Telsey Advisory Group lowered its recommendation on Dick's Sporting Goods to Market Perform from Outperform and reduced the firm's price target to $145 from $255 in a note released Wednesday, pointing to a more protracted recovery timeline for the retailer's recently acquired Foot Locker business.
The downgrade came after Dick's reported quarterly results on Tuesday that fell short of expectations and prompted management to trim the company's full-year guidance.
Analyst assessment
Telsey's analyst Cristina Fernández attributed the firm's decision to a wider slowdown in consumer demand for athletic apparel and footwear and to Foot Locker's concentrated exposure to a softer footwear lifestyle segment. Fernández said this combination delays the turnaround at Foot Locker that Telsey had anticipated, pushing recovery out by at least a few quarters.
Product trends and category performance
According to Telsey, consumer preferences are shifting toward dressier styles and there is an overall lack of sufficient newness in the market. Where fresh product is present, shoppers are responding to low-profile styles, Mary Jane silhouettes, adidas prints and patterns, the Nike Mind line and performance footwear. However, Fernández noted that these pockets of demand have not been large enough to offset weakness in high-volume legacy lifestyle footwear.
Fernández added that the slowdown intensified as the second quarter progressed and is not limited to a single brand. She said the softness has affected Nike, adidas and New Balance, while On and Hoka have shown comparatively better results.
Core business and comps
Telsey observed that Dick's core business held up relatively well. The company reported a 4.9% comparable sales increase, which outpaced expectations and was aided by World Cup-related product. Positive comparable sales were recorded across apparel, footwear and hardlines.
Estimates and outlook
In its note, Telsey lowered its 2026 earnings estimate for Dick's to $11.50 from $14.30. The firm expects the stock to remain range bound until Foot Locker achieves sustainable growth. Looking further out, Telsey still sees the potential for Dick's to gain share through improvements in marketing, in-store experience and assortment.
Bottom line
Telsey's downgrade and marked reduction in price target reflect concerns about demand trends in athletic apparel and footwear and the delayed recovery at Foot Locker after a quarterly earnings miss and a cut to full-year guidance.