Major Sporting Goods Company Hurt by Ending Gun Sales
Dick’s Sporting Goods Inc. (NYSE: DKS) posted poor earnings for the most recent quarter. Among the reasons, according to management, was its decision to stop gun sales.
Dick’s made the decision to stop selling assault-type rifles in February. It also raised the minimum age for people to buy guns at its locations to 21. These decisions happened after several mass shootings. At the time, Dick’s CEO Edward W. Stack wrote:
We will no longer sell assault-style rifles, also referred to as modern sporting rifles. We had already removed them from all DICK’S stores after the Sandy Hook massacre, but we will now remove them from sale at all 35 Field & Stream stores. And. We will no longer sell firearms or ammunition to anyone under 21 years of age.
Dick’s sales for the period that ended November 3 were $1.86 billion, down from $1.94 billion in the same quarter a year ago. Net income was $37.8 million, up from $36.9 million in the year earlier. The worst news was that same-store sales fell 3.8%. Guns fall within what Dick’s labels its “hunt” unit, results of which were worse. Management said:
Specific to hunt, in addition to the strategic decisions we made regarding firearms earlier this year, the broader industry has decelerated and remains weak, as evidenced by most recent national background check data. We believe this also contributed to the decline we saw during the quarter.
The decisions about assault rifles and age have only been part of the reason. Overall, gun sales are mostly down. NICS Firearm Checks, kept by the FBI, show gun sales have flattened, and in some cases gone down, compared to the same months last year and the year before.
Dick’s is paying the price for what it described as a moral decision. Management has shown no sign of backing down. As a by-product, however, its results have suffered.