Dick's Sporting Goods, which began scaling back gun sales in the wake of last year's school shooting in Parkland, Florida, is removing even more weapons from its shelves.
The retailer will drop hunting gear starting around August from about 125 stores where it is underperforming, Dick's CEO Ed Stack announced Tuesday. The change, which affects about 17 percent of the Dick's chain, follows a trial run last year when Dick's removed hunting products from 10 of its stores.
The announcement, coupled with continuing declines in same-store sales, jarred investors. Dick's shares fell as much as 11 percent, the most since August 2017, to $34.45 in New York trading. The stock was up 25 percent this year through Monday.
Stack said fourth-quarter sales rose at the 10 stores that pulled hunting products, and the locations delivered better margins and foot traffic than when they had guns. For the 125 additional stores, hunting floor space "will be replaced by merchandise categories that can drive growth, each based on the needs of that particular market," Stack said on the company's earnings call.
The new approach follows a tightening of gun policies that Stack self-imposed in February 2018. After the deadly shooting in Parkland, Stack said that he'd stop selling assault-style rifles and high-capacity magazines. He also raised the minimum age for purchasing a gun to 21.
One analyst noted that following the gun policy changes, some Dick's customers have moved on to competitors, leading to further sales declines at the Coraopolis, Pennsylvania-based chain.
"Our data show that a lot of hunters and gun enthusiasts have migrated to retailers like Bass Pro and to smaller specialists," wrote Neil Saunders, managing director at GlobalData Retail. Despite Stack's claims about fourth-quarter sales rising at the 10 stores that pulled hunting gear, Saunders added that overall "Dick's has not benefitted from an upswing in trade among those who agree with its gun policy. We make no political judgement on Dick's stance; however, it has clearly had an adverse impact on sales."
The gun policy change drew anger last year from many who felt the it contradicted the Second Amendment. The National Rifle Association criticized Stack's "strange business model," and the National Shooting Sports Foundation expelled Dick's from its membership. Dick's was once a major vendor of firearms in the U.S., and though the industry was struggling before the decision, Stack has made it clear that the blowback hurt sales.
Still, Stack said that if this 125-store move goes well, the company could decide to remove hunting gear from more stores next year.
The company's 2018 revenue was down almost 2 percent to $8.4 billion, a dip that Stack has attributed to slower firearm sales, a change in Under Armour Inc.'s distribution strategy and weak performance in electronics sales. Stack has expressed optimism about Under Armour going forward, and Dick's has now fully exited the electronics business.
Last month, Stack was one of four CEOs to sign a letter supporting a universal gun control bill that recently passed in the U.S. House of Representatives, and he recently joined the business council of Everytown, a nonprofit that advocates for gun control. (Everytown was founded by Michael Bloomberg, owner of Bloomberg News' parent company.)
—Bloomberg News with contributions from Ad Age