DICK’S Sporting Goods, Inc. Litigation Report

Case Introduction

Plumbers and Pipefitters Local Union No. 719 Pension Trust Fund v. Dick’s Sporting Goods, Inc., et al 2:24-cv-00196-KT

On February 16, 2024, investors sued DICK”S Sporting Goods, Inc. (“DSG” or the “Company”) in United States District Court, Western District of Pennsylvania.

Plaintiffs in the federal securities class action allege that they acquired DSG stock at artificially inflated prices between May 25, 2022 and August 21, 2023 (the “Class Period”). They are now seeking compensation for financial losses incurred upon public revelation of the Company’s alleged misconduct during that time. To learn whether you may be eligible for a recovery under this class action, go to: https://zlk.com/pslra-1/dicks-sporting-goods-lawsuit-submission-form?wire=31

Summary of the Allegations

Company Background

The Company (NYSE:DKS) does business as a “leading sporting goods retailer.”

As such, DSG sells sports equipment, clothing, footwear, and accessories to customers throughout the United States. Specifically, the Company does so online, and on its app, as well as at brick-and-mortar locations. According to the complaint, the Company now has more than 700 “physical locations” throughout the country.

The Company says its history dates to 1948, with humble beginnings as a “modest bait and tackle store” in Binghamton, NY.  Within a few years, the Company’s young founder, who accepted $300 from his grandmother to get the venture off the ground, soon made more products available at the shop. The second shop opened in Vestal, NY, in 1971.

The business remained in the family, but under new leadership, from the mid-80s onward. DSG’s growth continued through the end of the 20^th century and into the dawn of the 21^st century, when it opened its 100^th store in Kansas City, Missouri. The Company began trading publicly in 2002, and had more than 140 stores in operation by the end of that year.

Summary of Facts

DSG and three of its senior officers and/or directors (the “Individual Defendants”) now stand accused of deceiving investors by lying and withholding crucial information about the Company’s business and financial standing during the Class Period.

In particular, they are accused of omitting truthful information about DSG’s inventory, margins, and prospects, from SEC filings and related material. By knowingly or recklessly doing so, they allegedly caused DSG stock to trade at artificially inflated prices during the time in question.

The truth came out on August 22, 2023. That’s when the Company announced “disappointing results for the second quarter of fiscal 2023.”  According to the complaint, DSG mostly blamed the “significantly reduced margins and profitability” on “promotional sales of excess Outdoor inventory.”

A closer look…

As alleged, DSG and/or the Individual Defendants repeatedly made false and misleading statements throughout the Class Period.

During an earnings call held at the beginning of the Class Period, for instance, the Company’s CEO (an Individual Defendant) stated in relevant part: “[W]e had anticipated that certain categories, like fitness and outdoor equipment would normalize this year. And they have normalized as we expected...” However, she also added that,  “[w]e are not anticipating any significant markdown risk” because the Outdoor segment, among others, “ha[d] rebaseline[d] meaningfully higher than our pre-pandemic volume.”

Then, during an earnings call on November 22, 2022, the Company’s CEO stated in pertinent part: “So we absolutely believe in the structural changes in our overall margin. I would point to the fact that our EBT margin, even with that investment that we made to clean up apparel, it was 10.3%. So over 3x what it was pre-2019, we have tremendous confidence in the long-term sustainability of our profitability.”

Finally, during an earnings call on March 7, 2023, the Company’s CFO (an Individual Defendant) stated in pertinent part: “[W]e continue to address targeted inventory overages due to late arriving Spring] product. As a result of these actions, our inventory is in great shape as we start 2023.”

Actions You May Take

If you have purchased the Company’s stock during the Class Period, you may join the class action as a lead plaintiff, remain a passive class member, or opt out of this litigation and pursue individual claims that may not be available to the class as a whole. To learn more about your options, go to: https://zlk.com/pslra-1/dicks-sporting-goods-lawsuit-submission-form?wire=31

NOTE: The deadline to file for lead plaintiff in this class action is April 22, 2023. You must file an application to be appointed lead plaintiff prior to this deadline in order to be considered by the Court.