New York
CNN
—
Dick’s Sporting Goods warned Tuesday that retail theft is damaging its business and would lead to lower annual profits.
The sporting goods and athletic clothing seller reported second-quarter results Tuesday morning that included a 23% drop in profit, despite sales that rose 3.6% in the period. Shares of Dick’s (DKS) plunged nearly 24% Tuesday.
The company blamed shrink, the industry term for theft and damaged inventory, for its surprisingly poor earnings. Although other national retailers have also warned investors about growing theft, Dick’s is among the first to blame its lackluster quarterly financial report primarily on theft.
“Our [second-quarter] profitability was short of our expectations due in large part to the impact of elevated inventory shrink, an increasingly serious issue impacting many retailers,” CEO Lauren Hobart said in a statement. Retail “shrink” is a term that refers to merchandise that goes missing due to theft, fraud, damage, accounting errors or other reasons.
Looking ahead, the retailer said it now expects its earning per share for the year to come in 12% below its initial forecast. The Pittsburgh-based retailer stuck to its full-year forecast for sales at stores open at least a year: flat to up 2%.
Retailers large and small say they are struggling to contain an escalation in store crimes — from petty shoplifting to organized sprees of large-scale theft that clear entire shelves of products. Target warned earlier this year that it was bracing to lose half a billion dollars because of rising theft. The retailer reported a large number of incidents of shoplifting and organized retail crime in its stores nationwide.
It’s not clear that crime is growing significantly more serious. Within the industry, at least one major player has argued that the problem is being overhyped: Walgreens (WBA) earlier this year changed