current and anticipated demand and the promotional environment, which may be impacted by changes in customer merchandise preference, current and anticipated demand, consumer spending, weather patterns, economic conditions, business trends or merchandising strategies that could cause our inventory to be exposed to obsolescence or slow-moving merchandise. A 10% change in our obsolete inventory reserves as of January 31, 2026, would have affected income before income taxes by approximately $10.6 million in fiscal 2025.
For inventory valued using the retail inventory method, the cost value of inventory and gross margins are determined by calculating a cost-to-retail ratio and applying it to the retail value of inventory. Permanent markdowns are reflected in inventory valuation when the price of an item is reduced, and reserves are established when current selling prices have not yet been marked down to market. The retail inventory method requires estimates and assumptions regarding markups, markdowns and shrink, among others, and as such could result in distortions of inventory amounts. Judgment is required for these estimates and assumptions, as well as to differentiate between promotional and other markdowns that may be required to correctly reflect
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merchandise inventories at the lower of cost or market. The failure to take permanent markdowns on a timely basis may result in an overstatement of inventory value. The decision to take permanent markdowns includes many factors, including the current retail environment, inventory levels, and the age of the item. We believe this method and its related assumptions, which have been consistently applied, to be reasonable.
Shrink expense is accrued as a percentage of merchandise sales based on historical shrink trends. We perform physical inventories at our stores and distribution centers throughout the year. The shrink reserve represents the cumulative loss estimate for each of our locations since the last physical inventory date through the reporting date. Estimates by location and in the aggregate are impacted by internal and external factors and may vary significantly from actual results. A 10% change in our shrink reserves as of January 31, 2026, would have affected income before income taxes by approximately $4.4 million in fiscal 2025.
Goodwill and Intangible Assets
Goodwill and indefinite-lived intangible assets are reviewed for impairment on an annual basis, or whenever circumstances indicate that a decline in value may have occurred. Our evaluation for impairment requires accounting judgments and financial estimates in determining the fair value of the reporting unit or asset. If these judgments or estimates used in estimating future cash flows and asset fair values change in the future, we may be required to record impairment charges for these assets that could be material to our consolidated financial statements.
Our goodwill impairment test compares the fair value of each reporting unit to its carrying value. We determine the fair value of our reporting units using a combination of an income approach and a market approach. The income approach involves estimates related to our projected future growth, profitability and discount rates on expected future cash flows, while the market approach considers observed market data. Estimates may differ from actual results due to, among other things, economic conditions, changes to our business models, or changes in operating performance. Significant differences between these estimates and actual results could result in future impairment charges and could materially affect our future financial results. If the fair value of the reporting unit exceeds the carrying value of the net assets assigned to that reporting unit, goodwill is not impaired. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, an impairment charge is recorded to reduce the carrying value of the reporting unit to its fair value.
Similar to our test for impairment of goodwill, the impairment test for indefinite-lived intangible assets involves comparing their estimated fair values to their carrying values. We estimate the fair value of indefinite-lived intangible assets, which are comprised primarily of trademarks and trade names, based on an income approach using the relief-from-royalty method, which assumes that, in lieu of ownership, a third-party would be willing to pay a royalty in order to derive a benefit from these types of assets. This approach is dependent on a number of factors, including estimates of future sales projections and growth, royalty rates in the category of intellectual property, discount rates and other variables. If actual results are not consistent with our estimates and assumptions used in estimating fair value, we may be exposed to material losses. We recognize an impairment charge when the estimated fair value of the intangible asset is less than its carrying value. Refer to Part IV Item 15. Exhibits and Financial Statement Schedules, Note 12 – Fair Value Measurements for further information.
In fiscal 2025, our acquisition of Foot Locker resulted in the recognition of goodwill and indefinite-lived intangible assets of $618.8 million and $710.0 million, respectively. The carrying value of these assets approximates the fair value as of January 31, 2026, and therefore any significant or adverse change in estimates or assumptions could result in an impairment in the future. For the remainder of the Company’s goodwill and intangible assets as of January 31, 2026, the estimated fair values are substantially in excess of carrying values and a 10% change would not indicate a potential impairment. We recorded no significant impairments in fiscal 2025, 2024 or 2023 to goodwill or intangible assets.
Impairment of Long-Lived Assets
We review long-lived assets whenever events and circumstances indicate that the carrying value of these assets may not be recoverable based on estimated undiscounted future cash flows. Assets are reviewed at the lowest level for which independent cash flows can be identified, which is typically the store level. We use an income approach to determine the fair value of individual store locations, which requires discounting projected future cash flows over each store’s remaining lease term. When determining the stream of projected future cash flows associated with an individual store location, we make assumptions about key store variables that incorporate local market conditions, including sales growth rates, gross margin and controllable expenses, such as store payroll. An impairmentloss is recognized when the carrying amount of the store location is not recoverable and exceeds its fair value. During 2023, the Company completed a business optimization to better align its talent, organizational design and spending in support of its most critical strategies while also streamlining its overall cost structure (the “Business Optimization”). We recorded non-cash impairment charges from our Business Optimization. Refer to Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 12 – Fair Value Measurements for further information. There were no other significant long-lived asset impairment charges recognized during fiscal 2025 or 2024.
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Business Combinations
In accounting for business combinations, we allocate the purchase price of an acquired business to its identifiable assets and liabilities based on estimated fair values and the excess of the purchase price over the amount allocated to the assets and liabilities, if any, is recorded as goodwill. The determination of fair value requires significant judgment by management and involves the use of estimates and assumptions which we believe provides a reasonable basis for determining fair value. We engage outside appraisal firms to assist in the fair value determination of long-lived assets, income taxes and any other significant assets or liabilities. We may adjust the preliminary purchase price allocation, as necessary, up to one year after the acquisition closing date as we obtain more information regarding asset valuations and liabilities assumed. Refer to Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 2 – Acquisition of Foot Locker for further information.
Valuation Allowance for Deferred Tax Assets
We record income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets and liabilities are expected to be realized or settled. We evaluate the likelihood that our deferred tax assets will be realized based on expected future taxable income, which requires management to apply significant judgment. In making this assessment, we evaluate all available positive and negative evidence to determine whether it is more likely than not that our deferred tax assets will be recovered, including historical and projected operating results, the expected timing and source of future taxable income, the anticipated reversal of existing temporary differences, and the availability of prudent and feasible tax-planning strategies. Because this analysis involves forward-looking estimates and the weighting of evidence that varies across jurisdictions—particularly in regions with cumulative losses, limited visibility into near-term profitability, or recent acquisition-related changes—the determination of whether a valuation allowance is required involves significant judgment. When the weight of the evidence indicates that realization is not more likely than not, we record a valuation allowance.
We will periodically reassess available evidence including projected income, reversal of temporary differences, tax planning actions, and recent results of operations to determine whether positive evidence outweighs any other negative indicators. Any required release or addition of valuation allowance will be reflected as a tax benefit or expense in our Consolidated Statements of Income. Refer to Part IV. Item 15. Exhibits and Financial Statement Schedules, Note 2 – Acquisition of Foot Locker for further information and Note 13 – Income Taxes for further information.
