Dick’s Sporting Goods to phase out hunting departments in some stores

3/12/2019
Dick’s Sporting Goods is feeling the sales fallout from its decision not to sell some guns, but it’s not backing down.

In February 2018, following the mass shootings in Parkland, Fla., Dick’s ended the sale of assault-style rifles and high-capacity magazines and of all guns and ammunition to anyone under 21 years old. In previous remarks, he has said the decision impacted overall sales last year.

On Tuesday, Dick’s reported that sales fell to $2.49 billion in the fourth quarter, ended Feb. 2, from $2.66 billion the year ago which had an extra week, beating estimates of $2.48 billion. Net sales for the full year decreased 1.8% from last year's 53 week period to approximately $8.44 billion.

Same-store sales for the fourth quarter fell 2.2% on a 13-week to 13-week basis. But were down 3.7% on an unshifted calendar basis.

On Dick’s quarterly call with investors, executives said the company will remove guns, ammunition and hunting apparel from about 120 of its stores in locations where the category is underperforming. The retailer will fill the resulting open floor space with activewear, athletic footwear and sports gear. The move comes after a test in 10 stores late last year.

“We will continue to optimize our assortment, reallocate for space to regionally relevant growing categories and make stores more experiential,” said Dick’s CEO Ed Stack on the call.

Dick’s net income totaled $102.6 million, or $1.07 a share, in the quarter, down from $116.0 million, or $1.11 a share, in the year-ago period which had one extra week. Adjusted per-share earnings came to $1.22, ahead of Street estimates of $1.06.

Adjusted online sales for the fourth increased approximately 17%. E-commerce accounted for approximately 23% of total net sales, compared to approximately 19% during the fourth quarter of 2017.

"Our core business performed quite well, as our athletes have responded positively to many of our initiatives, resulting in comp sales gains across key categories and double digit percentage increases in e-commerce and private brand sales," Ed Stack said in a statement. "For 2018, we delivered earnings near the high end of our expectations, which represents an 8% increase over last year.”

As of February 2, 2019, the company operated 729 Dick’s Sporting Goods stores in 47 states, 94 Golf Galaxy stores in 32 states, and 35 Field & Stream stores in 16 states.

Analyst Neil Saunders, managing director of GlobalData Retail, commented that his data show that a lot of hunters and gun enthusiasts have migrated to retailers like Bass Pro and to smaller specialists in the wake of Dick’s firearms decision, which has had an adverse impact on sales. But the company is challenged on other fronts as well.

“From our data, Dick’s attains low scores for store ambience and store inspiration, where it is way below rivals like Nike, REI, Lululemon and Bass Pro,” Saunders said. “In our view, little attempt has been made to create an aspirational and engaging shopping experience —something that is vital if customers are to be enticed into stores.” For more analysis, click here.
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