Virtue-signaling rarely makes for good business…but apparently, Dick’s is the exception. The sporting goods chain’s shares skyrocketed on Wednesday, now up over 26 percent, making it the biggest one-day jump the company has seen since it went public in 2002.
The news comes after Dick’s reported unexpectedly high first-quarter earnings. The company’s estimated revenue was $1.88 billion, but it ended up raking in a whopping $1.91 billion, a 4.6 percent increase from last year. The sporting goods chain also saw a rise in e-commerce sales, and overall profit was up 3.2 percent at $60.1 million.
"Our strong first quarter earnings reflect improved execution against our merchandising strategy, which resulted in higher merchandise margins," Chairman and CEO Edward W. Stack explained in a press release. "Product newness, strength in our private brands and a more refined assortment led to a much healthier business, with fewer promotions and cleaner inventory throughout the quarter."
However, the spike in sales is still perplexing given Dick’s decision to introduce a number of controversial, anti-gun policies in the wake of the mass shooting at Marjory Stoneman Douglass High School in Parkland, Florida.
First, the sporting goods chain announced it would no longer sell firearms to anyone under the age of 21, despite federal law allowing eligible 18-year-olds to purchase long guns. In the same announcement, Dick’s also vowed to stop selling so-called assault weapons and high-capacity magazines.
Despite angering a significant portion of its customer base, and facing a few lawsuits, the company didn’t stop there; it decided it also needed to hire a gun control lobbyist.
Many threatened to stop shopping at the sporting goods store in response, and, for a short time, Dick’s was feeling it. In March, Fortune reported that the company “posted a deeper-than-expected sales decline” and “its stock sank the most in four months.”
A few months later, a handful of gun manufacturers decided they’d had enough of the company sticking up its middle finger to the pro-gun community and severed ties with the chain.
“It has come to our attention that Dick’s Sporting Goods recently hired lobbyists on Capitol Hill to promote additional gun control,” Iver Mossberg, Chief Executive Officer of O.F. Mossberg & Sons, said in a statement. “Make no mistake, Mossberg is a staunch supporter of the U.S. Constitution and our Second Amendment rights, and we fully disagree with Dick’s Sporting Goods’ recent anti-Second Amendment actions.”
MKS Supply, the producer of Hi-Point Firearms, followed suit.
“In recent months, Dick's Sporting Goods and its subsidiary, Field & Stream, have shown themselves, in our opinion, to be no friend of Americans' Second Amendment,” MKS Supply President Charles Brown said in a statement. “We believe that refusing to sell long guns to adults under 21, while many young adults in our military are not similarly restricted, is wrong. We believe that villanizing modern sporting rifles in response to pressure from uninformed, anti-gun voices is wrong. We believe that hiring lobbyists to oppose American citizens' freedoms secured by the Second Amendment is wrong. Dick's Sporting Goods and Field & Stream, in purportedly doing all of these things, have demonstrated that they do not share our values.”
Springfield Armory posted a similar message to Facebook.
Having such big names in the gun industry publicly slam the chain for its anti-gun stance definitely wasn’t a good look for Dick's. But if today's report is any indication, it seems things are turning back around for the company. According to a report, Dick’s is still seeing a dip in hunting product sales, but other departments are doing well.
Although, it’s not clear how long the company’s good fortune will last. An analyst from the Center for Financial Research & Analysis (CFRA), Victor Ahluwalia, told U.S. News Dick’s has a tough year ahead of it.
"We expect the company to face difficulty in growing sales comps in [fiscal 2019] amid excessive discounting in the physical sporting goods retail environment," Ahluwalia said.
It seems Dick's uncertain future is more a side effect of the business Dick’s is in, rather than it’s new anti-gun policies. Either way, angering millions of law-abiding gun owners and Second Amendment supporters who are potential customers with its ridiculous policies probably doesn't help.
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