Dick's Stock Tumbles To Conservatives' Delight

Two weeks after Dick's Sporting Goods infuriated Second Amendment supporters when the sporting goods retailer announced it would end sales of assault rifles, its stock is plunging and conservatives will hardly shed a tear.

In early trading, shares of Dick’s tumbled as much as 7.3% to just above $30.19, its biggest intraday decline since mid-November, slashing in half the 13% gain YTD.

What is odd is that the drop in DKS stock has nothing to do with the halt in assault rifle sales, and everything to do with the general lackluster state of the US consumer, and specifically its second consecutive - and bigger than expected - sales decline.

Adjusted EPS were $1.22 in Q4, missing estimates of $1.24, but it was the big miss (and drop) in sales which hit $2.66 billion - well short of the $2.74 billion consensus - that have sent the stock into a tailspin. Meanwhile, the closely watched same-store sales fell 2%, more than the expected drop of 1.2%.  This was the second consecutive quarterly decline, prompting many shareholders to bail on the stock.

While the sales impact of Dick's decision to limit gun sales has yet to be felt - some conservative groups have already vowed to boycott the retalier in response - what is surprising is how quickly its business has foundered: as Bloomberg notes, "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, of course, the ubiquitous Amazon which is promoting its own private-label athletic gear.

Hoping to project confidence, CEO 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 also plans to open 19 Dick’s stores this year, with eight of those coming in the current quarter.

However, even with the expansion, profit this year will be $2.80 to $3 a share, as same-store sales will range from flat to a low-single-digit decline.

But the biggest question, of course, is how much will DKS' sales suffer as a result of its hard-line stance on guns, which will certainly have an impact on demand after alienating a substantial portion of its customers. The effect on its business from this decision remains to be seen, so tune in in 3 months when the company announced earnings for the quarter ended April.


overbet HockeyFool Tue, 03/13/2018 - 12:09 Permalink

I shorted DKS after the AR comment partially because there is no upside to pissing off some customers and also as a hedge for my LOW long post earnings drop. I bought LOW figuring the hedge funds would be adding to positions. The recent 13-f filings show several hedge funds established new positions in LOW so after the earnings drop they have to add and average so figured there would be some support there. Maybe DKS can turn it around by selling tampons and soy caramel lattes. 

In reply to by HockeyFool

greenskeeper carl cheka Tue, 03/13/2018 - 13:27 Permalink

Ya that place sucks. Their entire business model seems to be selling the exact same thing you can get from academy sports right down the street, but for more money. Haven't bought anything in there for years. I went in one about a week before Christmas looking for a specific item, which they didn't have, and it was dead in there. Adjacent down the road was packed. 

In reply to by cheka

STP greenskeeper carl Tue, 03/13/2018 - 18:24 Permalink

I went in there, late last year, looking for US Geographical Topo Maps.  They had none, didn't carry them.  Had every stupid camping accessory you could think of, but no maps.  That ain't no sporting goods store, that's just a Gap for people who drive Subaru Outback's and pretend they're rugged outdoorsmen, while sporting their North Face outfits and Oakley sunglasses.

In reply to by greenskeeper carl

FireBrander IH8OBAMA Tue, 03/13/2018 - 11:17 Permalink

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

Reebok is also doing this as I've bought multiple pairs directly from the Reebok site...a few days ago, they emailed me a "2 for $30" deal on the Reebok website...buy them at a store, at Dicks?...lol...no way.

In reply to by IH8OBAMA

FireBrander bigkahuna Tue, 03/13/2018 - 11:33 Permalink

Dicks emailed me a 50% off a single item, $10 max discount, coupon..I'd never been there, the coupon brought me in...wanted to spend $20 and get the item for $10....wholly shit!...that place is expensive...the only thing for $20 is a single fucking pair of Nike socs...I tore the coupon up and walked out...Scheels is just down the street...sells everything imaginable at a better price...Can't believe Dicks is still open.

In reply to by bigkahuna

FireBrander FireBrander Tue, 03/13/2018 - 11:26 Permalink

If Dicks wanted to stop selling AR's, then they should have just QUIETLY stopped selling...making a publicity event out of it is beyond stupid...if they really believe the "answer" to "gun violence" is banning guns, then they should have stopped selling EVERYTHING related to guns!

This is as dumb as Target and their toilet policy...good golly, what a public relations disaster that was...Locally, a large regional chain correctly handled the toilet issue...WITHOUT FANFARE, they removed single, large Men/Women toilet rooms and installed multiple, one person at a time (6'x7'), men's and women's private toilet rooms along with 1 large "family" toilet. PERFECT!

In reply to by FireBrander

FireBrander FireBrander Tue, 03/13/2018 - 11:42 Permalink

If Dicks believes in leftist Social issues, then:

Dicks should stop selling all guns - it's cruel to animals and the police will protect us...

Dicks should stop selling all fishing gear - it's cruel to animals and corporate America will feed us...

Dicks should stop selling baseball, football, soccer, and all sports gear - those playing fields and stadiums are destructive to the environment and displace native species.

Dicks should stop selling EVERYTHING - because EVERYTHING they sell is harmful to people, animals and the environment in one way or another! And I think it goes without question, that EVERYTHING Dicks sells, and even it's physical infrastructure, is contributing to Global Climate Change that is going to destroy the Earth! So, if Dicks REALLY wants to be "Socially and Globally Responsible"...they should just shut the doors.

In reply to by FireBrander

FireBrander BabaLooey Tue, 03/13/2018 - 11:51 Permalink

"To have a president in place now with Lauren and her digital experience and marketing experience, I think is going to be very beneficial to the business," said Dicks Chief Executive Ed Stack

LOL! Oops!

Holy Shit! She's a "Marketing" executive! What school taught her that marketing "success" comes from picking sides in a highly divisive, emotionally charged, political/social issue!

That is marketing suicide!

What's next for Lauren? Picking sides in the abortion debate? Priceless...I think it's time to hand her the golden parachute before she sinks the ship.

In reply to by BabaLooey

Bemused Observer FireBrander Tue, 03/13/2018 - 13:21 Permalink

Maybe the question to ask is why did Dick's, a sporting goods store, hire the ex-CEO of a FAST FOOD COMPANY!?

What do these two businesses even have in common?

How can someone who runs a fast food outlet segue into sporting goods? By opening a drive-through fishing lures window?


Hey Business Owners! Try hiring your next CEO from among a pool of people that ACTUALLY KNOW YOUR BUSINESS AND HOW TO RUN IT! Jackasses...


In reply to by FireBrander

Kefeer IH8OBAMA Tue, 03/13/2018 - 11:43 Permalink

Field and Stream is owned and operated by Dick's as well.  Unfortunately, unless one is totally self sufficient and free of any government hands and has some territory to work within, then we are enslaved to one degree or another.  Freedom is and always has been an illusion - just by definition.

In reply to by IH8OBAMA

Endgame Napoleon JimmyJones Tue, 03/13/2018 - 11:17 Permalink

Maybe, this will give the Main Street sporting goods shops a comeback, the ones I remember from childhood, selling engraved trophies for the kids’ sports teams and hand-made custom silkscreen t-shirts with the local mascots. By the time I hit my teenage years, those were already on the way out, wiped out by the big boxes. By the time I owned a Main Street shop in my early 30s, they were relics from the past or hobbies, with most owners just supplementing retirement or spousal income. The independent merchant life was no longer providing individuals with a means to make a living, no more than working for the big-box competition does unless you are a manager or a momma, working in a big box part time to stay below the earned-income limits for monthly welfare that covers your rent and groceries and refundable child tax credits up to $6,444.

In reply to by JimmyJones

migra JimmyJones Tue, 03/13/2018 - 12:00 Permalink

Just another example of an organization that does not know its place in the world. Gun buyers were a big part of there customer based and gun accessories are high margin items. Gun buyers who were not shopping for guns would go there to buy their kids some over priced baseball glove just so they could go by the gun section of the store to see what they have. But now those gun buyers are pissed off. Dicks has always been overpriced on their goods so on top of that, why shop somewhere that doesn't value you and your needs as a customer? That gun buyer with kids who needs all the accessories that go with his baseball season shops place else now for those high margin items. And Wall Street knows it. Fuck you, Dick.

In reply to by JimmyJones

Shift For Brains migra Tue, 03/13/2018 - 13:12 Permalink

All these companies have to do is "obey the law." They avoid all controversy because they operate "within the law." If AR-15s are legal to sell to an adult that has passed a background check, you sell them one.

These morons wanted to "take the moral high ground." Only later will the employees they have to let go understand the top ranks still will get out with the big loot as the rest of them are buried alive.

It won't take long for remaining share holders to get a real burning sensation from their Dick's.


In reply to by migra