Dick's股价创最大跌幅，董事长称更多痛苦将至

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Listen on demand wherever you get your podcasts or watch us live on YouTube. Let's go back to corporate news because uh it is retailers earning season. John Tucker and Dick Sporting Goods is down 25% this morning. Yeah, pretty painful if you are a shareholder of Dick Sporting Goods. And this uh could be because the Foot Locker acquisition um has not really done a whole lot for its financials. Lindsay Dutch is our Consumer Hardines senior analyst joining us now from Princeton.

Is this the verdict of that Foot Locker acquisition that it really isn't doing it for Dick Sporting Goods or is this kind of a broader um trend of people not spending on uh recreational footwear?

Hi Scarlet, thanks for having me. I think it's a bit of both. Um so Dixs, you know, announced this Foot Locker deal in May of last year, closed on it almost a year ago. They had an aggressive plan to bring Foot Locker, you know, turn that business around, bring it back to sales group with their brand relationships, fixing the assortment. Everything was going good, you know, until we got the results this morning. And this was really the time that Dixs had to prove that buying Flocker was the right move.

And there was a lot of investor skepticism about the deal. And that stock is down over 20% because you know everyone is very disappointed that that turnaround it is not coming to fruition so far.

Uh I'm trying to count the number of retailers who are in a you know a position of a turnaround. Um where do they go from here?

Yeah. So I mean Dick's management is steadfast on you know they believe that the acquisition is a good long-term opportunity. I will say that I think there was a a pretty abrupt pullback in that lifestyle footwear market and a pullback in in the discretionary spend in that category specifically. That's why we saw Foot Locker see same store sales decline 3.6% but the legacy Dicks business was really up 4.9%. So there's a big gap between those two businesses.

And so, you know, Dick's doing this deal, that's what everyone was worried about is now you're subject to this lifestyle demand- which can have this rapid swing. Um, and they have to figure out h how to get the assortment right and and reduce that volatility. Talk a little bit more about the legacy business at Dixs that's working that's working well in fact and whether Dix can do more to invest in that part of the business.

Right. Yeah. So the the legacy business is more based in sport. So it's whether you know kids are or adults are trying recreational sports, you know, and and getting the clothes, the equipment, the shoes for that. Um or, you know, if you're a big fan, um the major league teams, you know, they carry all of the the branded apparel for those teams. and and World Cup was an advantage in the second quarter for that legacy business.

You know, that demand has a little been a little bit more steady than than sort of lifestyle. Um, and same source sales is slowing down a bit just because they've had strong comps. Um, so but Dix is still obviously seeing growth there and I think they can continue leaning into sports moments. You know, they're a big sponsor of the LA Olympics in 28. So, so we have lots of events to look forward to to fuel that business going forward.

Hey, I I just want to look at the the balance sheet there in terms of um free cash flow, debt. What does that look like at this point?

Yeah, so the the Dicks business had to go through their own turnaround several years ago um and they were successful in doing that, shoring up the balance sheet, getting all the financial metrics in better shape. Foot Locker, the addition of that business adds some pressure. it was already a lower profitability business. So we were expecting you know pressure on you know the overall consolidated results for the back half of this year even going into next year.

But I think that the results today say that the pressure on profitability for that Foot Locker business you know could extend a lot longer than expected. It could be worse than expected and that that's going to be something that Dix is going to have to figure out. you know, where they're investing in capex, do they have to pull back? You know, how do they get the return on their investments?

Very quickly, Lindsay, is is management management um vulnerable in any way here because of this acquisition and how how it's not going as smoothly as they had hoped

in terms of turnover. Yeah.

Um I think we would have to wait and and see. I mean, I think for now, you know, it was just one quarter. Um it was it was a very important quarter because the turnaround of that Foot Locker business had been promised for back to school season. Um but but I think that you know we we do have to give some time. It has been less than a year since the deal was done and there is long-term opportunity. So we just have to see them more aggressively bring the results from that.

Stay with us. More from Bloomberg Intelligence coming up after this. [music] You're listening to the Bloomberg Intelligence Podcast. [music] Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App.

Listen on demand wherever you get your podcasts or watch us live on YouTube. We want to talk a little bit about what's going on with United Airlines because they fly out of Newark and John.

Well, that's their hub, right? Their major.

That is their hub. Although, don't they do a lot in Chicago as well?

Do they have regional hubs? Is that what's happen?

Maybe our guest would know.

Okay, let's check in with Sid Phillip. He is our chief correspondent for Global Aviation. Um Sid, United is expanding a longhaul network with a fleet of Airbus XLR jets. How significant is this? I mean, United um has a hub in Newark. We know that United had some issues. Was it earlier this year or late last year?

I you know, [laughter] it's been it's been for a couple memory.

Yeah. Well, it's been it's been for a while. Yeah. Um and you know even with additional capacity the issues at airports like Newark have kind of cast a bad light on airlines that are based out of there. So talk to us about what United is doing here.

So United is basically expanding their international network. They're making a bet that Americans will want to travel overseas and so that's where the big growth for the industry is going to come from. And so Newark is betting uh United is betting on Newark and they're sort of expanding their international longhorn network from Newark as well as other airports in the US. But given the fact that Newark is obviously one of their biggest international hubs, this is a significant moment for them.

And what they're actually doing is they're using an aircraft called the A321 XLR, which gives you the economics of a narrow body aircraft. So, think of the aircraft that typically you fly domestically and that's the aircraft they're going to use. But instead, this aircraft can fly for 8 hours over the ocean and essentially offer you the same sort of economics that you would get on a narrow body aircraft without having the risk of having to fill up a big widebody jet like the trip 7 or the 787 that they typically fly.

So American is betting that Americans will want to travel overseas at a time when the rate of inflation is rising, when airfares are rising, when the economic outlook is uncertain. Is that a good bet?

So United has bet on the fact that there's there is a huge demand for premium as well as leisure travelers who are sort of well healed. I mean they've talked about how the average income for their typical customers is much higher than the typical US airlines and so United has s