Dick's Sporting to reduce hunting rifle distribution, cuts Reebok for private brand

Dick’s Sporting Goods Inc said on Tuesday it would stop selling hunting rifles and ammunition at 125 stores and forecast 2019 profit below analysts’ expectations, sending its shares down 10 percent.

The company also said it would replace Reebok merchandise on its shelves with its new in-house private label apparel brand, pressuring shares of Nike Inc and Under Armour Inc, which count Dick’s as a major retail partner.

“We think that it (company’s private label) will do more business there than we did with Reebok,” Chief Executive Officer Edward Stack said on a post earnings call with analysts.

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Sales at Dick’s Sporting have been pressured in the last year after it tightened its gun sales policy, banning sales of assault-style rifles and high-capacity magazines to people under 21 after a high school shooting in Parkland, Florida in February 2018.

The company replaced hunting equipment in 10 stores where it had underperformed with “more compelling” products late in the third quarter and said those stores had positive comparable sales in the following three months. The company did not disclose what products it deemed “more compelling.”

The retailer will replace the underperforming hunting supplies category in another 125 stores in 2019 with more in-demand merchandise, Stack said.

The company reported a 3.7 percent fall in comparable sales in the fourth-quarter ended Feb. 2, hit by weakness in its hunting and electronics categories.

Dick’s Sporting Goods, which has 729 stores in the United States, will continue selling hunting equipment in stores where demand is strong.

For 2019, the company expects earnings in the range of $3.15 to $3.35, the mid-point of which comes below the average analysts’ estimate of $3.34, according to IBES data from Refinitiv.