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Dick’s Stock Soars After Unexpectedly High Earnings Report

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Following the shooting in Parkland, Dick’s Sporting Goods did something that angered a whole lot of us. They made a decision to expand their refusal to sell AR-15s to their Field & Stream stores. They also decided they would refuse to sell long guns to anyone under 21 despite federal law permitting sales to 18-year-olds.

Many in the gun community felt that this would amount to suicide for the company and initial signs seemed like that prediction might bear out.

Well, following an announcement from the company, those predictions need to be reviewed.

Dick’s Sporting Goods Inc.’s stock spiked as much as 24 percent — the most ever — after the sports retailer posted results that impressed investors, with higher profit guidance outweighing uncertainty over the company’s vocal stance on guns.

Revenue beat expectations, despite the company’s move to end sales of assault-style rifles in February after a shooting at a Florida high school. Chief Executive Officer Ed Stack has since met with elected officials, spoken publicly about the need to increase regulations and hired a lobbying firm to push Congress.

 

Big Beat

 

Dick’s topped earnings estimates by the widest margin since 2011.
How much those moves helped or hurt the retailer remains to be seen. Dick’s was struggling to grow revenue before it took these measures, and Stack warned in March that the company would receive some “blowback” that would hurt sales. But the chain’s main customers are also parents of school-age children, so the brand could have received a boost of goodwill in some parts of the country.

While the retailer’s first-quarter same-store sales fell 0.9 percent, its third straight decline, the drop wasn’t as steep as Wall Street expected and helped the company surpass projections on profit, too. Dick’s also raised its earning forecast for the year to as much as $3.12 a share, up from $3, because of fewer promotions and more revenue coming from its more profitable private-label brands.

So what does any of this mean?

Honestly, it’s too early to see. As Bloomberg notes, their stance on guns may have actually contributed to the spike in earnings. While gun owners are refusing to do business with the company at all, anti-gunners have likely looked to Dick’s for all of their sporting goods purchases, driving revenue.

If that’s the case, Dick’s is still in trouble. After all, anti-gunners aren’t typically that loyal as consumers, but gun owners have long memories of companies that they feel screw them over. In other words, this may be a temporary spike that won’t last more than a quarter or two.

Of course, it’s easy to look at how something like this panned out and try to find a positive spin on it.

It’s also possible that any boycott against Dick’s just doesn’t have the traction many of us would like to think it has. It’s entirely possible that many may not agree with the decision but still shop at the retailer for whatever reason. I can’t begin to imagine what those reasons might be, but I’m sure they exist.

Basically, it’s too early to tell just what this means in the grand scheme of things. There could easily be a number of reasons why this happened, some of which have nothing to do with guns. We’ll just have to wait and see.

 

The post Dick’s Stock Soars After Unexpectedly High Earnings Report appeared first on Bearing Arms.

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