Dick’s Sporting Goods Execs Should Face Fraud Claims, Court Says

Dick’s Sporting Goods Inc. and some of its top executives should continue to face investor accusations the retailer concealed the volume of its excess inventory post-pandemic, and that those execs profited from the deception, a federal magistrate judge said.

Stock sales made made by the retailer’s top brass close in time to their purported misstatements about inventory levels bolstered investors’ inference the executives intended to commit securities fraud, Magistrate Judge Kezia O.L. Taylor said. Collectively, executive chairman Edward W. Stack, CEO Lauren R. Hobart, and chief financial officer Navdeep Gupta allegedly reaped about $47 million during the proposed class period.

But the pension funds leading the suit inadequately pleaded Dick’s misrepresented its retail theft level and the risks of sales declines and markdowns, Taylor said Tuesday, recommending only part of the lawsuit be permitted to move forward. The funds failed to allege disclosures on increased theft required more detail, or that significant dips in demand had already occurred when related statements were made, Taylor said.

Her ruling now goes to US District Court for the Western District of Pennsylvania Judge J. Nicholas Ranjan for ratification or rejection.

Dick’s saw a surge in sales during the pandemic as people sought ways to stay active—but as lockdowns lifted, demand waned and inventory piled up, the funds’ most recent complaint said. At the same time, the merchant was contending with increased retail theft. But, Dick’s and its corporate overseers downplayed those shareholder concerns and expressed optimism about its profitability, according to Rhode Island’s general treasurer, suing on behalf of the state’s retirement system, and the Western Pennsylvania Teamsters and Employers Pension Fund Public Employees.

Dick’s stock price plunged more than 24%, closing at $111.53 on Aug. 22, 2023, the day the retailer revealed disappointing second quarter profits that year hurt by theft, and company executives discussed inventory markdowns in an earnings call. It was then the stock’s steepest single-day decline since Dick’s 2002 market debut, according to data compiled by Bloomberg.

Most of the plaintiffs’ alleged misstatements about the health of inventory levels were plausibly misleading when made, while some were inactionable declarations of corporate optimism, Taylor said.

She advised against granting the investors leave to amend claims she deemed defective.

The complaint—containing confidential former employee statements on how leaders would’ve known about excess inventory—sufficiently alleged the level of intent or recklessness to defraud investors, Taylor said. Top brass visits to overloaded stores and access to weekly reports on inventory levels supported an inference of intent or recklessness to deceive investors.

Robbins Geller Rudman & Dowd LLP and Pomerantz LLP are lead counsel for the proposed class, which targets those who got Dick’s stock from Aug. 23, 2022 through Aug. 21, 2023. Jones Day and Wachtell, Lipton, Rosen & Katz represent Dick’s, Stack, Hobart, and Gupta. None of these law firms nor Dick’s immediately responded to emails seeking comment.

The case is Plumbers and Pipefitters Local Union No. 719 Pension Trust Fund v. Dick’s Sporting Goods, Inc., W.D. Pa., No. 2:24-cv-00196, 8/12/25.