The CEO of Dick’s Sporting Goods on Becoming a Gun Control Advocate

The CEO of Dick’s Sporting Goods on Becoming a Gun Control Advocate

Ed Stack, the chief executive of Dick’s Sporting Goods, decided after the Parkland school shooting to pull assault rifles and high-capacity magazines from all of his company’s stores. The controversial choice hurt revenues. But the retailer weathered the storm, thanks to inclusive and thoughtful decision-making, careful communication with all stakeholders, and a strategic shift to new product lines. Stack explains why he chose to take such a public stance on a hot-button social issue and how it has affected him personally and professionally. He is the author of It’s How We Play the Game: Build a Business. Take a Stand. Make a Difference.

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ALISON BEARD: Welcome to the HBR IdeaCast from Harvard Business Review. I’m Alison Beard.

Most corporate leaders try to stay away from politics and controversy. They know that customers, employees, and shareholders usually hold a range of views on hot button issues. So they want to stay impartial and focus on running a business that appeals to everyone. But there are times when CEOs and their organizations do take a stand, even if it means risking the support of all those stakeholders, and the money they bring in. Ed Stack, the chief executive of Dick’s Sporting Goods did that in 2013 after the tragic school shooting at Sandy Hook Elementary in Connecticut. He pulled assault weapons from Dick’s shelves. He did it again in a much more public way in 2018 after another horrific school shooting, this one in Parkland, Florida. He banned the sale of assault weapons and high capacity magazines not only at Dick’s but also at its Field & Stream chain of stores. In the months since, he has taken guns out of some stores altogether, first at ten, then 125. And he’s become a leading voice in the push for common-sense gun laws in the United States.

Stack is here today to talk about that advocacy. His new book is, It’s How We Play the Game, Build A Business, Take A Stand, Make A Difference. Ed, welcome. Thank you so much for coming to the show.

ED STACK: Thanks, Alison. It’s nice to be here.

ALISON BEARD: So I’d love for you to take us back to the days after Parkland. You had already banned assault rifles at the Dick’s stores. Why did you think that you needed to do more?

ED STACK: Well, after the, there have been so many shooting with these assault-style rifles, and then it culminated for me at what happened in Parkland. And watching those kids file out of the school, you know, their hands up, hands out, to make sure that they didn’t have a weapon, listening to the parents talk about the kids that were lost, and listening to these, the survivors from the school shooting, it just had a profound effect on me, and I felt that we needed to do something to try to help move this conversation along. You know, prior to that, there had been so many other shootings, whether it was Sandy Hook, the shooting in Vegas, the nightclub in Orlando, San Bernardino, it just seemed that this continued to go on and on, and I felt that we needed to stand up and say something.

ALISON BEARD: Why do you think that you had such an emotional reaction? Tell me about sort of how you feel about guns in general.

ED STACK: Well, my emotional reaction was not so much around guns, as it was around the kids and what happened to those kids and those families. I’ve been around guns my whole life. I mean, I’m a gun owner. I believe in the Second Amendment. I’m very comfortable around guns. So I didn’t have an issue around guns. I have an issue around this particular gun. You know, the assault-style rifle that has been used in so many of these shootings. It’s really a derivative of a military weapon that has now been modified for civilian use. But it was made for one thing and one thing only, and that was to kill as many people as possible in the shortest amount of time. And I just don’t think that particular gun should be on the market.

ALISON BEARD: And after Sandy Hook, and then again after Parkland, was it difficult for you to get buy-in from your executive team and your board to take yourself out of this particular category of products?

ED STACK: It really wasn’t. During that weekend, after Parkland, I sat down and wrote kind of response of what I thought we should say publicly about the shooting and about what we were going to do. And I came back in on Monday and sat down with our management team, and I had had a really emotional weekend. I’ve talked about this, and I put this in the book also, that I can be a pretty stoic guy. I’m not much of a crier. And watching those kids, those survivors and those parents talk about their kids, I sat and watched that on TV, and I hadn’t cried that much since my mother passed away. When I came back in on Monday morning and had this statement that I had written, which was a draft of what I thought we should do, and assembled our senior management team and started to read what I thought we should do, I got choked up again. I couldn’t finish it. And our chief of staff had to take it out of my hand, and she read it to the rest of the group. And we had a pretty, we had a very thorough conversation about it. And it wasn’t difficult to get everybody’s buy-in on this. We all felt the same way. We felt that these shootings, we had to try to do something to reduce or stop these shootings, and we all agreed that we would stand up and take this stand.

ALISON BEARD: At the time, did you or any of your team have an instinct to go further?

ED STACK: I did. But the rest of the team, what we decided to do was that we would no longer sell any of the assault-style rifles in any of our Dick’s stores. We would no longer sell any high capacity magazines. We would not sell a firearm to anyone under 21 years old. And we had never sold, but we reaffirmed the fact that we would never sell bump stocks. And that was, and then we were going to call on Congress to come together with the real intent to move this conversation forward and put some things in place that could help reduce these tragedies.

ALISON BEARD: And we often hear that in business we shouldn’t be emotional, that we should be purely rational. But you definitely made this big and important decision when emotions were running very high. So how did you separate yourself from the horror and think, what was the right thing to do for the company?

ED STACK: Well, I mean, businesses are run by people. People are emotional. And it’s OK to make emotional decisions for your business. Now, we didn’t, after Parkland, we didn’t make the decision the next day. We were very thoughtful about who we had to kind of bring under the tent, what we wanted to do, what the ramifications were going to be. So we were emotional about what happened in Parkland, but we weren’t emotional when we made our final decision. We were very thoughtful about how we went about this to make sure that we did it the right way.

ALISON BEARD: So once you made that decision, how did you strategize about communicating it to all of the different stakeholders, to your employees, to your suppliers, to your customers, and then also to Wall Street, since you’re a publicly-traded company?

ED STACK: Yeah, what I had originally wanted to do, I’ve always tried to fly below the radar screen from the PR standpoint.

ALISON BEARD: You’re not doing that anymore. [LAUGHTER]

ED STACK: No, definitely not. All I wanted to do was send out this statement of what we were going to do, and the team kind of sat down with me and said, you know, what, this is a really big deal if we’re going to do this with what’s going on here. We’d really like you to go on TV, make this announcement, and I wasn’t really comfortable doing that. But as we talked about it, and it was a really, it really started to lead this conversation, I acquiesced and said I would go and do a couple of interviews on TV to talk about our decision and why we were doing it and what we wanted to have done.

ALISON BEARD: And did you do anything else in terms of talking to your employees, and particularly your suppliers, who I’m sure were angry with the decision?

ED STACK: Yeah, so if we take this between all the different constituents, on the, so we made our announcement on February 28th, which was exactly two weeks after the Parkland shooting. And we had it all laid out what we were going to do because we had an awful lot of people we had to communicate with. We wanted to communicate with the public of what we were going to do. We had to communicate with our employees. We wanted to make sure they understood what we were doing. We also wanted to communicate with our customers. So I went on Good Morning America with Stephanopoulos, and at the same time, we sent an email out to our employees. We sent an email out to our entire customer base and some of our suppliers. And you’re right, our suppliers were not happy with us. We had a number of pretty spirited conversations with them, and a number of them decided not to do business with us anymore. They pulled future orders and didn’t want their products in our stores.

ALISON BEARD: Right. And that was just a piece of the backlash. I know you got some very vitriolic responses from customers. How did you deal with that, both personally and as an organization? Did you ever second guess the decision?

ED STACK: I can tell you, never second-guessed the decision, and today roughly 18 months after, if we had the chance to do it all over again, we’d do it all over again exactly the same way. What we, we were really kind of battening down the hatches for a real negative response, and we got that. We had a number of people who were really upset, who sent emails and letters and phone calls. They were pretty descriptive on how they thought about us and about me in particular. What we were surprised about is the outpouring of support that we received from the public about our decision.

ALISON BEARD: Yeah. The company, though, did then take a financial hit, which was expected. So did it get bad? And how did you weather the hit you did take?

ED STACK: Well, we did take a hit, and we knew we were going to. When we had that first management meeting and talked about the things that we were going to do, our CFO, who was fully supportive of the idea, said, you know what? I need to sit down and run some numbers if we do this, and what’s going to be the financial impact. And I said, you’re absolutely right, you should do that because we have to guide the street to what we’re doing. But I don’t really care what the financial impact is. This is what we’re going to do. And he said, fine. He went back and ran the impact, and we thought it would be about a quarter of a billion dollars in sales. And that’s pretty close to what it came out to be. So our next quarter, our next call, we went out, we reduced our guidance, took our sales plan down, and the Street reacted. And we expected that.

ALISON BEARD: But you had seen the company through very difficult times before. So did those experiences help you get through this one? Or did it feel different?

ED STACK: Well, it felt different this time, because we had never made a decision quite this significant that could impact our business since the decision we made at, after Sandy Hook. This was much different, because we were much more vocal, much more out in the marketplace talking about this, and we annoyed an awful lot of people. But we knew what the impact was going to be from a financial standpoint. We knew we could weather that impact. And we set about to institute a plan that would allow us to get through this and continue to grow our business, or minimize the loss as much as we could. And our management team did a great job, because each of the next successive three quarters, we actually raised our guidance each quarter from what we had originally done. The sales impact was real. But the team did a great job from an expense standpoint, margin rates, all the other controllables we had in our business, they did a great job, and our business really did very well.

ALISON BEARD: Right. And when you remove a product line, in addition to sort of tightening up, you need to replace it with something else. So did you shift the company strategically in terms of what you were offering to make up for that loss/

ED STACK: We did. We took a look at some areas of the business that we thought we had underinvested in from a marketing standpoint or inventory and tried to grow those businesses. We really felt that our team sports business, that high school athlete, junior high school athlete, we could do a much better job, and we refocused on that, and that was a big help to our business.

ALISON BEARD: So you’ve since taken more steps away from guns, not just assault rifles, but any kind of firearm, even though, as you said, you are a gun owner yourself. You’ve pulled them from some stores. Most recently you sold eight of your Field & Stream locations, which are hunting focused. So why have you kept going with this?

ED STACK: Well, what we did, a number of our brands decided not to sell us any longer, which we were fine. And somebody asked me, well, what did you say when the brands called and said, we’re not going to do business with you any longer?

ALISON BEARD: These are the gun brands.

ED STACK: The gun brands. And the conversation was, OK, no problem. We never tried to get them to change their minds. They didn’t want to do business with us. We were just fine with that. So what we did and said, in our, the hunt business continued to deteriorate. We were pretty transparent about that in our quarterly calls. And we said, let’s see what happens if we take hunt out. So in the fourth quarter of last year, we took hunt out of ten stores. And we were really pleasantly surprised at what happened. So we took that space out, the gun space out and the inventory out, reinvested that in areas of the stores that we thought were best for those communities, and those stores significantly outperformed the balance of the chain. So we said after that, after that test we said, alright, let’s broaden the test a little bit, and we have, at the end of the first quarter, we had taken it out of another 125 stores. And that’s gone extremely well also. So we continue to look at the hunt business under strategic review. You’re right, we just sold several of our Field & Stream stores to Sportsmen’s Warehouse. And we continue to assess what we’re going to do with this business. I think it’s actually going to be a bit of a blessing in disguise because we’re finding ways for the business to perform better without the hunt business.

ALISON BEARD: Do you envision a day that none of your stores will carry guns?

ED STACK: For right now, I’ll just say, we continue to have the whole hunt business under strategic review.

ALISON BEARD: From the beginning, your company has supported children and communities with youth sport programs. You know, there’s the great story about your dad, who brought Little League to your whole hometown. So you see this gun stance as an extension of that?

ED STACK: I do. I think that our company has always gotten involved in the community, and tried to make a difference where we could, whether it was, as I talk about in the book, what my father did with Little League back in Binghamton, New York, where the company started, to what we’ve done with youth sports programs, what we’ve done around kids, and then now what we’re doing about the gun issue, also.

ALISON BEARD: Right. So Dick’s is a publicly-traded company now, but it’s also your family business. You know, your dad started it with two stores, and then you took it over as a young man, and you have built it into the huge retail operation that it is today. Do you think that that made it easier to take this stand? Do you feel emboldened because it is your business?

ED STACK: Well, I think it is probably a little bit easier for us than it might be for some other public CEOs to do what we did because we are a family business and still controlled by the family. But other companies have started to make those kinds of decisions, to take a stand on certain social issues, and in particular the gun issue. When we made our announcement on February 28th at seven o’clock in the morning, by six o’clock that night, Walmart had made a very similar statement, along with Kroger and LL Bean and a few others. And it was really, it was great to see these other people follow this and validate what we were trying to do.

ALISON BEARD: So was part of your goal not just to have Dick’s do the right thing, but to encourage other CEOs to be more vocal advocates on this issue?

ED STACK: No. That never crossed our mind. We never thought anybody else would follow us, and especially companies that are of the size that some of these companies are. We just felt we needed to do the right thing.

ALISON BEARD: But do you think that you have had an influence on your peers, not just about gun control, but making other CEOs, other corporate leaders more comfortable taking stands on social issues?

ED STACK: You know, I think we’ve had some impact. I’ve had a number of people who have called me about different issues now and have said, you know, walk me through the process of what you did. Walk me through the process of why you did it, who you talked with, what the ramifications were. So I do think that we’ve had at least a little bit of an impact.

ALISON BEARD: And is that how it should be? Or is there a slippery slope here when companies and CEOs are getting too political?

ED STACK: Well, that’s an interesting question. And I’m sure there’s some point. But our feeling is that if you see something that’s drastically wrong that’s going on, and you have an expertise in what’s going on, and you can offer a solution, and you can be part of the solution, then I think you should speak up. And so that’s what we’ve done on the gun issue.

ALISON BEARD: And you’ve actually been actively lobbying Congress. You did an open letter with other CEOs. So why have you been compelled to actually go to Washington and start trying to push the government toward policy change?

ED STACK: Well, I think it’s the right thing to do. I think it’s the right thing for the country. I think it’s the right thing, certainly, for our kids. And after we made our announcement, I was invited down by some of the families from Parkland to speak with them. And if you want to talk about a day that was a very emotional and difficult day, sitting talking to those families who lost a loved one, you know, a child or a spouse at Parkland, that was a day I will never forget. And the one thing that I got from the families there is that they were very rational in their argument. They didn’t say, we should ban all guns. Their comments were, we need to have reasonable gun reform so that what happened to my child or my family doesn’t happen to anyone else. And I firmly believe that in the country today, we have so many touchpoints that we’re divided upon, and that today rational people argue their position irrationally. And this group of families, if there was ever a group who had the right to argue their position irrationally, it was this group of families. And they didn’t. They were very rational about it. Which is why I can’t understand that if these families have gone through such an incredible loss, something that no family, no parent should ever have to go through, and if they can argue rationally about what we should do around firearms, I don’t understand why Congress then has the right to argue their position irrationally. The one thing I promised the families when we left is that I would continue this conversation. I would not stop this conversation. So that’s why we’ve gone to Washington to talk to Congress, which got absolutely nowhere. It’s all divided across party lines.

ALISON BEARD: And has it at all been a distraction from running the business?

ED STACK: It has not. We have a great management team. And our business is in great shape, and it’s something that we just need to do, and it hasn’t been a distraction at all.

ALISON BEARD: And as a sporting goods supplier that still has a big brick and mortar presence, how are you thinking about the future of those sales, especially with competitors like Amazon?

ED STACK: Well, in order to survive in today’s retail environment, you have to have a real reason for being. And you have to create experiences in the stores that want to bring customers or what we characterize as athletes, bring athletes into our store, whether they’re going to shop in our store or shop online. And we’ve done that. We revamped our entire baseball business this past year. We’ve got in 150 of the stories what’s called a technology called HitTrax, which is a batting cage that young men and women can go in with a baseball bat, and we can fit them for the bat that’s perfect for them. They can take a look at their bat speed, the ball speed coming off that particular bat, their angle of attack. We can really make sure that the kids have the right equipment to play their game. It’s hard to do that online. And we’re really differentiating ourselves from an experience standpoint going forward. Which is one of the reasons why I think our business continues to be so good.

ALISON BEARD: Yeah and the move away from guns has actually opened up more opportunities for you to put those things into your stores.

ED STACK: Yeah, we’ve got space in the store that’s now opened up that we can reinvest in that high school athlete, junior high school athlete. Our women’s apparel and equipment business has been just terrific. And along with our athletic footwear business. So those are three areas that we’re really focusing on to take up the space with guns, and it’s working very well in the stores that we’ve done it in.

ALISON BEARD: Terrific. Ed, thank you so much for joining us.

ED STACK: Alison, thanks for having me. I appreciate it.

ALISON BEARD: That’s Ed Stack, CEO of Dick’s Sporting Goods and author of the book, It’s How We Play the Game. This episode was produced by Anne Saini. We get technical help from Rob Eckhardt. Adam Buckholz is our audio product manager.

Thanks for listening to the HBR IdeaCast. I’m Alison Beard.

via Harvard Business Review

October 8, 2019 at 11:01AM

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