The legal action, spearheaded by Pomerantz LLP, centers on allegations of unlawful business practices and misleading disclosures. The scrutiny follows the company’s August 25, 2026, earnings release, which revealed adjusted earnings of $3.53 per share—missing the $3.76 target set by analysts. The company also lowered its full-year 2026 net sales guidance to between $21.9 billion and $22.2 billion.

Much of the financial friction stems from the company's $2.5 billion acquisition of Foot Locker, completed in September 2025. Executive Chairman Edward Stack attributed the poor performance to a highly promotional marketplace and a lack of successful footwear launches. Foot Locker’s comparable sales forecast was slashed from a projected growth of up to 3% to a potential decline of 2%. In response to the disclosures, Dick's stock dropped $55.02, closing at $124.31 on the day of the announcement.