Dick’s Sporting Goods: The Bold Decision to Stop Selling Assault Rifles

Abstract

Once a major brick-and-mortar retailer of sports equipment, Dick’s Sporting Goods has fallen victim to the rise of e-commerce. Though its decision to stop the sales of firearms in 2018 was considered the right thing to do, the company now risks losing a customer segment, which had brought in a revenue of US$1 billion the year before.

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

Resources

Exhibit. DICK’S Financials

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED (in thousands, except per share data)

53 Weeks Ended

52 Weeks Ended

February 3, 2018

% of Sales1

January 28, 2017

% of Sales1

Net sales

$8,590,472

100.00%

$7,921,981

100.00%

Cost of goods sold, including occupancy and distribution costs

6,101,412

71.03

5,556,198

70.14

GROSS PROFIT

2,489,060

28.97

2,365,783

29.86

Selling, general and administrative expenses

1,982,363

23.08

,875,643

23.68

Pre-opening expenses

29,123

0.34

10,268

0.51

INCOME FROM OPERATIONS

477,574

5.56

449,854

5.68

Interest expense

8,047

0.09

5,856

0.07

Other income

(31,810)

(0.37)

(14,424)

(0.18)

INCOME BEFORE INCOME TAXES

501,337

5.84

458,422

5.79

Provision for income taxes

77,892

2.07

171,026

2.16

NET INCOME

$323,445

3.77%

$287,396

3.63%

EARNINGS PER COMMON SHARE:

Basic

$3.02

$2.59

Diluted

$3.01

$2.56

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic

106,977

111,095

Diluted

107,586

112,216

Cash dividends declared per share

$0.680

$0.605

1Column does not add due to rounding

DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS – UNAUDITED (Dollars in thousands)

February 3, 2018

January 28, 2017

ASSETS

CURRENT ASSETS:

Cash and cas equivalents

$101,253

$164,777

Accounts receivable, net

60,107

75,199

Income taxes receivable

4,433

2,307

Inventories, net

1,711,103

1,638,632

Prepaid expenses and other current assets

129,189

114,763

    Total current assets

2,006,085

1,995,678

Property and equipment, net

1,677,340

1,522,574

Intangible assets, net

136,587

140,835

Goodwill

250,476

245,059

Other assets:

    Deferred income taxes

13,639

45,927

    Other

19,812

108,223

        Total other assets

133,451

154,150

TOTAL ASSETS

$4,203,939

$4,058,296

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES

Accounts payable

$843,075

$755,537

Accrued expenses

354,81

384,210

Deferred revenue and other liabilities

212,080

203,788

Income taxes payable

10,476

53,234

Current portion of other long-term debt and leasing obligations

5,202

646

    Total current liabilities

1,425,014

1,397,415

LONG-TERM LIABILITIES

Other long-term debt and leasing obligations

60,084

4,679

Deferred income taxes

10,232

Deferred revenue and other liabilities

767,1108

726,713

    Total long-term liabilities

837,424

731,392

COMMITMENTS AND CONTINGENCIES STOCKHOLDERS’ EQUITY

Common stock

783

856

Class B common stock

247

247

Additional paid-in capital

1,77,778

1,130,830

Retained earnings

2,205,651

1,956,066

Accumulated other comprehensive loss

(78)

(132)

Treasury stock, at cost

(1,442,880)

(1,158,378)

    Total stockholders’ equity

1,941,501

1,929,489

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$4,203,939

$4,058,296

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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