The price per share of Dick’s sporting goods has beaten wall street estimations on both its top and bottom lines in their 2018 fourth quarter earnings issued Tuesday however shares sank over 10% on a decline in same store sales, combined with disappointing guidance for 2019. Dick’s has also made a statement regarding their future with hinting goods, and Reebok.
Removing hunting items from 125 stores
In 2018 Dick’s stopped the sale of hunting equipment from 10 stores where it was underperforming. After the removal of the goods, the stores generated positive sales in the fourth quarter. CEO Ed Stack said on their Q4 earnings call “following the success we have had from the re arrangement, we will be removing hunting goods from an estimated 125 additional stores in the year of 2019 where the category is underperforming.”
The current definition of Dick’s Hunting supplies is categorized as rifles and ammunition, and additionally “accessories related to firearms, hunting apparel, and anything associated with hunting.” President of Dick’s sporting goods Lauren Hobart, late clarified that it would not be including kayaks and other outdoor activities.
Dick’s has been a leader in the national political conversation, when last year they stopped the sale of automatic assault rifles, in all of its stores, following the mass shooting in Parkland. It also set its stance in stone when raising the minimum age of firearm purchase to 21 years of age. Dick’s political stance has seen a decline in same store sales since then, however Dick’s share price is up over 10% since the move, and almost 15% in 2019 so far.
On Tuesday’s conference call, Dick signaled that their partnership with the Field and Stream Brand may soon be eliminated from their stores entirely. Ed Stack said “We're not sure exactly what we're going to do with it,” said Stack. “We're not implementing any new Field & Stream products. And right now, although they're not a drain on the company we are looking to move away from a partnership.”
Reebok being removed from all stores
Dick’s has also shared their plans for its private partnership labels, which is bad news for Adidas and under armor. Stack said that Dick’s private apparel brands, such as CALIA will continue to be an integral part of the company’s strategy, and will be playing an important role in their future space allocation in store. Dick’s are set to expand their footprints of CALIA in 80 of their physical locations, and launch a new brand that will replace Reebok in time for the back to school season. “We think that we'll do more business there than we did with Reebok,” said Stack.
Ending the licensing agreement Dick’s had with Reebok, sent shares of Adidas Group parent company of Reebok on a steep decline.
Christopher Hull – Middleton Associates