What Happened?

A number of stocks fell in the morning session after Dick's Sporting Goods reported weaker-than-expected quarterly earnings and warned of rising inventory levels that are forcing heavy promotional discounting across the athletic retail sector. Shares of athletic footwear and apparel makers retreated after Dick's Sporting Goods reduced its full-year profit outlook according to the company’s press release, signaling broader margin pressures across the sportswear market.

Retail executives noted that excess inventory in athletic shoes and clothing has led to an increasingly promotional environment, as consumers hesitate to make discretionary purchases without substantial discounts. Footwear product launches also underperformed expectations during the quarter. Because major retail chains serve as primary sales channels for global athletic brands, softening retail demand and increased price markdowns threaten order volumes and wholesale profitability for apparel manufacturers. The retail update has intensified investor worries about persistent headwinds in consumer discretionary spending.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Consumer Discretionary - Apparel and Accessories company Figs (NYSE: FIGS) fell 3.8%. Is now the time to buy Figs? Access our full analysis report here, it’s free.
• Consumer Discretionary - Toys and Electronics company Funko (NASDAQ: FNKO) fell 3.7%. Is now the time to buy Funko? Access our full analysis report here, it’s free.
• Consumer Discretionary - Footwear company Caleres (NYSE: CAL) fell 3.6%. Is now the time to buy Caleres? Access our full analysis report here, it’s free.
• Consumer Discretionary - Footwear company Nike (NYSE: NKE) fell 2.6%. Is now the time to buy Nike? Access our full analysis report here, it’s free.
• Consumer Discretionary - Footwear company Genesco (NYSE: GCO) fell 3.4%. Is now the time to buy Genesco? Access our full analysis report here, it’s free.

Zooming In On Figs (FIGS)

Figs’s shares are very volatile and have had 29 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 18 days ago when the stock gained 28.5% on the news that the healthcare apparel company reported second-quarter 2026 results that beat Wall Street on both revenue and adjusted earnings. FIGS is converting more customers into bigger baskets: active customers rose 13% to 3.1 million, average order value climbed to $127, and adjusted EPS of $0.11 cleared the $0.07 consensus as margins expanded sharply. Management tied the $196.6 million revenue print (+28.8% year over year, roughly $10.5 million above estimates) to higher order volume and pricing/mix that lifted AOV about 8.5%.

That top-line strength flowed through to profitability: operating margin widened to 17.9% from 6.5% a year earlier, helped by gross-margin gains from pricing, efficiency, and tariff-related items. Cash generation also improved, with free cash flow swinging positive versus a cash burn a year ago. Looking ahead, FIGS is targeting roughly 20% full-year 2026 net revenue growth and mid-teens adjusted EBITDA margins, and the board raised its buyback authorization—signals that management sees the rebound as durable enough to return cash. Street models that had been skeptical of FIGS’ ability to grow and expand margins at the same time are likely to revise higher after a third straight quarter of accelerating adjusted profitability.

Figs is up 28.9% since the beginning of the year, but at $14.69 per share, it is still trading 14.2% below its 52-week high of $17.12 from March 2026. Despite the year-to-date gain, investors who bought $1,000 worth of Figs’s shares 5 years ago would now be looking at only $396.81.

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