Dick’s CEO Admits Company Lost $250 Million Due to Anti-Gun Policy
He also ordered the destruction of rifles worth $5 million.
Dick’s Sporting Goods CEO Ed Stack admitted that his company lost $250 million after he decided not to sell guns to people under 21-years-old.
The company also destroyed $5 million worth of rifles “because Stack believed no one should be allowed to own them.”
Dick’s decided to stop selling certain rifles and high-capacity magazines in 2018 after the shooting at Marjory Stoneman Douglas High School in Parkland, FL.
Stack decided to take this route even though the shooter did not use the gun he purchased at Dick’s. He used the gun he bought at Sunrise Tactical Supply.
The company stopped selling guns at 125 locations. Stack has considered banning gun sales from all of the stores in the future.
From The Washington Free Beacon:
“I said, ‘You know what? If we really think these things should be off the street, we need to destroy them,'” he told CBS.
In the interview, Stack was unapologetic about the loss of hundreds of millions of dollars worth of revenue. He said the company lost about as much money as he expected it to lose when he decided to institute a new gun control posture.
The loss of money has not changed Stack’s mind about the anti-gun policy nor has the fact that it will likely “continue to have an impact going forward.” He still uses Dick’s money to lobby for more gun control and force other stores to stop selling specific guns:
“The hunting category is a sizeable part of our business; however, there has been an overall slowdown in sales in this category since the announcement of our new firearms policy,” the annual report read. “Despite this, we continue to believe that implementing this new policy is the right decision for our athletes and our communities. In fact, if we could go back and revisit it, we would still make the same choice today.”
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“Negative publicity or perceptions involving the Company or our brands, products, vendors, spokespersons, or marketing and other partners may negatively impact our reputation and adversely impact our ability to attract and retain customers and employees,” the report’s section on risk factors said. “For example, after the Company announced changes to its policy relating to the sale of firearms and accessories and announced its support for certain gun reform measures in the first quarter of 2018, the Company’s hunt business experienced an accelerated decline.”
Will Stack’s virtue-signaling affect the gun business? Stephen Gutowski pointed out that a 2018 report shows “the gun industry had been experiencing a slowdown in sales over the last several years.”
Sales have picked up in the past two months as Democrats and the left continue to tout gun control.
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We have a contender for the John Hechinger award.
?
Google Hechinger lumber
And the WaPo mentions nothing about him siding with the Brady bunch and the grassroots boycott by blue collar tradesmen who spent their weekends hunting and fishing.
How many of us knew a couple of years ago that we would be seeing a posting like this here? I guess if you are a liberal, and therefore incapable of making mistakes in the first place, then there is simply no opportunity to learn from mistakes, hence their repetition on a timely basis
I hope the Stack family has solid control, the $250 million is a fair amount of money. Regardless, they are a public company with a responsibility to the stockholders. I’m not certain such political stands, while certainly virtue signalling, meet the fiduciary requirement of leadership when such funds are involved.
Neither do the shareholders or the litigation industry.
The stock, share “Stake” holders should sue Stack out of the company.
He’s lost them lots of dividends!
How can share-holders stand for this? Toss this dude out!
Stack stands on principal! Burns a $250m dollar bill because he’s a strict moralist! Launches big money lobbying campaign to bribe politicians because he’s an honest dealer!
But won’t pay the janitor $21.50 an hour.
(Hey, make them live by their own rules)
Virtue signaling has a cost,unfortunately the share holders have to absorb it thanks to the CEO.
Anti-civil rights.
The right to keep and bear arms… legs, a head, and life, shall not be infringed.
yet abortion to sell baby parts is apparently legal.
The hunting community spends plenty of money each and every year, nice way to alienate a viable , long term customer base who purchase more than just weapons. I’m sure the competition is sending him a large Christmas card every year.
Bass Pro/Cabellas are happy to pick up the slack.
They didn’t have any AR-15 type firearms in the Post Falls, ID Cabellas Maybe a month ago, and I panicked a bit. They were showing them though in their catalog, and then a couple weeks ago, checked out the store in Missoula, and their supply was low, but still quite visible, including some used ones. Still, everyone should keep their eyes open to a stealth move by them to get out of the market without paying the price that Dick’s did.
I was in a local Dick’s a little while back and the store was completely empty. They only had one cash register open and just a few employees on the floor. I thought it was strange but now it all makes sense.
And they say it’s all about money.
If you look at gun sales for the last 30 years or so, they were phenomenal during Klinton’s reign, gun shows all but disappeared and sales dropped during Bush, then they peaked under Obummer for 8 years, and now with Trump they have slumped off again. People used to joke that every gun dealer in the country should send a $5K check to Klinton and Reno as their share of the windfall profits. There was a huge speculation in AR-15 lowers before the 2016 election and there was a huge glut in both the finished receiver and 80% markets for those speculating on a Hillarity win. Now they are being dumped at 30% of the pre-election pricing.
Dicks is a perfect example of the get woke go broke connection. I am certain that he will blame their woes on everything BUT his stupid stance. The problem with these companies is that they actually believe the press releases when they say that the NRA has no real power, and then they discover that messing with the blue-collar grassroots membership, both official and the sympathizers, has drastic consequences. Even today the MSM will not make a connection between Hechinger’s public position on gun-control and the complete disappearance of his chain of 300 stores in just 5 years, which is why Dicks is now repeating that same mistake, as will someone else down the road.
I don’t think that I have see the 30% prices. We have recently seen a floor of right below $50 for either completed or 80% complete lowers, and periodically being sold out. Could you give some ideas where we could find them cheaper?
Personally, I remain unconvinced that they will not succeed in enacting another AWB. What should be fun though is trying to turn in an AR-15 lower receiver in a firearm buyback. After all, according to the ATF, that legally is the firearm. (-;
https://andersonmanufacturing.com/ $40 stripped, but my sources are dealer priced at $30. The irony here is that the dems are directly responsible for the expansion of the AR market and the drastic drop in prices. Used to be that pretty much everyone in the black rifle club knew each other.
With price tag of 5 million of AR-15s they destroyed, I estimate that at a rough price of $1000 per, they destroyed more rifles than were actually used in homicides in 2018.
There has to be some fudging going on somewhere. I keep hearing that there are 10m or so AR-15s and other “assault weapons” in private hands, and this company just destroyed half that amount. Doesn’t work out.
Dicks will likely go out of business in <10 years.
Stupid has a price.
I don’t think they will last that long,I’D give them perhaps 4 years at the best. One the day of the announcing of the closing of their doors for good,I’ll pull a cork in celebration of woke virtue signaling.
My last three long gun purchases were made at Dick’s before they became virtuous. I haven’t set foot in a Dick’s since.
I “was” a Dick’s customer since they came to the Pittsburgh area in the mid 1990’s. However, when they went knee jerk liberal, I severed my customer relationship. There are other sources for their products and I won’t support them. Hopefully they go out of business soon!
I will not set foot in a Dicks. Academy Sports has what I need locally and/or my local gun shops.
Will dicks also ban baseball bats at the next murder using a baseball bat? How about golf clubs? Tennis rackets can kill too.
Seems he believes all his customers are criminals in waiting, he should only sell foam tomahawks to Atlanta Braves fans.
The bottom line is that any decision that you make, in business, is supposed to increase income and profit, not lose money. So, the soccer moms increase their business in your store, because you discontinue selling firearms. Great. How many soccer balls is she going to buy every year? How many shirts, socks, and shoes. And, what is the profit margin on these items? Now the shooting/hunting clientele. How many boxes of ammo [each box sells for about the same as a soccer ball] are they going to buy every year? How many shirts, socks, pairs of pants, outerwear, accessories, supplies and firearms? And what is the profit margin on the these items? Apparently, the shooting clientele spends more than the soccer mom clientele, as the $250 million shortfall points out.
He has that Democratic touch for bringing down the business or institution. No doubt about it.
Competitors rejoiced and new stores opened in the areas abandoned. It is what capitalism does.
This may explain some:
https://en.wikipedia.org/wiki/Hechinger
Keep digging, stupid.
Shareholders: are you listening?
“The company also destroyed $5 million worth of rifles “because Stack believed no one should be allowed to own them.””
Pfft… That’s nothing, dude, if you really want to make a difference you need to spend at least $200 million of Dick’s money to buy lots more rifles and destroy those too!
I spend about $800/yr on sporting goods. Just not from Dick’s anymore. And none of it was gun-related. Apparently, I’m not alone. What an irony that a dickless sporting goods company would be called Dick’s. Should be renamed to Eunuch’s.
“He said the company lost about as much money as he expected it to lose when he decided to institute a new gun control posture.”
Really? This guy made a conscious decision, to stop selling a legal product, expecting it would cost shareholders 1/4 billion dollars and he did it anyway?
He should be fired at a minimum and sued by the shareholders.
My family doesn’t spend $250 million, but we spend what we spend. And not one red cent of our money will ever be spent in a Dick’s again.
I expect to see a filing of Bankruptcy by Dicks, in the near future. The Woke generation, can’t find their way out of their own bubble, let alone support and buy from a Woke company.
the raimondo school of economics–” let’s stick to our guns. if we keep going this direction, maybe we can lose $60m ! ”
what a fool–he obviously believes dick’s is the only sporting goods/weapons outlet in operation
The guy’s a moron. He’s destroying the company his father built, and put him in a position to expand it and become a billionaire. He’s destroying the value of stock held by his investors, and may possibly drive the company out of business. He has taken nothing “off the streets” by destroying $5 million worth of useful merchandise — rifles are still being made, and those who are interested can still buy whatever the like, and as many as they care to. Dick’s stockholders should sue him into poverty.
“See the mighty king salmon swim up the river! Struggling, it leaps through the rapids and up the small falls, always progressing. Then the real test comes on it’s journey, the 5 foot water falls, with a bear at the top for a reward…. See the mighty king salmon get it’s guts ripped out by the hungry bear…dinner has been served!”
Seldom are things as they seem, just like virtue signaling is it’s own reward…and often self-destructive behavior.
Apparently, being a left-wing socialist business moron is now in vogue.
The vendors who sold this idiot $5,000,000 worth of rifles must be very happy. Presumably, they were paid for the rifles, and in lieu of reselling them, they were destroyed. People who wanted the rifles that were destroyed will just buy them from another business, who may well purchase them from the same vendors.
I hope everyone who shops there stops doing so.
I am surprised no stockholder used an deer rifle to punish him for squandering all that money.
Stack and his relatives are majority stockholders. The majority of stockholders will vote to support him. The minority of stockholders should understand that this corporation is not run to maximize the value of shares and act accordingly before the value of the shares drops further.
According to the company’s 10-K, there were 98.8 million shares of DKS outstanding at the end of the last year. The latest NASDAQ report shows institutions held 74.3 million of those shares.
In certain threads, I like to start with my credentials. This is another such thread. I am a retired financial analyst who worked on both the “buy side” (pension and mutual fund management) and the “sell side” (investment banking) of the business.
I was never a dedicated retailing analyst, but I was a buy-side generalist. In that role, I looked at companies in just about every industry including retailers. I found it a difficult sector to follow and ultimately specialized elsewhere. But I do remember the basic metrics and structure, and used that knowledge here.
Beyond that, I am a Life Member of the NRA, and live in a household with 14 guns and plenty of ammo. I’ve been in a Dick’s once in my life, and will never set foot in one again unless we’re on a trip and in dire need of something only they have. Thus, nothing below should EVER be interpreted as my endorsement or agreement with what they have done, but only my experienced and realistic interpretation and analysis.
Okay, with that tedium finished, anyone who stumbles across what I have to say will not like what they hear.
As part of a different conversation a few days ago, I looked up the publicly-held companies in the sporting goods retail sector and read their most recent financial reports. I think Stack overstated the cost of his anti-gun stance to make himself look heroic to his choir of anti-gun soccer moms and dads. I don’t think the cost was anywhere near $250 million.
Dick’s appears to be the largest sporting goods retailer in the country not including Amazon. (I say “appears,” because a significant percentage of that sector is either privately held or operates within a larger enterprise — Amazon, Wal-Mart — and isn’t easily or at least quickly quantified.)
Their net profit margin was 5% in the most recent quarter. That compares to 5.5% a year ago. Sales were up 3% both overall and “same store,” a closely-watched metric in the retail business. If you extrapolate that onto an entire year (risky if you were analyzing the company for a fund or a bank, but it works here because precision isn’t as important), Dick’s could be expected to post about $8.7 billion in revenues, and net profit of maybe $325 to $350 million this year.
Dick’s doesn’t break out gun and ammo sales in its reporting, which means they’ve never been too important — something backed up by my one-time visit, and by gunner friends who never considered them a good place to buy guns or ammo. Thus, dropping guns (including stupidly destroying $5 million worth of AR-15 inventory) cannot have directly cost them much money. Since they don’t publicly break out those sales, I can only speculate how much, and all I’ll say is “trivial.”
As a contrary example, I’d point to a much smaller publicly-held competitor, Sportsman’s Warehouse (where I bought one of my guns, by the way). They are about 1/10th the size of Dick’s and their financial statements break out “hunting equipment,” including guns and ammo, at about 40% of sales. I don’t know what the Securities & Exchange Commission requires along these lines, but if guns were material to results at Dick’s, they’d be broken out in a line item somewhere.
There are two possible indirect effects to mention. One is that Dick’s (850 stores) operated 35 stores under the “Field & Stream” brand. I suspect that a lot of their firearms and related revenue came from those stores. They’ve already sold eight of them. There might some one-time costs associated with divesting the remaining 27 Field & Streams, but it’s very hard to believe that any hit would be material in a company as large as Dick’s.
The other potential cost would be lost business from people like me who’ll never buy ANYTHING from Dick’s. I doubt this will matter, given that they were never much of a force in gun retailing to begin with, and given that boycotts of any kind rarely matter. Not only that, but it might actually wind up being offset by increased business from the anti-gun crowd.
This leads back to why Stack would overstate the impact. He obviously feels righteous about what he’s done, so anything that magnifies his profile feeds his ego. This is not to be minimized. As an analyst, I met thousands of CEOs and CFOs. I had a high opinion of them as a group, but the egos are large.
Past that, he’s got a crowd to play to. He’s in a tough retail sector, and his company’s stock is down about one-third from its peak. (Which is much less bad than the other “brick and mortar” publicly-held sporting goods retailers — but it’s still down in what has been a rising market.) Anything he can do to create or enhance a bandwagon effect is in his interest.
The shareholders (almost certainly dominated by institutions of the kind I used to work for) won’t protest. They hold stock in a company in a sector that’s under siege from Amazon. They’ll see Stack’s actions as a kind of Hail Mary pass. Even if he really “lost $250 million” — doubtful, as I explained above — that’s almost certainly in sales, which at 5% net margins is $12.5 million.
If (a very big “if”) that were the case, it’s 13 cents a share. Dick’s made $3.24 a share last year. Trust me, no one likes to leave 13 cents a share on the table, but that doesn’t even come remotely close to the kind of thing that causes revolts within wood-paneled rooms.
BOTTOM LINE: Whatever happens to Dick’s Sporting Goods in the future won’t have much of anything to do with Stack’s decision to exit the gun category.