Q3 2025 DICK'S Sporting Goods Inc Earnings Call

Speaker #1: We're on mute right now. Now.

Operator: We're on mute right now. Now we're—

Nate Gilch: We're on mute right now. Now we're—

Speaker #1: we're... So don't say

Robert Ohmes: Don't say something.

Navdeep Gupta: Don't say something.

Speaker #2: something.

Lauren Hobart: Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome you to the DICK'S Sporting Goods Q3 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you'd like to ask a question at that time, simply press star, followed by the number one on your telephone keypad. If you'd like to withdraw that question, again, press star one. Thank you. I would now like to turn the conference over to Nate Gilch, Investor Relations. Nate, please go ahead.

Operator: Ladies and gentlemen, thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome you to the DICK'S Sporting Goods Q3 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you'd like to ask a question at that time, simply press star, followed by the number one on your telephone keypad. If you'd like to withdraw that question, again, press star one. Thank you. I would now like to turn the conference over to Nate Gilch, Investor Relations. Nate, please go ahead.

Speaker #3: My name is Krista, and I will be your conference operator today. Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome you to the DICK'S Sporting Goods third quarter 2025 earnings conference call.

Speaker #3: All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer that time, simply press session.

Speaker #3: telephone keypad. And if you'd like to withdraw that question, again, press star If you'd like to ask a question at one. Thank you. I would now like to turn the conference over to Nate Gilch, Investor Relations.

Speaker #3: ahead. Good morning,

Ed Stack: Good morning, everyone, and thank you for joining us to discuss our Q3 2025 results. On today's call will be Ed Stack, our Executive Chairman, Lauren Hobart, our President and Chief Executive Officer, and Navdeep Gupta, our Chief Financial Officer. A playback of today's call will be archived on our Investor Relations website, located at investors.dicks.com, for approximately 12 months. As a reminder, we will be making forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Any such statements should be considered in conjunction with cautionary statements in our earnings release and risk factor discussions in our filings with the SEC, including our last annual report on Form 10-K and our quarterly report on Form 10-Q for the first fiscal quarter, as well as cautionary statements made during this call.

Nate Gilch: Good morning, everyone, and thank you for joining us to discuss our Q3 2025 results. On today's call will be Ed Stack, our Executive Chairman, Lauren Hobart, our President and Chief Executive Officer, and Navdeep Gupta, our Chief Financial Officer. A playback of today's call will be archived on our Investor Relations website, located at investors.dicks.com, for approximately 12 months. As a reminder, we will be making forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Any such statements should be considered in conjunction with cautionary statements in our earnings release and risk factor discussions in our filings with the SEC, including our last annual report on Form 10-K and our quarterly report on Form 10-Q for the first fiscal quarter, as well as cautionary statements made during this call.

Speaker #4: Discuss our third-quarter 2025 results. On today's call, we'll have Ed Stack, our executive chairman, and Lauren Hobart, our president and chief executive officer, and Navdeep Gupta, our chief financial officer. Thank you for joining us.

Speaker #4: A playback of today's call will be available on the website located at investors.dicks.com for approximately 12 hours. As a reminder, we will be subject to various risks and uncertainties that could cause our actual results to differ materially from these statements.

Speaker #4: Any such statements should be considered in conjunction with cautionary statements in our earnings release and risk factor discussions in our filings with the SEC.

Speaker #4: On Form 10-K and our quarterly report on Form 10-Q, including our last annual report for the first fiscal quarter. As well as cautionary statements made during this call.

Ed Stack: We assume no obligation to update any of these forward-looking statements or information. Please refer to our Investor Relations website to find the reconciliation of our non-GAAP financial measures referenced in today's call. Finally, a couple of admin items. First, a quick note on our comparable sales reporting. Foot Locker will be included in our comp base beginning in Q4 of next year, which will mark the start of their 14th full month of operations post-acquisition. As such, all reported comp sales for this quarter and for the upcoming year pertain to the DICK'S business only. Second, I want to provide clarity on certain terminology we'll use throughout today's call and going forward. First, when we refer to the DICK'S business, we mean our existing DICK'S Sporting Goods operations, including the DICK'S Sporting Goods, Golf Galaxy, Going Going Gone!, and Public Lands banners, as well as Game Changer.

We assume no obligation to update any of these forward-looking statements or information. Please refer to our Investor Relations website to find the reconciliation of our non-GAAP financial measures referenced in today's call. Finally, a couple of admin items. First, a quick note on our comparable sales reporting. Foot Locker will be included in our comp base beginning in Q4 of next year, which will mark the start of their 14th full month of operations post-acquisition. As such, all reported comp sales for this quarter and for the upcoming year pertain to the DICK'S business only. Second, I want to provide clarity on certain terminology we'll use throughout today's call and going forward. First, when we refer to the DICK'S business, we mean our existing DICK'S Sporting Goods operations, including the DICK'S Sporting Goods, Golf Galaxy, Going Going Gone!, and Public Lands banners, as well as Game Changer.

Speaker #4: obligation to update any of these forward-looking statements or information. We assume no Please refer to our Investor Relations website non-GAAP financial measures referenced in today's to find the reconciliation of our call.

Speaker #4: And finally, a couple of admin items. First, a quick note on our comparable sales reporting. Foot Locker will be included in our comp base beginning in Q4 of next year, which will mark the start of their 14th full month of operations post-acquisition.

Speaker #4: For this quarter and for the upcoming period, all reported comp sales year pertain to the DICK'S business only. Second, I want to provide clarity on certain terminology we'll use throughout today's call and going forward.

Speaker #4: First, when we refer to the DICK'S business, we mean our existing DICK'S Sporting Goods operations, including the DICK'S Sporting Goods, Golf Galaxy, Going, Going, Gone, and Public Lands banners.

Speaker #4: As well as game DICK's business exclude the dilutive changer. Earnings per diluted share results for the effect of the 9.6 million shares issued as part of the Foot Locker acquisition.

Ed Stack: Earnings per diluted share results for the DICK'S business exclude the dilutive effect of the 9.6 million shares issued as part of the Foot Locker acquisition. Second, the Foot Locker business refers to our newly acquired operations, including the Foot Locker, Kids Foot Locker, Champs Sports, WSS, and Atmos banners. Finally, for future scheduling purposes, we are tentatively planning to publish our Q4 2025 earnings results on 10 March 2026. With that, I'll now turn the call over to Ed.

Earnings per diluted share results for the DICK'S business exclude the dilutive effect of the 9.6 million shares issued as part of the Foot Locker acquisition. Second, the Foot Locker business refers to our newly acquired operations, including the Foot Locker, Kids Foot Locker, Champs Sports, WSS, and Atmos banners. Finally, for future scheduling purposes, we are tentatively planning to publish our Q4 2025 earnings results on 10 March 2026. With that, I'll now turn the call over to Ed.

Speaker #4: Second, the Foot Locker business refers to our newly acquired operations, including the Foot Locker, Kids Foot Locker, Champs Sports, WSS, and Atmos banners. And finally, for future scheduling purposes, we are tentatively planning to release 2025 earnings results on March 10th.

Speaker #4: 2026. With that, I'll now turn the call over

Nate Gilch: Thanks, Nate. Good morning, everyone. Thanks for joining us today. This is an important call. It's our first earnings call as a combined company with Foot Locker. We have a lot to share, a lot of detail, and a lot of numbers. We want to make it clear we're doing all that our shareholders would expect us to do to make the Foot Locker business accretive in 2026. I have to tell you, as the largest shareholder, I couldn't be more excited about the progress we're making and the opportunities ahead. As announced earlier this morning, we delivered another great quarter with comps of 5.7% for the DICK'S business, and we continue to operate from a position of strength.

Ed Stack: Thanks, Nate. Good morning, everyone. Thanks for joining us today. This is an important call. It's our first earnings call as a combined company with Foot Locker. We have a lot to share, a lot of detail, and a lot of numbers. We want to make it clear we're doing all that our shareholders would expect us to do to make the Foot Locker business accretive in 2026. I have to tell you, as the largest shareholder, I couldn't be more excited about the progress we're making and the opportunities ahead. As announced earlier this morning, we delivered another great quarter with comps of 5.7% for the DICK'S business, and we continue to operate from a position of strength.

Speaker #5: everyone. Thanks for joining us today. This is an important call. It's our first earnings call as a combined company with Foot Locker. We have a lot to share.

Speaker #5: There's a lot of detail and a lot of Thanks, Nate. numbers. We want to make it clear we're doing all that our Foot Locker business accretive in shareholders would expect us to do to make 2026.

Speaker #5: And I have to tell you, as the largest shareholder, I couldn't be more excited about the progress we're making and the opportunities ahead. As announced earlier this morning, we delivered another great quarter with comps of 5.7% for the DICK'S business, and we continue to operate from a position of strength.

Nate Gilch: Our momentum in the DICK'S business remains strong as we execute against the key priorities that have fueled our success: a differentiated, on-trend product assortment, and an industry-leading omnichannel athlete experience. This is the flywheel of our success as a company, and it's driving consistent growth and performance. Now, I will discuss the tremendous opportunity we see with Foot Locker. Completing this acquisition on 8 September marks a bold and transformative moment for DICK'S. Together, we're building a global platform that is at the intersection of sport and culture, one that we believe will redefine sports retailing. This powerful combination will allow us to serve a broader consumer base, deepen our partnerships with the world's leading sports brands, and significantly expand our total addressable market. When we announced this acquisition, we knew that business was going to need work. Let me be candid.

Our momentum in the DICK'S business remains strong as we execute against the key priorities that have fueled our success: a differentiated, on-trend product assortment, and an industry-leading omnichannel athlete experience. This is the flywheel of our success as a company, and it's driving consistent growth and performance. Now, I will discuss the tremendous opportunity we see with Foot Locker. Completing this acquisition on 8 September marks a bold and transformative moment for DICK'S. Together, we're building a global platform that is at the intersection of sport and culture, one that we believe will redefine sports retailing. This powerful combination will allow us to serve a broader consumer base, deepen our partnerships with the world's leading sports brands, and significantly expand our total addressable market. When we announced this acquisition, we knew that business was going to need work. Let me be candid.

Speaker #5: remains strong as we execute our momentum in the DICK'S business against the key priorities that have fueled our success: a differentiated, on-trend product assortment and an industry-leading omnichannel athlete experience.

Speaker #5: This is the company, and it's driving a consistent flywheel of our success as a growth and performance leader. Now, I will discuss the tremendous opportunity we see with Foot Locker.

Speaker #5: Completing this acquisition on September 8th marks a bold and transformative moment for DICK'S. Together, we're building a global platform that is at the intersection of sport and culture, one that we believe will redefine sports retailing.

Speaker #5: This powerful combination will allow us to serve a broader consumer base, deepen our partnerships with the world's leading sports brands, and significantly expand our total addressable market.

Speaker #5: When we announced this acquisition, we knew that the business was going to need work. Let me be candid. Foot Locker strayed from retail 101 and did not execute the fundamentals.

Nate Gilch: Foot Locker strayed from retail 101 and did not execute the fundamentals. Post-COVID, Foot Locker did not react quickly enough when its largest brand pivoted toward a direct-to-consumer model, leaving Foot Locker with the wrong inventory: too much of what did not sell, and not enough of what did sell. Consequently, as we enter this transitional phase, the Foot Locker business, as expected, comped negatively, with pro forma comp sales for the full Q3 declining 4.7%, including a 10.2% decline internationally. Now, after looking even deeper under the hood as the owners of Foot Locker, our conviction that we can turn this business around is only growing. We will bring our operational excellence, our supplier relationships, and our merchandise expertise to return Foot Locker to its rightful place as a top player in the specialty athletic channel.

Foot Locker strayed from retail 101 and did not execute the fundamentals. Post-COVID, Foot Locker did not react quickly enough when its largest brand pivoted toward a direct-to-consumer model, leaving Foot Locker with the wrong inventory: too much of what did not sell, and not enough of what did sell. Consequently, as we enter this transitional phase, the Foot Locker business, as expected, comped negatively, with pro forma comp sales for the full Q3 declining 4.7%, including a 10.2% decline internationally. Now, after looking even deeper under the hood as the owners of Foot Locker, our conviction that we can turn this business around is only growing. We will bring our operational excellence, our supplier relationships, and our merchandise expertise to return Foot Locker to its rightful place as a top player in the specialty athletic channel.

Speaker #5: Post-COVID, Foot Locker did not react quickly enough when its largest brand pivoted toward a direct-to-consumer model, leaving Foot Locker with the wrong inventory. There was too much of what didn't sell and not enough of what did sell.

Speaker #5: Consequently, as we enter this transitional phase, the expected comp sales for the full third quarter declined by 4.7%, including a 10.2% decline internationally for the Foot Locker business.

Speaker #5: Now, after looking even deeper under the hood as the owners of Foot Locker, our conviction that we can turn this business around is only growing.

Speaker #5: Excellence, our supplier relationships, and our merchandise will bring our operational expertise to return Foot Locker to its rightful place as a top channel.

Nate Gilch: Today, we're even more excited about the long-term value we believe this acquisition will deliver to our shareholders. We're committed to investing in Foot Locker's business to return it to profitable growth. We've assembled a world-class management team to lead the Foot Locker business, and I'm personally excited to guide this next chapter. As previously announced, Ann Freeman, a longtime former Nike executive, is now serving as Foot Locker North America President. Ann brings deep industry expertise and leadership experience, and she is supported by a high-caliber team of senior leaders: a combination of key executives from Foot Locker, all of whom are well-respected by the Stripers, Blue Shirts, and our brand partners, experienced leaders from DICK'S, and talent from other world-class companies. This team was handpicked to return Foot Locker to its rightful place in our industry, and we're already moving quickly in North America to build momentum.

Today, we're even more excited about the long-term value we believe this acquisition will deliver to our shareholders. We're committed to investing in Foot Locker's business to return it to profitable growth. We've assembled a world-class management team to lead the Foot Locker business, and I'm personally excited to guide this next chapter. As previously announced, Ann Freeman, a longtime former Nike executive, is now serving as Foot Locker North America President. Ann brings deep industry expertise and leadership experience, and she is supported by a high-caliber team of senior leaders: a combination of key executives from Foot Locker, all of whom are well-respected by the Stripers, Blue Shirts, and our brand partners, experienced leaders from DICK'S, and talent from other world-class companies. This team was handpicked to return Foot Locker to its rightful place in our industry, and we're already moving quickly in North America to build momentum.

Speaker #5: Even more excited about the long-term value for our shareholders. We're a player in the specialty athletic space, committed to investing in Foot Locker's business growth. We've assembled a world-class management team to lead the Foot Locker business, and I'm personally excited to guide this next chapter to return it to profitable growth.

Speaker #5: As previously announced, Anne Freeman, a longtime former Nike executive, is now serving as Foot Locker North America President. Anne brings deep industry experience and is supported by a high-caliber team of senior experts and leadership leaders.

Speaker #5: the striper's blue shirts Locker, all of whom are well-respected by A combination and our brand partners, experienced leaders from DICK'S, and talent from other of key executives from Foot world-class companies.

Speaker #5: return Foot Locker to its rightful place in our This team was handpicked to industry, and we're already moving quickly in North America to build momentum.

Speaker #5: In addition, we're thrilled to have just announced that Matthew Barnes, former CEO of Aldi, will be joining our team next month as President of the Foot Locker International business.

Nate Gilch: In addition, we're thrilled to have just announced that Matthew Barnes, former CEO of Aldi, will be joining our team next month as President of the Foot Locker International business. Matthew has nearly three decades of experience in global retail and a track record of transforming brands. We look forward to working to stabilize and ultimately accelerate that business with targeted turnaround strategies to meet the evolving needs of consumers globally. There's a lot happening to position the business for the short term, and build for the long term. Our first priority is clear. We need to clean out the garage of underperforming assets. This means clearing out unproductive inventory, closing underperforming stores, and right-sizing assets that don't align with our go-forward vision for the Foot Locker business. This is the groundwork for the transformation. We began this work shortly after the closing on 8 September.

In addition, we're thrilled to have just announced that Matthew Barnes, former CEO of Aldi, will be joining our team next month as President of the Foot Locker International business. Matthew has nearly three decades of experience in global retail and a track record of transforming brands. We look forward to working to stabilize and ultimately accelerate that business with targeted turnaround strategies to meet the evolving needs of consumers globally. There's a lot happening to position the business for the short term, and build for the long term. Our first priority is clear. We need to clean out the garage of underperforming assets. This means clearing out unproductive inventory, closing underperforming stores, and right-sizing assets that don't align with our go-forward vision for the Foot Locker business. This is the groundwork for the transformation. We began this work shortly after the closing on 8 September.

Speaker #5: Matthew has nearly three decades of experience in global retail and a track record of transforming brands. We look forward to working to stabilize and ultimately accelerate that business with targeted turnaround strategies to meet the evolving needs of consumers globally.

Speaker #5: There's a lot happening to position the business for the short term and build for the long term. Our first priority is the garage of underperforming assets.

Speaker #5: This means clearing out unproductive inventory, closing underperforming stores, and right-sizing assets that don't align with our go-forward vision for the Foot Locker business. This is the groundwork for the transformation.

Speaker #5: We began this work shortly after the closing on September 8th. We have identified an initial number of underperforming assets around the globe, including inventory that needs to be marked down and liquidated, along with a preliminary number of stores that need to be impaired or closed.

Nate Gilch: We have identified an initial number of underperforming assets around the globe, including inventory that needs to be marked down and liquidated, along with a preliminary number of stores that need to be impaired or closed. We initiated certain pricing actions in late Q3 and will be more aggressive in Q4 to clean up unproductive inventory. Our intent is to get the vast majority of the inventory charges behind us by the end of the year, so we can start 2026 fresh and position Foot Locker for an inflection point during the back-to-school season in 2026. As a result, we expect Q4 margin rates for the Foot Locker business to be down between 1,000 and 1,500 basis points, with pro forma Q4 comp sales being down mid to high single digits.

We have identified an initial number of underperforming assets around the globe, including inventory that needs to be marked down and liquidated, along with a preliminary number of stores that need to be impaired or closed. We initiated certain pricing actions in late Q3 and will be more aggressive in Q4 to clean up unproductive inventory. Our intent is to get the vast majority of the inventory charges behind us by the end of the year, so we can start 2026 fresh and position Foot Locker for an inflection point during the back-to-school season in 2026. As a result, we expect Q4 margin rates for the Foot Locker business to be down between 1,000 and 1,500 basis points, with pro forma Q4 comp sales being down mid to high single digits.

Speaker #5: We initiated certain pricing actions in late Q3 and will be more aggressive in Q4 to clean up unproductive inventory. Our intent is to get the vast majority of the inventory charges behind us by the end of the year so we can start 2026 fresh and position Foot Locker for a back-to-school season at an inflection point during 2026.

Speaker #5: As a result, we expect Q4 margin rates for the Foot Locker business to be down between 1,000 and 1,500 basis points, with pro forma Q4 comp sales down mid to high single digits.

Speaker #5: We believe this aggressive purging of needs to be done to return Foot Locker to its rightful position as a key industry player.

Nate Gilch: We believe this aggressive purging of underperforming assets is what needs to be done to return Foot Locker to its rightful position as a key leader in this industry. Navdeep will share more details in his remarks about the charges we anticipate as part of this important cleanup effort. Importantly, we've met with all of our key vendor partners, and they are fully aligned with our vision, and are eager to support a thriving, growing Foot Locker. They indicated they are committed to investing alongside us to reignite the Foot Locker business. We're moving with urgency and have already kicked off an 11-store pilot to begin testing changes in product and the in-store presentation. It's early, but we're encouraged by what we're seeing and learning.

We believe this aggressive purging of underperforming assets is what needs to be done to return Foot Locker to its rightful position as a key leader in this industry. Navdeep will share more details in his remarks about the charges we anticipate as part of this important cleanup effort. Importantly, we've met with all of our key vendor partners, and they are fully aligned with our vision, and are eager to support a thriving, growing Foot Locker. They indicated they are committed to investing alongside us to reignite the Foot Locker business. We're moving with urgency and have already kicked off an 11-store pilot to begin testing changes in product and the in-store presentation. It's early, but we're encouraged by what we're seeing and learning.

Speaker #5: His remarks about the charges we lead in this anticipate as part of this important cleanup. Navdeep will share more details in this effort. Importantly, we've met with all of our key vendor partners, and they are fully aligned with our vision and are eager to support a thriving, growing Foot Locker.

Speaker #5: They indicated they are committed to investing alongside us to reignite the Foot Locker business. We're moving with urgency and have already kicked off an 11-store pilot to begin testing changes in presentation.

Speaker #5: It's early, but product and the in-store teams are encouraged by what we're seeing and learning. Looking ahead to back-to-school next year, we expect an inflection point as our new strategies, assortments, and processes align to drive meaningful progress in the Foot Locker business.

Nate Gilch: Looking ahead, we expect back-to-school next year to be an inflection point as our new strategies, assortments, and processes align to drive meaningful progress in the Foot Locker business, all supported by the work we're doing now by cleaning out the garage to position Foot Locker for future success. With these actions, we continue to expect Foot Locker to be accretive to our EPS in fiscal 2026, excluding one-time costs. What amplifies our confidence are the talented people we found inside the Foot Locker business. Over the past two months, we've spent time in Foot Locker stores, offices, and distribution centers. Our teammates' passion is real, especially among the Stripers and Blue Shirts, along with the rest of the team members. They love sneakers, they're hungry for leadership, and they want to get back to playing offense. That energy is validating our excitement and building focus for what's ahead.

Looking ahead, we expect back-to-school next year to be an inflection point as our new strategies, assortments, and processes align to drive meaningful progress in the Foot Locker business, all supported by the work we're doing now by cleaning out the garage to position Foot Locker for future success. With these actions, we continue to expect Foot Locker to be accretive to our EPS in fiscal 2026, excluding one-time costs. What amplifies our confidence are the talented people we found inside the Foot Locker business. Over the past two months, we've spent time in Foot Locker stores, offices, and distribution centers. Our teammates' passion is real, especially among the Stripers and Blue Shirts, along with the rest of the team members. They love sneakers, they're hungry for leadership, and they want to get back to playing offense. That energy is validating our excitement and building focus for what's ahead.

Speaker #5: All supported by the work we're doing now by Locker for future success. With these actions, we continue to clean out the garage to position Foot Locker as a creative contributor to our EPS in fiscal '26, excluding one-time costs.

Speaker #5: The talented people we found inside Foot Locker amplify our confidence in the business. Over the past two months, we've spent time in offices, distribution centers, and Foot Locker stores.

Speaker #5: Our teammates' passion is real, especially shirts along with the rest of the team members. They love sneakers, they're hungry for leadership, and they want to give back to playing among the stripers and blue excitement, building focus for offense.

Speaker #5: What's ahead? In closing, at DICK'S, we've built a business that leads our industry in performance, innovation, and customer loyalty. Strong growth and consistent margins have generated a relentless focus on delivering shareholder value. That energy is validating our value.

Nate Gilch: In closing, at DICK'S, we've built a business that leads our industry in performance, innovation, and customer loyalty. DICK'S has generated consistent growth and strong margins, with a relentless focus on delivering shareholder value. While we're just getting started on Foot Locker's transformation, our deep expertise and our track record of growth and success fuel our conviction that we can turn this business around, and we are confident that Foot Locker will reemerge as a stronger, more resilient, and more dynamic business. We will do this with the same grit, vision, and execution that got DICK'S to where it is today. Before turning it to Lauren, I want to take a moment to thank our more than 100,000 teammates across all of our banners for their passion and commitment during this exciting chapter for our company, and wish everyone a happy Thanksgiving.

In closing, at DICK'S, we've built a business that leads our industry in performance, innovation, and customer loyalty. DICK'S has generated consistent growth and strong margins, with a relentless focus on delivering shareholder value. While we're just getting started on Foot Locker's transformation, our deep expertise and our track record of growth and success fuel our conviction that we can turn this business around, and we are confident that Foot Locker will reemerge as a stronger, more resilient, and more dynamic business. We will do this with the same grit, vision, and execution that got DICK'S to where it is today. Before turning it to Lauren, I want to take a moment to thank our more than 100,000 teammates across all of our banners for their passion and commitment during this exciting chapter for our company, and wish everyone a happy Thanksgiving.

Speaker #5: While we're just getting started on Foot, deep expertise and our track record of growth and success fuel our conviction that we can turn this business around. We are confident that Foot Locker will reemerge as a stronger, more resilient, and more dynamic business.

Speaker #5: We will do this with the same grit, vision, and execution that got DICK'S to where it is. Lauren, I want to take a moment today.

Speaker #5: Before turning it to

Speaker #5: Teammates across all of our banners, thank you for your passion and commitment during this exciting chapter for our company. I wish everyone a happy Thanksgiving. Now, I'll turn it over to Lauren to share more on the continued momentum across the DICK'S business.

Nate Gilch: With that, I'll turn it over to Lauren to share more on the continued momentum across the DICK'S business.

With that, I'll turn it over to Lauren to share more on the continued momentum across the DICK'S business.

Speaker #2: Thank you, Ed, and good morning.

Simeon Gutman: Thank you, Ed, and good morning, everyone. We're very pleased with our strong Q3 results for the DICK'S business, which continue to demonstrate the strength of our operating model and our team's disciplined execution. We are entirely focused on delivering on our strategies and sustaining our strong momentum. As always, our performance is powered by our compelling omnichannel athlete experience, differentiated product assortment, best-in-class teammate experience, and our ability to create deep engagement with the DICK'S brand. Today, we are raising our full-year outlook for the DICK'S business. This updated guidance reflects our strong Q3 results and the ongoing confidence we have in our business, grounded in our team's execution of the four strategic pillars I just mentioned. We now expect comp sales growth of 3.5% to 4% for the year and EPS to be in the range of $14.25 to $14.55 for the DICK'S business.

Lauren Hobart: Thank you, Ed, and good morning, everyone. We're very pleased with our strong Q3 results for the DICK'S business, which continue to demonstrate the strength of our operating model and our team's disciplined execution. We are entirely focused on delivering on our strategies and sustaining our strong momentum. As always, our performance is powered by our compelling omnichannel athlete experience, differentiated product assortment, best-in-class teammate experience, and our ability to create deep engagement with the DICK'S brand. Today, we are raising our full-year outlook for the DICK'S business. This updated guidance reflects our strong Q3 results and the ongoing confidence we have in our business, grounded in our team's execution of the four strategic pillars I just mentioned. We now expect comp sales growth of 3.5% to 4% for the year and EPS to be in the range of $14.25-$14.55 for the DICK'S business.

Speaker #2: Outlook for the DICK'S business. This updated guidance reflects our strong Q3 results and the ongoing confidence we have in our business, four strategic pillars I just grounded in our team's execution of the mentioned.

Speaker #2: We now expect comp sales growth of 3.5% to 4% for the year, and EPS to be in the range of $14.25 to $14.55 for the DICK'S business.

Speaker #2: Now, moving to our third-quarter results for the DICK'S business. Our Q3 comps increased 5.7%, with growth in average ticket and transactions. These strong comps were on top of a 4.3% increase last year and a 1.9% increase in 2023, as we continue to gain market share.

Simeon Gutman: Now, moving to our Q3 results for the DICK'S business, our Q3 comps increased 5.7% with growth in average ticket and transactions. These strong comps were on top of a 4.3% increase last year and a 1.9% increase in 2023 as we continue to gain market share. Our gross margin expanded 27 basis points in line with our expectations, and we delivered non-GAAP EPS of $2.78 for the DICK'S business, up from $2.75 in the prior year's quarter. As we continue to execute through our strategic pillars, we're seeing strong momentum across the three growth areas for the DICK'S business that we are focused on for 2025. First, we're incredibly proud of the progress we're making in repositioning our real estate and store portfolio. In Q3, we opened 13 new House of Sport locations, the most we've ever opened in a single quarter, bringing our year-to-date total to 16 openings.

Now, moving to our Q3 results for the DICK'S business, our Q3 comps increased 5.7% with growth in average ticket and transactions. These strong comps were on top of a 4.3% increase last year and a 1.9% increase in 2023 as we continue to gain market share. Our gross margin expanded 27 basis points in line with our expectations, and we delivered non-GAAP EPS of $2.78 for the DICK'S business, up from $2.75 in the prior year's quarter. As we continue to execute through our strategic pillars, we're seeing strong momentum across the three growth areas for the DICK'S business that we are focused on for 2025. First, we're incredibly proud of the progress we're making in repositioning our real estate and store portfolio. In Q3, we opened 13 new House of Sport locations, the most we've ever opened in a single quarter, bringing our year-to-date total to 16 openings.

Speaker #2: Expanded 27 basis points in our gross margin, in line with our expectations. We delivered non-GAAP EPS of $2.78 for the DICK'S business, up from $2.75 in the prior year's quarter.

Speaker #2: As we continue to execute through our strategic pillars, we're seeing strong momentum across the three focused on for 2025. First, we're incredibly proud of the progress we're making in repositioning our real estate and store portfolio.

Speaker #2: In four locations, the most we've ever opened in Q3, we opened 13 new houses in a single quarter, bringing our year-to-date total to 16 openings.

Speaker #2: This achievement reflects the outstanding work of our team, whose focus and execution made this ambitious rollout a reality. We now have 35 house locations nationwide, a major milestone in the growth of this transformative new field. We opened 35 house locations in Q3 and opened another just last concept.

Simeon Gutman: This achievement reflects the outstanding work of our team, whose focus and execution made this ambitious rollout a reality. We now have 35 House of Sport locations nationwide, a major milestone in the growth of this transformative concept. We also opened six new Fieldhouse locations in Q3 and opened another just last week, completing our 15 planned openings for the year and bringing us to a total of 42 Fieldhouse locations across the US. These innovative formats are delivering powerful financial results, deepening engagement with our athletes, brand partners, and landlords, and laying the foundation for long-term profitable growth for the DICK'S business. The second of our three major focus areas is driving growth across key categories. Our unparalleled access to top-tier products from both national and emerging brand partners continues to fuel athlete demand and excitement, driving strong growth across the DICK'S business.

This achievement reflects the outstanding work of our team, whose focus and execution made this ambitious rollout a reality. We now have 35 House of Sport locations nationwide, a major milestone in the growth of this transformative concept. We also opened six new Fieldhouse locations in Q3 and opened another just last week, completing our 15 planned openings for the year and bringing us to a total of 42 Fieldhouse locations across the US. These innovative formats are delivering powerful financial results, deepening engagement with our athletes, brand partners, and landlords, and laying the foundation for long-term profitable growth for the DICK'S business. The second of our three major focus areas is driving growth across key categories. Our unparalleled access to top-tier products from both national and emerging brand partners continues to fuel athlete demand and excitement, driving strong growth across the DICK'S business.

Speaker #2: Planned openings for the year are bringing us to a total of 42 Field House locations across the U.S. These innovative formats are delivering powerful financial results, deepening engagement with our athletes, brand partners, and landlords, and laying the foundation for long-term profitable growth for the DICK'S business.

Speaker #2: Of our three major focus areas, driving growth across key categories is essential. We also opened six new categories. Our unparalleled access to top-tier products from both national and emerging brand partners continues to fuel athlete demand and excitement, driving strong growth across the DICK'S business.

Speaker #2: At the same time, our with our athletes. Further contributing to this vertical brands are resonating incredibly well momentum. For Q3, this growth came from having more athletes purchase from purchases and more spending each trip.

Simeon Gutman: At the same time, our vertical brands are resonating incredibly well with our athletes, further contributing to this momentum. For Q3, this growth came from having more athletes purchase from us, with more frequent purchases, and more spending each trip. We feel great about the product pipeline from our brand partners, and our inventory is well-positioned to meet athlete demand this holiday season. I also want to highlight our ongoing expansion into trading cards and collectibles. In partnership with Fanatics, we've launched the Collector's Clubhouse in 20 House of Sport locations, with plans to include it in every new location going forward. These spaces feature trading cards, autographed memorabilia, and more, and the athlete response has exceeded our expectations. It's a unique and fast-growing category that's a great complement to everything we do, and we're very excited about the opportunity ahead.

At the same time, our vertical brands are resonating incredibly well with our athletes, further contributing to this momentum. For Q3, this growth came from having more athletes purchase from us, with more frequent purchases, and more spending each trip. We feel great about the product pipeline from our brand partners, and our inventory is well-positioned to meet athlete demand this holiday season. I also want to highlight our ongoing expansion into trading cards and collectibles. In partnership with Fanatics, we've launched the Collector's Clubhouse in 20 House of Sport locations, with plans to include it in every new location going forward. These spaces feature trading cards, autographed memorabilia, and more, and the athlete response has exceeded our expectations. It's a unique and fast-growing category that's a great complement to everything we do, and we're very excited about the opportunity ahead.

Speaker #2: We feel great about the product pipeline from our brand partners, and our inventory is well-positioned to meet athlete demand this holiday season. I also want to highlight our ongoing expansion into trading cards and collectibles.

Speaker #2: In partnership with Fanatics, we've launched the Collector's Clubhouse in 20 locations, with plans to include it in every new location going forward.

Speaker #2: Cards, autographed memorabilia, and trading spaces feature more. The athlete response has exceeded our expectations. It's a unique and fast-growing category that's a great complement to everything we do, and we're very excited about the opportunity ahead.

Simeon Gutman: Our third major focus area, our multi-billion-dollar, highly profitable e-commerce business, continues to stand out as a growth driver, once again growing faster than the DICK'S business overall. I'd like to highlight three examples of ways we're building strength and differentiation in e-commerce. First, we're really leaning into our app experience, including app-exclusive reservations that are establishing us as a leader in launch culture across many key categories. Second, we're continuing to invest in capabilities to deliver more personalized experiences, content, product recommendations, and search results. An example of this is how we're targeting NFL fans with personalized creative messaging and product recommendations for their favorite team. Third, for the holiday season, we're making it easier than ever to find the perfect gift with a new capability for athletes to build and share their wish lists with family and friends.

Our third major focus area, our multi-billion-dollar, highly profitable e-commerce business, continues to stand out as a growth driver, once again growing faster than the DICK'S business overall. I'd like to highlight three examples of ways we're building strength and differentiation in e-commerce. First, we're really leaning into our app experience, including app-exclusive reservations that are establishing us as a leader in launch culture across many key categories. Second, we're continuing to invest in capabilities to deliver more personalized experiences, content, product recommendations, and search results. An example of this is how we're targeting NFL fans with personalized creative messaging and product recommendations for their favorite team. Third, for the holiday season, we're making it easier than ever to find the perfect gift with a new capability for athletes to build and share their wish lists with family and friends.

Speaker #2: Our multibillion-dollar, highly profitable e-commerce business continues to stand out as a growth driver, once again growing faster than the DICK’S business overall. I'd like to highlight three examples of ways we’re building strength and differentiation in e-commerce.

Speaker #2: First, we're really leaning into our app experience, including app-exclusive reservations that are crucial across many key categories. Second, we're establishing ourselves as a leader in launches, continuing to invest in capabilities to deliver more personalized experiences, content, product recommendations, and search results.

Speaker #2: An example of this is how, with personalized creative messaging, we're targeting NFL fans and product recommendations for their favorite team. Third, for the holiday season, we're making it easier than ever to find the perfect gift with a new capability for athletes to build and share their wish lists with family and friends.

Speaker #2: Lastly, as part of our broader digital strategy, we're harnessing the power of our athlete data and continue to be enthusiastic about the long-term growth opportunities we see with Game Changer and the DICK'S media network.

Simeon Gutman: Lastly, as part of our broader digital strategy, we're harnessing the power of our athlete data, and continue to be enthusiastic about the long-term growth opportunities we see with GameChanger and the DICK'S Media Network. Our GameChanger platform keeps expanding with new features, partnerships, and content that enriches the whole youth sports experience, and reinforces our leadership in the multi-billion-dollar youth sports tech ecosystem. A great example is our new Game Insights feature, which gives coaches fast, actionable takeaways after every game, further elevating the value we provide to athletes, coaches, and families. We're also seeing great momentum with our DICK'S Media Network, which is deepening engagement with consumers and key brand partners, while expanding across new ad platforms.

Lastly, as part of our broader digital strategy, we're harnessing the power of our athlete data, and continue to be enthusiastic about the long-term growth opportunities we see with GameChanger and the DICK'S Media Network. Our GameChanger platform keeps expanding with new features, partnerships, and content that enriches the whole youth sports experience, and reinforces our leadership in the multi-billion-dollar youth sports tech ecosystem. A great example is our new Game Insights feature, which gives coaches fast, actionable takeaways after every game, further elevating the value we provide to athletes, coaches, and families. We're also seeing great momentum with our DICK'S Media Network, which is deepening engagement with consumers and key brand partners, while expanding across new ad platforms.

Speaker #2: Our Game Changer platform keeps expanding with new features, partnerships, and content that enrich the whole youth sports experience and reinforces our leadership in the multibillion-dollar youth sports tech ecosystem. The new Game Insights feature gives coaches fast, actionable insights.

Speaker #2: Great example is our very pleased with our strong third quarter. In addition to our collection of results, we remain highly confident in our long-term strategies to drive sustained sales and profit growth for the DICK'S business.

Speaker #2: Elevating the value we provide to athletes, coaches, and families. We're also seeing great momentum and key brand partners, along with our DICK'S media network, which is deepening engagement with consumers' platforms.

Simeon Gutman: In addition to our collection of owned and our full spectrum of off-site channels, we're ramping up our in-store capabilities, like our interactive digital experiences and programmable spaces that are driving impactful brand activations in our House of Sport locations. In closing, we're very pleased with our strong Q3 results and remain highly confident in our long-term strategies to drive sustained sales and profit growth for the DICK'S business. We believe the power of our omnichannel athlete experience and our compelling, differentiated product offering will resonate with our athletes this holiday season, supported by our fantastic holiday brand campaign, which launched a few weeks ago. I'd like to thank all of our teammates for their hard work and commitment, and for their focus on delivering great experiences for our athletes throughout the season. Also, a warm welcome to all Stripers, Blue Shirts, and team members from the Foot Locker business.

In addition to our collection of owned and our full spectrum of off-site channels, we're ramping up our in-store capabilities, like our interactive digital experiences and programmable spaces that are driving impactful brand activations in our House of Sport locations. In closing, we're very pleased with our strong Q3 results and remain highly confident in our long-term strategies to drive sustained sales and profit growth for the DICK'S business. We believe the power of our omnichannel athlete experience and our compelling, differentiated product offering will resonate with our athletes this holiday season, supported by our fantastic holiday brand campaign, which launched a few weeks ago. I'd like to thank all of our teammates for their hard work and commitment, and for their focus on delivering great experiences for our athletes throughout the season. Also, a warm welcome to all Stripers, Blue Shirts, and team members from the Foot Locker business.

Speaker #2: The power of our omnichannel athlete experience and our compelling, differentiated product offering will resonate with our athletes this holiday season, supported by our fantastic "We Believe" holiday brand campaign, which launched a few weeks ago.

Speaker #2: I would like to thank all of our teammates for their hard work and commitment, and for their focus on delivering great experiences for our athletes throughout the season.

Speaker #2: And also, a warm welcome to all stripers, blue shirts, and team members from the Foot Locker business. DICK'S family, together to achieve great things. We're excited to have you as part of the team.

Simeon Gutman: We're excited to have you as part of the DICK'S family and to achieve great things together. I share Ed's excitement about how we will bring our operational excellence, our supplier relationships, and our merchandise expertise to return Foot Locker to its rightful place as a top player in the specialty athletic channel. With that, I'll turn it over to Navdeep to share more detail on our financial results and 2025 outlook. Navdeep, over to you.

We're excited to have you as part of the DICK'S family and to achieve great things together. I share Ed's excitement about how we will bring our operational excellence, our supplier relationships, and our merchandise expertise to return Foot Locker to its rightful place as a top player in the specialty athletic channel. With that, I'll turn it over to Navdeep to share more detail on our financial results and 2025 outlook. Navdeep, over to you.

Speaker #2: I share in the excitement about how we will bring our operational excellence, our supplier relationships, and our merchandise expertise to return Foot Locker to its rightful place as a top player in the specialty athletic channel.

Speaker #2: With that, I'll turn it over to Navdeep to share more detail on our financial results and 2025 outlook. Navdeep, over to you. Thank you, Lauren, and good morning, everyone.

Navdeep Gupta: Thank you, Lauren, and good morning, everyone. Before I begin my review of our Q3 results, I would like to take a moment to provide important context for Foot Locker's performance included in our consolidated financial results. As noted in this morning's release, our acquisition of Foot Locker closed on 8 September 2024. As a result, our Q3 consolidated financials do not include the peak back-to-school selling season in August for the Foot Locker business. They reflect just eight weeks of post-acquisition results in September and October, historically an unprofitable time period for the Foot Locker business. Let's now move to a brief review of our Q3 results for the consolidated company, including continued strong performance for the DICK'S business.

Navdeep Gupta: Thank you, Lauren, and good morning, everyone. Before I begin my review of our Q3 results, I would like to take a moment to provide important context for Foot Locker's performance included in our consolidated financial results. As noted in this morning's release, our acquisition of Foot Locker closed on 8 September 2024. As a result, our Q3 consolidated financials do not include the peak back-to-school selling season in August for the Foot Locker business. They reflect just eight weeks of post-acquisition results in September and October, historically an unprofitable time period for the Foot Locker business. Let's now move to a brief review of our Q3 results for the consolidated company, including continued strong performance for the DICK'S business.

Speaker #2: Before I begin my review of our third-quarter results, I would like to take a moment to provide important context for Foot Locker's performance included in our consolidated financial results.

Speaker #2: As noted in this morning's release, our acquisition of Foot Locker closed on September 8th. As a result, our third-quarter consolidated financials do not include the peak back-to-school selling season in August for Foot Locker and reflect just eight weeks of business.

Speaker #2: And October has historically been an unprofitable time period for the Foot Locker business. Let's now move to a brief review of our third-quarter results for the consolidated company, including continued strong performance for the DICK'S business.

Speaker #2: Consolidated net sales increased 36.3% to $4.17 billion, driven by an approximate $931 million sales contribution from a partial quarter of owning the Foot Locker business, and a 5.7% comp increase to gain market share for the DICK'S business as we continue to grow.

Navdeep Gupta: Consolidated net sales increased 36.3% to $4.17 billion, driven by an approximate $931 million sales contribution from a partial quarter of owning the Foot Locker business and a 5.7% comp increase for the DICK'S business as we continue to gain market share. On a two-year and a three-year stack basis, comps for the DICK'S business increased 10% and 11.9%, respectively. These strong comps were driven by a 4.4% increase in average ticket and a 1.3% increase in transactions. We also saw broad-based strength across our three primary categories of footwear, apparel, and hard lines. As Nate said, Foot Locker will be included in the comp base beginning in Q4 of next year, which is when they will commence their 14th full month of operation following the closing of the acquisition.

Consolidated net sales increased 36.3% to $4.17 billion, driven by an approximate $931 million sales contribution from a partial quarter of owning the Foot Locker business and a 5.7% comp increase for the DICK'S business as we continue to gain market share. On a two-year and a three-year stack basis, comps for the DICK'S business increased 10% and 11.9%, respectively. These strong comps were driven by a 4.4% increase in average ticket and a 1.3% increase in transactions. We also saw broad-based strength across our three primary categories of footwear, apparel, and hard lines. As Nate said, Foot Locker will be included in the comp base beginning in Q4 of next year, which is when they will commence their 14th full month of operation following the closing of the acquisition.

Speaker #2: On a two-year and a three-year stack basis, comps for the DICK'S business increased 10%, respectively. These strong comps were driven 11.9% by a 4.4% increase in average ticket and a 1.3% increase in transactions.

Speaker #2: We saw broad-based strength across our three primary categories: footwear, apparel, and hard lines. As Nate said, Foot Locker will be included in the comp base beginning in Q4 of next year, which is when they will commence their 14th full month of operation following the closing of the acquisition.

Speaker #2: Pro forma comp sales for the Foot Locker business in Q3 in its entirety decreased 4.7%, with comparable sales in North America decreasing by 2.6%, and the comparable sales in Foot Locker International decreasing by 10.2%, primarily driven by softness in Europe.

Navdeep Gupta: For reference, pro forma comp sales for the Foot Locker business in Q3 in its entirety decreased 4.7%, with the comparable sales in North America decreasing by 2.6%, and the comparable sales in Foot Locker International decreasing by 10.2%, primarily driven by softness in Europe. Consolidated gross profit for the quarter was $1.38 billion, or 33.13% of net sales, down 264 basis points from last year. For the DICK'S business, gross margin increased by 27 basis points and was in line with our expectations. Notably, the year-over-year decline in consolidated gross margin was driven entirely by the mixed impact from the lower gross margin Foot Locker business. On a non-GAAP basis, consolidated SG&A expenses increased 40.8%, or $320.9 million, to $1.11 billion, and deleveraged 84 basis points compared to last year's non-GAAP results. $259.9 million of this consolidated increase was driven by Foot Locker business.

For reference, pro forma comp sales for the Foot Locker business in Q3 in its entirety decreased 4.7%, with the comparable sales in North America decreasing by 2.6%, and the comparable sales in Foot Locker International decreasing by 10.2%, primarily driven by softness in Europe. Consolidated gross profit for the quarter was $1.38 billion, or 33.13% of net sales, down 264 basis points from last year. For the DICK'S business, gross margin increased by 27 basis points and was in line with our expectations. Notably, the year-over-year decline in consolidated gross margin was driven entirely by the mixed impact from the lower gross margin Foot Locker business. On a non-GAAP basis, consolidated SG&A expenses increased 40.8%, or $320.9 million, to $1.11 billion, and deleveraged 84 basis points compared to last year's non-GAAP results. $259.9 million of this consolidated increase was driven by Foot Locker business.

Speaker #2: Consolidated gross profit for the quarter was $1.38 billion, or 33.13% of net sales, down 264 basis points from last year. For the DICK'S business, gross margin increased by 27 basis points and was in line with our decline in consolidated gross margin, which was driven entirely by the mixed impact from the lower gross margin Foot Locker business.

Speaker #2: On a non-GAAP basis, consolidated expectations showed that SG&A expenses increased 40.8%, or $320.9 million, to $1.11 billion. Notably, the year-over-year dollar increase deleveraged by 84 basis points compared to last year's non-GAAP results.

Speaker #2: $259.9 million of this consolidated increase was driven by the Foot Locker business. For the DICK'S business, expense dollars increased by 7.7% and deleveraged 45 basis points.

Navdeep Gupta: For the DICK'S business, expense dollars increased by 7.7% and deleveraged 45 basis points, which was in line with our expectation and driven by strategic investments digitally, in-store, and in marketing to better position DICK'S business over the long term. Consolidated pre-opening expenses were $30.6 million, an increase of $13.8 million compared to the prior year. As Lauren mentioned, this supported the opening of 13 new House of Sport locations in Q3, our highest number opened in a single quarter to date, plus another six Fieldhouse locations we opened in the quarter. Consolidated non-GAAP operating income was $242.2 million, or 5.81% of net sales, compared to $289.5 million, or 9.47% of net sales last year. For the DICK'S business, non-GAAP operating income was $288.6 million, or 8.92% of net sales.

For the DICK'S business, expense dollars increased by 7.7% and deleveraged 45 basis points, which was in line with our expectation and driven by strategic investments digitally, in-store, and in marketing to better position DICK'S business over the long term. Consolidated pre-opening expenses were $30.6 million, an increase of $13.8 million compared to the prior year. As Lauren mentioned, this supported the opening of 13 new House of Sport locations in Q3, our highest number opened in a single quarter to date, plus another six Fieldhouse locations we opened in the quarter. Consolidated non-GAAP operating income was $242.2 million, or 5.81% of net sales, compared to $289.5 million, or 9.47% of net sales last year. For the DICK'S business, non-GAAP operating income was $288.6 million, or 8.92% of net sales.

Speaker #2: This was in line with our expectations and driven by strategic investments digitally, in-store, and in marketing to better position DICK'S business over the long term.

Speaker #2: Consolidated pre-opening expenses were $30.6 million and increased by $13.8 million compared to the prior year. As Lauren mentioned, this supported the opening of 13 new houses in Q3, our highest number opened in a single quarter to date.

Speaker #2: Plus, another six

Speaker #1: Income from operations was 5.81% of net sales at $242.2 million, compared to $289.5 million, or 9.47% of net sales from the prior year for the business.

Speaker #1: Operating non-GAAP income was sales sales or . This consolidated 8.92% of net year's included a loss in quarter from the Locker business, which was primarily driven by the Foot margin decline.

Navdeep Gupta: This year's consolidated results included a $46.3 million operating loss in the quarter from the Foot Locker business, which was primarily driven by the gross margin decline as we initiated certain pricing actions in late Q3. Importantly, since the acquisition of Foot Locker closed on 8 September 2024, these results exclude a profitable back-to-school season for the Foot Locker business in August and through Labor Day. For reference, pro forma non-GAAP operating income for the Foot Locker business in Q3 in its entirety was approximately $6.8 million. On a non-GAAP basis, other income, comprised primarily of interest income, was $12.7 million, down $7.8 million from prior year. This decline was from lower cash on hand and a lower interest rate environment. Consolidated non-GAAP EBT was $239.9 million, or 5.76% of net sales, including the Foot Locker business.

This year's consolidated results included a $46.3 million operating loss in the quarter from the Foot Locker business, which was primarily driven by the gross margin decline as we initiated certain pricing actions in late Q3. Importantly, since the acquisition of Foot Locker closed on 8 September 2024, these results exclude a profitable back-to-school season for the Foot Locker business in August and through Labor Day. For reference, pro forma non-GAAP operating income for the Foot Locker business in Q3 in its entirety was approximately $6.8 million. On a non-GAAP basis, other income, comprised primarily of interest income, was $12.7 million, down $7.8 million from prior year. This decline was from lower cash on hand and a lower interest rate environment. Consolidated non-GAAP EBT was $239.9 million, or 5.76% of net sales, including the Foot Locker business.

Speaker #1: initiated As we pricing actions in late . Q3 certain since the of Importantly , Foot Locker closed on the September 8th , acquisition these results exclude a profitable back to school season for the Foot Locker business in August and through Labor Day for reference , pro non-GAAP forma income for the operating Foot Locker business in Q3 in its entirety was approximately $6.8 million .

Speaker #1: On a non-GAAP basis, other income comprised primarily of interest income, which was $12.7 million, down from the prior year. This decline of $7.8 million was due to lower cash balances and a lower interest rate.

Speaker #1: Consolidated non-GAAP ET environment was $239.9 million , or 5.76% of net Foot Locker including The This compares to an ETU of $297.1 million , or 9.7% of net sales , in Q3 of last year Moving down .

Navdeep Gupta: This compares to an EBT of $297.1 million, or 9.7% of net sales in Q3 of last year. Moving down the piano, consolidated non-GAAP income tax expense was $59.4 million, or a rate of 24.7%. While the income for the DICK'S business was taxed at a low 20% rate, the combined company was subject to a higher tax rate, primarily driven by the Foot Locker's EMEA business, where full valuation allowance remains in place. In total, we delivered a consolidated non-GAAP earnings per diluted share of $2.07 for the quarter. These results included non-GAAP earnings per diluted share of $2.78 for the DICK'S business, based on a share count of 81.2 million, which excludes the dilutive effect of the shares issued in connection with the acquisition of Foot Locker. This is up from the earnings per diluted share of $2.75 last year.

This compares to an EBT of $297.1 million, or 9.7% of net sales in Q3 of last year. Moving down the piano, consolidated non-GAAP income tax expense was $59.4 million, or a rate of 24.7%. While the income for the DICK'S business was taxed at a low 20% rate, the combined company was subject to a higher tax rate, primarily driven by the Foot Locker's EMEA business, where full valuation allowance remains in place. In total, we delivered a consolidated non-GAAP earnings per diluted share of $2.07 for the quarter. These results included non-GAAP earnings per diluted share of $2.78 for the DICK'S business, based on a share count of 81.2 million, which excludes the dilutive effect of the shares issued in connection with the acquisition of Foot Locker. This is up from the earnings per diluted share of $2.75 last year.

Speaker #1: The P&L consolidated non-GAAP income tax expense of $59.4 million was at a rate of 24.7%, while the income for the business was taxed at a lower 20% rate.

Speaker #1: The combined company subject to a higher was tax rate , primarily driven by the Foot Locker's Amaya where full allowance remains in . In total delivered a , we consolidated non-GAAP per business , diluted earnings share of $2.07 for the quarter .

Speaker #1: These results place non-GAAP earnings per diluted share at $2.78 for the business, based on a share count of 81.2 million, which excludes the dilutive effect of shares connected to the acquisition of Foot Locker.

Speaker #1: This is up the earnings per diluted from share of $2.75 last year . This business results were partially offset by the effects of the partial order the Foot Locker business , which include a $0.52 negative impact from Foot Locker operations , including the gross margin as well decline , as the higher tax rate a 19 contribution from impact negative increased share from the which count , was up 5.9 million , for the eight weeks of the Locker ownership .

Navdeep Gupta: The DICK'S business results were partially offset by the effects of the partial quarter contribution from the Foot Locker business, which include a $0.52 negative impact from Foot Locker operations, including the gross margin decline, as well as the higher tax rate, a $0.19 negative impact from the increased share count, which was up 5.9 million, prorated for the eight weeks of the Foot Locker ownership. On a GAAP basis, our earnings per diluted shares were $0.86. This includes the non-cash gains from our non-operating investment in Foot Locker stock, as well as $141.9 million of pre-tax Foot Locker acquisition-related costs. For additional details on this, you can refer to the non-GAAP reconciliation table of our press release that we issued this morning.

The DICK'S business results were partially offset by the effects of the partial quarter contribution from the Foot Locker business, which include a $0.52 negative impact from Foot Locker operations, including the gross margin decline, as well as the higher tax rate, a $0.19 negative impact from the increased share count, which was up 5.9 million, prorated for the eight weeks of the Foot Locker ownership. On a GAAP basis, our earnings per diluted shares were $0.86. This includes the non-cash gains from our non-operating investment in Foot Locker stock, as well as $141.9 million of pre-tax Foot Locker acquisition-related costs. For additional details on this, you can refer to the non-GAAP reconciliation table of our press release that we issued this morning.

Speaker #1: On a GAAP earnings per share basis, our diluted shares were $0.86. This non-cash gain from our non-operating investment in Foot Locker stock, as well as $141.9 million of pre-tax costs associated with the Foot Locker acquisition, includes the costs.

Speaker #1: For additional information, you can refer to the non-GAAP details table of our press release that we issued this morning. Now, turning to the balance sheet.

Speaker #1: To our Q3, we ended with approximately $821 million in cash and cash equivalents, and no borrowings on our $2 billion unsecured credit facility. The quarter-end inventory increased compared to Q3 of last year at Foot Locker.

Navdeep Gupta: Now, turning to our balance sheet, we ended Q3 with approximately $821 million of cash and cash equivalents and no borrowings on our $2 billion unsecured credit facility. Our quarter-end inventory levels increased 51% compared to Q3 of last year. Excluding the Foot Locker business, inventory levels for DICK'S business increased 2% compared to Q3 of last year. We believe the inventory in DICK'S business is well-positioned to continue fueling our sales momentum. For reference, on a pro forma basis, inventory levels for the Foot Locker business increased approximately 5% as compared to the same period last year. As I've mentioned, the work is underway to clear out the unproductive inventory at the Foot Locker business. Turning to our Q3 capital allocation, net capital expenditures were $218 million, which included $201 million for the DICK'S business and $17 million for the Foot Locker business.

Now, turning to our balance sheet, we ended Q3 with approximately $821 million of cash and cash equivalents and no borrowings on our $2 billion unsecured credit facility. Our quarter-end inventory levels increased 51% compared to Q3 of last year. Excluding the Foot Locker business, inventory levels for DICK'S business increased 2% compared to Q3 of last year. We believe the inventory in DICK'S business is well-positioned to continue fueling our sales momentum. For reference, on a pro forma basis, inventory levels for the Foot Locker business increased approximately 5% as compared to the same period last year. As I've mentioned, the work is underway to clear out the unproductive inventory at the Foot Locker business. Turning to our Q3 capital allocation, net capital expenditures were $218 million, which included $201 million for the DICK'S business and $17 million for the Foot Locker business.

Speaker #1: Inventory levels for DICK'S business increased 2% compared to Q3 of last year. We believe the inventory index business is well positioned to continue our momentum.

Speaker #1: For fueling form a basis reference, inventory levels for the Foot Locker business increased by approximately 5% as compared to the same period last year. And as I mentioned, the work is underway to clear out the unproductive inventory at the Foot Locker business.

Speaker #1: Turning to capital year, our third quarter net capital expenditures were $218 million, which included $201 million for the Dex business and $17 million for the other business.

Speaker #1: We also paid $109 million in quarterly dividends to Foot Locker. Before I move to our outlook, I want to address a few key expectations surrounding the Foot Locker acquisition. First, as.

Navdeep Gupta: We also paid $109 million in quarterly dividends. Before I move to our outlook, I want to address a few key expectations surrounding the Foot Locker acquisition. First, as Ed discussed, our immediate priority is to clean out the garage of unproductive assets as we look to optimize the inventory assortment and store portfolio of the Foot Locker business. We expect these actions, along with other merger and integration costs, to result in a future pre-tax charge of between $500 million and $750 million. Importantly, these future pre-tax charges are excluded from today's outlook. Second, we remain confident in achieving the previously announced $100 to $125 million in cost synergies over the medium term, primarily from procurement and direct sourcing efficiencies. Third, as Ed said, we continue to expect the acquisition to be accretive to EPS in fiscal 2026, excluding one-time costs.

We also paid $109 million in quarterly dividends. Before I move to our outlook, I want to address a few key expectations surrounding the Foot Locker acquisition. First, as Ed discussed, our immediate priority is to clean out the garage of unproductive assets as we look to optimize the inventory assortment and store portfolio of the Foot Locker business. We expect these actions, along with other merger and integration costs, to result in a future pre-tax charge of between $500 million and $750 million. Importantly, these future pre-tax charges are excluded from today's outlook. Second, we remain confident in achieving the previously announced $100 to $125 million in cost synergies over the medium term, primarily from procurement and direct sourcing efficiencies. Third, as Ed said, we continue to expect the acquisition to be accretive to EPS in fiscal 2026, excluding one-time costs.

Speaker #1: As discussed, our immediate priority is to clean out the garage of unproductive assets as we look to optimize the inventory assortment and store portfolio of the Foot Locker business.

Speaker #1: We expect these actions , along with other merger and costs , to a result in future pre-tax charge of between 500 million and $750 million .

Speaker #1: Importantly , these integration future pre-tax charges are excluded from today's outlook Second , we remain achieving confident in the previously announced 100 to $125 million in cost synergies .

Speaker #1: , primarily from procurement and direct sourcing efficiencies . Third , as Ed said , we continue to expect the acquisition to be accretive to EPs in 2026 , fiscal excluding one time costs .

Speaker #1: Now, moving to our outlook today, we are providing for 2025 an outlook that is specific to DICK'S updated business and does not include the Foot Locker business, which we will address separately.

Navdeep Gupta: Now, moving to our outlook for 2025, today we are providing an updated outlook that is specific to DICK'S business and does not include the Foot Locker business, which we will address separately. We are taking this approach to ensure comparability of our performance across the quarters, and to provide ongoing visibility into the DICK'S business. This outlook also excludes the investment gains, as well as the merger and integration costs related to the Foot Locker acquisition. As Lauren said, we are raising our expectation for comp sales and EPS for the DICK'S business. Our updated guidance reflects our strong Q3 performance and includes the expected impact from all tariffs currently in effect. This outlook balances our confidence in the outcomes we are driving through our strategic initiatives, and our operational strength against the ongoing dynamic macroeconomic environment.

Now, moving to our outlook for 2025, today we are providing an updated outlook that is specific to DICK'S business and does not include the Foot Locker business, which we will address separately. We are taking this approach to ensure comparability of our performance across the quarters, and to provide ongoing visibility into the DICK'S business. This outlook also excludes the investment gains, as well as the merger and integration costs related to the Foot Locker acquisition. As Lauren said, we are raising our expectation for comp sales and EPS for the DICK'S business. Our updated guidance reflects our strong Q3 performance and includes the expected impact from all tariffs currently in effect. This outlook balances our confidence in the outcomes we are driving through our strategic initiatives, and our operational strength against the ongoing dynamic macroeconomic environment.

Speaker #1: We are taking a proactive approach to ensure the comparability of our performance across the quarters and to provide ongoing visibility into the business. This outlook also excludes the investment gains, as well as the merger and integration costs related to the Foot Locker acquisition. As we stated, we are raising our expectations for comparable sales and EPS for the next business quarter.

Speaker #1: updated reflects our Q3 and includes Lauren the guidance performance impact Our all currently in effect tariffs outlook balances confidence our in the outcomes we are driving through our .

Speaker #1: our operational strength against the ongoing dynamic macroeconomic environment . We This full year expect sales growth comp for the now business range of 3.5% to 4% , compared to our growth expectation of Dick's 2% to 3.5% .

Navdeep Gupta: We now expect fully account sales growth for the DICK'S business in the range of 3.5% to 4%, compared to our prior growth expectation of 2% to 3.5%. Total sales for the DICK'S business are expected to be in the range of $13.95 billion to 14 billion, compared to our prior expectation of $13.75 billion to 13.95 billion. Driven by the quality of our assortment, we continue to expect to drive gross margin expansion for the full year. We anticipate this expansion will be offset by SG&A deleverage, as we are making strategic investments digitally, in-store, and in marketing to better position ourselves over the long term. We still expect operating margins to be approximately 11.1% at the midpoint. At the high end of the expectations, we continue to expect to drive approximately 10 basis points of operating margin expansion.

We now expect fully account sales growth for the DICK'S business in the range of 3.5% to 4%, compared to our prior growth expectation of 2% to 3.5%. Total sales for the DICK'S business are expected to be in the range of $13.95 billion to 14 billion, compared to our prior expectation of $13.75 billion to 13.95 billion. Driven by the quality of our assortment, we continue to expect to drive gross margin expansion for the full year. We anticipate this expansion will be offset by SG&A deleverage, as we are making strategic investments digitally, in-store, and in marketing to better position ourselves over the long term. We still expect operating margins to be approximately 11.1% at the midpoint. At the high end of the expectations, we continue to expect to drive approximately 10 basis points of operating margin expansion.

Speaker #1: Total sales for the business are expected to be in the range of $13.95 billion to $14 billion, compared to our prior expectation of a range of $13.75 billion to $13.95 billion.

Speaker #1: Driven by the quality of our assortment, we continue to expect to drive gross margin expansion for the full year. We anticipate this expansion will be offset by leverage as we are making strategic investments digitally, in-store, and in marketing to better position ourselves for the long term.

Speaker #1: Operating margins are expected to be approximately 11.1% at the long midpoint and at the high end of expectations. We continue to expect to drive approximately ten basis points of margin operating points of expansion.

Speaker #1: We now expect EPs business in the range for of $14.25 to $14.55 , compared to our prior expectation of $13.90 to $14.50 . Our earnings for Dick's guidance business is approximately 81 million average diluted shares outstanding , and excludes the dilutive the 9.6 million shares connection impact of acquisition .

Navdeep Gupta: We now expect EPS for DICK'S business in the range of $14.25 to $14.55, compared to our prior expectation of $13.90 to $14.50. Our earnings guidance for DICK'S business is based on approximately 81 million average diluted shares outstanding and excludes the dilutive impact of the 9.6 million shares issued in connection with the acquisition. This outlook for DICK'S business also assumes an effective tax rate of approximately 24%, compared to our prior expectation of approximately 25%. We continue to expect net capital expenditures of approximately $1 billion for the full year for the DICK'S business. Turning now to the Foot Locker business, we want to provide some perspective on our expectations for the fourth quarter. As Ed discussed, our priority is to position Foot Locker for a fresh start in 2026 and reset the business for long-term success.

We now expect EPS for DICK'S business in the range of $14.25 to $14.55, compared to our prior expectation of $13.90 to $14.50. Our earnings guidance for DICK'S business is based on approximately 81 million average diluted shares outstanding and excludes the dilutive impact of the 9.6 million shares issued in connection with the acquisition. This outlook for DICK'S business also assumes an effective tax rate of approximately 24%, compared to our prior expectation of approximately 25%. We continue to expect net capital expenditures of approximately $1 billion for the full year for the DICK'S business. Turning now to the Foot Locker business, we want to provide some perspective on our expectations for the fourth quarter. As Ed discussed, our priority is to position Foot Locker for a fresh start in 2026 and reset the business for long-term success.

Speaker #1: This Dick's business outlook for issued in assumes also an effective tax rate approximately 24% . Compared to prior our expectation of approximately 25% .

Speaker #1: We expect expenditures of capital for the full year to be approximately $1 billion. For the next business, turning now to the Foot Locker business.

Speaker #1: We want to provide some on our perspective expectations for the fourth quarter . I As , our priority is to position Foot discussed Locker for a fresh start in 2026 and reset the business for long term success includes .

Speaker #1: strategic actions address unproductive taking assets optimization , including the of inventory and of to the . As a our result of optimize Foot Locker's inventory , we actions to expect Q4 gross closure Locker be business will down between points as 1000 to 1500 basis compared to Foot Locker's for Foot results reported period same last in the year , with a pro forma comp sales being mid to high .

Navdeep Gupta: This includes taking strategic actions to address unproductive assets, including the optimization of inventory and the closure of underperforming stores. As a result of our actions to optimize Foot Locker's inventory, we expect Q4 gross margins for Foot Locker business will be down between 1,000 to 1,500 basis points as compared to Foot Locker's reported results in the same period last year, with the pro forma comp sales being down mid to high single digits. Excluding the one-time costs associated with our actions to address unproductive assets, we expect Q4 operating income for the Foot Locker business to be slightly negative. Looking ahead, we expect next year's back-to-school season to be an inflection point to drive meaningful progress in the Foot Locker business. As a reminder, we continue to expect the Foot Locker acquisition to be accretive to our EPS in fiscal 2026, excluding the one-time costs.

This includes taking strategic actions to address unproductive assets, including the optimization of inventory and the closure of underperforming stores. As a result of our actions to optimize Foot Locker's inventory, we expect Q4 gross margins for Foot Locker business will be down between 1,000 to 1,500 basis points as compared to Foot Locker's reported results in the same period last year, with the pro forma comp sales being down mid to high single digits. Excluding the one-time costs associated with our actions to address unproductive assets, we expect Q4 operating income for the Foot Locker business to be slightly negative. Looking ahead, we expect next year's back-to-school season to be an inflection point to drive meaningful progress in the Foot Locker business. As a reminder, we continue to expect the Foot Locker acquisition to be accretive to our EPS in fiscal 2026, excluding the one-time costs.

Speaker #1: Single digits down one time cost associated actions to address unproductive , We expect Q4 operating income for the assets . be slightly business to negative .

Speaker #1: Looking with our ahead , expect we year's back to school be an inflection drive point to progress in the Foot Locker . As Locker a business reminder , we meaningful Locker acquisition to the Foot accretive to fiscal 2026 .

Speaker #1: Excluding the cost one time . in wrap up , expect I want to season to provide a couple of Before we consolidated company assumptions to provide our your EPs continue to .

Navdeep Gupta: Before we wrap up, I want to provide a couple of consolidated company assumptions to provide clarity for your models. For the fourth quarter, we expect approximately $91 million average diluted shares outstanding, which includes the dilutive impact of the 9.6 million shares issued in connection with the Foot Locker acquisition. We also anticipate a consolidated company effective tax rate of approximately 29% for Q4, impacted by the expected Foot Locker losses in AMEA, where no corresponding tax benefit is anticipated. As Ed and Lauren said at the top of the call, we are proud that we continue to operate from a position of strength, with robust momentum in DICK'S business, and a significant effort underway to return the Foot Locker business to growth. We are doing all that our shareholder would expect to make the Foot Locker business accretive in 2026.

Before we wrap up, I want to provide a couple of consolidated company assumptions to provide clarity for your models. For the fourth quarter, we expect approximately $91 million average diluted shares outstanding, which includes the dilutive impact of the 9.6 million shares issued in connection with the Foot Locker acquisition. We also anticipate a consolidated company effective tax rate of approximately 29% for Q4, impacted by the expected Foot Locker losses in AMEA, where no corresponding tax benefit is anticipated. As Ed and Lauren said at the top of the call, we are proud that we continue to operate from a position of strength, with robust momentum in DICK'S business, and a significant effort underway to return the Foot Locker business to growth. We are doing all that our shareholder would expect to make the Foot Locker business accretive in 2026.

Speaker #1: Expect approximately 91 million average diluted shares outstanding for the fourth quarter, which includes the dilutive impact of the 9.6 million shares issued in connection with the models Foot Locker acquisition.

Speaker #1: We also anticipate a consolidated company tax effective rate of approximately 29% for Q4, impacted by the expected Foot Locker losses in EMEA, where no corresponding benefit is anticipated.

Speaker #1: As editor and at the the we call , proud that we continue to operate from a position of top of strength with Lawrence said , momentum business and significant a effort underway Foot Locker return the to growth .

Speaker #1: We are doing index our shareholder would expect Foot Locker business to robust business all that to make the in 2026 . not be We could more excited about our future concludes our prepared together .

Speaker #1: remarks . for your interest in DICK'S SPORTING GOODS, INC. . Operator . You may now open the line for Thank you . questions

Navdeep Gupta: We could not be more excited about our future together. This concludes our prepared remarks. Thank you for your interest in DICK'S Sporting Goods. Operator, you may now open the line for questions.

We could not be more excited about our future together. This concludes our prepared remarks. Thank you for your interest in DICK'S Sporting Goods. Operator, you may now open the line for questions.

Speaker #2: you . We will now begin Thank question and you would answer like to question , session . please press one on your If telephone raise your hand and join the star queue .

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you'd like to withdraw that question, again, press star one. As a reminder, please limit yourself to one question and one follow-up. For any additional questions, please re-queue. Your first question comes from the line of Robert Ohmes with Bank of America. Please go ahead.

Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you'd like to withdraw that question, again, press star one. As a reminder, please limit yourself to one question and one follow-up. For any additional questions, please re-queue. Your first question comes from the line of Robby Ohmes with Bank of America. Please go ahead.

Speaker #2: keypad to like to the withdraw again , press star one . And as reminder , a limit please yourself to one question and for if you'd additional one follow up questions , please Requeue .

Speaker #2: And your first question comes from the line of Robby with Bank of America. Please go ahead.

Speaker #3: morning . Hi , Ed Good and Lauren . My is

Robert Ohmes: Good morning. Hi, Ed and Lauren. My first question is, I know we're going to be talking a lot about Foot Locker today, but on the DICK'S business, it looked like a really, really great quarter, comps up 5.7%, etc., and you raised guidance. Just how are you driving that, and how are you guys thinking about your confidence going into holiday here?

Robby Ohmes: Good morning. Hi, Ed and Lauren. My first question is, I know we're going to be talking a lot about Foot Locker today, but on the DICK'S business, it looked like a really, really great quarter, comps up 5.7%, etc., and you raised guidance. Just how are you driving that, and how are you guys thinking about your confidence going into holiday here?

Speaker #3: Locker Foot today , but on the business , you know , look a really like , really great quarter . Comps up 5.7% , etc.

Speaker #3: And you raised guidance, but just how are you driving that, and how are you guys thinking about confidence going into Q4, you know?

Speaker #3: And you raised guidance , but just how are you driving that and how are you guys thinking your about confidence going into Ohmes you know , holiday ?

Speaker #4: Robby . We are Thanks ,

Speaker #4: so proud of the team for 5.7% comp . And importantly , we are comping strong comps . So a two year stack 10% .

Lauren Hobart: Thanks, Robbie. We are so proud of the team for 5.7% comp. Importantly, we are comping strong comp, so a two-year stack of 10%. As you know, it's been several quarters, seven quarters in a row, actually, where we've had an over 4% comp. That really speaks to the fact that our long-term strategies are working. I would point to the differentiated product assortment that we've been able to bring in, everything from newness from our strategic partners to emerging brands, our vertical brands. Consumers, athletes are really resonating with the products that we are providing. At the same time, our entire team is fully focused on delivering an engaging athlete experience. That's in our stores, that's our digital environment. We are really focused on excelling and getting people the product that will give them the confidence, the excitement to do their absolute best.

Lauren Hobart: Thanks, Robbie. We are so proud of the team for 5.7% comp. Importantly, we are comping strong comp, so a two-year stack of 10%. As you know, it's been several quarters, seven quarters in a row, actually, where we've had an over 4% comp. That really speaks to the fact that our long-term strategies are working. I would point to the differentiated product assortment that we've been able to bring in, everything from newness from our strategic partners to emerging brands, our vertical brands. Consumers, athletes are really resonating with the products that we are providing. At the same time, our entire team is fully focused on delivering an engaging athlete experience. That's in our stores, that's our digital environment. We are really focused on excelling and getting people the product that will give them the confidence, the excitement to do their absolute best.

Speaker #4: really speaks to the fact long our term that strategies are And working . And I would point to the product differentiated assortment that we've been able to bring in everything from newness , from our strategic partners to emerging brands , our vertical brands , consumers , resonating with products that really we are athletes are same time , our at the entire the team is fully focused on delivering an engaging athlete providing .

Speaker #4: experience , and that's in our stores . That's our digital environment . We are really focused on excelling and getting people the product that And will give them the confidence , the excitement to do their best .

Speaker #4: absolute So , so our strategies are working . If you at Q3 , look one of the great things we saw was that growth across our key categories .

Lauren Hobart: Our strategies are working. If you look at Q3, one of the great things we saw was that we had growth across all of our key categories. When you think of back-to-school, you think of back-to-sport, you think of footwear, apparel, and team sports. We knocked it out of the park with those categories, but also golf, as well as our licensed business and our trading card business really doing well. As we flip to holiday, all of those themes are the reasons why we are so excited and confident as we look to Q4 and that we just raised our guidance. We've got an incredible product assortment for athletes. The consumer is fully focused on sport, and we are right at the middle of the intersection of sport and culture. We've got great gifts across our entire portfolio.

Our strategies are working. If you look at Q3, one of the great things we saw was that we had growth across all of our key categories. When you think of back-to-school, you think of back-to-sport, you think of footwear, apparel, and team sports. We knocked it out of the park with those categories, but also golf, as well as our licensed business and our trading card business really doing well. As we flip to holiday, all of those themes are the reasons why we are so excited and confident as we look to Q4 and that we just raised our guidance. We've got an incredible product assortment for athletes. The consumer is fully focused on sport, and we are right at the middle of the intersection of sport and culture. We've got great gifts across our entire portfolio.

Speaker #4: think of back to had school , you think of back to And apparel and team sports . We of the park with we also all of golf and , but as well as our license business and our business really doing trading card flip to holiday well .

Speaker #4: , all of themes are the reasons why we are so excited and confident as I as we look to those Q4 and we just raised our guidance , we've got incredible So product assortment for an The athletes .

Speaker #4: consumer is fully focused on sport , and we are right at the middle of the intersection of sport and culture , and we've got great across our entire gifts portfolio .

Speaker #4: really pleased going So we're Q4 .

Speaker #3: really then just helpful . up , And just on Foot Locker , you know what ? That's of What kind assumptions did about Foot Locker's cleanup of you make inventory Having in the fourth quarter ?

Lauren Hobart: We're really pleased going into Q4.

We're really pleased going into Q4.

Robert Ohmes: That's really helpful. Just my follow-up, just on Foot Locker, what kind of assumptions did you make about Foot Locker's cleanup of inventory in the fourth quarter having on DICK'S Sporting Goods? Also, how many stores are you guys planning to close, and what would the timing be there?

Robby Ohmes: That's really helpful. Just my follow-up, just on Foot Locker, what kind of assumptions did you make about Foot Locker's cleanup of inventory in the fourth quarter having on DICK'S Sporting Goods? Also, how many stores are you guys planning to close, and what would the timing be there?

Speaker #3: Sporting Goods and also many how you guys planning on Dick's close ? And what would the timing to be there ?

Speaker #5: Robbie . Thanks , we take As a look at store closings , we're still We've got stores that addressing that . some we think we're going to close .

Ed Stack: Thanks, Robbie. As we take a look at store closings, we're still addressing that. We've got some stores that we think we're going to close. We're also looking to address just the upside that we think we have in these stores, and how many really need to be closed and how many can we make more profitable. We'll give you some more guidance on that at the end of our fourth quarter call.

Ed Stack: Thanks, Robbie. As we take a look at store closings, we're still addressing that. We've got some stores that we think we're going to close. We're also looking to address just the upside that we think we have in these stores, and how many really need to be closed and how many can we make more profitable. We'll give you some more guidance on that at the end of our fourth quarter call.

Speaker #5: We're also looking to address just upside the that we have in these stores . And how need to many really be closed and how many can make more think we we profitable .

Speaker #5: So we'll give you some more guidance At the end of our fourth quarter , fourth quarter call .

Speaker #1: quickly add on to the me Locker cleanup Foot fourth quarter . So what Ed said in his prepared remarks , as well as said , that expect the gross we the Foot Locker margins in business Robbie , let in the fourth quarter to be down between 1000 to 1500 basis points .

Nate Gilch: Robbie, let me quickly add on to the Foot Locker cleanup of the inventory in the fourth quarter. What Ed said in his prepared command remarks, as well as what I said, is that we expect the gross margins in the Foot Locker business in the fourth quarter to be down between 1,000 to 1,500 basis points. As you can imagine, that is primarily driven by us quickly addressing the unproductive inventory that is in the system right now and having the room available to bring the excitement assortment that will position the business really well for 2026.

Navdeep Gupta: Robbie, let me quickly add on to the Foot Locker cleanup of the inventory in the fourth quarter. What Ed said in his prepared command remarks, as well as what I said, is that we expect the gross margins in the Foot Locker business in the fourth quarter to be down between 1,000 to 1,500 basis points. As you can imagine, that is primarily driven by us quickly addressing the unproductive inventory that is in the system right now and having the room available to bring the excitement assortment that will position the business really well for 2026.

Speaker #1: As you what I can is imagine , that primarily driven by us addressing the unproductive is in the system right inventory that now and have the room quickly bring the that will assortment excitement the position business really for 2026 .

Speaker #1: well

Speaker #3: Thank you .

Speaker #2: Next, your question comes from the line of Simeon Gutman with Morgan Stanley. Please go ahead.

Robert Ohmes: Thank you.

Robby Ohmes: Thank you.

Operator: Your next question comes from the line of Simeon Gutman with Morgan Stanley. Please go ahead.

Operator: Your next question comes from the line of Simeon Gutman with Morgan Stanley. Please go ahead.

Speaker #6: Hey . Good morning , team . My first question on So it looks like the may business bit softer than footlocker . was expecting have been a And you're anticipating a slightly negative Q3 .

Simeon Gutman: Hey, good morning, team. My first question on Foot Locker. It looks like the business may have been a bit softer than the street was expecting in Q3, and you're anticipating a slightly negative operating income in Q4. Yet you're expecting the acquisition to be accretive to EPS in 2026. Can you walk through the building blocks to achieve it, and then what gives you confidence?

Simeon Gutman: Hey, good morning, team. My first question on Foot Locker. It looks like the business may have been a bit softer than the street was expecting in Q3, and you're anticipating a slightly negative operating income in Q4. Yet you're expecting the acquisition to be accretive to EPS in 2026. Can you walk through the building blocks to achieve it, and then what gives you confidence?

Speaker #6: Q4 . Yet in operating income expecting be the acquisition to accretive to EPs in 26 . Can through the building you walk it ?

Speaker #6: And

Speaker #5: Thanks. I can't tell Simeon I you. Really couldn't be more excited about Foot Locker and the opportunity of Foot Locker. But there's some work that needs to be done to get it to for 26, and for it to be accretive to our business.

Ed Stack: Sure. Thanks, Simeon. I can't tell you, we really couldn't be more excited about Foot Locker and the opportunity of Foot Locker. There is some work that needs to be done to get it ready for 2026 and for it to be accretive to our business. One of the things that we're doing, and we gave the Foot Locker team kind of a visual that we need to clean out the garage. We're cleaning out the garage, we're cleaning out old unproductive inventory, and we're going to be impairing underperforming assets. From a confidence standpoint, those are all part of the building blocks that we need to put together to be ready for 2026. We have tremendous confidence in this management team that we've assembled.

Ed Stack: Sure. Thanks, Simeon. I can't tell you, we really couldn't be more excited about Foot Locker and the opportunity of Foot Locker. There is some work that needs to be done to get it ready for 2026 and for it to be accretive to our business. One of the things that we're doing, and we gave the Foot Locker team kind of a visual that we need to clean out the garage. We're cleaning out the garage, we're cleaning out old unproductive inventory, and we're going to be impairing underperforming assets. From a confidence standpoint, those are all part of the building blocks that we need to put together to be ready for 2026. We have tremendous confidence in this management team that we've assembled.

Speaker #5: ready one of the things that So we're doing , and we gave the Foot Locker team kind of a that we need to we visual out the So we're cleaning garage .

Speaker #5: garage . cleaning We're out we're inventory . out the You know , we're going to be impairing , underperforming assets . And from a standpoint , those are all confidence part of the building blocks that to put together to we need for 2026 .

Speaker #5: We have a tremendous management team that we've assembled in North America. As we've talked about, it's being led by Anne, a longtime Nike executive, who we have a tremendous amount of respect for, and in the brand, we have a tremendous amount of executive experience.

Ed Stack: In North America, as we talked about, it's being led by Ann Freeman, a longtime Nike executive that we've got a tremendous amount of respect for, and the brands have a tremendous amount of respect for. We just announced today that Matthew Barnes is going to run our international business. He's a Brit, and we think that EMEA truly needs to be run by a European. We're making some real changes on how we are approaching the international business, which we think is going to be very positive. One of the things we love about Foot Locker, and one of the reasons we bought it when we went out and did our due diligence before, is the men and women in the stores, the stripers in the blue shirts.

In North America, as we talked about, it's being led by Ann Freeman, a longtime Nike executive that we've got a tremendous amount of respect for, and the brands have a tremendous amount of respect for. We just announced today that Matthew Barnes is going to run our international business. He's a Brit, and we think that EMEA truly needs to be run by a European. We're making some real changes on how we are approaching the international business, which we think is going to be very positive. One of the things we love about Foot Locker, and one of the reasons we bought it when we went out and did our due diligence before, is the men and women in the stores, the stripers in the blue shirts.

Speaker #5: announced today that Matthew We just Barnes is going to run our international business, and he's a Brit. We think that it needs to be truly run by a European.

Speaker #5: We're making it may it how changes on are approaching the we international business , which we think is going to be very positive And one of the things we love about footlocker , and one of the reasons .

Speaker #5: due before , is the the women in the men and stripers and the stores , the blue shirts . These young men and women , they love sneakers .

Speaker #5: Foot Locker is diligent about the product around this. They are really, really going to be our secret weapon as we go forward. And the other thing that gives us tremendous confidence is that we've talked to every brand, and every brand has a renewed interest in being supportive to Foot Locker.

Ed Stack: These young men and women, they love sneakers, they love Foot Locker, they love to be around this product, and they're really our—we really think they're our secret weapon as we go forward. The other thing that gives us a tremendous amount of confidence is we've talked with every brand, and every brand has a renewed interest in being supportive to Foot Locker, and they've all talked that they want a stable and growing Foot Locker. To be honest with you, it's great for our business, but it's also great for the brand's business. We've got complete alignment with the brands, and we are confident that in 2026, we do put all these building blocks together. We're confident that Foot Locker will be accretive to our earnings in 2026.

These young men and women, they love sneakers, they love Foot Locker, they love to be around this product, and they're really our—we really think they're our secret weapon as we go forward. The other thing that gives us a tremendous amount of confidence is we've talked with every brand, and every brand has a renewed interest in being supportive to Foot Locker, and they've all talked that they want a stable and growing Foot Locker. To be honest with you, it's great for our business, but it's also great for the brand's business. We've got complete alignment with the brands, and we are confident that in 2026, we do put all these building blocks together. We're confident that Foot Locker will be accretive to our earnings in 2026.

Speaker #5: And they've all talked that they want a stable and growing Foot locker . And to be honest with you , our it's But it's business .

Speaker #5: also great for the in business . And we complete alignment with brand's the and confident that we are in 2026 , do we put all great for brands blocks these confident .

Speaker #5: that Foot Locker will be accretive to our earnings in

Speaker #6: my So

Speaker #6: up , I I'll make it two parts . First , just to that point on 26 accretion . That's footlocker guess , including synergy .

Simeon Gutman: My follow-up, I guess I'll make it two parts. First, just to that point on '26 accretion, that's Foot Locker standalone, including synergy. That's not, let's say, DICK'S Sporting Goods electing to buy stock back. That's Foot Locker mass adding to DICK'S earnings base. That's part one of the follow-up. Part two, you don't tell us what your footwear gross margin is inside of core DKS. If you look at Foot Locker, they've been on a steady decline for the last several years, and a lot of it does track with one of your major suppliers' proliferation of product. Is it feasible once you're done with your cleanup that you can get gross margins at parity with DICK'S Sporting Goods, or is there something about the mix and the selection that you can't get it quite to that level?

Simeon Gutman: My follow-up, I guess I'll make it two parts. First, just to that point on 2026 accretion, that's Foot Locker standalone, including synergy. That's not, let's say, DICK'S Sporting Goods electing to buy stock back. That's Foot Locker mass adding to DICK'S earnings base. That's part one of the follow-up. Part two, you don't tell us what your footwear gross margin is inside of core DKS. If you look at Foot Locker, they've been on a steady decline for the last several years, and a lot of it does track with one of your major suppliers' proliferation of product. Is it feasible once you're done with your cleanup that you can get gross margins at parity with DICK'S Sporting Goods, or is there something about the mix and the selection that you can't get it quite to that level?

Speaker #6: That's not, let's say, Sporting Goods electing to buy stock. That's standalone Foot Locker, 2026. Math back to Dick's earnings, adding. That's part one of the follow-up.

Speaker #6: And then part two you know you don't tell us what footwear gross margin is inside of core . DCS . But if you look at footlocker they've been on a steady decline your for the last years .

Speaker #6: And a lot of it several one of your major suppliers . Proliferation of product . Is it track with once you're done with your cleanup , that you can get gross margins at parity Dick's is there something about the mix and Sporting Goods ?

Speaker #6: you with can't get it quite to that level , meaning how quick repair could there much once you clean up be the assortment ?

Speaker #5: Well, we're not going to guide right now, and we'll provide more guidance at the end of Q4. But we're...

Simeon Gutman: Meaning, how much quick repair could there be once you clean up the assortment?

Meaning, how much quick repair could there be once you clean up the assortment?

Speaker #5: we're not going to tell you where be it's going to Or compared to Dick's Sporting Goods . you do know can be that it meaningfully to give different than right now .

Ed Stack: Well, we're not going to guide right now, and we'll give you some more guidance at the end of Q4, but we're not going to give you—we're not going to tell you where it's going to be compared to DICK'S Sporting Goods. We do know that it can be meaningfully different than it is right now. There's a huge opportunity. One of the reasons it's struggled is they haven't had access to some of the key product. They haven't had allocation of some of the product. There's a number of stores that are out of stock in product that they don't have. I was just in a store in New York yesterday, as a matter of fact, talking to the gentleman who runs the store, and he said, we're a great running store.

Ed Stack: Well, we're not going to guide right now, and we'll give you some more guidance at the end of Q4, but we're not going to give you—we're not going to tell you where it's going to be compared to DICK'S Sporting Goods. We do know that it can be meaningfully different than it is right now. There's a huge opportunity. One of the reasons it's struggled is they haven't had access to some of the key product. They haven't had allocation of some of the product. There's a number of stores that are out of stock in product that they don't have. I was just in a store in New York yesterday, as a matter of fact, talking to the gentleman who runs the store, and he said, we're a great running store.

Speaker #5: There's a huge it is opportunity . But we One of the reasons it's struggled is they haven't had access to some of the key product .

Speaker #5: They haven't had allocation of some of the product . There's a number of stores that are out of stock in product that they don't have .

Speaker #5: I was just in a store in New York yesterday. As a matter of fact, I was talking to the gentleman who runs the store, and he said he works at a running store.

Speaker #5: We just got Nike's running construct in. We're having a great week. And when you take a look at some things, like there's a huge opportunity.

Ed Stack: We just got Nike's running construct in last week. When you take a look at some things like that, there's just a huge opportunity. That product is being sold at full price. Yeah, we're really confident that there'll be a meaningful increase in their gross margin, and we'll give you some more color on that at the end of the fourth quarter.

We just got Nike's running construct in last week. When you take a look at some things like that, there's just a huge opportunity. That product is being sold at full price. Yeah, we're really confident that there'll be a meaningful increase in their gross margin, and we'll give you some more color on that at the end of the fourth quarter.

Speaker #5: Products that are being sold at full price. Yeah, we're really confident that there'll be a meaningful increase in their gross margin. Give you some.

Speaker #5: More that at the end of color on fourth quarter, and we'll the...

Speaker #6: And then I don't know, sorry. Was that a follow-up to the accretion comment? If you can comment any more on that, whether that included buyback or that just core Foot Locker.

Simeon Gutman: I don't know, Ed, sorry, if it was that follow-up to the accretion comment, if you can comment any more on that, whether that included buyback or that's just core Foot Locker.

Simeon Gutman: I don't know, Ed, sorry, if it was that follow-up to the accretion comment, if you can comment any more on that, whether that included buyback or that's just core Foot Locker.

Speaker #5: that's core That's footlocker . That's not to say we might not , you know , as we've said , been we've we we'll be opportunistic based on what happens with the stock .

Ed Stack: That's core Foot Locker. That's not to say we might not—as we've said, we've been—we'll be opportunistic based on what happens with the stock. We may buy back some stock, but we think from a core Foot Locker standpoint, it can be accretive to our earnings in 2026.

Ed Stack: That's core Foot Locker. That's not to say we might not—as we've said, we've been—we'll be opportunistic based on what happens with the stock. We may buy back some stock, but we think from a core Foot Locker standpoint, it can be accretive to our earnings in 2026.

Speaker #5: We may buy back some stock, but we think from a core Foot Locker standpoint, it can be to buy our accretive earnings in 2026.

Speaker #6: Okay. Happy holidays. Thanks. Good luck.

Speaker #5: Thanks to

Speaker #2: Your next question

Speaker #2: Comes from the line of McShane with Goldman Sachs. Please go ahead.

Simeon Gutman: Okay, happy holidays. Thanks, good luck.

Simeon Gutman: Okay, happy holidays. Thanks, good luck.

Ed Stack: Thanks. You too.

Ed Stack: Thanks. You too.

Operator: Your next question comes from the line of Kate McShane with Goldman Sachs. Please go ahead.

Operator: Your next question comes from the line of Kate McShane with Goldman Sachs. Please go ahead.

Speaker #7: Hi. Good morning. Thanks for taking our question. We were curious about how you are going to manage the markdowns at Foot Locker.

Kate McShane: Hi, good morning. Thanks for taking our question. We were curious about how you're going to manage the markdowns at Foot Locker. I guess the concern is that if you do discount aggressively in the fourth quarter, do you think you'll be in a position where you can go back to full price selling and the customer be ready for that as new product comes into the store? Our second question on the discounting is, do you feel like the market is going to be heavy with discounts now in Q4, and how much do you expect that to impact the market and DICK'S own footwear sales?

Kate McShane: Hi, good morning. Thanks for taking our question. We were curious about how you're going to manage the markdowns at Foot Locker. I guess the concern is that if you do discount aggressively in the fourth quarter, do you think you'll be in a position where you can go back to full price selling and the customer be ready for that as new product comes into the store? Our second question on the discounting is, do you feel like the market is going to be heavy with discounts now in Q4, and how much do you expect that to impact the market and DICK'S own footwear sales?

Speaker #7: guess the I concern is , that is do discount aggressively in the fourth quarter , a do you think you'll be in a where you can go back and full to price selling and the customer be ready for that as new product comes into the position store ?

Speaker #7: And our second question on the discounting , do is you feel market is going to be discounts now in heavy with Q4 ? And how you expect that to impact the much do market ?

Speaker #7: And Dick's own footwear sales?

Speaker #8: .

Speaker #5: Thanks Sure the thanks , Kate . I for think that that's going to be an these issue with And then going back to markdowns .

Ed Stack: Sure. Thanks, Kate. I don't really think that that's going to be an issue with these markdowns and then going back to full price because the product that we're marking down is older product that hasn't sold, product that's been sitting around for a while. When we get the new fresh product, we're confident we'll sell that at full price. The consumer out there is looking for new fresh product that is innovative in the marketplace, and that's what Foot Locker for the most part doesn't have right now. We'll be bringing that product in as we get into 2026. From a discounting standpoint, right now, and who knows, things could change, but right now, we don't think that the discounting is going to be meaningfully different than it was last year.

Ed Stack: Sure. Thanks, Kate. I don't really think that that's going to be an issue with these markdowns and then going back to full price because the product that we're marking down is older product that hasn't sold, product that's been sitting around for a while. When we get the new fresh product, we're confident we'll sell that at full price. The consumer out there is looking for new fresh product that is innovative in the marketplace, and that's what Foot Locker for the most part doesn't have right now. We'll be bringing that product in as we get into 2026. From a discounting standpoint, right now, and who knows, things could change, but right now, we don't think that the discounting is going to be meaningfully different than it was last year.

Speaker #5: full because the product that price marking older is hasn't product that sold down around , product that's while . So when we for a get the new fresh we're product we'll sell , we're confident that at we'll sell full been sitting price .

Speaker #5: And there is consumer demand for looking for new products that are innovative in the marketplace. And that's what Foot Locker, for the most part, doesn't have right now.

Speaker #5: And we'll be bringing that product in as we as we get into 26 from a standpoint discounting right now . And who knows , things could change .

Speaker #5: But right now we don't think the that discounting is going to be meaningfully different than it was last year . We do feel that we've got , as Lauren said in her remarks , we've got different and innovative product , more premium product that you'll see product that's not as fully distributed in the We don't see that promotional marketplace .

Ed Stack: We do feel that we've got, as Lauren said in her remarks, we've got different and innovative product, more premium product that you'll see, product that's not as fully distributed in the marketplace. We don't see that the promotional activity impacting our business a whole lot.

We do feel that we've got, as Lauren said in her remarks, we've got different and innovative product, more premium product that you'll see, product that's not as fully distributed in the marketplace. We don't see that the promotional activity impacting our business a whole lot.

Speaker #5: promotional activity impacting our business a whole lot .

Speaker #7: Thank you .

Speaker #2: Your next question comes from Adrian Yee of Barclays. With that, go ahead.

Operator: Thank you. Your next question comes from the line of Adrienne Yih with Barclays. Please go ahead.

Kate McShane: Thank you.

Operator: Your next question comes from the line of Adrienne Yih with Barclays. Please go ahead.

Speaker #2: .

Speaker #9: very great to see much . It's the Great . continued momentum at the Dick's brand . I guess . Lauren and Ed , obviously I'm going to talk a question about from about footlocker .

Lauren Hobart: Great. Thank you very much. It's great to see the continued momentum at the DICK'S brand. I guess, Lauren and Ed, obviously, I'm going to talk a question about Foot Locker. Is this a case of kind of just historically underperforming operations, and with some closures and inventory management, that you can control the controllable to kind of turn the business, or are there more infrastructure investments and some longer-tailed structural things about the business? Secondarily, are there banners within Foot Locker that no longer perhaps make sense, if you can talk about that? Finally, my follow-up is on inventory. 1,000 to 1,500 basis points is quite a bit. Is there a write-off/reserve within that, and is it just the depth of the promo, or are you using third-party channels?

Adrienne Yih: Great. Thank you very much. It's great to see the continued momentum at the DICK'S brand. I guess, Lauren and Ed, obviously, I'm going to talk a question about Foot Locker. Is this a case of kind of just historically underperforming operations, and with some closures and inventory management, that you can control the controllable to kind of turn the business, or are there more infrastructure investments and some longer-tailed structural things about the business? Secondarily, are there banners within Foot Locker that no longer perhaps make sense, if you can talk about that? Finally, my follow-up is on inventory. 1,000 to 1,500 basis points is quite a bit. Is there a write-off/reserve within that, and is it just the depth of the promo, or are you using third-party channels?

Speaker #9: Is this a case of, kind of just, you know, historically underperforming operations, and with some closures and inventory management, that you control the controllables to kind of turn the business?

Speaker #9: Or are there more infrastructure investments in some longer tailed , you know , structural about the business ? Secondarily , are there banners within footlocker that no longer perhaps make And if you sense ?

Speaker #9: can talk about that , and then finally , my follow on up is inventory thousand to quite a bit . Is 1500 basis points is off there a flash reserve .

Speaker #9: You within that and is it just the depth of know , promo the you using or are third party channels just understand the the trying to magnitude of that and the quickness of trying to get through that in the next couple of months ?

Speaker #9: Thank you very much

Lauren Hobart: Just trying to understand the magnitude of that, and the quickness of trying to get through that in the next couple of months. Thank you very much.

Just trying to understand the magnitude of that, and the quickness of trying to get through that in the next couple of months. Thank you very much.

Speaker #5: , that's a lot . . That's Well that's a lot . Adrian , let me start .

Ed Stack: Wow. That's a lot. That's a lot, Adrienne. Let me start.

Ed Stack: Wow. That's a lot. That's a lot, Adrienne. Let me start.

Speaker #8: Thank That was .

Speaker #8: you . All one .

Speaker #5: okay . okay That's That's . So the idea of this is or historically underperforming operations I think that's a big part of this footlocker really .

Nate Gilch: That's wonderful.

Lauren Hobart: That's wonderful.

Operator: What you can. Thank you.

Adrienne Yih: What you can. Thank you.

Ed Stack: That's okay. That's okay. The idea of this is historically underperforming operations. I think that's a big part of this. Foot Locker really didn't—no, they kind of got away from retail 101 of trying to have the right product in the right store and having those—I think turning this around, we don't think there's going to be some capital involved, and we're going to invest in the stores. We've just done an 11-store test, and it was pretty capital light. What we really did is we took the inventory, most of the inventory out of the store, and we relayed out the wall. One of the things that the DICK'S team is really good at, and we're bringing that expertise to Foot Locker, is from a merchandising standpoint and how those visual merchandising really can help drive the store.

Ed Stack: That's okay. That's okay. The idea of this is historically underperforming operations. I think that's a big part of this. Foot Locker really didn't—no, they kind of got away from retail 101 of trying to have the right product in the right store and having those—I think turning this around, we don't think there's going to be some capital involved, and we're going to invest in the stores. We've just done an 11-store test, and it was pretty capital light. What we really did is we took the inventory, most of the inventory out of the store, and we relayed out the wall. One of the things that the DICK'S team is really good at, and we're bringing that expertise to Foot Locker, is from a merchandising standpoint and how those visual merchandising really can help drive the store.

Speaker #5: you Didn't know they kind of got away from retail 101 of trying to have the the right product and the right store and having those I turning think this around , we don't think there's going to be some capital involved .

Speaker #5: To invest in the stores, and we're going, but we've just done an 11-store test, and it was pretty capital light.

Speaker #5: What we really did is we took most of the inventory out of the store, and we relaid out the wall.

Speaker #5: the And one of the that , you know , the Dick's team is at and really good bringing that things expertise to footlocker , is from a merchandising standpoint and how those visual merchandising really can help drive the store .

Speaker #5: We took the inventory out of the store, redid the walls, and there’s no real infrastructure back in there. But if you had walked into a Foot Locker store and still walk into a lot of Foot Locker stores other than these 11 and look at the wall, it's kind of merely a run-on sentence of shoes.

Ed Stack: We took the inventory out of the store, and we redid the walls. No real infrastructure back in there. If you had walked into a Foot Locker store and still walk into a lot of Foot Locker stores other than these 11 and look at the wall, it's kind of merely a run-on sentence of shoes. What we've done is we've taken and tried to segment it and show the consumer what's important in the stores. We've got this 11-store test, and now it's only 11 stores. The results have been—we're pretty enthusiastic about the results. We think that we can definitely turn this around. As far as the inventory being down 1,000 to 1,500 basis points, we are going to take markdowns to get this out of the store of older underperforming SKUs.

We took the inventory out of the store, and we redid the walls. No real infrastructure back in there. If you had walked into a Foot Locker store and still walk into a lot of Foot Locker stores other than these 11 and look at the wall, it's kind of merely a run-on sentence of shoes. What we've done is we've taken and tried to segment it and show the consumer what's important in the stores. We've got this 11-store test, and now it's only 11 stores. The results have been—we're pretty enthusiastic about the results. We think that we can definitely turn this around. As far as the inventory being down 1,000 to 1,500 basis points, we are going to take markdowns to get this out of the store of older underperforming SKUs.

Speaker #5: And what we've done is we've taken and tried to segment it and show the consumer what's important in the stores , and we've got this 11 store test , and now it's only 11 stores .

Speaker #5: But the been results have we're pretty about the enthusiastic results . So we think that we can definitely turn this around as the as far inventory being down 1000 to 1500 basis points , we are going to we're going to take markdowns to get this out of the store of older , underperforming SKUs .

Speaker #5: And we do expect that at the end of the year, there will be a program that sells some of this. We will offload to just clean out what's left from the jobber and inventory, and be able to get a fresh start in 2026.

Ed Stack: We do expect at the end of the year there will be a program that we will sell some of this off to a jobber and just clean out what's left from the inventory, and be able to get a fresh start in 2026. That's why we're moving as quickly as we can to get a fresh start in 2026.

We do expect at the end of the year there will be a program that we will sell some of this off to a jobber and just clean out what's left from the inventory, and be able to get a fresh start in 2026. That's why we're moving as quickly as we can to get a fresh start in 2026.

Speaker #5: So we're that's that's why why we're quickly as moving as we to get can a fresh start in 2026 .

Speaker #4: want to just add to what Yeah , I my perspective . If you look at the core challenges that we're facing with the business , it really is , as you said , it's underperforming operations .

Nate Gilch: Yep. I want to just add to what Ed is saying. From my perspective, if you look at the core challenges that we're facing with the business, it really is, as you said, it's underperforming operations, it's inventory management, it's core retail 101. One of the things that's been so amazing to see as the team is coming together and Ed is spending a ton of time with them is that the core expertise in DICK'S, be it merchandising and the balance of art and science, or the visual presentation, you can hear in his remarks just talking about that. The fact that we are a marketing-driven company and that we believe in brand, those plans are being worked on for next year, and the brand relationships, there's a heavy operational focus. All of those things are being transferred by osmosis, the coaching, mentorship, all of that.

Lauren Hobart: Yep. I want to just add to what Ed is saying. From my perspective, if you look at the core challenges that we're facing with the business, it really is, as you said, it's underperforming operations, it's inventory management, it's core retail 101. One of the things that's been so amazing to see as the team is coming together and Ed is spending a ton of time with them is that the core expertise in DICK'S, be it merchandising and the balance of art and science, or the visual presentation, you can hear in his remarks just talking about that. The fact that we are a marketing-driven company and that we believe in brand, those plans are being worked on for next year, and the brand relationships, there's a heavy operational focus. All of those things are being transferred by osmosis, the coaching, mentorship, all of that.

Speaker #4: It's inventory management; it's core retail 101. One of the things that's been so amazing to see is that the team is together.

Speaker #4: And Ed coming is spending a ton of time with them . Is that the core expertise in Dick's , be it merchandising and the balance of art and science or the visual presentation ?

Speaker #4: You can hear in his remarks ? Just talking about that , the that fact our , you know , we are a driven marketing company and we believe in brand .

Speaker #4: And so those plans are being worked on for next year . And the brand relationships , which is the heavy operational focus , all of those things are being transferred by osmosis , coaching , mentorship , all of that .

Speaker #4: And that's what gives me the confidence that we are moving in the right direction.

Nate Gilch: That's what gives us the—what gives me the confidence that we are moving in the right direction.

That's what gives us the—what gives me the confidence that we are moving in the right direction.

Speaker #9: Just to be crystal clear, the markdowns of the inventory are on lifestyle and will have no competitive impact on the performance premium at DICK'S Sporting Goods.

Lauren Hobart: Okay. Just to be very crystal clear, the markdowns of the inventory are on lifestyle and will have kind of no competitive impact with the performance, premium performance at DICK'S. There's no crossover there.

Adrienne Yih: Okay. Just to be very crystal clear, the markdowns of the inventory are on lifestyle and will have kind of no competitive impact with the performance, premium performance at DICK'S. There's no crossover there.

Speaker #9: So there's no crossover there.

Speaker #5: product The that we're marking down is not is not key product at at at Dick's Goods . Sporting It's older product that that quite frankly and the visual we used with the footlocker team .

Ed Stack: The product that we're marking down is not key product at DICK'S Sporting Goods. It's an older product that, quite frankly, and the visual we used with the Foot Locker team, and it has kind of caught on globally, is we just got to clean out the garage. We got to clean out all the inventory that's kind of in the corner that's not selling that we need to have out of our system.

Ed Stack: The product that we're marking down is not key product at DICK'S Sporting Goods. It's an older product that, quite frankly, and the visual we used with the Foot Locker team, and it has kind of caught on globally, is we just got to clean out the garage. We got to clean out all the inventory that's kind of in the corner that's not selling that we need to have out of our system.

Speaker #5: And it is kind of caught on globally as we've just got out the to clean got to clean out all the kind of in inventory .

Speaker #5: the corner . That's not That's selling that . We garage . have out need to of our We've system .

Speaker #9: Fantastic . Makes 100% sense . Good

Speaker #5: you

Lauren Hobart: Fantastic. Makes 100% sense. Good luck.

Adrienne Yih: Fantastic. Makes 100% sense. Good luck.

Ed Stack: Thank you.

Ed Stack: Thank you.

Speaker #2: go ahead .

Operator: Your next question comes from the line of Michael Lasser with UBS. Please go ahead.

Operator: Your next question comes from the line of Michael Lasser with UBS. Please go ahead.

Speaker #11: Good morning. Thank you so much for taking my question. The first one is relatively straightforward. The expectation that Foot Locker will be accretive next year is based on the $14.25 to $14.55 for this.

Robert Ohmes: Good morning. Thank you so much for taking my question. The first one's relatively straightforward. The expectation that Foot Locker will be accretive next year is based on the $1,425 to 1,455 for this year. Is that correct? How dependent is the accretion expectation on inflicting the sales that you would anticipate by back-to-school for next year?

Michael Lasser: Good morning. Thank you so much for taking my question. The first one's relatively straightforward. The expectation that Foot Locker will be accretive next year is based on the $1,425 to 1,455 for this year. Is that correct? How dependent is the accretion expectation on inflicting the sales that you would anticipate by back-to-school for next year?

Speaker #11: Is that correct? How year-dependent is the accretion expectation on inflecting the sales that you would anticipate by back to school for the year?

Speaker #1: thanks for Michael , that

Speaker #1: clarify on exactly like you said . Yes . The basis is on the 1425 to 1455 on as the basis for 2025 results and the and the kind of the and the dependency , I think so starts with what editor said about the building blocks .

Nate Gilch: Michael, thanks for that question. Yeah. Let me clarify on exactly like you said. Yes, the basis is on the $1,425 to 1,455 as the basis for 2025 results. Kind of the dependency, I think, starts with what Ed said about the building blocks. It starts out with cleaning out the garage, positioning the inventory, and having that excitement assortment, and the newness that is resonating so well at DICK'S Sporting Goods with the gross margin expansion and the merch margin expansion that you're seeing is going to be the first and foremost priority as we look to the building blocks for how can this business be accretive. Keep in mind, we talked about as part of the cleaning out of the garage that there are other unproductive assets. We are looking into the store portfolios where there are some unprofitable stores.

Navdeep Gupta: Michael, thanks for that question. Yeah. Let me clarify on exactly like you said. Yes, the basis is on the $1,425 to 1,455 as the basis for 2025 results. Kind of the dependency, I think, starts with what Ed said about the building blocks. It starts out with cleaning out the garage, positioning the inventory, and having that excitement assortment, and the newness that is resonating so well at DICK'S Sporting Goods with the gross margin expansion and the merch margin expansion that you're seeing is going to be the first and foremost priority as we look to the building blocks for how can this business be accretive. Keep in mind, we talked about as part of the cleaning out of the garage that there are other unproductive assets. We are looking into the store portfolios where there are some unprofitable stores.

Speaker #1: It starts out with cleaning out the garage, positioning the inventory, and having an excitement assortment and the newness that is resonating. Next, well at DICK'S Sporting Goods, gross margin expansion and the merch margin expansion that you’re going to see is going to be the first and foremost order of priority as we look to the building business. This blocks for be accretive?

Speaker #1: And keep in know , we mind , you talked about as out of the garage , cleaning are other unproductive that there are looking into the store portfolio where there are some unprofitable stores .

Speaker #1: But the opportunity we are looking that that is not only deciding if the store should be closed , but actually the opportunity is , is the say if those reverse to access to the right product and the right innovation and the newness , can those stores around be turned made and profitable ?

Nate Gilch: The opportunity we are looking at is not only deciding if the store should be closed, but actually the opportunity is the reverse to say if those stores had access to the right product, the right innovation, and the newness, can those stores be turned around and made profitable? We are looking into that. We are absolutely looking into some of the unproductive assets that will not be part of the core business going forward. To your point, it starts with sales and margin. In addition to that, we will look into cleaning out of the garage to position the business for profitable growth into 2026, especially from the back-to-school season of next year.

The opportunity we are looking at is not only deciding if the store should be closed, but actually the opportunity is the reverse to say if those stores had access to the right product, the right innovation, and the newness, can those stores be turned around and made profitable? We are looking into that. We are absolutely looking into some of the unproductive assets that will not be part of the core business going forward. To your point, it starts with sales and margin. In addition to that, we will look into cleaning out of the garage to position the business for profitable growth into 2026, especially from the back-to-school season of next year.

Speaker #1: So we are looking into that. We are absolutely looking into some assets that won't be part of the core business going unproductive forward.

Speaker #1: But to the your point , it starts with margin . And in addition to that , we'll look into out of the cleaning garage to to position the business for a profitable growth into 2026 , especially in the back to school from the of next year .

Speaker #11: You and got my follow-up question is: one of the key debates on the combined enterprise story is how right now to fence the core?

Robert Ohmes: Got you. My follow-up question is one of the key debates on the combined enterprise story right now is how do you ring-fence the core DICK'S business in order to ensure that the integration of Foot Locker does not become a distraction to slow the momentum of the core business? It does look like in the fourth quarter, you are anticipating a significant slowdown, got into a flat to slightly positive comp for the core business. A, what is fostering that expectation? B, given you have owned this business for a matter of months now, give us a sense of how you anticipate that they won't become a distraction such that the core business can accelerate into next year and drive some growth on top of the accretion that you're anticipating for Foot Locker. Sorry, there was a lot of words in that question.

Michael Lasser: Got you. My follow-up question is one of the key debates on the combined enterprise story right now is how do you ring-fence the core DICK'S business in order to ensure that the integration of Foot Locker does not become a distraction to slow the momentum of the core business? It does look like in the fourth quarter, you are anticipating a significant slowdown, got into a flat to slightly positive comp for the core business. A, what is fostering that expectation? B, given you have owned this business for a matter of months now, give us a sense of how you anticipate that they won't become a distraction such that the core business can accelerate into next year and drive some growth on top of the accretion that you're anticipating for Foot Locker. Sorry, there was a lot of words in that question.

Speaker #11: Business in order to ring do you that the ensure integration of Foot Locker does not become a distraction to the slow momentum the business?

Speaker #11: It does core look like quarter , in the fourth you are anticipating a significant slowdown , guiding to a flat to slightly positive comp for the core business .

Speaker #11: So a what is fostering that expectation ? And B , given you have on this business for a matter of months give us a sense of how now , you anticipate that they won't be become a it won't distraction such that the core business can accelerate into next some growth year and on top of the drive accretion that anticipating for Foot Locker .

Speaker #11: Sorry, there were a lot of words in that question.

Speaker #4: I got it . Thank you Michael One of the . absolute for us to prerequisites do this was exactly what you're We needed to saying .

Nate Gilch: Got it. Thank you, Michael. One of the absolute prerequisites for us to do this acquisition was exactly what you're saying. We needed to ring-fence the DICK'S team, and DICK'S needs to stay completely focused on driving our growth and our strategic priorities. That is exactly what we are doing. I mean, eight, 10 weeks in now, I'm even more confident that that is how we're doing it. We've set up the team at Foot Locker. Ed is very much spending time over there. The DICK'S team is fully focused on the DICK'S priorities. We're going to continue to just keep the teams sharing learnings, but not remotely working, not distracting each other from what their core priorities are. When we look at Q4, you mentioned the deceleration. I want to be really clear about this.

Lauren Hobart: Got it. Thank you, Michael. One of the absolute prerequisites for us to do this acquisition was exactly what you're saying. We needed to ring-fence the DICK'S team, and DICK'S needs to stay completely focused on driving our growth and our strategic priorities. That is exactly what we are doing. I mean, eight, 10 weeks in now, I'm even more confident that that is how we're doing it. We've set up the team at Foot Locker. Ed is very much spending time over there. The DICK'S team is fully focused on the DICK'S priorities. We're going to continue to just keep the teams sharing learnings, but not remotely working, not distracting each other from what their core priorities are. When we look at Q4, you mentioned the deceleration. I want to be really clear about this.

Speaker #4: ring acquisition fence Zix , and team needs to the completely stay focused on driving our and our priorities . And that growth is strategic exactly what we are I mean , eight , doing .

Speaker #4: Ten weeks in now, I'm even more confident that that is how we're doing it. We've set up the team at Foot Locker.

Speaker #4: It is very much about spending time over the team, which is fully focused on DICK'S priorities, and we're going to continue to keep teams sharing learnings.

Speaker #4: not the not working . You know , not distracting each other from what their core are . When priorities at Q4 , you mentioned the to be deceleration .

Speaker #4: really clear about this . I want We just came off of a and we're up 5.7% comp , against a 6.4% comp last year .

Nate Gilch: We just came off of a 5.7% comp, and we're up against a 6.4% comp last year. The fact that you see our comp slightly moderating in Q4, we actually just raised the comp. The high end of our previous guidance now is the low end of our guidance. We are really bullish on the holiday. We are just balancing that with an appropriate level of caution, as we always do. We don't ever guide to the best possible outcome. We are pumped and ready to go on the DICK'S side for Q4.

We just came off of a 5.7% comp, and we're up against a 6.4% comp last year. The fact that you see our comp slightly moderating in Q4, we actually just raised the comp. The high end of our previous guidance now is the low end of our guidance. We are really bullish on the holiday. We are just balancing that with an appropriate level of caution, as we always do. We don't ever guide to the best possible outcome. We are pumped and ready to go on the DICK'S side for Q4.

Speaker #4: So the the fact that you see our comp slightly moderating in Q4 , we actually just raised the and the high end of comp our previous guidance now is the low end of our guidance .

Speaker #4: are So really bullish on holiday . We a are just balancing that the level of appropriate , as we caution always do . We don't guide to the to the possible best outcome , but we ever are pumped and go on are .

Speaker #4: the Dick's side for Q4 .

Speaker #2: next from the line of question comes Baker with

Robert Ohmes: Thank you very much, and good luck.

Michael Lasser: Thank you very much, and good luck.

Ed Stack: Thank you.

Ed Stack: Thank you.

Nate Gilch: Thanks.

Lauren Hobart: Thanks.

Operator: Your next question comes from the line of Mike Baker with DA Davidson. Please go ahead.

Operator: Your next question comes from the line of Mike Baker with D.A. Davidson. Please go ahead.

Speaker #12: couple to start on . First , a Thank you very little bit more detail on that 11 store test . Maybe any initial results or pop and sales .

Simeon Gutman: Great. Couple to start on. First, a little bit more detail on that 11-store test, maybe any initial results or pop in sales. I mean, is it just as simple as relaying a back wall, or there's got to be more to what you're doing? If you could address that, please.

Mike Baker: Great. Couple to start on. First, a little bit more detail on that 11-store test, maybe any initial results or pop in sales. I mean, is it just as simple as relaying a back wall, or there's got to be more to what you're doing? If you could address that, please.

Speaker #12: And I mean , is it just as relaying a back as simple or there's got to be more what you're doing . So if you to to could address that , please .

Speaker #5: Sure . So not going we're out the to lay kind of said , they're As I we're really very , very encouraged on them .

Ed Stack: Sure. We're not going to lay out kind of the results. As I said, they're early, but we're really very encouraged on them. It's not just as simple as laying out the wall as we've kind of taken some of the older product out of those stores, put in some newer, fresher product that we were able to get our hands on. One of the things we've also done is we're bringing the apparel business back to Foot Locker. They had really kind of walked away from the apparel business. If you walk into these stores, you can see the apparel in there, and the apparel is selling really quite well too. We think that there's an increase from a footwear standpoint, from an apparel standpoint going forward.

Ed Stack: Sure. We're not going to lay out kind of the results. As I said, they're early, but we're really very encouraged on them. It's not just as simple as laying out the wall as we've kind of taken some of the older product out of those stores, put in some newer, fresher product that we were able to get our hands on. One of the things we've also done is we're bringing the apparel business back to Foot Locker. They had really kind of walked away from the apparel business. If you walk into these stores, you can see the apparel in there, and the apparel is selling really quite well too. We think that there's an increase from a footwear standpoint, from an apparel standpoint going forward.

Speaker #5: And it's just as not laying out the wall as we kind of simple the order of taking some of the product out of that.

Speaker #5: Those stores put in some newer products that we fresher were able to get our hands on. And one of the things we've also done is we're bringing the apparel to Foot Locker.

Speaker #5: The business had really kind of walked away from the business. And if you walk into these stores, you can see the apparel in there, and the apparel is really quite good too.

Speaker #5: selling So we think that there's an from a footwear standpoint from apparel standpoint going forward . And you know , we'll we'll we'll more than likely give you a little bit more color on this test at the at the end of the fourth quarter , as we give guidance into going 2026 .

Ed Stack: We'll more than likely give you a little bit more color on this test at the end of the fourth quarter as we give guidance going into 2026. There is a lot of just basic retail 101 that if Foot Locker gets back to that, or when Foot Locker gets back to it, will have a meaningful impact on their business.

We'll more than likely give you a little bit more color on this test at the end of the fourth quarter as we give guidance going into 2026. There is a lot of just basic retail 101 that if Foot Locker gets back to that, or when Foot Locker gets back to it, will have a meaningful impact on their business.

Speaker #5: But it there's a lot of just basic retail , one on one footlocker that gets back or to that when if footlocker gets back to it , we'll have a meaningful impact on their business .

Speaker #12: Great . Fair enough . One more follow up . If I could . You're talking about a start and fresh get everything . Getting cleared by the end of everything quarter .

Simeon Gutman: Great. Fair enough. One more follow-up. If I could, you're talking about a fresh start and getting everything cleared by the end of the fourth quarter, but back-to-school is the inflection point. Not to put too much pressure on you or try to accelerate it, why not spring as an example as the inflection point? Why should presumably the first half not be as strong?

Mike Baker: Great. Fair enough. One more follow-up. If I could, you're talking about a fresh start and getting everything cleared by the end of the fourth quarter, but back-to-school is the inflection point. Not to put too much pressure on you or try to accelerate it, why not spring as an example as the inflection point? Why should presumably the first half not be as strong?

Speaker #12: the fourth back to school is the inflection point , not to , put too much pressure or try to you know , accelerate it , why not but but on you an example spring as , as the Why ?

Speaker #12: Inflection point? Why? Why should the first, not presumably the first half, not...

Speaker #12: strong ? I think

Speaker #12: strong ? I think as really good

Speaker #12: Strong? I think that’s really good.

Speaker #5: question . And that's a main reason the for that is , is our merchandising philosophy and how buying the product . We didn't buy that .

Ed Stack: I think that's a really good question. The main reason for that is our merchandising philosophy and how we're buying the product. We didn't buy that; it was bought by the previous management team. We think that there's some—and we're going to talk to the brands about trying to plug some holes—but the third quarter or the back-to-school timeframe is the first time we will have had complete control over the assortment going forward.

Ed Stack: I think that's a really good question. The main reason for that is our merchandising philosophy and how we're buying the product. We didn't buy that; it was bought by the previous management team. We think that there's some—and we're going to talk to the brands about trying to plug some holes—but the third quarter or the back-to-school timeframe is the first time we will have had complete control over the assortment going forward.

Speaker #5: It was bought by the previous management team, and we assume there’s — and we’re thinking that the brand’s about trying to plug some holes.

Speaker #5: But the the back to school time third quarter or the frame is the first time we will have had complete control the over the going assortment forward .

Speaker #5: .

Speaker #12: Perfect sense. Thank you for that response.

Speaker #5: Sure .

Speaker #2: Your next question comes from the line of Christopher Horvers with J.P. Morgan. Please go ahead.

Simeon Gutman: Makes perfect sense. Thank you for that answer.

Mike Baker: Makes perfect sense. Thank you for that answer.

Ed Stack: Sure.

Ed Stack: Sure.

Operator: Your next question comes from the line of Christopher Horvers with JP Morgan. Please go ahead.

Operator: Your next question comes from the line of Christopher Chris Horvers with JPMorgan. Please go ahead.

Speaker #13: Hi . This is Jolie Wasserman on for Chris . Just following up with Dick's ability to affect inventory for orders footlocker . just that you're So confirming you won't be able to fully saying that affect it until the start of the third quarter , but are you able to have any sort of impact , even if it's later in the first half ?

Kate McShane: Hi, this is Jolee Wasserman on for Chris. Just following up with DICK'S ability to affect inventory orders for Foot Locker. Just confirming that you're saying that you won't be able to fully affect it until the start of the third quarter. Are you able to have any sort of impact, even if it's lighter in the first half? Specifically on the percent of spring ordered since the acquisition, how much of that have you been able to order thus far, and how do you see that flowing into the fall?

Jolie Wasserman: Hi, this is Jolie Wasserman on for Chris. Just following up with DICK'S ability to affect inventory orders for Foot Locker. Just confirming that you're saying that you won't be able to fully affect it until the start of the third quarter. Are you able to have any sort of impact, even if it's lighter in the first half? Specifically on the percent of spring ordered since the acquisition, how much of that have you been able to order thus far, and how do you see that flowing into the fall?

Speaker #13: just And specifically on the percent spring of ordered since the acquisition ? How much of that have you been able to order thus far , and how do you see that flowing into the fall ?

Speaker #5: We have seen some impact in Q2 compared to Q1, and probably a bit more in Q2 than Q1. But hopefully we're through that and working with the brands. They are being as helpful as they can to try to get the product to us that we need.

Ed Stack: We can have some impact on Q1 and Q2, probably hopefully a little bit more on Q2 than Q1, but we're working through that and working with the brands, and they are being as helpful as they can to try to get product to us that we need. It's really going to be in that third quarter that you'll see the big difference that our team will have fully bought that product and merchandised that product.

Ed Stack: We can have some impact on Q1 and Q2, probably hopefully a little bit more on Q2 than Q1, but we're working through that and working with the brands, and they are being as helpful as they can to try to get product to us that we need. It's really going to be in that third quarter that you'll see the big difference that our team will have fully bought that product and merchandised that product.

Speaker #5: But it's really going to be in that third quarter that you'll big see the difference that our team will have fully , fully bought that product and merchandise that product .

Speaker #13: That makes sense . And our follow up question was on just gross margin . With the third quarter , just more broadly , if you could speak to what's going on there in terms of promotional environment for this is all for promotional tariff costs and the other environment , inputs .

Kate McShane: That makes sense. Our follow-up question was just on gross margin with the third quarter. Just more broadly, if you could speak to what's going on there in terms of promotional environment—this is all for Core DICK'S—promotional environment, tariff costs, and the other inputs we discussed last quarter, like the GameChanger business.

Jolie Wasserman: That makes sense. Our follow-up question was just on gross margin with the third quarter. Just more broadly, if you could speak to what's going on there in terms of promotional environment—this is all for Core DICK'S—promotional environment, tariff costs, and the other inputs we discussed last quarter, like the GameChanger business.

Speaker #13: We discussed last quarter , like the game changer business .

Speaker #1: we Yeah . So reported today at 27 basis points in in our gross margin . Keep in mind that that 27 basis points of gross margin on top expansion is a 70 basis points of expansion saw in terms of the proportionality within the quarter , the proportionality , as you can imagine , the overall marketplace continues to remain dynamic .

Nate Gilch: Yeah. We reported today a 27 basis points expansion in our gross margin. Keep in mind that 27 basis points of gross margin expansion is on top of a 70 basis points of expansion that we saw. In terms of the promotionality within the quarter, the promotionality, as you can imagine, the overall marketplace continues to remain dynamic. We participated in select promotions, which we always do during the important back-to-school season. The tariff impact was within that quarter, our results as well within the merchandising margin. Keep in mind, we still delivered a merchandising margin expansion of five basis points on top of almost about a 60 basis points of impact, a positive impact last year. There was a slight unfavorable impact from the mix, like Lauren talked about.

Navdeep Gupta: Yeah. We reported today a 27 basis points expansion in our gross margin. Keep in mind that 27 basis points of gross margin expansion is on top of a 70 basis points of expansion that we saw. In terms of the promotionality within the quarter, the promotionality, as you can imagine, the overall marketplace continues to remain dynamic. We participated in select promotions, which we always do during the important back-to-school season. The tariff impact was within that quarter, our results as well within the merchandising margin. Keep in mind, we still delivered a merchandising margin expansion of five basis points on top of almost about a 60 basis points of impact, a positive impact last year. There was a slight unfavorable impact from the mix, like Lauren talked about.

Speaker #1: We participated in select promotions , which we always do during the important back to school season . The tariff impact was within that quarter .

Speaker #1: Our results as well , merchandising within the margin . But keep in mind , we still delivered a merchandising margin expansion of five basis points on top of almost about a 60 basis points of impact positive impact last year .

Speaker #1: And there was a slight impact from the unfavorable Like Lauren talked about , the business performed really well , which is our which is a fantastic growth opportunity but has a slightly lower margin .

Nate Gilch: The license business performed really well, which is a fantastic growth opportunity, but has a slightly lower margin. We had a little bit of an unfavorable impact from the mix as well. Just to kind of round out that answer, I would say that if you look at it, we have guided that we expect our gross margin to expand on a full year basis. We expect gross margin to expand on the back half as well as within the fourth quarter. Overall, we feel great about the merchandising capability, the work that the GameChanger team is doing, and the DICK'S Media Network. Those ingredients continue to remain in place that drive our confidence in the gross margin expansion for this year and into the future.

The license business performed really well, which is a fantastic growth opportunity, but has a slightly lower margin. We had a little bit of an unfavorable impact from the mix as well. Just to kind of round out that answer, I would say that if you look at it, we have guided that we expect our gross margin to expand on a full year basis. We expect gross margin to expand on the back half as well as within the fourth quarter. Overall, we feel great about the merchandising capability, the work that the GameChanger team is doing, and the DICK'S Media Network. Those ingredients continue to remain in place that drive our confidence in the gross margin expansion for this year and into the future.

Speaker #1: So that we had bit of an a little unfavorable impact from the mix as well . And just to kind of round out that answer , I would if you look say that at it , have we guided that we expect our gross to margin expand on year a full basis .

Speaker #1: We gross expect margin to expand in our on the back half , as well as within the fourth quarter . So overall , we feel great about the merchandising capability , the work that the game changer team is doing and the Dick's Media Network , those those ingredients continue to remain in place that drive our confidence in the gross margin expansion for this year into the future .

Speaker #13: Thank you .

Speaker #2: Your next question comes from the line of Paul Lajos with Citi . Please go ahead .

Operator: Thank you. Your next question comes from the line of Paul Lejuez with Citi. Please go ahead.

Jolie Wasserman: Thank you.

Operator: Your next question comes from the line of Paul Lejuez with Citi. Please go ahead.

Speaker #14: Hey guys, can you talk about the $500 million to $750 million in charges that might be coming? How much of that is cash versus just write-offs?

Robert Ohmes: Hey, guys. Can you talk about the $500 to 750 million in charges that might be coming? How much of that is cash versus just write-offs? How many stores are actually being reviewed when you think about that range of $500 to 750 million? Any split that you can share in US, international, or by banner?

Paul Lejuez: Hey, guys. Can you talk about the $500 to 750 million in charges that might be coming? How much of that is cash versus just write-offs? How many stores are actually being reviewed when you think about that range of $500 to 750 million? Any split that you can share in US, international, or by banner?

Speaker #14: And how many stores are actually being ? When you reviewed think about that range of 500 to 750 and any split that you can share between us or international by banner .

Speaker #1: Yeah . Paul , we'll we'll share much more of the detailed assumptions . As you can imagine , we are ten weeks into this acquisition .

Nate Gilch: Yeah, Paul, we'll share much more of the detailed assumptions. As you can imagine, we are 10 weeks into this acquisition. Like I said before, we are balancing the evaluation that we are doing with the opportunity that we see in terms of driving growth and profitability expansion on a store basis. On stores, we'll share much more of the detailed plans during our Q4 call. In terms of the makeup of the 500 to 750, I would say there are three main buckets. The first and foremost, as Ed talked about, is the unproductive inventory, which makes up quite a decent chunk of that. That we will be addressing. The vast majority of that will be addressed here in Q4. That does include some of the fourth-store portfolio evaluation.

Navdeep Gupta: Yeah, Paul, we'll share much more of the detailed assumptions. As you can imagine, we are 10 weeks into this acquisition. Like I said before, we are balancing the evaluation that we are doing with the opportunity that we see in terms of driving growth and profitability expansion on a store basis. On stores, we'll share much more of the detailed plans during our Q4 call. In terms of the makeup of the 500 to 750, I would say there are three main buckets. The first and foremost, as Ed talked about, is the unproductive inventory, which makes up quite a decent chunk of that. That we will be addressing. The vast majority of that will be addressed here in Q4. That does include some of the fourth-store portfolio evaluation.

Speaker #1: And like I said before, we are balancing the re-evaluation that we are doing with the opportunities that we see in terms of driving growth and profitability, expansion on a store basis.

Speaker #1: So on stores, we will share much more of the detailed plans during our Q4 call. In terms of the makeup of the 500 to 750, I would say there are three main buckets.

Speaker #1: The first and foremost , as I talked about , is the unproductive inventory , which a quite makes up a decent chunk of that that we will be addressing .

Speaker #1: The vast majority of that will be addressed here in Q4. That does include some of the store portfolio evaluation. And then we are looking deeper into the assets that we have in place.

Speaker #1: Some of the technology assets , some of the legacy contracts that we will evaluate as part of the fourth quarter and clean that also up to position the business and the profitability of the business for 2026 .

Nate Gilch: We are looking deeper into the assets that we have in place, some of the technology assets, some of the legacy contracts that we will evaluate as part of the fourth quarter and clean that also up to position the business and the profitability of the business for 2026. In terms of the cash versus non-cash, I would say it will be a combination of both things. Inventory definitely would be cash, but if there are some existing assets on the balance sheet that we'll be cleaning up, those will obviously be non-cash. We'll share more detailed assumptions behind all of this during our fourth quarter call.

We are looking deeper into the assets that we have in place, some of the technology assets, some of the legacy contracts that we will evaluate as part of the fourth quarter and clean that also up to position the business and the profitability of the business for 2026. In terms of the cash versus non-cash, I would say it will be a combination of both things. Inventory definitely would be cash, but if there are some existing assets on the balance sheet that we'll be cleaning up, those will obviously be non-cash. We'll share more detailed assumptions behind all of this during our fourth quarter call.

Speaker #1: In terms of the cash versus non-cash , I would say it would be a combination of both things . You know , inventory would be definitely cash .

Speaker #1: are some existing But if there assets on the balance sheet , that will be cleaning up , those will obviously be we'll share more detailed assumptions behind all of this during our fourth quarter call .

Speaker #14: Okay . Thanks . And then the just on synergy number , the 1 to 125 , how much of that are you assuming you can capture in f 26 to get to those accretion numbers ?

Robert Ohmes: Thanks. Just on the synergy number, the 1 to 125, how much of that are you assuming you can capture in F26 to get to those accretion numbers? I'm curious if you're thinking you might be actually playing for a bigger number than that 100 to 125 longer term.

Paul Lejuez: Thanks. Just on the synergy number, the 1 to 125, how much of that are you assuming you can capture in F26 to get to those accretion numbers? I'm curious if you're thinking you might be actually playing for a bigger number than that 100 to 125 longer term.

Speaker #14: I'm curious if you're thinking about playing for a bigger number than that, $100 to $125, longer term.

Speaker #14: .

Speaker #1: 100 to 225 million . say we have a there's a lot of work that has already been done on what we are Yeah , working through .

Nate Gilch: Yeah. Well, the $100 to 125 million, I would say we have a lot of work that has already been done. What we are working through, as you can imagine, is just conversations with the brands, conversations with the non-merchandising vendors. Those conversations are happening right now. We'll have a better line of sight, call it 12 weeks from now, as part of the fourth quarter. In terms of looking for additional opportunity, you know us, we'll continue to focus on driving the top line and the bottom line results for the collective business now. Absolutely, that's a focus within the organization.

Navdeep Gupta: Yeah. Well, the $100 to 125 million, I would say we have a lot of work that has already been done. What we are working through, as you can imagine, is just conversations with the brands, conversations with the non-merchandising vendors. Those conversations are happening right now. We'll have a better line of sight, call it 12 weeks from now, as part of the fourth quarter. In terms of looking for additional opportunity, you know us, we'll continue to focus on driving the top line and the bottom line results for the collective business now. Absolutely, that's a focus within the organization.

Speaker #1: As you can is just imagine , conversations with with the brands , conversations with the vendors . And those merchandising conversations are happening right now .

Speaker #1: So have a we'll better sight . line of Call it 12 weeks from now . As part of the fourth quarter . And in terms of looking for additional opportunity , you know , us , we'll we'll to continue focus on driving the top line and the bottom line results for the collective business now .

Speaker #1: So absolutely, that's a focus within the organization.

Speaker #14: you Thank

Speaker #2: Your question comes from the line of Cristina Fernandez with Telsey Advisory Group. Please go ahead.

Speaker #2: next

Robert Ohmes: Thank you so much.

Paul Lejuez: Thank you so much.

Operator: Your next question comes from the line of Christina Fernandez with TLC Advisory Group. Please go ahead.

Operator: Your next question comes from the line of Cristina Fernández with elsey Advisory Group. Please go ahead.

Speaker #15: morning . Good I wanted to ask a question on vision for the the merchandising and Foot Locker business That historically was heavy on basketball , sneaker culture and kids .

Kate McShane: Good morning. I wanted to ask a question on the vision for the merchandising at Foot Locker. That business historically was heavy on basketball, sneaker culture, and kids. As you look at where there can be improvement, do you see that mix materially changing on the apparel side? Are you looking to lean more into private label, or do you also see national brands playing a big role in their apparel expansion?

Cristina Fernández: Good morning. I wanted to ask a question on the vision for the merchandising at Foot Locker. That business historically was heavy on basketball, sneaker culture, and kids. As you look at where there can be improvement, do you see that mix materially changing on the apparel side? Are you looking to lean more into private label, or do you also see national brands playing a big role in their apparel expansion?

Speaker #15: As you look at where they're can be improvement , do you see that mix materially changing on the apparel side ? Are you looking to lean more into private label , or do you also see national brands playing a big role in in their apparel expansion ?

Speaker #5: Yeah, Foot Locker has always been steeped in basketball culture, and it will. Basketball will still be a very important part of that.

Ed Stack: Yeah. Foot Locker has always been steeped in basketball culture, and basketball will still be a very important part of that. The basketball construct that we see in the product coming forward from a basketball standpoint, we are really enthusiastic about across a couple of brands. The apparel business, we do see the apparel business. The national brands is where they had kind of stepped away from and leaned into their private brands, which we think the private brands certainly have a place there. We feel that the national brands will have a meaningful increase in the apparel business in Foot Locker, which will help drive the AURs, and we think it'll be very profitable.

Ed Stack: Yeah. Foot Locker has always been steeped in basketball culture, and basketball will still be a very important part of that. The basketball construct that we see in the product coming forward from a basketball standpoint, we are really enthusiastic about across a couple of brands. The apparel business, we do see the apparel business. The national brands is where they had kind of stepped away from and leaned into their private brands, which we think the private brands certainly have a place there. We feel that the national brands will have a meaningful increase in the apparel business in Foot Locker, which will help drive the AURs, and we think it'll be very profitable.

Speaker #5: basketball construct that The we see in the product coming from a forward basketball standpoint , we are really enthusiastic about across a couple of brands and the apparel business .

Speaker #5: We do see the apparel business , the the national brands is where they've they had kind of stepped away from and leaned into their private brands , which we think the private brands certainly have a place there , but we feel that the national will have a brands meaningful increase in the apparel business in Foot Locker , which will help drive the and we think it'll be very profitable .

Speaker #15: And then my second question is on Foot Locker. They have also been on a pretty significant remodel and refresh program. Have you continued with those Foot Locker reimagined stores, or have you passed that program in and are looking to make changes in that real estate strategy that they have been on?

Kate McShane: My second question is on Foot Locker also has been on a pretty significant remodel and refresh program. Have you continued with those Foot Locker reimagined stores, or have you paused that program and looking to make changes in that real estate strategy that they have been on?

Cristina Fernández: My second question is on Foot Locker also has been on a pretty significant remodel and refresh program. Have you continued with those Foot Locker reimagined stores, or have you paused that program and looking to make changes in that real estate strategy that they have been on?

Speaker #5: I think the Foot Locker reimagined stores have been an interesting test as we've kind of gone through there. There are parts of the reimagined store that are very good and other parts that need to be rethought.

Ed Stack: I think the Foot Locker reimagined stores has been an interesting test. As we've kind of gone through there, there's parts of the reimagined store that are very good, and other parts that need to be rethought. We're in the process of rethinking those right now. As an example, what they characterize as the kick it club and the drop zone, when you first walk into a Foot Locker store in the middle of the store, we're going to take that out, reimagine that, give better sight lines to the balance of the store, and repurpose some of that place, that area of the store, which was not very productive at all. It was more of a social place, and turn that into giving the apparel presentation more space and really focusing from an apparel standpoint, which we think will drive the sales even better than they are.

Ed Stack: I think the Foot Locker reimagined stores has been an interesting test. As we've kind of gone through there, there's parts of the reimagined store that are very good, and other parts that need to be rethought. We're in the process of rethinking those right now. As an example, what they characterize as the kick it club and the drop zone, when you first walk into a Foot Locker store in the middle of the store, we're going to take that out, reimagine that, give better sight lines to the balance of the store, and repurpose some of that place, that area of the store, which was not very productive at all. It was more of a social place, and turn that into giving the apparel presentation more space and really focusing from an apparel standpoint, which we think will drive the sales even better than they are.

Speaker #5: in the And we're process of rethinking those right now . So as an example , what they characterize it club as the kick and the the drop zone , when you first walk into a Locker store in of the store , we're going to Foot the middle out that , , reimagine balance of the lines to area of the which store that was repurpose , and that store , which place not very productive at was more of all .

Speaker #5: a It social some of And turned that giving the into apparel presentation more space and really focusing from an apparel standpoint , which we think will will drive the sales even they better than are .

Speaker #2: We have time for that one more question comes from question . And the line of Steve Forbes with Guggenheim . Please go ahead .

Operator: We have time for one more question. That question comes from the line of Steve Forbes with Guggenheim. Please go ahead.

Operator: We have time for one more question. That question comes from the line of Steve Forbes with Guggenheim. Please go ahead.

Speaker #16: Good morning . Editor Lauren . I was curious , maybe to just explore , like any demographic differences , we should be aware of as we think about the performance spread between the two businesses .

Simeon Gutman: Good morning, Ed, Lauren, Navdeep. Ed, I was curious maybe to just explore any demographic differences we should be aware of as we think about the performance spread between the two businesses. Yeah, I think one of the thoughts out there is maybe more exposure to lower income. I'd be curious to maybe just hear you summarize how we should think about the demographic exposure and how that sort of impacts your merchandising plans on a go-forward basis here.

Steve Forbes: Good morning, Ed, Lauren, Navdeep. Ed, I was curious maybe to just explore any demographic differences we should be aware of as we think about the performance spread between the two businesses. Yeah, I think one of the thoughts out there is maybe more exposure to lower income. I'd be curious to maybe just hear you summarize how we should think about the demographic exposure and how that sort of impacts your merchandising plans on a go-forward basis here.

Speaker #16: You know , I think one of the thoughts out there is maybe more exposure to lower income , but I'd be curious to maybe just hear you summarize how we should think about the demographic exposure and how that sort of impacts your merchandising plans on a go basis .

Speaker #16: You know , I think one of the thoughts out there is maybe more exposure to lower income , but I'd be curious to maybe just hear you summarize how we should think about the demographic exposure and how that sort of impacts your merchandising plans on a go forward Here .

Speaker #5: Well , we'll we'll merchandise Foot for footlocker for Foot Locker , which is going to be a bit more basketball inspired , a bit more trend inspired , definitely more urban than the Dick's business .

Ed Stack: Well, we'll merchandise Foot Locker for Foot Locker, which is going to be a bit more basketball-inspired, a bit more trend-inspired, definitely more urban than the DICK'S business. The DICK'S business will be more sport-led, along with the lifestyle product. We think DICK'S is really kind of at the center of sport and culture, and it's a more suburban concept. With that being said, all categories of consumer, if you will, are looking for product that is new, innovative, and different than what's out there in the marketplace right now. Foot Locker didn't have that new and innovative product. As we get into 2026, we'll start to have more of that product. By the third quarter, we think we'll be fully invested in the newer, innovative product that the consumer across all income levels is looking for.

Ed Stack: Well, we'll merchandise Foot Locker for Foot Locker, which is going to be a bit more basketball-inspired, a bit more trend-inspired, definitely more urban than the DICK'S business. The DICK'S business will be more sport-led, along with the lifestyle product. We think DICK'S is really kind of at the center of sport and culture, and it's a more suburban concept. With that being said, all categories of consumer, if you will, are looking for product that is new, innovative, and different than what's out there in the marketplace right now. Foot Locker didn't have that new and innovative product. As we get into 2026, we'll start to have more of that product. By the third quarter, we think we'll be fully invested in the newer, innovative product that the consumer across all income levels is looking for.

Speaker #5: The business will be more sport led along with the lifestyle product . We think really Dick's is kind of at the the center of sport and culture , and it's a more suburban concept with that being said , all categories of consumer , if you will , are looking for is product that new , innovative and and different than what's out there in the marketplace right now in footlocker didnt have that new and innovative , innovative product .

Speaker #5: As we get into know , the , you 2026 , we'll start to have more of that product . And by the third quarter , we think we'll be fully in that newer the newer , innovative that the product consumer across all income levels is looking for .

Speaker #16: And then follow up, just a quick note, Nadeem, maybe just to ensure we're all on the same page here, that the slightly negative adjusted EBIT for Foot Locker on a pro forma basis compares to the $118 million last year.

Simeon Gutman: Just a quick follow-up, Navdeep, maybe just so we're all on the same page here, there's a slightly negative adjusted EBIT for Foot Locker on a pro forma basis. That compares to the $118 million last year. I guess confirm that. Is there any way to sort of think through how you sort of view a normalized for Q4 or how you would speak to just where that LTM adjusted EBITDA profile is for the business relative to the $395 million that's in the presentation?

Steve Forbes: Just a quick follow-up, Navdeep, maybe just so we're all on the same page here, there's a slightly negative adjusted EBIT for Foot Locker on a pro forma basis. That compares to the $118 million last year. I guess confirm that. Is there any way to sort of think through how you sort of view a normalized for Q4 or how you would speak to just where that LTM adjusted EBITDA profile is for the business relative to the $395 million that's in the presentation?

Speaker #16: It just I guess , confirm that . And then is there any way to sort of think through how you view sort of , you know , like a normalized for Q or , or how you would speak to just where that LTM adjusted EBITDA profile is for the business relative to the 395 that's in the presentation ?

Speaker #1: the comparison Yeah . So you're right . It's comparing normalized on a non-GAAP basis . to a The that the results footlocker posted in fourth quarter of last year .

Nate Gilch: Yeah. The comparison, you're right, it's comparing to a normalized, on a non-GAAP basis, the results that Foot Locker posted in the fourth quarter of last year. Keep in mind, the connection point between the 1,000 or the 1,500 basis points of the margin decline versus the slightly negative operating income expectation for Foot Locker is the part of the cleanup of the garage inventory. That's the piece that we have threaded between the numbers and the estimates that we gave out for the Foot Locker business.

Navdeep Gupta: Yeah. The comparison, you're right, it's comparing to a normalized, on a non-GAAP basis, the results that Foot Locker posted in the fourth quarter of last year. Keep in mind, the connection point between the 1,000 or the 1,500 basis points of the margin decline versus the slightly negative operating income expectation for Foot Locker is the part of the cleanup of the garage inventory. That's the piece that we have threaded between the numbers and the estimates that we gave out for the Foot Locker business.

Speaker #1: Mind the connection point between the thousand or the 1,500 basis points of the margin decline versus the slightly negative operating income expectation for Foot Locker. This is part of the cleanup of the garage inventory, and that's the piece that we have threaded between the two.

Speaker #1: The numbers and the estimates that we gave out for the Foot Locker business.

Speaker #16: Thank you .

Speaker #2: And that concludes the question and answer session . I will now turn the conference back over to President Lauren Hobart and Chief Officer Executive for closing comments .

Simeon Gutman: Thank you.

Steve Forbes: Thank you.

Operator: That concludes the question and answer session. I will now turn the conference back over to Lauren Hobart, President and Chief Executive Officer, for closing comments.

Operator: That concludes the question and answer session. I will now turn the conference back over to Lauren Hobart, President and Chief Executive Officer, for closing comments.

Speaker #4: Okay . Well , thank you all for your interest in the Dick's story . We will see you next quarter . Have a a wonderful Thanksgiving and a huge thank you to our entire teams of over 100,000 people around the globe .

Navdeep Gupta: Okay. Well, thank you all for your interest in the DICK'S story. We will see you next quarter. Have a wonderful Thanksgiving. A huge thank you to our entire teams of over 100,000 people around the globe. Thank you.

Lauren Hobart: Okay. Well, thank you all for your interest in the DICK'S story. We will see you next quarter. Have a wonderful Thanksgiving. A huge thank you to our entire teams of over 100,000 people around the globe. Thank you.

Speaker #4: you Thank . .

Operator: Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation. You may now disconnect.

Operator: Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation. You may now disconnect.