Why is the stock price of DICK'S Sporting Goods trending up, even as sales have slightly declined? The retailer's decision to remove guns from more stores offers a few clues.
Ed Stack, CEO of Dick's Sporting Goods, announced during a recent earnings call that the company will entirely remove guns from the shelves of 125 stores nationwide.
The disappearing firearms will be accompanied by a selection of hunting inventory. The stock is expected to be replaced by an assortment of goods from other sporting categories such as boating and baseball, as well as a few novel features such as indoor batting cages.
The removal of guns from approximately 1/6th of the 729 Dick's Sporting Goods stores is not unprecedented. Last year, Stack made a similar call when he elected to remove assault-style weapons and high capacity magazines from all Dick's stores following the Parkland, Florida school shooting. He further vowed they would never be carried again. At the same time, Dick's changed its policy to restrict sales of any firearms to people over the age of 21.
That decision was met with vehement backlash from the NRA, a revocation of its membership to the National Shooting Sports Foundation and blacklisting from some of the country’s largest gun manufacturers such as Mossberg and Springfield. Many organizations and individuals pledged to boycott Dick's.
The results are in: Dick's has indeed suffered a loss in sales. The last calendar year has put Dick's down 4 percent in total revenue. This coincides, however, with a 12 percent decrease in firearms sales across the nation according to Small Arms Analytics. The slump in gun sales reflects the social and political turmoil surrounding the issue; this trend also helps to validate Stack’s decision to partially divest in guns.
Despite that decline in sales, the company’s stock value has actually increased about 10 percent in the year since the decision to remove assault-style weapons was made. Stores have seen increased foot traffic and other outpourings of support from people happy to finally see a corporation take a public stand on gun control.
That creates an interesting juxtaposition. Stock value increasing while sales decrease is an unusual scenario in well-established businesses. It may, however, become more common as businesses choose ethics over short-term profit. The influence of public perception is more powerful than ever.
Stack would certainly agree. He said, “We are really very, very confident and excited about our business.”
The decision to remove guns from a significant portion of Dick's stores wasn’t made on a whim, nor was it motivated by social pressures. Instead, it’s the result of an experiment that has been taking place since the tragic incident in Parkland.
Firearms were pulled from select Dick's stores in 10 locations over the last year. These pilot stores had historically low gun sales anyway, so their disappearance wasn’t much noticed. Dick's replaced their firearm displays with ski gear and kayaks and swapped out ammunition for shoes.
The results were uniformly positive - increased sales, more foot traffic and more satisfied customers.
These results bode well for Dick's, especially stores in areas with a low population engaged in hunting or sport shooting. Firearms sales vary widely from store to store and tend to be slow-moving inventory. The 125 stores that are dropping guns, while still unidentified, were confirmed to be among the stores that didn’t sell much hunting equipment.
Perhaps that’s just indicative of the times, as the U.S. hunting population continues to dwindle. The shift to selling more apparel and outdoor sporting equipment doubles as future-proofing as well as social-proofing.
As Ed Stack famously said in his letter addressing the Parkland school shooting: “Thoughts and prayers are not enough.” It’s encouraging to see a Fortune 500 CEO both talking the talk and walking the walk.
Image credit: Mike Mozart/Flickr
Patrick Grubbs is an environmental writer with a keen interest in the interactions between people and ecosystems. Past work includes projects to integrate permaculture into architecture, community education of urban agriculture, and published research in aquatic ecology. He is currently based in Philadelphia, but spends most of his time traveling abroad.