Dick’s Sporting Goods has reported a 23 percent profit drop and blames rampant theft for the downturn, with the company’s chairman warning that the situation is expected to get worse.
Dick’s reported net income for the three-month period ended July 29 of $244 million, or $2.82 per share, compared to $318.5 million, or $3.25 per share, for the same period last year.
Shares of the retail giant fell more than 24 percent after earnings announcements on Tuesday.
“Our second-quarter profitability fell short of our expectations, largely due to the impact of increased inventory shrinkage, an increasingly serious problem affecting many retailers,” CEO Lauren Hobart said in a statement.
This was the first reference in nearly two decades that the company has referred to “shrink” in an earnings call or press release.
Images of blatant thefts at Dick’s stores across the country have been circulating on social media in recent months
Shares of the retail giant fell more than 24 percent after earnings announcements on Tuesday
Chairman Ed Stack blames a third of the company’s margin decline on contraction and warned that things are expected to get even worse.
‘It’s been moved. It’s gone up a little bit,” Stack told CNBC about the rise in store theft.
“We expect it to get even a little worse. In the second half of the year we took a little more reserve for this.
“Only because what we see happening with organized retail crime is grab and gos,” Stack said in an interview.
“We think we’re doing our best to contain this with the security we have in the stores, working with local authorities.”
Images of blatant thefts at Dick’s stores across the country have been circulating on social media in recent months.
In one example, at a Colorado retail outlet, three young men were caught on surveillance tapes running out of the store with approximately $2,600 worth of North Face jackets.
In another incident in Oregon, a man was filmed by a customer walking out of the store in broad daylight.
In another incident in Oregon, a man was filmed by a customer walking out of the store in broad daylight
Fortunately, on this occasion, the police were waiting for the thief outside the entrance
A Target employee closes one of the cabinets of men’s deodorant. Most stores these days lock their goods to prevent shoplifting
Fortunately, on this occasion, the police were waiting for the thief outside the entrance.
It’s because retailers large and small are increasingly blaming theft for depressing their profit margins.
Dick’s was forced to lower its profit expectations for this year and announced global workforce cuts.
The retailer now expects earnings of $11.33 to $12.13 per share for the year, compared to previously issued guidance of $12.90 to $13.80.
Just under one percent of the company’s workforce was laid off Monday, mostly in the customer support center, it announced.
The cuts will cost about $20 million in severance payments in the coming quarter and could result in additional one-time charges of $25 to $50 million.
Organized shoplifting by criminal gangs of varying degrees of sophistication has increased in recent years.
According to the National Retail Federation, “shrinkage” cost retailers nationwide $94.5 billion in 2021, compared to $90.8 billion in 2020.
Major US retailers have been forced to close stores over millions of dollars in losses as rampant theft plagues major stores across the country
Major retailers in the US have been forced to close their stores because of the losses.
In April, Walmart announced it would close four of its stores in Chicago, just weeks after America’s largest employer closed its only Portland stores.
Just a month later, Target announced it was expected to lose $500 million a year to violent shoplifters.
The retailer made the shocking announcement during an earnings call in May.
“The unfortunate fact is that violent incidents are on the rise in our stores and across the retail industry,” CEO Brian Cornell said on the call.
“Unchecked, organized retail crime degrades the communities we call home. As we work to address this issue, the safety of our guests and our team members will always be our primary concern,” he added.
Progressive prosecutors in cities like Chicago, New York, Portland and California have been blamed for effectively “legalizing shoplifting” by not prosecuting thefts under $950, or letting criminals go with a slap on the wrist.