Dick's Sporting Goods to lay off employees as retail theft cuts into profits

Dick’s Sporting Goods said on Tuesday that retail theft has hurt its profits, one of the reasons the Findlay-based chain is laying off an unspecified number of employees.

“We are conducting a business optimization of our organization to better align our talent, organizational design and spending in support of our most critical strategies while also streamlining our overall cost structure,” the company said in its second quarter earnings call.. “As part of our review, we eliminated certain positions primarily at our customer support center on Aug. 21, 2023.”

Dick’s said theft and damage to merchandise was a primary factor in the weaker profit, referring to the losses as “shrink.” The other factor was weak sales in the outdoor category.

“The biggest impact in terms of the surprise for (the second quarter) primarily came from shrink,” said Navdeep Gupta, executive vice president and chief financial officer. “We thought we had adequately reserved for it. However, the number of incidents and the organized retail crime impact came in significantly higher than we anticipated, and that impacted our Q2 results as well.

Lauren Hobart, president and CEO, said shrink is a problem for retailers across the country.

“It’s something that we all need to work together on with our partners, with our trade organizations, and with our government,” Hobart said. “We’ve all seen the stories and it’s quite alarming what’s going on. We are going to fight to keep our teammates, our athletes, and our stores safe, and that’s with increased security, with lockup cameras and working with local law enforcement and with our industry partners.”

The company expects to pay out about $20 million in severance in the third quarter as it moves through staffing cuts.

Dick’s reported that it employed about 18,800 full-time and 34,000 part-time workers as of January. None are covered by a collective bargaining agreement.

The company did not respond to messages asking for further details on the number of jobs and what positions would be affected.

The sporting goods retailer reported a 1.8% growth in comparable store sales, a key retail metric that tracks stores that have been open for at least a year. In the same quarter last year, the company shed 5.1%.

Dick’s reaffirmed its 2023 comparable store sales outlook in the range of flat to positive 2.0%.

Net income dropped by 23% to $244 million for the quarter ended July 29 compared to the same period a year ago. Net sales still grew by 3.6%.

The company’s stock lost 24.14% throughout Tuesday.