Dick's Sporting Goods: Gun policy change, Under Armour to blame for weak results
Dick’s Sporting Goods said a recent change to its gun sales policy and lower demand for Under Armour products contributed to weak results in the company’s second fiscal quarter.
The embattled sports retailer reported a same-store sales decline of 4 percent compared to the same period one year earlier, or about 1.9 percent when not accounting for the 53rd week in the year. For the full year, Dick’s expects same-store sales to fall by 3 percent to 4 percent, compared to a 0.3 percent decline last year.
"We delivered double digit growth in ecommerce, private brands, and athletic apparel excluding Under Armour, however, as expected, sales were impacted by the strategic decisions we made regarding the slow growth, low margin [hunting] and electronics businesses, which accounted for nearly half of our comp decline,” Dick’s Sporting Goods CEO Edward Stack said in a press release.
Dick’s executives had previously warned that the company’s hunting business would suffer as a result of a decision to stop selling assault rifles at stores. The company discontinued sales of rifles and enacted a 21-and-over age limit on all firearm sales after a deadly shooting at a Florida high school left 17 dead last February.
Shares were trading higher at $35.89 on Thursday. The company reported earnings per share of $1.20 on quarterly revenue of $2.18 billion.
Company officials said Under Armour’s decision to enter a sales partnership with Kohl’s caused a 3 percent sales decline at its own stores. Stack said the company expects Under Armour to be “much less of a drag” on its business in fiscal 2019.
The Dick’s CEO added that the brand will look to expand offerings in its baseball category and among its private brands to offset losses in the hunting business.
“We are very confident our sales trajectory will improve next year as these headwinds are expected to subside,” Stack said.