Does Dick’s Sporting Goods need to hunt for customers?
Dick’s Sporting Goods, which earned national headlines in February 2018 for its decision to end sales of assault rifles, last week announced plans to remove the hunting department from another 440 doors. Once removed, the category will be in only 12 percent of its locations, most located in rural areas.
The retailer also previously banned the sale of guns to people younger than 21. The decision followed the school shooting in Parkland, FL. AR-15 and other high-capacity magazines at the time were only being sold at its smaller Field & Stream banner. Dick’s banned them from its signature boxes in 2012 following the Sandy Hook massacre.
The decision, along with gun-control lobbying by Dick’s CEO Ed Stack and the destruction of $5 million in inventory as a message that such weapons should be outlawed, drew the ire of the National Rifle Association (NRA) and boycott threats from the hunting community.
Pulling the overall hunting category, which also includes a wide array of archery and hunt-related apparel, footwear and accessories, was a business decision, Mr. Stack told analysts on his company’s fourth-quarter conference call.
Hunting was “probably the lowest turning, lowest margin category we have,” said Mr. Stack. The category also “declined significantly over the last couple of years,” although that’s because the arrival of a Republican presidential administration reduced panic-driven purchases as gun legislation became less of a concern. Sales soared during the Obama administration and often spiked after shooting incidents.
Dick’s had tested the removal of the category from 135 stores and found the stores generally comped above the company average while offering significantly higher margins. The hunting category was replaced by better sellers in each region.
On its conference call, several analysts still expressed concerns about Dick’s revised mix with one wondering if Dick’s will look too much like a department store. Beyond apparel and footwear categories, the CEO saw opportunities to better reach the “female athlete” and expand golf and team sports such as soccer. “I don’t think there will be any confusion that we are in the sports and fitness business as opposed to a department store,” said Mr. Stack.
- Dick’s Sporting Goods Reports Fourth Quarter and Full Year 2019 Results; Delivers 5.3% Increase in Fourth Quarter Same-Store Sales – Dick’s Sporting Goods
- Dick’s Sporting Goods Inc (DKS) Q4 2019 Earnings Call Transcript – The Motley Fool
- Dick’s Sporting Goods destroyed $5 million worth of assault weapons — and its CEO tells us the gun industry’s blowback has been ‘a blessing in disguise’ – USA Today
- Dick’s Sporting Goods destroyed $5 million worth of assault weapons — and its CEO tells us the gun industry’s blowback has been ‘a blessing in disguise’ – Business Insider
- Dick’s Sporting Goods Destroyed $5 Million Worth of Guns – The New York Times
DISCUSSION QUESTIONS: Does Dick’s make a solid business case for getting out of the hunting category? Are sporting goods stores the right environments for gun sales?