Dick’s Sporting Goods CEO says overhauled gun policies cost the company a quarter of a billion dollars

After 17 people were gunned down at Marjory Stoneman Douglas High School, Dick's Sporting Goods chief executive Ed Stack said he was removing all assault-style weapons from company stores.

Those unsold guns not only came off the shelves, but off the streets. Rather than return the inventory to manufacturers, Dick’s destroyed about $5 million worth of the weapons, turning them into scrap metal.

Stack has brought gun reform to the center of his role as CEO. In the last year and a half, Dick’s has overhauled its gun sales policies, most recently pulling all guns out of more than 100 stores. And even while the National Rifle Association, Republican lawmakers, and critical customers have blasted Stack, he says that the company’s entire firearms category is under “strategic review.”

"We said, 'The system is broken, we need to stand up and say something,' " Stack told CNBC Tuesday morning. "If you have an expertise on this, and you feel that it's important to say, you should stand up and say it."

Tuesday marked the release of Stack’s memoir, in which he tracks the company’s evolution from a modest regional chain to one of the biggest players in the $70 billion sporting-goods market. Stack often turns to gun reform as a particularly urgent issue facing his company, corporate America, and the nation. Last month, Stack joined 145 CEOs who pressed Senate leaders to expand background checks to all firearms sales and enact stronger “red flag” laws. Signatories to a letter included the heads of major retailers, tech firms, and financial institutions, from Levi Strauss to Twitter to Bain Capital.

Immediately after the Parkland shooting, Stack raised the possibility of getting Dick’s out of the gun business altogether, the Washington Post reported earlier this year. In his memoir, Stack describes days of internal debates about the financial risk of such a drastic move. Even if the margin rate on guns wasn’t terribly strong at Dick’s, the company knew that hunters didn’t only buy guns but also hunting coats, boots, socks, and other big-ticket items. Plus, hunting had been a mainstay of its business since the company’s earliest days.

“If we stopped selling guns altogether, we’d be punishing those customers, some of whom had been with us for sixty years -- men and women who knew to treat firearms with respect and who used them for legitimate sport,” Stack wrote. “Did it make sense to needlessly alienate loyal Dick’s customers who bought shotguns and deer rifles, and were law-abiding and do-right citizens?”

Ultimately, Dick’s pulled all assault-style weapons from its stores, banned high-capacity magazines, and “bump stocks” that could effectively convert semiautomatic weapons into machine guns. Stack also announced that Dick’s would not sell firearms to people younger than 21.

But that strategy didn't cushion the company entirely. The policy changes after Parkland cost the company about a quarter of a billion dollars, Stack told CBS News. (The company has never disclosed what share of its sales come from gun sales alone.) For the fiscal year ending Feb. 2, 2019, same-store sales fell 3.1%, according to company earnings, with Stack blaming much of the slump on gun issues. Customers boycotted the company, and more than 60 employees quit.

But there’s evidence of a turnaround. In August, Dick’s announced that same-store sales jumped 3.2% in the second quarter -- its strongest showing since 2016 -- and the company raised its full-year guidance.

Some of the company’s critics charge that Stack and Dick’s oppose Second Amendment rights, or that limiting sales of assault-style weapons means that all weapons will eventually be banned. The National Rifle Association on Monday tweeted a Breitbart story about Dick’s destroying its unsold assault-style rifles “to keep them out of private hands.”

Democratic presidential candidate Beto O’Rourke -- who advocates for a ban on assault weapons and also a mandatory buyback -- shot back. “Dick’s Sporting Goods is doing more to keep Americans safe from assault weapons than Congress,” O’Rourke tweeted.

America’s largest retailers have drawn particular scrutiny for their gun policies. After 24 people were killed in shootings at Walmart stores this summer, the company announced it would stop selling ammunition for military-style weapons and no longer allow customers to openly carry firearms in stores. Other retailers also changed their open-carry policies, including Kroger, CVS, and Walgreens.

Lawmakers may be stalled on major gun legislation, but there is broad public support for change. A recent Washington Post-ABC News poll found Americans across party and demographic lines overwhelmingly support expanded background checks for gun buyers and allowing law enforcement to temporarily seize weapons from troubled individuals. The poll found 86% of Americans support implementing “red flag” provisions that allow guns to be taken from people judged to be a danger to themselves or others. In addition, 89% support expanding federal background checks to cover private sales and gun-show transactions.