The one number
$3.1 billion.
That is how much of Dick's revenue last year was Foot Locker, a company it did not own for most of the period. The figure is not an estimate. It is in Dick's own Form 10-K for the fiscal year ended 31 January 2026, which states that the year "includes $3.1 billion of net sales for the Foot Locker Business since the acquisition date".
Revenue that year rose from $13.443 billion to $17.215 billion, an increase of $3.772 billion. So the acquisition supplied 82% of the growth.
We should disclose why this is the stock of the day. Yesterday we published a four-way comparison of $NKE, $DKS, $LULU and $AEO that printed Dick's six-year revenue growth as +97% and said nothing about Foot Locker. Measured without the acquired sales, that six-year figure is about 61%. We corrected it publicly this morning. Chasing the correction is what produced everything below, which is the honest account of how this review came to exist.
The objection that nearly killed this piece
The easy version of this story is the annual one: revenue up 28%, operating income down 26%. It is true, and it is weak, because the year it describes is the year the deal closed. Any reader can reply that acquisitions carry one-off costs in the quarter they complete, and that reader would be right to ask.
So the right test is whether the margin recovered once the closing period was behind the company. It did not recover to where it was.
Operating margin, quarter by quarter
Retail quarters are not comparable with each other. Dick's fourth quarter carries the holiday season; its first does not. A plain run of ten quarters would let anyone dismiss the shape as the calendar. So each quarter below is set against the same quarter a year earlier and nothing else.
| Operating margin | FY ended Feb 2025 | FY ended Jan 2026 | FY ending Jan 2027 |
|---|---|---|---|
| Q1 | 10.96% | 11.53% | 8.73% |
| Q2 | 13.53% | 12.40% | 7.89% |
| Q3 | 9.36% | 2.23% | not yet reported |
| Q4 | 9.94% | 2.96% | not yet reported |
The deal closed on 8 September 2025, inside the quarter that printed 2.23%.
Read across the rows. Before the acquisition, Dick's ran between roughly 9% and 13.5% depending on the season. The two quarters around the close fell to 2.23% and 2.96%. The two since have recovered to 8.73% and 7.89%, and both sit about four points below their own prior-year comparison.
Three of those ten quarters are derived rather than filed, and it is worth saying which: Dick's does not file a fourth-quarter 10-Q, so each Q4 is the full year less its three filed quarters, and the quarter ended 2 May 2026 is the filed half-year less the filed second quarter. The headline pair, 7.89% against 12.40%, is filed against filed.
The latest quarter on its own
The three months ended 1 August 2026, reported on 3 September 2026:
| Three months ended | 2 Aug 2025 | 1 Aug 2026 | Change |
|---|---|---|---|
| Revenue | $3,646.6m | $5,586.8m | +53.2% |
| Operating income | $452.2m | $440.8m | -2.5% |
| Net income | $381.4m | $315.5m | -17.3% |
| Operating margin | 12.40% | 7.89% | -4.5 pts |
Revenue rose by more than half. Operating profit did not rise at all, and net profit fell by a sixth.
Two things are worth separating here. The revenue comparison is flattered, because the earlier quarter is from before Dick's owned Foot Locker, so it is not a like-for-like business. The margin comparison is not flattered by that at all: a margin is a ratio, and the question it answers is what proportion of each dollar of sales the combined company keeps. That proportion has fallen.
Note also that net income fell much further than operating income. The gap sits below the operating line, where interest and tax live. We have not read the interest footnote closely enough to attribute it, so we are not going to.
It has borrowed again, and the market priced the risk
On 22 September 2026, ten days before this review, Dick's priced $1 billion of new senior unsecured notes. The pricing term sheet gives the terms exactly:
| Tranche | Size | Coupon | Yield | Benchmark Treasury | Spread |
|---|---|---|---|---|---|
| Due 25 Sep 2036 | $400m | 6.200% | 6.220% | 4.625% of Aug 2036 at 4.970% | +125 bp |
| Due 25 Sep 2056 | $600m | 6.900% | 6.903% | 5.000% of May 2056 at 5.303% | +160 bp |
Expected ratings were Baa2 (stable) from Moody's and BBB (stable) from S&P. Net proceeds were about $988 million, for general corporate purposes which the prospectus says may include repaying debt, repurchasing stock and future acquisitions.
This is useful because it is a second, independent opinion on the same company, formed by a different set of buyers on a known date. Investment grade, comfortably. A hundred and sixty basis points over the long bond is not a market worried about solvency.
It is worth putting that next to the last time Dick's sold thirty-year paper. In January 2022 it priced the 4.100% notes of 2052 at a yield of 4.114%, 200 basis points over the Treasury, with an expected Moody's rating of Baa3. So the cost of thirty-year money rose 279 basis points between the two deals, while the Treasury it prices against rose 319. The new deal priced tighter, at 160 over, and the new notes carry a higher Moody's rating. Almost all of the extra cost is the rate, not the borrower.
One caveat on that comparison, because it would be easy to overstate: we have not measured the broad BBB index spread on the January 2022 date, so we cannot say how much of the 40 basis point tightening is specific to Dick's and how much is a market-wide move. The ratings difference is issuer-specific; the spread difference may not be entirely.
None of which makes the borrowing free. A company committing to 6.9% for thirty years has to earn more than that on what it does with the money, and the margin table above is the record of what it earned on the last thing it bought.
What this is and is not
This is not an argument that the Foot Locker deal has failed. It is eleven months old. Acquisitions of this size are routinely dilutive to margin early and are defended on the grounds that the buyer will fix the acquired business, and Dick's may well do that. Foot Locker was a visibly troubled retailer before the deal; buying it was always going to pull the blended margin down arithmetically, whatever happens next.
What the numbers do establish is narrower and firmer. The revenue growth this company has shown over the past year is mostly purchased rather than generated. The margin has not returned to its prior level in the two quarters since the closing period. And anyone reading the top line alone is reading the half of the story that improved.
The question
Does the margin come back?
That is the whole thing, and it has a scheduled answer. The next checkpoint is third-quarter results, which on the pattern of the last two years land in the second half of November with the 10-Q following in late November or early December. It will be the first quarter to compare against a prior-year quarter that also contained Foot Locker, which removes the distortion from the revenue line and leaves only the margin.
Until then: $DKS trades at about 13.5 times trailing earnings of $9.86 a share, computed from filed net income over the last four reported quarters. It is the only name in yesterday's four whose share price is higher than five years ago.