Add Dick's to the growing number of
retailers blaming theft for financial struggles. And while the retailer posted a 3.6% sales gain for the quarter and improved its market share, profits tumbled. The company announced layoffs to
streamline growth and cut costs.
Revenues rose to $3.22 billion, compared with $3.11 billion in the same period of 2022. On a comparable store sales basis, that amounts to a gain of 1.8%. Net
income fell to $244.3 million from $318.5 million. The news surprised investors. At one point, the company's stock had dropped by 25%.
And while the company called out theft as an ongoing drag
on profits, it also says sales trends were accelerating significantly in July. "We remain confident in delivering positive comp sales for 2023," said Lauren Hobart, president and chief executive
officer, in the announcement. The company reaffirmed that it expects comparable store sales for the entire year to land in the range of flat to up by 2%.
Dick's opened seven new House of Sport
locations during the second quarter -- and those stores, significantly larger than Dick’s regular fleet, are performing well, the company says. House of Sport stores, in addition to selling
merchandise, all include experiential components, from batting cages to rock-climbing walls.
Calling the results "disappointing," Seth Basham, an analyst who follows Dick's for Wedbush, notes
that the layoffs are expected to cost about $20 million in severance. They will also result in cost savings that can be invested in more strategic employees. Bloomberg reports that the company is
laying off 250 people.
The impact of shrink, as the industry calls the unexplained loss of inventory from either theft or errors, is impacting many retailers, including Target, Home Depot,
Walgreens and Best Buy.
And while theft conjures up visions of individual shoplifters, which are indeed a growing problem, the worst damage comes from organized crime, often in heists that
occur at the cargo and supply-chain level.
The National Retail Federation estimates that shrink costs the retail industry as much as $100 billion annually.