Dick’s Sporting Goods recently unveiled a “business optimization plan,” which included a significant number of layoffs, primarily within its customer support center.
The decision, which was announced in a company press release, is set to cost the retailer $20 million in severance payments this quarter as the company steers its focus toward other investment areas.
Simultaneously, their recently released Quarter 2 earnings show a net sales increase of 3.6% year over year, despite grappling with high inventory shrink levels, which CEO Lauren Hobart quoted as affecting profitability.
The company’s net and operating income both dipped in double digits – a 23% decrease in net income to $244 million and a 32% fall in operating income to approximately $312 million. Hobart attributed the declines to “decisive action” on inventory excess and theft.
Hobart referred to theft as an “increasingly serious issue.” Echoing her sentiments, Neil Saunders, Managing Director at GlobalData, commented via email, “While the problem is not one of Dick’s making, management does not seem to have immediate solutions.”
While the exact number of affected employees remains unannounced, insiders cited by Bloomberg estimate 250 corporate job cuts. The reductions reportedly comprise less than 1% of Dick’s total workforce. An individual close to the matter emphasized Dick’s Sporting Goods’ intention to “reinvest in critical growth drivers,” which potentially involves hiring in other divisions.
The retailer remains committed to the House of Sport store concept, with seven new locations launched in the past quarter alone. Executive Chairman Ed Stack stated that the House of Sport initiative, alongside the brand’s novel 50,000-square-foot store format, has been delivering impressive results.
“We are extremely excited about the future of our business,” Stack said. “Our newest DICK’S concepts, DICK’S House of Sport and our next generation 50,000 square foot DICK’S store, are yielding powerful results. We haven’t seen growth opportunities like these since we went public in the early 2000s.”
By 2027, Dick’s plans to operate between 75 to 100 House of Sport locations.
Amidst the internal shake-ups, the sporting goods giant, which boasted robust sales during the pandemic, was expected to discuss further investment strategies and gauge consumer demand in a Tuesday conference call, according to Market Watch.
As of January, the company had approximately 18,800 full-time and 34,000 part-time employees on its roster, according to financial filings.
This news article was partially created with the assistance of artificial intelligence and edited and fact-checked by a human editor.