Sunday, March 25, 2018

Dick's Disses Gun Owners, Sales and Stock Prices Drop




Dick's Sporting Goods took the politically correct route to placate media pushed gun control after the mass murder in Florida. They banned sale of the popular AR-15 type rifles and said they would refuse to sell rifles to people under 21 years old. Federal law requires that gun dealers not sell rifles and shotguns to people less than 18 years old. It wasn't the first time the controversial chain had put political correctness ahead of stockholders and customer. 

CEO Edward Stack said he expected to lose sales. From cnn.com:
The CEO of Dick's Sporting Goods said he's forging ahead with his new gun sales policy, even though he expects to lose customers.

"There's going to be some pushback and we expected that," said CEO Edward Stack, in an earnings call with Wall Street analysts. "There are going to be the people who don't shop us anymore for anything."
 A couple of weeks later, sales have dropped, and so has Dick's stock price. Fortune magazine says that the drop in stock price should not be assumed to have anything to do with the store's decision to anger a significant percentage of its customers. From fortune.com:
Dick’s move last month at its three-dozen Field & Stream stores — extending a ban on assault-style rifles already in place at its namesake locations — came after a fatal shooting spree at a Florida high school. The company also raised the age limit to 21 from 18 on the purchase of any firearm. But the effect on its business remains to be seen.

Shares of Dick’s fell as much as 7.3 percent to $30.19 in New York, the biggest intraday decline since mid-November. They had climbed 13 percent this year through Monday’s close.
 
Fourth Quarter

Excluding some items, profit amounted to $1.22 a share in the fourth quarter that ended Feb. 3, the company said in a statement. Analysts had estimated $1.24 on average. Sales of $2.66 billion also fell short of projections for $2.74 billion.

Same-store sales, a key metric, fell 2 percent in the period. Analysts had estimated a drop of 1.2 percent, according to Consensus Metrix. E-commerce sales rose 9 percent.
That may be true. Stocks of gun manufacturers have dropped a bit during President Trumps administration. But gun sales are at historically high levels, down only a little from the record set in 2013 and 2016.

Most companies realize that it is bad business to mix politics and sales on controversial issues. No matter what side you are taking, you are taking a side, and those who you side against will be angered.

If you do not take sides, those angered will only be the ones whipped into an emotional frenzy by the short term media attacks. It may lead to a temporary blip in sales, but it will be quickly over. You will join the majority of businesses that do not take sides.  If you have a strong base on one side of an issue, it may make sense. But if on any side, Dick's base is on the side of the Second Amendment.

It seems Dick's CEO is putting his politics ahead of his shareholder's profits. There is strong competition in sporting goods retail, much of it from online retailers.

©2018 by Dean Weingarten: Permission to share is granted when this notice and link are included.

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2 comments:

Paul Weber said...

Corporate suicide at it's finest.

Wireless.Phil said...

Years ago, ours did have guns & ammo, etc. Then they got rid of all that. Sold mostly clothes and shoes,I stopped going in the place.