Is Edward Stack Insane?

May 14, 2018
by Bob Adelmann

Two lifetimes of blood, sweat, effort, and tears have gone into building Dick’s Sporting Goods from a small bait and tackle fishing supply store in Binghamton, New York into a corporate giant. Its chain of 610 stores plus Field & Stream, Affinity Sports, Golf Galaxy, Oshman’s Sporting Goods, and True Runner generates, until recently, $8 billion in annual sales with a total asset value of over $4 billion.

So why would Dick’s Chairman and CEO, Edward Stack, son of founder Dick Stack, want to burn the place down, just to make an ideological statement? The NRA has called his actions “irrational” and “strange” while other observers have called them bizarre, inconsistent, and hypocritical.

It started in February, following the high school shooting in Florida on Valentine’s Day. One of his stores sold a shotgun to the perp and Stack felt personally responsible even though it wasn’t used in the massacre. Something had to be done, he felt, even if it was irrational. In announcing that his stores would no longer sell AR-15 semi-automatic rifles, nor handguns to anyone under age 21, nor “high capacity” (over 10 rounds) magazines, Stack said:

We support and respect the Second Amendment, and we recognize and appreciate that the vast majority of gun owners in this country are responsible, law-abiding citizens.

But we have to help solve the problem that’s in front of us. Gun violence is an epidemic that’s taking the lives of too many people, including the brightest hope for the future of America — our kids.

This is bizarre, as those AR-15 semi-automatic rifles have precious little to do with mass murders. According to the FBI, rifles of all types, including bolt-action and semi-automatic, were used to commit 374 murders in 2016, while “knives or cutting instruments” were used to 1,604 murders that year.

Stack was also inconsistent, illogical, and hypocritical. The FBI noted that handguns were used to commit 7,105 murders in 2016, yet Stack’s Field & Stream chain of stores continues to sell both “tactical knives” and handguns.

The NRA said Stack’s move was “irrational,” that his decision didn’t “focus on the actual problem [but instead] is punishing law-abiding citizens. What a waste, and what a strange business model.”

Strange, indeed. He told his board of directors to expect fallout, that his decisions were “not going to be positive from a traffic standpoint and a sales standpoint. There are going to be people who won’t shop us for anything.”

But that wasn’t good enough. Stack announced that rather than return his inventory to the manufacturers under the return policies, or offering them to local law enforcement agencies, he ordered his company to destroy them! Destroying company inventory simply to make a political statement isn’t a rational act.

But even that wasn’t good enough. Lobbying records uncovered by The Federalist in early May show that Dick’s Sporting Goods hired three anti-gun lobbyists to push for gun-control legislation in Washington. The Federalist noted:

The three lobbyists tapped by Dick’s to push for gun control are … Joel Johnson, who worked for both President Bill Clinton and Senate Democrat leadership; Andrew King, who worked for Sen. Lindsey Graham (R-S.C.); and Christina Brown, a former staffer for Sen. Bob Casey (D-Pa.).

This is textbook behavior if he wants to alienate not only his thousands of loyal customers, but dozens of his key suppliers. True to form, those suppliers began to bail on Dick’s. On May 3, Springfield Armory ended its relationship with Dick’s: “It is clear where Dick’s Sporting Goods and its subsidiary, Field & Stream, stand on the Second Amendment, and we want to be clear about our message in response. Their position runs counter to what we stand for as a company. At Springfield Armory, we believe in the rights and principles fought for and secured by American patriots and our founding forefathers, without question. We will not accept Dick’s Sporting Goods’ continued attempts to deny Second Amendment freedoms to our fellow Americans.”

The next day, the National Shooting Sports Foundation, with a membership of 13,000 manufacturers, distributors, firearms dealers, shooting ranges, publishers, and sportsmen’s organizations, voted unanimously “to expel Dick’s Sporting Goods from membership for conduct detrimental to the best interests of the Foundation.”

Last Tuesday, MKS Supply, which makes Hi-Point firearms, ceased doing business with Dick’s, issuing this statement:

We believe that refusing to sell long guns to adults under age 21, while many young adults in our military are not similarly restricted, is wrong. We believe that villainizing modern sporting rifles in response to pressure from uninformed, anti-gun voices is wrong.

We believe that hiring lobbyists to oppose American citizens’ freedoms secured by the Second Amendment is wrong. Dick’s Sporting Goods and Field & Stream, in purportedly doing all of these things, have demonstrated that they do not share our values. [We’re] standing by the American people by refusing any further sales to Dick’s Sporting Goods & Field & Stream.

The next day Mossberg terminated its relationship with Dick’s, issuing this statement from Iver Mossberg, its CEO:

It has come to our attention that Dick’s Sporting Goods recently hired lobbyists on Capitol Hill to promote additional gun control. Make no mistake, Mossberg is a staunch supporter of the U.S. Constitution and our Second Amendment rights, and we fully disagree with Dick’s Sporting Goods’ recent anti-Second Amendment actions.

At this writing, several lawsuits have been filed over Stack’s actions and employees at several of his stores have quit over his policies.

But Stack hasn’t lost all grasp of reality. In early April, he saw what he was doing to his company and its stock and liquidated a million dollars’ worth of his personal stock holdings. Specifically, on April 3 he sold 31,787 shares of his company’s stock at $33.81 per share, putting $1,074,718 into his pocket. Last Friday, DKS closed at $31.91 a share, while the stock dropped further in after-market trading, to $31.71 a share. In other words, while his company’s stock was losing another six percent of its value (it has lost 35 percent of its value in the last 52 weeks), he was on the sidelines. Would this, perhaps, be insider trading?

Remarkably, of the 30 stock analysts following DKS, 19 of them have put a “hold” on the stock, which raises the question: what are they waiting for? How much more damage must Stack’s actions do to the company before they put a “sell” on the stock?

Ed Stack may not be insane but he has certainly lost touch with reality by running off his best customers and suppliers, all to make a political statement.

The next meeting of the board of directors is scheduled for Tuesday.  Might the conversation include Stack’s bizarre behavior that is damaging his father’s company?

----------------------------

Sources:

The Federalist: Dick’s Sporting Goods Hired Three Gun Control Lobbyists In April

NRAILA: Hard Times for Dick’s as Second Amendment Supporters Respond to Company’s Anti-Gun Bent

Legal Insurrection: Mossberg Firearms Latest Company to Sever Ties With Dick’s Sporting Goods

Insider actions on DKS

52 week high and low on DKS:  high $48.24  low $ 23.88

NSSF EXPELS DICK’S SPORTING GOODS

Mossberg® Terminates Relationship with Dick’s Sporting Goods

Guns.com: More gun makers break ties with Dick’s Sporting Goods

Guns.com: Dick’s retains gun control lobbyists in D.C.

Springfield Armory: We’re cutting ties to Dick’s

Fox News: Dick’s Sporting Goods loses firearms businesses after gun control push

The Washington Times: Dick’s Sporting Goods feeling bottom-line pinch from P.C. gun control

LedgerGazette.com: Dick’s Sporting Goods (DKS) Shares Sold by LPL Financial LLC

Analysts Recommendations on DKS

History of Dick’s Sporting Goods

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