Dick's Is Tumbling, and Its Woes Have Nothing to Do With Guns

Dick's Sporting Goods Inc. has vowed to limits 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 four 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.

Dick's move last month at its three-dozen Field & Stream stores -- extending a ban on assault-style rifles already in place at its namesake locations -- came after 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.

Shares of Dick's fell as much as 7.3 percent to $30.19 in New York, the biggest intraday decline since mid-November. They had climbed 13 percent this year through Monday's close.

Fourth Quarter

Excluding some items, profit amounted to $1.22 a share in the fourth quarter that ended Feb. 3, the company said in a statement. Analysts had estimated $1.24 on average. Sales of $2.66 billion also fell short of projections for $2.74 billion.

Same-store sales, a key metric, 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.

Looking forward, Chief Executive Officer Edward Stack said "stronger product innovation from select key partners and the continued expansion of our private brands" will result in less pressure on profit margins this year.

The company plans to open 19 Dick's stores this year, with eight of those coming in the current quarter.

Profit this year will be $2.80 to $3 a share, the company said. Same-store sales will range from flat to a low-single-digit decline.

Updates trading in second and sixth paragraphs.

Read Dick's Is Tumbling, and Its Woes Have Nothing to Do With Guns on bloomberg.com


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