Dick's move on guns may backfire
Dick's Sporting Goods expects the company's decision to pull assault rifles from stores will negatively impact sales in the first quarter.
During its fourth quarter fiscal sales report Tuesday, Dick's said it expects same-store sales to decline as much as a low-single digit percentage in 2018.
"The announcement we made two weeks ago is not going to be positive from a traffic and sales standpoint," CEO Edward Stack said during an earnings call Tuesday.
Dick's was the first major retailer to change it gun policy after the school shooting in Parkland, Fla. last month. Retailers such as Walmart, Kroger and others followed suit.
For the fourth quarter ended Feb. 3, Dicks's net income totaled $116 million, or $1.11 a share, compared with $90.2 million, or 81 cents per share, a year ago. Revenue was $2.66 billion.
Same-store sales were down 2% overall for the holiday quarter. Same-store sales grew 5% during the period a year earlier.
"As expected, margins remained under pressure, however the decline was less than we anticipated," said Stack. "During 2017, we made significant progress on key priorities as we grew both our online and private brand businesses to over one billion dollars in sales. In 2018, we expect stronger product innovation from select key partners and the continued expansion of our private brands to result in less margin pressure than previously expected. We see meaningful opportunity to drive improvements across our business and will make significant investments that will continue to position DICK'S Sporting Goods as the leader in our industry."
E-commerce sales for the fourth quarter increased approximately 9% on a 13-week to 13-week comparative basis, as the company successfully completed its first holiday season on its new web platform. E-commerce penetration for the fourth quarter was 19% of total net sales, compared to 17.9% during the fourth quarter of 2016.
"Looking ahead, we see considerable opportunity to deliver a stronger performance as we make improvements to our business," added Lauren R. Hobart, President of DICK'S Sporting Goods. "Across the organization, we are focused on executional excellence and enhancing our omni-channel capabilities as we continue to transform to meet our customer's ever-changing needs. Our priorities include elevating the customer experience across our stores and our website, and leveraging the strength of our brand to deepen customer engagement and drive omni-channel traffic."
In the fourth quarter, the company relocated one DICK'S Sporting Goods store and closed three DICK'S Sporting Goods stores and four Golf Galaxy stores. As of Feb. 3, the company operated 716 DICK'S Sporting Goods stores in 47 states.