Dick’s Sporting Goods CEO blames organized retail theft for loss in profits

The New York Post reports that despite its sales rising 3.6 percent, the retail chain reported a 23 percent decrease in profits across its more than 700 stores in the second quarter.

Lauren Hobart, Dick's president and CEO, told investors that its reported losses are the result of "organized retail crime" and the chain's ability to manage stolen or lost inventory, calling it "an increasingly serious issue impacting many retailers."

"Our Q2 profitability was short of our expectations due in large part to the impact of elevated inventory shrink," Hobart told investors, according to the outlet.

"Based on the results from our most recent physical inventory cycle, the impact of theft on our shrink was meaningful to both our second-quarter results and our go-forward expectations for the balance of the year. We are doing everything we can to address the problem and keep our stores, our teammates, and athletes safe," Hobart continued.

Following Tuesday's start of the next quarter, the share price of Dick's fell more than 20 percent, according to NY Post.

The largest retail trade organization in the country, the National Retail Federation, reported that its most recent security assessment of about 60 shops revealed inventory shrink came in at an average rate of 1.4 percent last year, totaling $94.5 billion in losses.

Dick's Sporting Goods has been a hotspot for shoplifters in recent months with notable incidents documented in Wisconsin, New Jersey, Maryland, and California, according to the outlet.

Fox 6 reported that three women stole $200 worth of goods from a Dick's location in Brookfield, Wisconsin, and then fled in a Toyota with a Texas license plate just weeks ago.

In Melville, New Jersey, a former deputy commissioner of public safety in Oyster Bay, New York, was arrested for allegedly stealing over $1,100 worth of golf clubs from Dick’s location, according to News 12.

At the sporting goods store’s location in Montgomery County, Maryland, brazen thieves had allegedly loaded up carts full of equipment and merchandise and then made a run for the store's exit, according to NY Post.

In addition, there were eight shoplifting incidents over the court of seven days at the same Dick's location in Pleasant Hill, California, according to Claycord.

While Dick's blamed organized crime for some of its losses, it didn't say how much of its inventory loss was due to theft specifically.

Investors were informed by Dick's CFO Navdeep Gupta during the meeting that "the number of incidents and the impact of organized retail crime came in significantly higher than we anticipated."

Dick's had previously provided a projection of $12.90 to $13.80 per share; however, the crime wave led Dick's to lower its forecasts to $11.33 to $12.13 per share.

In comparison to the $319 million, or $3.25 per share, recorded during the same period last year, the company's net income for the second quarter was $244 million, or $2.82 per share.

Comparing the quarter to the second quarter of 2022, inventory was down about 5 percent, the outlet reports.