Dick's Sporting Goods (DKS) management appears too optimistic on athletic footwear, particularly because the Foot Locker acquisition adds outsized exposure to the category's most-pressured segments, including Nike and lower-income customers, Truist said in a note Thursday.

The brokerage said it is incrementally cautious on the next-twelve-month outlook due to higher gas prices and promotional intensity, tough first-half fiscal 2027 comparisons, and heavy investment in Foot Locker as Dick's fixed-cost base grows.

Truist said it has little conviction in management's view that current softness is purely supply-driven, noting the company appeared to underestimate Foot Locker's inventory issues and broader lifestyle demand pressure. It also said Dick's is accelerating markdowns to defend share despite touting differentiated product access.

Core occupancy costs grew about 7% in the first half of fiscal 2026 as depreciation catches up with a tripling of capex from fiscal 2022 to 2025. Assuming core sales growth of 3% and occupancy cost growth of 7%, it calculated an EPS headwind of about $0.40.

Truist maintained its hold rating on the stock and lowered its price target to $128 from $135.

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