Thursday, August 20, 2009

Dick's Sporting Goods Gives Michael Vick the Heisman...

...when it comes to selling his Philadelphia Eagles jersey.

Our take: Stupid, stupid move!

Sure, companies have a right to offer any type of product or service they want, but knowing Dick's Sporting Goods (NYSE: DKS) is a publicly-traded company, don't they have a fiduciary responsibility to the shareholders? After all, as long as what they are doing is legal and stays within the guardrails of ethical responsibility, then the company should do what's going to bring in the $$$$. Why companies feel they have a higher morale authority than the people walking in the store still baffles me. But, who knows.

The loser in this decision: The shareholders of DKS. Sure, the stock was up big today, even after the company reported .33 cents versus .34 cents one year ago. But the octane in today's rally was from the company giving a very rosy outlook for the future. And, they would know better than us. However, selling the jersey will obviously help revenues, with very-limited risk.

But, what they don't understand about the #7 jersey is the purchase decision has been made before the customer walks in the door. This item doesn't sell, it's bought, and the sooner DKS management realizes this, the better for the bottom line.

Full disclosure here: We do not, nor any of our employees, have a position in DKS. This post is simply to point out the hilarity of business and how companies (publicly-traded, mind you) seem to forget who actually "owns" the entity.

Good luck, DKS. Don't be surprised when the company reverses course and begins offering the jersey in its stores--probably around week 5, just before Vick's suspension has ended.

Until later,

Todd M. Schoenberger, Managing Director
LandColt Trading, Inc.

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