Dick's Sporting Goods reported better-than-expected holiday quarter results, but its profit fell sharply by 57% due to the impact of acquiring Foot Locker.

According to data from London Stock Exchange Group (LSEG), the company forecasts adjusted earnings per share for fiscal year 2026 to be between $13.50 and $14.50, below the analyst consensus estimate of $14.67.

In an interview with CNBC, Executive Chairman Ed Stack stated that while acquisition-related costs will continue to impact the current fiscal year, the business optimization for Foot Locker is largely complete, and the brand is expected to return to a growth trajectory.

The retailer announced on Thursday that its holiday quarter performance surpassed expectations, but it issued a muted full-year profit outlook as the Foot Locker acquisition continues to weigh on results.

The company indicated it expects Foot Locker to resume profit and sales growth within the year but is still incurring significant costs to clear slow-moving inventory inherited during last year's merger and to close underperforming stores.

These measures, along with other transaction-related expenses, are projected to total between $500 million and $750 million. Approximately $390 million of these costs were recognized in fiscal 2025, with more expenses anticipated in the current fiscal year.

Speaking to CNBC's Sara Eisen, Executive Chairman Ed Stack confirmed that the operational restructuring of Foot Locker is nearly finished.

"In retail, you're never completely finished cleaning things up," Stack commented. "Any remaining work will fall within the scope of normal operations."

For the three-month period ending January 31, Dick's Sporting Goods exceeded Wall Street forecasts for both revenue and profit. The company's fourth fiscal quarter results compared with analyst expectations (compiled by LSEG) are as follows:

Earnings per share: Adjusted $3.45, compared to an expected $2.87 Revenue: $6.23 billion, compared to an expected $6.07 billion

Net income was $128.3 million, or $1.41 per share, a significant 57% decrease from $299.97 million, or $3.62 per share, reported in the same quarter the previous year.

Sales increased to $6.23 billion, up from $3.89 billion in the prior-year period, which did not include Foot Locker's results.

Six months ago, Dick's Sporting Goods completed the $2.5 billion acquisition of Foot Locker, creating one of the largest distributors for key athletic brands such as Nike, Adidas, and New Balance.

The acquisition provided Dick's with access to a new customer base, supported its international expansion, and strengthened its bargaining power with brands at a time when sportswear companies are reducing their reliance on wholesale partners.

Although the purchase drove a 60% surge in fourth-quarter sales, it also saddled Dick's Sporting Goods with a historically underperforming business—Foot Locker had relied heavily on a large number of stores concentrated in shopping malls for the bulk of its revenue.

Following the acquisition, Dick's began shuttering underperforming locations. During fiscal 2025, it closed 57 stores globally under the Foot Locker, Champs, Kids Foot Locker, and WSS banners.

The company has launched a pilot program called "Fast Break" in 11 Foot Locker locations to test adjustments to merchandise assortments and in-store displays.

Dick's Sporting Goods reported that these pilot stores are performing exceptionally well due to optimized brand storytelling, revamped displays, and a streamlined product selection. The company plans to roll out this model more broadly later this year.

Prior to the acquisition, former Foot Locker CEO Mary Dillon had pursued an aggressive store transformation strategy, aiming to relocate stores away from malls and remodel existing locations with new concepts. It is unclear whether the "Fast Break" initiative differs from this earlier strategy.

Dick's Sporting Goods anticipates a turnaround in Foot Locker's comparable store sales and profitability starting with the back-to-school shopping season. For the full year, Foot Locker's comparable sales are projected to grow between 1% and 3%.