**Dick’s Sporting Goods’ Second-Quarter Sales Surge, But Profits Decline Amid Inventory Discrepancies**
Dick’s Sporting Goods reported its financial results for the second quarter of fiscal 2023, showcasing a surge in sales but a decrease in profits. The company attributed this profit decline primarily to inventory shrinkage, highlighting the challenges it faces in managing its inventory effectively.
**Sales Revenue and Comparable Store Sales**
Dick’s Sporting Goods reported total sales revenue of $3.36 billion for the second quarter, representing a 9.4% increase compared to the same period last year. This growth was driven by a 6.5% increase in comparable store sales, indicating strong demand for the company’s sporting goods and athletic apparel products.
**Profitability and Inventory Shrinkage**
While sales increased, Dick’s Sporting Goods saw a decline in its profit margin. The company reported a net income of $264.1 million for the quarter, down from $316.2 million in the second quarter of 2022. This 16.5% decrease in net income was primarily attributed to inventory shrinkage, which resulted in a loss of approximately $120 million.
According to the company, the inventory shrinkage was caused by a combination of factors, including theft, fraud, and errors in inventory management. Dick’s Sporting Goods stated that it is actively working to address these issues and improve its inventory controls.
**Gross Margin and Operating Expenses**
The company’s gross margin declined slightly from 32.2% in Q2 2022 to 31.8% in Q2 2023, primarily due to increased promotional activity and product cost inflation. Operating expenses also increased by 7.2% to $1.14 billion, driven by higher labor costs, marketing expenses, and technology investments.
**CEO Commentary**
Ed Stack, CEO of Dick’s Sporting Goods, commented on the company’s financial performance:
.
