Dick's CEO: "The Retail Industry Is In Panic Mode"

With Dick's stock crashing after reporting dreadful results this morning, in which both comp sales and EPS missed as the company slashed its full year guidance below even the lowest sellside forecast (it now sees full year EPS of $2.80 to $3.00, below the previous guidance of $3.65 to $3.75 and the Wall Street estimate of $3.62 ), the management team had no reason to hold back on today's earnings call, and luckily - unlike many other retailers who still hold out hope that the worst is behind them - it did not, for an unvarnished look into the retail space.

Confirming just how little pricing power retailers have, CEO Ed Stack said "we have conducted extensive consumer research, and the customers have told us they feel our prices are not competitive in today's environment" in which everyone is slashing price to capture market share, and as a result the company is "intentionally joining this battle, and we will aggressively be promoting our business to drive market share to our stores and online."

Stack said he observed heavier promotions and price cuts particularly on athletic apparel, electronics, and hunting, fishing and camping gear which started as early as Father's Day. "We started to see this happening a little bit before Father's Day, and it continued to be very promotional, not only from retailers but also from some of the brands on a direct-to-consumer basis."

Having no other choice, Dicks has joined the battle of the "deep discounters", and has also launched a "best price guarantee" in which it promises customers that if they find a lower price on a product, Dick's will match it. Of course, by doing so, the retailer assures that both Dick's and its peers margins and net income shrink even more in the coming quarters.

Another major concern on the call - and to management - was the recent partnership between Amazon and Nike. Asked "how can you ensure that your positioning is still differentiated from that of the Amazon offering" the CEO responded: "We'll see how this goes. They've been transparent talking to us about this test, and I suspect it will probably go well, and then Nike will decide what they want to do about it and how they want to handle the balance of the market. Our relationship with Nike has been - has always been very good. It continues to be very good. We continue to work with them on shops, on our footwear decks and exclusive products. They are a strategic vendor of ours and we've got great relationship and what we're going to test and what they'll do ultimately we'll deal with that when it happens."

Speaking to CNBC, SW Retail Advisors' Stacey Widlitz said that "Dick's is another example of Amazon becoming the new middleman... Here we go down the gross margin rabbit hole just in time for the holidays."

Of course, if Nike ultimately decides to go exclusively with Amazon at least Dick's terminal suffering will be greatly shortened. Meanwhile, as the call went on, there was the following striking admission by the CEO:

"There's a lot of people right now, I think, in retail and in this industry in panic mode. There's been a difficult environment. I think people, I'm not going to speculate what they're thinking, but they seem to be in panic mode with how they're pricing product, and we think it's going to continue to be promotional and at times, irrational going forward."

* * *

Just in case the message was not clear the first time, there was more panic: "People need to get rid of the inventory, and then some people are panicked as to what's going to happen with their business from a growth standpoint."

* * *

And then, to top it off,  just a little more: "What's going on in the marketplace right now is that it's just very promotional, almost panicked in some cases, I think, especially in the hunt, fish categories. There's a lot of inventory in the pipeline, and people need to move it out, and it's going to continue to be promotional until this inventory gets moved out of the pipeline"

* * *

Finally, one can't possibly use the word "panic" 4 times in a conference call without also adding the occasional "perfect storm", and sure enough:

"So I think it's just a perfect storm right now in retail, and I think sporting goods is in the center of it right now. There'll be further consolidation. We're seeing Gander Mountain closing right now. We'll see what happens with some other retailers, but it's a perfect storm right now. We're not particularly happy that we're in it."

Meanwhile, as the legacy retail sector implodes and as US households drown under a record amount of debt (the two may be connected), the Fed is confused why credit card defaults as mysteriously surging at a time when the US economy is supposed to be recovering...

Comments

pods Bill of Rights Tue, 08/15/2017 - 13:47 Permalink

Ever since Richard's moved away from sporting goods and into clothing things went to hell.Their first store kicked ass.  Started right where I grew up. We used to take deer there for their big buck contests, and you could walk right in the place with a shotgun or bow and nobody would care.Nowadays the good section (hunting and fishing) is a tiny section way in the back of the store.Of course, you cant make the margins selling fishing lures like you can sellin overpriced workout clothes but man I missed that kind of a store.  Walk in with blood on your camo and nobody gave you a second glance.pods

In reply to by Bill of Rights

pods NugginFuts Tue, 08/15/2017 - 13:55 Permalink

Nah, we have one right by the house but I dont shop there anymore. Cabela's, Bass pro, or online (or tackle shops at the beach) for me.  I dont need overpriced workout clothes. For a while it sucked cause where I lived they were the only game in town. But when I moved there was much more options.pods

In reply to by NugginFuts

hedgeless_horseman SethPoor Tue, 08/15/2017 - 15:13 Permalink

 

Another major concern on the call - and to management - was the recent partnership between Amazon and Nike. 

Fuck Amazon and Nike!TEOTWAWKI preps are on sale this weekend at The Salvation Army and the side of the road!!!!

Preparing for Zombie Apocalypse for less than $1,200 in just one weekend

Hurry now to your local restaurant dumpsters before all the good 5 gallon buckets are gone!

In reply to by SethPoor

philipat Creepy_Azz_Crackaah (not verified) Tue, 08/15/2017 - 18:29 Permalink

But, but, but....Gov just announced record Retail Sales numbers? Together with yesterday's story about the declining fortunes of the Restaurant Industry (Despite .Gov reporting millions of new "Waiters and Bartenders" jobs, this again suggests that .Gov is either willfully or stupidly completely out of touch with reality. The earlier piece about "sleepwalking into a recession" as a result of clueless "econometric models" (also either willfully or stupidly constructed) is very appropriate.

In reply to by Creepy_Azz_Crackaah (not verified)

Give Me Some Truth BullyBearish Tue, 08/15/2017 - 15:15 Permalink

So We have the above ZH headline re: Dick's and "retail panic"And then we have the "official" headline run by all the wire services, including Reuters and Bloomberg's (as seen on goldseek.com)Gold plunges "on strong retail data"...and, to be fair, reduced tensions in N. Korea.Whatever works to give a needed whack to fiat's nemesis. Same as it ever was.Anyone who thinks that "retail data" is really strong ... works for the Deep State or is committed to advancing the mission of the Deep State.

In reply to by BullyBearish

ejmoosa pods Tue, 08/15/2017 - 14:03 Permalink

Too much similar supply and nothing to stoke demand.  All the stores feel the same and carry similar if not the same things. The retail sector needs some serious innovation to move forward.  But they either do not have the talent or the insight to do so.  Online is where most of us do the shpping because you can see instantly if they have your size or not.  You do not have to sort through racks and racks of stuff hoping to find what you want.  And nothing worse than driving 30 minutes to a store that does not have what you seek in your size anyway. We have a Dick's here in North Atlanta surrounded by 10s of thousands of tennis players.  They have the worst tennis department around.  The store is their "standard" format".  They should be catering to their communty's unique demands.Home Depot used to let their store managers carry product specifically for their local community needs. But then Nardelli took over and that was that. 

In reply to by pods

mkkby ejmoosa Tue, 08/15/2017 - 15:54 Permalink

Really overpriced store... I'm surprised ANYBODY shops there.Is this the same DICKS that had a 4-story store in Denver a few decades ago?  That store rocked.  It had tons of ski equipment.  Everything in one place.  Now the stores are everywhere and it's all a narrow selection of overpriced junk.You deserve to go out of business.

In reply to by ejmoosa

Give Me Some Truth ejmoosa Wed, 08/16/2017 - 08:08 Permalink

As mentioned elsewhere, my theory - and I'm sticking to it - is that retail is crashing because consumers simply have less disposable income to buy stuff than they used to.Amazon benefits from this. Although their prices might not be lower, they do deliver straight to your door. This saves shoppers a good bit on the cost of gasoline. It also saves them a great deal of time, and, yes, time can be viewed as "money." The time shoppers save can and is used for other things or tasks, like taking care of the family, making meals (instead of eating out), maybe even working on a project that will produce extra income.Eliminating "shopping time" also makes it more possible or convenient for the buyer to work at his or her job, and thus keep earning an income. It eliminates "hassle" which improves one's mental health. It eliminates the possibility of a fender bender, speeding ticket, running a red light ticket, etc.I do think consumers are factoring all of the above in with their decision to shop on-line (and save time and money) by staying safely at home.

In reply to by ejmoosa

Oldwood jcaz Tue, 08/15/2017 - 14:48 Permalink

Retail is being forced to compete against online the same as American workers were forced to compete against illegals and Chinese. Are we WINNING yet? As long as we go for the cheapest we will eventually figure out that it does not include us. Retail is jobs. I would be surprised if online provides one job for every four they kill, but who cares as long as I have a job, right.....or at least a EBT card? We can't see beyond our noses.

In reply to by jcaz

The Cooler King (not verified) pods Tue, 08/15/2017 - 14:26 Permalink

@pods But just THINK about it! :-) OK ~ Here I'm going to solve the RETAIL CRISIS the same way I solved the VENEZUELA & GREEK crisis(es) the other day. In the other two, I said... JUST BUY BITCOIN! The pretext was that, since bitcoin seems predestined to go to a jabliblioon dollars. If you were the Venezuelan DICKTASTER, WHAT COULD POSSIBLY GO WRONG for you to: - open up 1 bitcoin wallet for each citizen of your country- buy one bitcoin each for every wallet (especially today, because they're on sale)- to FUND that maneuver, just sell some crude oil (FFS, just sell it to Israel, they like stealing black market oil). BITCOIN goes to $50k, MCafee saves his DICK, everyone goes home happy! NOW ~ speaking of DICK'S... - The retailer just starts accepting payments in BITCOIN...- The Under Armour CEO, Plank, creates a new line of pink pussy hats to be worn at nationwide protests- DICK'S sells them and accepts bitcoin as legal tender for the purchases- All the little pink pussy hat wearing bitcoin entrepeneurs start buying them with their 'profits'- After a little while, the bitcoin price spikes to $50,000.- DICKS's is rich based on the new value of their holdings Unicorn farts for EVERYONE!!! Tell me how this is, not only NOT POSSIBLE, but actually PROBABLE (if DO CHEN's 'fundamental' argument earlier is correct). ...

In reply to by pods

The Cooler King (not verified) The Cooler King (not verified) Tue, 08/15/2017 - 16:35 Permalink

pods, my man at least give me a SHOUT OUT here                          ... The bitcoiners are killing me with the downvotes (like they do al ALL threads). alas ~ the funny thing is, that, NOTWITHSTANDING THEIR DOWNVOTES... If EXACTLY what I proposed <above> were to occur: 1. Venezuela & Greece governments initiating 1 bitcoin wallet each to each citizen & funding each with a socialistic 1 bitcoin balance paid for by the way of crude oil sales, (which, frankly, IS POSSIBLE).2. DICK'S accepting payments in bitcoin3. Plank (from Under Armour), manufacturing pink pussy hats4. Pink pussy hat wearing bitcoin holders, NATIONWIDE, start buying them at DICK'S, with bitcoins5. The bitcoin holdings of DICKS, rockets to the McAfee dick eating Mendoza line EVERYONE, (including the 'downvoters', who, presumably, think I'm a DICK for THEORIZING the scenario), goes home happy... That's what kind of fucked up world we live in! I <3 ZH ~ FOR THE COMEDY! BTW~ "We used to take deer there for their big buck contests, and you could walk right in the place with a shotgun or bow and nobody would care." GANDER MTN is about all that's left & that's dwindling. The day that they tell me I can buy my next Glock or Browning with bitcoin, I'm outta there!

In reply to by The Cooler King (not verified)

EnragedUSMCExpat NugginFuts Tue, 08/15/2017 - 14:00 Permalink

This is where former military armorers will become the next most sought after talent after drone shoot-down techies. What would you pay for a hand-made work of art, one of a kind made to order gun that is unregistered and untracable?This is the future, along with blasting "antifa" cowards and snowflakes into mulch. Great fertilizer for that newly planted garden.

In reply to by NugginFuts

War and Fleece NugginFuts Tue, 08/15/2017 - 14:01 Permalink

Cosigned. The firearms carried at the local operation are terribly overpriced and a rather boring selection at best.There retailers forget that businesses were previously run by the common folks, and we always have the ability to undercut the nonsense. Whoever in these board meetings is advocating that competitive prices is a phase should re-explore the nature of capitalism.Sports authority died. Dicks; give em a few years and they'll shut their stores too.True story. Went in recently for some fishing lures and ended up taking them back. There were five cash registers and 1 young guy running one. The line was at least four customers deep. No walkie talkie communication to request help at the check out. Finally some stoner kid (I smoke plenty so no hate, but damn this guy was a dolt) appears, asks me what I need, rings up 4/5 fishing lures and tells me I'll get a refund of x$s, before I have to point out he missed a lure. He didn't really seem to understand at first but I was lucky enough that he decided to cancel the transaction and start over. He didn't know how to scan the 5th lure at that point.This is why these stores fail. They can't even take your money without being fucktarded.

In reply to by NugginFuts

Antifaschistische NugginFuts Tue, 08/15/2017 - 14:02 Permalink

all these retailers have an opportunity.   An opportunity join forces and put pressure on the etailer.It makes sense for me to buy online.  I am very busy.  it doesn't not makes sense for a pair of shoes I buy to come from Portland to Houston when that exact same pair of shoes is on the shelf 200 places in Texas.   It shouldn't take me a week to get my shoes...I should have them tomorrow because they're coming from a place 3 miles from my house....oh, and if you're asking why don't you just drive there?  the problem is that the brick/mortar places often don't have my preference for style/size?  so even if they sell brand X, they may not have the color I'm looking for...and if they have the color, they may not have the size...this is why online buying is best.   So, I don't know which store has it, and I do have the time to go to one store....I don't have the time to go to 6, or have the REI near me tell me they'll HOLD my shoes at the REI 15 miles away.  Then I spend all day hunting for shoes.   The retailers could collectively resolve this.  if I order brand X model Y size Z.  whoever is closest ships it to me.  It can't be that difficult!

In reply to by NugginFuts

buzzardsluck Antifaschistische Tue, 08/15/2017 - 16:35 Permalink

Buying online is easier no doubt.  However expecting local stores (or internet stores) to carry every fucking version of size 12 4E shoes is simply ridiculous (and who the fuck cares about color once over the age of 10 or so as long as it isn't pink or some other faggy color). So in a word  yes stocking every fashion of everything to the tune of 100s of thousands of dollars of inventory is difficult.  Gotta love the modern American.......

In reply to by Antifaschistische

rpboxster NugginFuts Tue, 08/15/2017 - 15:03 Permalink

Dicks opened a Field & Stream store 2 years ago near me.  Very good sales on guns, ammo and fishing stuff.  Way better than Gander Mtn or Bass Pro Shops.  It closed...in less than 2 years.  This was a huge store with all the taxidermied animals and everything, just like Bass Pro Shop.  Now the Gander by me closed, too.  I think it's just saturation.  5 years ago none of these businesses were here.  Then Cabelas, BPS, F&S and Gander moved in, while the several Dicks still sold the same hunting/fishing stuff.  No way to support that much hunting/fishing retail.

In reply to by NugginFuts

Nobody For President pods Tue, 08/15/2017 - 17:10 Permalink

Seems like PODS, sooner or later, everything gets pussified.Armor All was created by Joe Patcher, called it Tri-Don (No Dirt spelled backards), got sold to a marketing guy who changed the name to Armor All with the (still) best plastic,vinyl, rubber rejuvinator for (example) vehicle dashboards. It was and remains the best stuff to get your rig really spiffy - it even spiffed up my uncleaned for many years '86 pickup when it became my main rig.The motto of the stuff was something like "Get the crap out of your world".  Which it did.Then the marketing guy sold it off to McKesson, who broadened the line to car wash, tire cleaner, etc. - milking the Armor All name for all it was worth. Then Clorox bought it and added some more shit before selling it Avista Capital Partners, which put all the car cleaning stuff under ArmoredAuto Group. (That's right - no space between Armored and Auto - catchy what? NO.) Then THAT mess got bought up by Spectrum Brands Global Auto Care Division - you can't make this shit up, and dear old Armor All is now called Armor All Original Protectant, and seems to be the same stuff it was when I started using it in 1970, thank god.But there is no more slogan like "Get the crap out of your world". There is no more slogan at all.Good old Axe shower soap (excuse me, body wash...) went through the same shit. Started well, (Basically, get clean and go get laid) - got corporated and they changed the shape of the container, which was the best part of it - never dropped that thing in a shower, no matter how soapy the hands - but they made it a bit wider and less corragated grips - harder to hold than before, but still better than anything else, and they toned down (lots) the innuendo and slogans - afraid they might offend somebody. Hopefully they still do - sure not hard these days. They also expanded into all kinds of other shit - deoderants and hair wash (I think) and shit like that. But the basic soap is still good, and they haven't completely pussified the stuff - just mostly.But I'm just a grumpy old man still trying to set a  bad example.  

In reply to by pods