Store theft has become a major problem for Dick’s Sporting Goods—so bad the company blames shoplifters in part for a 23 percent net income drop for the second quarter compared to the same period a year ago. That dip came despite the fact that Dick’s reported a 3.6 percent uptick in sales.
Net income for the second quarter came in at $244 million, and Dick’s now expects to make $11.33 to $12.13 per diluted share this year, down from its previous outlook of $12.90 to 13.80 per share.
During Tuesday morning’s earnings call, Dick’s CEO Lauren Hobart said the retailer’s quarterly results were impacted by “higher inventory shrink, organized retail crime and theft in general, an increasingly serious issue impacting many retailers.”
Retail crime has been on the rise this year, with stores such as Dick’s, as well as Nike, Macy’s and TJ Maxx reporting widespread shoplifting. Earlier this summer, Maryland police arrested six minors suspected to be in connection with a string of “pack thefts” at 11 stores in Montgomery County. The suspects also are accused of stealing from more than 80 stores in Washington, D.C. Similar thefts have occurred in California, Pennsylvania and Minnesota.
“We thought we had adequately reserved for [shrinkage],” said Navdeep Gupta, CFO, Dick’s Sporting Goods. “However, the number of incidents and the organized retail crime impact came in significantly higher than we anticipated.”
In addition to shrink, Dick’s took a hit from reduced sales in its outdoor category, which the company has discounted to clear inventory.
Ahead of its earnings announcement, the company cut hundreds of corporate jobs, which comprise less than 1 percent of the retailer’s overall workforce. On Monday, Bloomberg reported Dick’s laid off around 250 employees, according to a person familiar with the matter.
Meanwhile, Dick’s has come under fire from animal welfare group The Center for a Humane Economy, which criticized the retailer for selling soccer cleats made with kangaroo leather. Nike and Puma have both pledged to phase out the use of kangaroo skins in its soccer shoes by the end of the year, and earlier this month, a bipartisan group of Congress members introduced legislation to ban the sale of kangaroo body parts in the United States after a similar effort two years ago.
Dick’s stock plummeted more than 24 percent this morning after its earnings announcement.
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