Dick’s Sporting Goods One Year After Gun Ban: What Analysts Expect Now

It’s been one year since Dick’s Sporting Goods made the controversial decision to ban the sales of assault-style rifles following the deadly February 2018 shooting at Marjory Stoneman Douglas High School in Parkland, Florida.

In the 12 months that followed, the sporting goods retailer — which also halted the sale of firearms to customers under 21 years old — has seen uneven quarterly results as it shouldered backlash from some rifle customers as well as generally softer momentum in the hunting and electronics categories.

Ahead of the firm’s fourth-quarter earnings report, due before the market open Tuesday, Susquehanna Financial LLLP analyst Sam Poser said he expects Dick’s to put up better-than-expected results as it laps the previous year’s headwinds related to its then-new firearms policy.

“We believe, over the long-term, that the number of consumers that do not like the firearms policy Dick’s has adopted will be more than offset by the number of new, sports-oriented customers that will be attracted to Dick’s because of the company’s stance on firearms,” Poser, who maintained a positive rating on the stock, wrote in a March 6 note. “Dick’s will begin lapping the topline headwind from the pullback in guns/ammo in 1Q19 and we believe same-store sales will begin to turn positive as Dick’s repositions assortments and moves into the higher margin apparel and footwear categories.”

Nevertheless, for now, consensus estimates peg the firm’s Q4 results to be down almost across the board with same-store sales predicted to be slip 3.3 percent and revenues in the red nearly 7 percent to $2.48 billion. Profits are also expected to tumble 13 percent year over year to $1.06.

Wedbush Securities analyst Christopher Svezia and Jane Hali & Associates, LLC analyst Jessica Ramirez both held their neutral ratings on Dick’s ahead of tomorrow results — each citing weakness at Under Armour among other concerns. (In August, Dick’s CEO Edward Stack called out Under Armour for contributing to the retailer’s slipping same-store sales, which fell 4 percent during the second quarter.)

“For fiscal year 2018, there are several supportive factors that should drive flat/slightly positive comps — including [second-half] weighted [growth]; reduced hunt/electronic headwinds [and] apparel momentum — and slight gross margin expansion [such as] higher full price sales [and] apparel/private label mix,” Svezia wrote on March 4.

Still, Svezia noted “several visibility risks” — such as weakness in the hunting category, the challenges at Under Armour and tariffs — could prove problematic. Meanwhile, “slight” comp growth, he wrote, will not be enough to drive SG&A leverage, against key investments such as digital, Team Sports, private label and supply chain.

When Dick’s last reported — in November — it saw a mixed finish to the third quarter with sales missing forecasts but profits shaping up better than expected.

Q3 sales fell 4.5 percent to $1.86 billion, slightly missing the $1.89 billion analysts had expected. Comparable sales also missed the mark, tumbling 6 percent during the quarter. Earnings, meanwhile, edged up 2 percent year over year to $37.8 million, or 39 cents per diluted share, significantly surpassing the 26 cents market watchers predicted.

The company had lifted its outlook for the remainder of the year, citing early rewards from its increased focus on profitability.

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