A shareholder rights firm is suing Dick's Sporting Goods over claims it overstated the benefits of buying Foot Locker, whose lingering inventory problems dragged on results. The retailer's stock lost roughly a third of its value in one day after it missed second-quarter revenue estimates and lowered its 2026 sales forecast.
Dick's Sporting Goods faces a securities class action after its shares fell 30 percent on weak second-quarter results tied to the Foot Locker acquisition.
Robbins LLP, the shareholder rights firm publicizing the suit, alleges the retailer misled investors about growth and profitability in light of the integration of Foot Locker, which Dick's acquired and touted as a strategic opportunity. The complaint contends Foot Locker's longstanding inventory and promotional problems persisted, leaving the business dependent on legacy footwear exposed to intensifying discounting across the athletic footwear industry.
Foot Locker generated $1.73 billion in second-quarter revenue, short of the $1.81 billion analysts expected, while Dick's cut its full-year 2026 net sales outlook to $21.9 billion to $22.2 billion. The company now projects Foot Locker pro forma comparable sales of negative 2 percent to flat for the year, down from an earlier forecast of 1.5 percent to 3 percent growth. Executive Chairman Edward W. Stack said the athletic footwear marketplace had become "increasingly promotional," which hit Foot Locker because of its "greater exposure to legacy footwear" and "dependence on footwear launch and retro product."
Dick's shares fell $55.02, or about 30 percent, to close at $124.31 on Aug. 25, erasing billions in market value in a single session. The proposed class covers investors who bought Dick's common stock between Sept. 8, 2025, and Aug. 24, 2026.
The complaint alleges Dick's failed to disclose that its cleanup of Foot Locker's inventory was incomplete, that the unit remained saddled with unproductive legacy footwear, and that Dick's was exposed to an industry-wide environment of excess inventory and promotional activity. As a result, the suit claims, Dick's could not achieve the sales growth, margins and profits it had touted to investors.
The lawsuit arrives as at least eight other firms, including Kirby McInerney, Pomerantz and Bleichmar Fonti & Auld, investigate potential claims tied to the same disclosures. Dick's also reported adjusted earnings per share of $3.53 versus a consensus estimate of $3.76, and Foot Locker comparable sales fell 3.6 percent.
The litigation adds a legal and reputational overhang to the operational work still required to integrate Foot Locker, whose inventory mix and margin contribution remain under scrutiny. Investors will watch Dick's next quarterly report for updated Foot Locker comparable sales and any disclosures on the legal proceedings.
This article is for informational purposes only and does not constitute investment advice.
