Dallas, Texas 05/21/2014 (FINANCIALSTRENDS) – Dicks Sporting Goods Inc (NYSE:DKS) stood-out amongst the range of retailers who reported very disappointing results this week and it is possible the state that golf is in, that is to largely be blamed. The company plunged 17.98% to close at $ 43.60 in Tuesday’s trading after its disappointing Q! results reflected the very high-single-digit comparable-sales drop in the golf business at the company’s namesake chain & a 10.4% dip at the company’s Golf Galaxy stores. Dicks Sporting Goods also saw much lower gun-sales post a phase of panic buying that started towards the end of 2012 that had been spurred by the concerns about gun-control legislation.
Drop in sales
While DKS now projects that the drop in gun sales will moderate. But the company’s chief executive officer, Edward Stack, has said over and over again that he does not really know exactly where the bottom of golf is. Typically, this varied from 10% of its total business in the Q4 to around 25% in the Q2, the most important selling-period in the category for the company. The percentage of golf-related and same-store sales to date in this quarter is much below and in the low teens said the CEO. He added that the more concerning & unpredictable issue is the company’s golf business
The situation worsens
They had anticipated softness but experienced a drop instead. They had underestimated exactly how significant the drop would be. They now expect that this trend will continue for what is left of 2014. The CEO also said that there are 3 main issues that affect Gold. One major factor is the glut in the inventory and at the wholesale & the retail levels since the sales have been dismal over the last 15 months. This has also resulted in a number of suppliers to very aggressively axe their prices to clear their merchandise.