Dick's Drops Most in a Year as Chain Scales Back Hunting Goods
(Bloomberg) -- Dick’s Sporting Goods Inc. shares tumbled after the retailer reported another quarter of slumping sales since it stopped carrying assault-style rifles in February.
Same-store sales fell 1.9 percent, worse than estimates for a 0.8 percent drop, according to Consensus Metrix, and marking the fourth consecutive quarter of declines. Shares slumped as much as 10 percent.
The decline stemmed from three main areas -- hunting, electronics and Under Armour products. The retailer is phasing out electronics entirely, while hunting goods are being promoted less, Chief Executive Edward Stack said on a conference call. Under Armour, meanwhile, has moved to increase distribution through other channels, which has affected its sales via Dick’s, he said. Excluding those three categories, same-store sales were up 1 percent.
“Other than that, we’re really excited about our business,” Stack said, citing areas such as golf, footwear and athletic apparel.
The hunting category, which includes gun sales, had been flagging before the decision to stop selling assault-style rifle earlier this year, and margins that have fallen well below the company average, Stack said. He added that the company will remove “virtually all” hunting products from 10 Dick’s stores where the sales had flagged most significantly.
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The sporting-goods retailer ended sales of the firearms following a mass shooting at a Florida high school that killed 17 people. The company also ended sales of firearms to anyone under the age of 21 and will no longer sell high-capacity magazines. Stack has also hired a lobbying firm to push congress on gun reform, a topic that is back in the national conversation following last weekend’s shooting in Jacksonville, Florida, which left three dead, including the shooter.
Flagging sales of Under Armour clothes at Dick’s stores have been an issue for the retailer in the past several quarters. Stack said that Dick’s is working with the Baltimore-based company to turn things around, and expected the problems to dissipate by the first quarter of next year.
Flagging Under Armour sales, due to changes in the Baltimore-based apparel company’s strategy, have been an issue for Dicks in the past several quarters. Stack said that Dick’s is working with Under Armour to turn things around, and expected the problems to dissipate by the first quarter of next year.
E-commerce sales, a critical part of the company’s future, and private brands both posted double-digit growth. Stack said private-brand sales are approaching the company’s target of $2 billion in sales.
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