While announcing a dip in sales for the fourth quarter of 2018, Dick’s Sporting Goods yesterday revealed it will remove all rifles and hunting supplies from 125 more of its 729 stores in the U.S. -- where they don’t sell so well anyway. The retailer will utilize the freed-up space for features such as batting cages and “more in-demand merchandise.”
“CEO Edward Stack said the move comes after the sporting goods retailer replaced hunting merchandise in 10 of its stores in last year’s third quarter. Those stores posted strong sales and profit margin numbers in the fourth quarter, he said,” the Associated Press reports.
The hunting gear will be replaced with “merchandise categories that can drive growth, each based on the needs of that particular market,” Stack said in a conference call with analysts that has been transcribed by Seeking Alpha. It will continue selling hunting equipment in stores where demand is strong.
“The company reported a 3.7% fall in comparable sales in the fourth-quarter ended Feb. 2, hit by weakness in its hunting and electronics categories,” Uday Sampath writes for Reuters. “Sales … have been pressured in the last year after it tightened its gun sales policy, banning sales of assault-style rifles and high-capacity magazines to people under 21 after a high school shooting in Parkland, Florida in February 2018.”
“The decision drew anger from many who felt the it contradicted the Second Amendment. The National Rifle Association criticized Stack’s ‘strange business model,’ and the National Shooting Sports Foundation expelled Dick’s from its membership. Dick’s was once a major vendor of firearms in the U.S., and though the industry was struggling before the decision, Stack has made it clear that the blowback hurt sales,” Eben Novy-Williams writes for Bloomberg.
Stack “appeared at conferences with Laurence D. Fink, the chief executive of BlackRock; Mark Bertolini, a former chief executive of Aetna; and other executives with strong opinions on gun control. In the process, Mr. Stack became a model for business leaders wading into contentious social issues. But his outspoken approach may have put pressure on his company, which sells much more than guns,” Tiffany Hsu observes for the New York Times.
“Stack, whose father started Dick’s in 1948, said in a recent interview that the company had ‘been in the gun business basically since inception.’ Gun demand broadly, he said, is ‘under pressure’ and is ‘going to continue to be under pressure,’” Hsu writes, adding that year-over firearm sales were down 12.4% in February to 1.1 million units, according to Small Arms Analytics & Forecasting estimates.
“Since Stack controls more than half of Dick’s voting stock, it’s important to note that he is, or at least has been, a Republican,” Craig Fehrman points out in an analysis for Outside last December titled “What Happened When Dick’s Stared Down the Gun Lobby.”
When Stack decided to remove AR-15 assault-style rifles from its Field and Stream subsidiaries last year, it “launched a splashy media campaign, granting interviews to the New York Times and ‘NBC Nightly News,’” Fehrman reports.
“After he wrapped ‘Good Morning America,’ Stack hustled to the studios of CNN’s ‘New Day.’ ‘Everybody talks about thoughts and prayers, and that’s great,’ he said during his appearance. ‘But that doesn’t really do anything.’ Throughout the morning, Stack stressed that Democrats and Republicans needed to work together. ‘We hope that it spurs a conversation,’ Stack said.”
“For the fiscal year ended Feb. 2, same-store sales fell 3.1%. The company said it expects comparable sales to be flat to up to 2% this fiscal year. Dick’s predicted same-store sales will return to growth in the second quarter, but also set annual earnings targets that were below Wall Street’s forecasts,” Sarah Nassauer writes for the Wall Street Journal.
“Dick’s stock fell 9% to $35.24 in morning trading as the broader market was slightly higher. The stock had rallied about 25% since the start of the year,” she adds.
“This year, the company plans to focus on its private-label brands, like Calia [by Carrie Underwood] which will be expanded in about 80 stores. Dick’s also plans to launch a new athletic apparel brand to replace Reebok,” Stephanie Ritenbaugh writes for the Pittsburgh Post-Gazette
“We will continue to invest in our product development team to help us reach our $2 billion sales goal in private brands,” Stack said on the earnings call.