(Bloomberg) -- Dick’s Sporting Goods Inc. has vowed to limit sales of guns. Its problem, however, is poor sales of everything else.
Only weeks after winning accolades from gun-control advocates for ending sales of assault rifles at its Field & Stream stores, Dick’s posted a deeper-than-expected sales decline. Its stock sank the most in seven months Tuesday in the wake of the quarterly report, which reflected struggles with excess inventory and deep discounting.
The future had appeared bright after Sports Authority collapsed in 2016, leaving Dick’s as the last national chain of its kind. But price cutting by competitors and tepid demand for items like basketball shoes have hammered the stock and put pressure on profit margins.
The company is also facing a threat from Nike, the largest sports brand in the world, which has been pushing more of its customers to its own stores and websites. And Amazon.com Inc. is promoting its own private-label athletic gear. The rapid growth of Fanatics Inc., which sells licensed sports team apparel, isn’t helping either.
Dick’s moved last month to change the gun policy at its three-dozen Field & Stream stores -- extending a ban on assault-style rifles already in place at its namesake locations -- following a fatal shooting spree at a Florida high school. The company also raised the age limit to 21 from 18 on the purchase of any firearm. But the effect on its business remains to be seen.
The company said that it expected an already-soft market for hunting gear to continue this year. The big issue is that demand for firearms has waned since Donald Trump was elected president. He isn’t expected to push strict gun-control measures, giving shoppers less incentive to stock up on weapons.
But Chief Executive Officer Edward Stack thinks the company may lose some customers because it took a stand on guns.
“Our firearms policy is not going to be positive from a traffic standpoint and a sales standpoint,” he said on a conference call.
Shares of Dick’s fell as much as 9.3 percent to $29.53 in New York, the biggest intraday decline since mid-August. They had climbed 13 percent this year through Monday’s close.
Profit will be $2.80 to $3 a share this year, the company said. Analysts expected $2.91 a share. Same-store sales will range from flat to a low-single-digit decline.
Excluding some items, profit amounted to $1.22 a share in the fourth quarter, which ended Feb. 3. Analysts had estimated $1.24 on average. Sales of $2.66 billion also fell short of projections.
Same-store sales fell 2 percent in the period. Analysts had estimated a drop of 1.2 percent, according to Consensus Metrix. E-commerce sales rose 9 percent. The company laid a lot of blame on Under Armour Inc., which counts Dick’s as its largest customer.
The brand has been expanding its distribution and discounting merchandise, both of which are making it less lucrative for Dick’s.
Looking forward, Stack said “stronger product innovation” from Nike and Adidas will result in less pressure on profit margins. He didn’t include Under Armour in this assessment, a sign the retailer may be relying less on the brand.
Dick’s also is going to be promoting more of its own product lines.
“We will continue to aggressively adapt our own apparel,” he said.
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