Dick’s Sporting Goods’ (DKS) recent move to stop selling assault-style weapons from some of its stores won the athletic gear retailer kudos from a big chunk of the public, but it certainly also added to the pressure on its sales, executives say.
Two weeks ago, in the wake of the massacre at a high school in Parkland, Florida that killed 17 people, Dick’s announced it would no longer sell assault-style rifles like the AR-15 at its 35-store Field & Stream chain, and raise the minimum age to buy firearms to 21 at all its stores, including its namesake chain. While many saw it as a principled move, Dick’s was simply reducing its exposure to a category that has been declining for a long time anyway.
At the same time, even though rifle sales have been sagging at Dick’s for a while, hunting gear does bring in shoppers, who might then buy, say running shoes or swim goggles while at the store. And though the change is quite recent, Dick’s executives told analysts on a conference call that they are starting to feel some effects.
“Some of those customers that buy firearms, buy other things also,” Dick’s Chief Executive Edward Stack told analysts on a conference call. “There are just going to be some people who just don’t shop us anymore for anything,” CEO Ed Stack told Wall Street analysts. He also said: “It’s only been two weeks, and we’ve seen a bit of a difference in the hunt business” even as he cautioned it was too early to tell.
The retailer reported weak quarterly sales for the key holiday period, and gave a lackluster forecast for 2018 on Tuesday. Even before it can full assess the impact of the assault rifle ban, Under Armour pointed the finger for some of its problems at a long, important ally: Under Armour.
On the call, Dick’s executives faulted Under Armour’s “expanded distribution” and how promotional the sports gear sector has become. About a year ago, Under Armour began selling its wares at Kohl’s (KSS), an 1,160-store chain, in a move to win more women customers. While praising Nike and Adidas for their innovation, Dick’s executives were muted about Under Armour’s new products, though Stack did allow that “I think Under Armour is going to come back.”
At the same time, it’s easy to see why Under Armour is looking to diversify its partners- it is facing pressure from Dick’s move to launch its own brands, which executives said could reach $2 billion in sales fairly quickly, or a big percentage of sales. (Last fiscal year, total sales hit $8.5 billion.) All the while, Nike is selling more and more gear on Amazon.com, adding to the pressure on Dick’s, which on top of everything, was hit by the bankruptcies of some rivals last year. That was also a factor in vendors wanting to broaden their distribution away from specialty chains like Dick’s.
