Dick’s earnings weren’t as bad as expected, even thought their gun and hunting business is hurting. My guess is that Dick’s will leave that line of business as sales in that area continues to flounder. I’d note that earnings beat expectations, which were low. Their earnings are the same as they were in Q1 of 2016 on about the same revenue. I’m wondering how much of their surprise has to do with online sales, which grew quickly, and may have prevented a loss. Same store sales being down means our boycott is having an effect, and Dick’s admits that’s a result of a decline in sales of our items.
I’m not sure this is the story their CEO and the media are making it out to be. Certainly I’m not going to spin this as good for us: Dick’s doesn’t have a history of beating Q1 expectations. It’s interesting that analysts lowballed them by 9 cents a share over the previous year. Q1 estimates for Dick’s have, generally speaking, been pretty spot on. Anyone have any idea how these earnings estimates get decided? How many people are involved? How much influence would someone like Bloomberg and his associates have on the process? I’m not ready to put my tin foil hat on yet, but I’m curious. Because setting up low expectations for Dick’s on purpose to achieve a PR coup would be something I’d do if I were Bloomberg and could pull it off. Just sayin’.
If same store sales keeps dropping, that will hurt Dick’s in the long run. So get the word out.
15 thoughts on “Dick’s Will Probably Exit the Gun Business”
I look at Dicks as being more of a mall sporting goods stores — they’ve never sold handguns. When my wife goes out to pick up a basketball or sports tape or whatever she’s still going to Dick’s as it’s closest to us. I never will … but that’s only about 3/4 the business from our family.
I don’t think it will hurt them that much, but we should do what we can.
Dicks does a sizeable sharenof their business selling baseball/Sadro all equipment and running shoes, etc. those are items that sell in Q1 &2. Much less so in Q3. They will still get some soccer sales then but they donâ€™t get to sell much football equipment. Hunting makes up for that and caries then through Q3 & 4. That is over now.
Sadro should be â€œsoftballâ€. Damn iPhone autocorrect.
No tin foil hat necessary. The system of putting together earnings estimates is not rigged, but its not very honest, either. Earnings estimates are developed by stock analysts. In theory, these people examine a business, analyze its performance and make a prediction of a company’s earnings for the quarter. In reality, since they do not have access to the company’s proprietary financial information, they are very dependent on the company to provide “earnings guidance.” This is usually done via press releases or meetings, often called analyst updates or investor updates. All of the analysts get the same general information due to SEC Regulation FD. As if using the same information wasn’t enough, almost no one wants to be the outlier, predicting massive growth or massive declines, because that brings the possibility of costing you a lucrative job at a major investment bank. Therefore, there is almost always a “groupthink” of estimates. Despite Dick’s having 27 different analysts, the range for next quarter’s earnings is only $0.91 to $1.14. That spread will get smaller as we get closer to next quarter’s earning release.
With regard to Q1, Dick’s has been all over the press stating how their firearms decision would hurt same-store sales. In other words, they were signalling to the analysts to lower their expectations.
By getting analysts to lower their estimates, Dick’s has a lower hurdle to clear at earnings time. You can already see that in the media coverage. From CNBC: “Dick’s Sporting Goods shares skyrocket as gun sales restrictions don’t hurt sales as much as feared”
As noted in other comments, it will be interesting to see the Dick’s earnings trend in later quarters.
Pretty good summation. I’d say estimates are complete bullshit. They are based feelings.
I wouldn’t be surprise if Bloomberg put some pressure to reduce the expectations, just to have the good PR.
I’m guessing Dicks will be much worse over the next three quarters.
It isn’t hunting season yet.
I would like to point out that Q1 ended March 31st. Parkland was on February 14th. People panic-bought. Dicks announced they were raising the age to buy long guns and stopping MSR sales on February 28th.
The big stuff, announcing they were destroying inventory and hiring anti gun lobbyists, didn’t come until after Q1 was long over.
Wait for Q2.
Oh wow. That’s a really great point.
Let’s see what Q2 brings.
There is also the timing aspect of all this. When did Dick’s make the announcement about age limits and ending AW sales? The end of Feb? That’s more than two months of gun sales in their Q1 numbers AND gun sales have been going wild since Las Vegas and haven’t dropped off. So a good chuck of reported earnings is STILL based on pre-announcement gun sales including AR pattern rifles which are hot sellers. I’m more interested in Q2 numbers. That will tell a better tale.
While Dick’s is focused more on sports their Field and Stream stores are aimed right at hunters, fishers and campers. 1/3 of each store is hunting/archery/gun supplies. This is the segment of Dick’s that will be hurt the most. As others have said, the Dick’s stores were a total waste when it came to hunting/fishing/camping. I’d like to see the sales figures for F&S stores compared to 1st quarter of last year.
We need to make sure that F&S in connected in people’s minds with Dick’s . I did not know this until recently.
They also spent less on advertising which helped their bottom line.
Good Bye & Good Riddance !!!
“Earnings estimates” by “analysts” are basically always nonsense.
(See every quarter people predicting, for clicks and attention, that Apple will “be disappointing” by predicting earnings above Apple’s own estimates.
Which Apple pretty much always meets dead on, because it knows its own business.)
Not sure who really buys firearms from a big box store like this anymore. Prices are far higher than you can get them for online, even after paying $25-40 for an FFL to do the transfer. I’ve only purchased 4 or 5 of my many firearms from brick and mortar stores. I would buy from a “real” store, but around where I live they just try to stick it in your backside. Not going to pay $600 for a Glock 19 when I can get one online for $470 + $25 transfer. I wonder if Dick’s will wind up saving money, as they were probably just chewing up a lot of cash keeping guns in inventory. They’re still tools in the worst sense of the word, but maybe they weren’t making money on firearms sales anyway.
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