A class action lawsuit was filed against DICK’s Sporting Goods (NYSE:DKS) on February 16, 2024. The plaintiffs (shareholders) alleged that they bought DICK’s Sporting Goods’ stock at artificially inflated prices between May 25, 2022, and August 21, 2023 (Class Period) and are now seeking compensation for their financial losses. Investors who bought DKS stock during that period can learn about joining the lawsuit here: https://zlk.com/pslra-1/dicks-sporting-goods-lawsuit-submission-form?wire=16
DKS is one of the largest retail chains of sporting goods in the U.S. The retailer sells sports apparel, footwear, equipment, and accessories through a mix of online, app, and brick-and-mortar stores. The company claims to have over 700 physical locations throughout the U.S.
The plaintiffs maintain that DKS and three of its senior officers and/or directors repeatedly lied and withheld crucial information regarding the company’s business and financial standing during the Class Period. The plaintiffs allege that the accused have misstated facts about DKS’ inventory, margins, and prospects, in SEC filings and related material.
The information became clear when on August 22, 2023, DKS announced “disappointing results for the second quarter of fiscal 2023.” The company cited “significantly reduced margins and profitability” on “promotional sales of excess Outdoor inventory.”
Meanwhile, during the Class Period, DKS had noted during an earnings call 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.” Also, the CEO stated during an earnings call, “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%.”
Moreover, on March 7, 2023, the CFO stated that “[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.”
As per the class action lawsuit, DICK’s Sporting Goods caused the DKS stock to trade at artificially inflated prices by knowingly and recklessly misleading investors about its business performance and financials.
Notably, on August 22, 2023, DKS stock price plunged over 22% owing to disappointing results. DKS shares have gained over 51% so far this year.
