Couldn’t Have Happened to a Bigger Bunch of …

Dicks Sporting Goods says it may have to close its Field and Stream stores because of poor sales. Still, they say they don’t regret their choices and would make the same choices again if they were given a do-over. It’s not many companies that will deliberately and knowingly piss away significant business while telling investors they are happy to have cost them money. I notice they are rated a sell currently.

Dick’s Sporting Goods Inc holds several negative signals and is within a wide and falling trend, so we believe it will still perform weakly in the next couple of days or weeks. We therefore hold a negative evaluation of this stock. Due to some small weaknesses in the technical picture we have downgraded our recommendation for this stock since last evaluation from a Hold/Accumulate to a Sell Candidate.

Sounds about right to me!

14 thoughts on “Couldn’t Have Happened to a Bigger Bunch of …”

  1. How to explain the self-destructive behavior of Dicks?

    There used to be a pretty hard division between rich capitalists and anti-capitalist academics.

    I suspect that the children of those rich capitalists, after a heavy dose of indoctrination during their College years, are forming a new category of rich anti-capitalists, and many of them are now entrenched in positions of power and influence including business management.

    1. I think its not just rich capitalists, but a lot of people due to government schools.

      I believe they do it for a couple of reasons:

      1. They actually don’t think it will hurt the business
      2. Even if it did, it’ll be for a short time
      3. Even if not, its still worth it
      4. And they’ll get lots of accolades from their peers, which is priceless.

      1. Sarah Hoyt has a theory called “Roll Left and Die”.
        Now, it doesn’t apply here given some of the priors involved.

        First Dicks isn’t in a field dominated by one ideology, and second I don’t /think/ they were in real trouble.

        When a magazine or a newspaper or any news or entertainment media was in real trouble, they went hard, hard left, then died.

        It took me a little while to realize this was a sane strategy. In a field completely controlled by the left, when you knew that your job was in peril be it through missmanagement or whatever, your last hope was to go incredibly hard left, so you could blame the failure on ideology. And instead of not being able to find a job, you found yourself lionized by all the “right” (left) “thinking people.” New jobs were assured.

        But the concept is compelling.

        In short it’s a “Well if we’re going down let’s remove the restraints, say what we /really/ think, and go down for a /reason/.”

        So maybe Dicks management didn’t /start out/ with this concept in mind, but once trouble started, there could have been a logic like the above to compel them to /continue/ down this path.

        Sure the Rank and File won’t be covered by this strategy, but the managers who drove Dicks into the ground (if we presume the company takes even more of a hit) will be able to jump ship and leverage their “courage”>

        1. It’s the James Taggart strategy. You can get paid by acquiring “pull” rather then cash ROI. The left is pretty good about giving their wounded culture warriors a soft landing in academia, a think tank, a government agency, etc.

  2. The shareholders should file an SEC suit for deliberate malfeasance…they’ve ruined the brand name.

    1. He has basically admitted guilt so I would think a competent lawyer could win this one.

    2. This.

      They’ve basically admitted that they KNOW that they fucked up, and they’ve continued to KNOWINGLY double-down on the same choices, which they KNEW would have a negative impact on the business.

      For any shareholders looking to sue, those statements should be ironclad evidence of the DSG managements’ collective disregard of their fiduciary duty.

  3. The strange thing is the stock just doesn’t care. DKS is actually up about 15% year-over-year.

    1. Accounting tricks, stock buybacks, and downsizing can make stagnant to shrinking businesses perk up on paper. Many have been doing it for years.

  4. My first reaction is good riddance My second is that it is a shame to lose a big box store that normalized guns to this shunning. Still the lesson has to be hard Screw with your customers and lose.

  5. All things considered, I’m curious how much of the apparent downturn in sales for DSG is actually a product of people actively avoiding DSG due to their political activism, and how much is just an indication of the overall health of the industry.

    As someone in the industry, I can state definitively that the market has been in the process of a MASSIVE correction since November of 2016. This past summer was the WORST summer for the industry that I have ever seen.

    In the last year or so, I’ve seen numerous shops in my area significantly cut back their hours, and in some cases they’ve closed altogether.

    Things seem to be picking up over the last few weeks, and hopefully it is an indication of greater things to come, but it’s been an extremely hard few years for most of the industry, and just about everyone is hurting.

    1. Gosh, what could have happened in late 2016 that would make people feel like they didn’t need to go out and buy guns urgently? What would have happened a few weeks ago to reverse that trend? It’s a mystery.

      1. I’m well aware of the consequences of elections.

        My point is that the market is still recovering from 8 solid years of panic buying. The market is absolutely flooded with the types of guns that the left likes to try to ban.

        At the same time, the economy has been trending significantly upwards after 8+ years of stagnation. That’s also relevant because people spend money differently based on economic conditions: When conditions are bad, people are worried about protecting what they have. When conditions improve, people finally have the time and resources to focus on taking care of delayed expenditures (e.g. paying debts, making house repairs/upgrades, and taking vacations).

        That was all complicated by the fact that the various manufacturers and distributors all bulked up on product going into the 2016 election, and then absolutely FLOODED the market with those products at firesale prices in 2017.

        In other words, I’m not convinced that recent apparent uptick in sales is directly related to the midterm election; I suspect it’s just a sign that we’re finally coming to the profitable side of the market correction — in 2017 they bought all the ban-fodder they could ever want (and didn’t already own) for pennies on the dollar, in 2018 they took summer vacations, and now as we go into 2019 they seem to be ready to come spend some of their new disposable income on the fun hobbies that they’ve been neglecting for years due to financial and time constraints.

      2. After skimming my previous reply, I noticed that (among other issues) my final paragraph doesn’t go deeply enough into the “why” — The simple answer is WHO is coming in, what they’re buying, or when the trend started.

        Sure, we still have people who suddenly feel the need to arm themselves (e.g. we had a wave of Jewish buyers in the wake of the Pittsburgh Shul shooting a few months ago), but they’re a relative constant — they don’t seem to be spiking in any kind of abnormal way. (Sidenote: The most significant panic of this type I’ve ever seen, by far, was following the 2015 Islamist attacks on Paris)

        So, in order:

        Who: Mostly, it seems to be people who have been shooters in the past, and are finally getting back into shooting as a hobby. For whatever reason, they’d gotten out of the habit of going shooting (probably mostly due to increased costs due to panic pricing in the middle of a down economy), and have decided to get back into it.

        What: One of the things that seems to be moving reasonably well at the moment is ammunition — in some calibers, we’ve sold more range/target ammo over the last two months than we sold in those calibers in the preceding six months. In short, the things being bought don’t line up with “Panic buying the guns we’re afraid will be banned” nor do they line up with “Buying the guns we suddenly think we need for home/self defense” Instead, they line up best with “Buying and feeding fun guns.” That, in turn, suggests a more healthy direction for the industry as a whole, one defined by what people actually want, rather than what they think they need or are afraid that politicians want to take away.

        When: The trend closely tracked falling temperatures — once it was cold enough that they didn’t want to spend time at the beach, they started looking into leisure activities that don’t require being outside.

Comments are closed.