Dick’s Sporting Goods Inc.’s fourth-quarter results were dinged by struggles with the Under Armour Inc. brand and the hunting category, according to executives who spoke on the Tuesday earnings call.

The sporting goods retailer’s stock plunged 11% in very active trade Tuesday, enough to pace the S&P Mid Cap 400 index’s losers. Volume spiked to over nine million shares, compared with the full-day average of about 1.9 million shares.

The company reported fiscal fourth-quarter net income that fell from a year ago, and adjusted earnings that beat expectations. Net sales and same-store sales also fell, but less than analysts had forecast.

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The full-year 2019 outlook for earnings per share was $3.15 to $3.35, compared with the FactSet consensus of $3.34, while same-store sales guidance of flat to up 2% compared with expectations of a 0.5% rise.

“Under Armour continues to be difficult, but we mentioned now for the second quarter in a row that our apparel business is a positive,” said Chief Financial Officer Lee Belitsky on the post-earnings conference call with analysts. “So we’ve been able to replace the lost Under Armour apparel business with other brands in the stores at this point.”

Chief Executive Edward Stack was optimistic about the prospects for the brand.

“As I indicated in the last call, we’re much more enthusiastic about the Under Armour business going forward,” he said. “We’ve made some changes to the assortment, Under Armour has been very helpful with that and we see a very different trajectory from Under Armour going forward.”

Under Armour

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 stock was down 0.2% in Tuesday trading.

Athletes are a key target for Dick’s Sporting Goods, with Stack saying the response has been positive from e-commerce marketing and other initiatives, and gains in categories like apparel, outdoor equipment, fitness, private labels, and athletic footwear.

However, hunters weren’t so keen on the retailer during the quarter, with guns, ammunition, firearm accessories and hunting apparel declining. According to Stack, the hunting and electronics categories hurt same-store sales by 3%.

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In February 2018, Dick’s Sporting Goods raised the minimum age for gun purchase to 21.

The company also removed the entire hunting category from 10 stores late in the third quarter where it was underperforming, according to Stack, “and replaced it with a more compelling assortment.”

“These 10 stores generated positive comp sales and had a strong margin rate improvement during the fourth quarter,” he said.

Dick’s Sporting Goods is planning to pull the category from 125 additional stores.

Neil Saunders, managing director at GlobalData Retail, has two concerns about the shift in Dick’s Sporting Goods’ business.

“Our data show that a lot of hunters and gun enthusiasts have migrated to retailers like Bass Pro and to smaller specialists,” he wrote in a note. “At the same time, Dick’s Sporting Goods has not benefited from an upswing in trade among those who agree with its gun policy.”

Growth among athletes puts the retailer in competition with an increasing number of chains that are courting the same customer.

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 and Kohl’s

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for example, have both increased their market share of the general sportswear category over the past year,” the note said. While this has not affected more specialist areas such as equipment, it has reduced the number of occasional shoppers who use Dick’s Sporting Goods.”

Saunders is also concerned that the online push is costly. Dicks said e-commerce sales increased 17% for the quarter.

“While this shows that Dick’s Sporting Goods’ investments in its website and fulfillment capabilities are paying, it remains dilutive to margins and is undermining the performance of stores,” Saunders said.

Data Saunders cited shows low scores for Dick’s Sporting Goods Stores, which might keep customers away.

“While we anticipated a gross margin decline, the magnitude of contraction was higher than expected, especially given the mix benefit away from lower margin categories such as hunt and electronics,” wrote UBS analysts led by Michael Lasser. “As such, the earnings outperformance came from the SG&A [selling, general and administrative] line. We suspect the sustainability of this will garner attention.”

UBS rates Dick’s Sporting Goods shares as neutral with a $38 price target.

Dick’s Sporting Goods shares have gained 11% for the year to date comparable with the S&P 500 index

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which is up 11.4% for the period.

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