The Buzz

All markets and investing news all the time

Dick's plunges 18%. Golfers, hunters not shopping there as much

May 20, 2014: 12:43 PM ET

Dick's Sporting Goods reported less-than-stellar first quarter results Tuesday. Investors reacted by dumping shares.

Are Americans not enjoying the great outdoors? Or maybe they're just not spending money to do so.

Shares of Dick's Sporting Goods (DKS) tanked 18% Tuesday after the retailer reported weak first quarter earnings, burned by sluggish golf and hunting sales.

Dick's definitely felt the bite from those businesses, which account for roughly 30% of its overall sales revenue.

And it doesn't expect things to get better anytime soon. The company lowered expectations for the rest of the year, again faulting golf and hunting.

The whiff in golf is particularly troublesome, since Dick's said it can't even guess when the business will get out of its rough patch.

So why is golf getting shafted?

According to David Magee, an analyst with SunTrust Robinson Humphrey, the industry hasn't done a good job of rolling out successful new products. Sleek clubs and golf balls promising greater distance and control have traditionally driven growth in the sport, Magee explained.

"There hasn't been much radical innovation," he said.

Related: For entrepreneurs, cycling is the new golf 

Unlike other retail chains, Dick's didn't specifically blame the weather for its issues early in the year. But Lee Giordano, an analyst with CRT Capital Group, thought the long winter had a negative effect, particularly on golf.

While golfers in much of the country don't take part in the sport in the dead of winter, often times they'll get out and play a few rounds in March if the barometer ticks up, Giordano claimed.

"We had snow on golf courses early in the season which prevented people from getting out and playing," he said.

On the hunting front, gun sales were down significantly when compared to the first quarter of 2013, when Dick's and others gun dealers experienced a surge in firearms demand after the Sandy Hook Elementary shooting in Newtown, Connecticut.

Related: Chipotle: Guns not welcome here

At the time, many gun enthusiasts worried that the tragedy would lead to tougher controls on gun purchases. "You get a year out and people have their guns already," said Magee. "Everyone knew it would be a tough comparison, but there were signs that the worst would be over."

Worries about Dick's golf and guns revenue appeared to be spreading to other companies whose lifeblood is those products. Cabelas (CAB), which derives much of its sales from hunting, fell 5% Tuesday, while the Callaway Golf Company (ELY) sank almost 9%.

On a positive note, Dick's said sales of women's and youth athletic apparel got a boost last quarter, as did its footwear and team sports segments.

The company also grew its ecommerce profit, a good development for a brick-and-mortar retailer in tough competition against the likes of Amazon (AMZN) and eBay (EBAY).

Another advantage for Dick's: It's a sporting goods store, as opposed to say, a bookstore. In other words, "the ability to touch and feel product helps," Giordano said.

Join the Conversation
Fear & Greed
Sponsored by
About This Author
Jesse Solomon
Jesse Solomon
Reporter, CNNMoney

Jesse Solomon is a reporter for CNNMoney’s markets and investing section. He covers stocks, bonds, currencies, alternative investments, emerging markets and mergers and acquisitions. He previously worked as an Associate Producer for CNN, where he covered the Boston Marathon bombing, Superstorm Sandy and other big, breaking news events.

To view my watchlist

Not a member yet?

Sign up now for a free account
Stupid Stock Move of the Day
#StupidStock Move of the Day! $FEYE up 7% because of $SNE? Yes. It's a cybersecurity company. But has history of losses and sales misses.
Powered by WordPress.com VIP.
Follow

Get every new post delivered to your Inbox.

Join 242 other followers