'The country is looking for leadership': The CEO of Dick's Sporting Goods tells us what led him to destroy $5 million worth of weapons, and why he wishes Mitch McConnell had 'the guts' to act on gun control

• Dick's Sporting Goods CEO Ed Stack sat down with Business Insider to discuss his new book "It's How We Play the Game," which chronicles the rise of the retailer, along with Stack's relationship with his father and predecessor, Richard "Dick" Stack.
• Stack also spoke at length about his company's decision to move away to from gun sales. Dick's dropped AR-15-style weapons from its hunting specialty stores after last year's Parkland massacre, and had previously dropped them from its big box stores. It destroyed $5 million of the guns it pulled.
• Stack called out Republican Senate Majority Leader Mitch McConnell, saying that he wished the Kentucky Republican had the "guts" to bring a bill establishing universal background checks to a vote. He also advocates for the renewal of the Federal Assault Weapons Ban that lasted between 1994 and 2004.
• The CEO talked about the business's renewed focus on private label brands, its recently shaky partnership with Under Armour, the best leadership lesson from his dad, and why he always looks for "left tackles" when hiring.

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Last year, Ed Stack made a decision that instantly made him both a hero and villain across America.

Stack, the CEO of Dick's Sporting Goods, said he'd stop selling AR-15 rifles and guns like it. His retailer also began limiting all gun sales to customers 21 and older. This was a big deal: Dick's had 732 big-box and 35 hunting specialty stores at the time, with more than $8 billion in sales, making it by far the United States' largest sports retailer.

As mass shootings increasingly became a regular part of the news cycle, the debate in the country over gun-control grew fiercer than ever. By picking the side that limited access to high-powered weapons, Stack knew that even in the best circumstances, it would hurt his business in the short term - but he decided it was necessary for the integrity of his company.

In an interview with Business Insider around the debut of his book "It's How We Play the Game," Stack explained why he went forward with his plan, and how he's dealt with the blowback in the year-and-a-half since.

Stack told us why he believes stepping back from the gun business is a "blessing in disguise." And because his new book is part memoir, we took the opportunity to ask him about his take on the sports retailing industry, as well as his evolution as a leader after taking over the business from Dick's namesake founder, his father Richard "Dick" Stack.

The following interview has been edited for length and clarity.

Why he destroyed $5 million worth of assault weapons

Feloni: The book opens with the idea of having a responsibility to community, especially how it's impacting kids affected by gun violence. When you were making that decision to get rid of the AR-15s, is this what was also going through your mind, its relationship to the community and the children in it?

Stack: After Sandy Hook, we took the assault-style rifles out of the Dick's stores. We didn't make a big deal out of it. There was a lot of pressure on us to make a statement and we just said, "Out of sympathy for the victims and their families, we're suspending the sale of assault-style rifles." We said we're suspending them, but we never put them back in.

During that time, we had spent about two years developing a concept called Field and Stream, which was an outdoor retail concept around hunt, fish, and camp. We had a pretty vigorous debate as to whether we would put those guns in those stores. We ultimately decided to put those in those stores. After Parkland, we came out and said we're taking them out everywhere.

Áine Cain: One striking moment in the book is when you destroyed $5 million worth of guns. Talk me through the decision-making behind that.

Stack: We didn't know what we were going to do with the inventory. We had a fair amount invested in these guns. Are we going to sell them back to the manufacturer? They buy them back at a discount. We would get maybe 80%, 85% of what we sold.

Do we just discount them and get them out of the stores? And we're in this meeting and I said, "We can't do that." We stood up and said, "We think these guns should be outlawed. We think the ban that was in place between 1994 and 2004 should be reinstated."

If we give them back to the manufacturer, they're going to end up back out on the street. If we try to sell them and just liquidate the inventory, they're back on the street. I said, "The only thing we can do with them is destroy them."

And so that's what we did.

Taking a hit for the sake of alignment with purpose

Cain: Obviously, that got a lot of praise and criticism. Do you think boycotts and "buycotts" actually affect your bottom line, though? That online chatter and online anger?

Stack: The boycotts did. The buycotts were really nice and we appreciated it, but they were kind of short-lived. We really appreciated the people stepping up and acknowledging what we did.

But the the boycotts, it's been pretty well chronicled that we expected that we would take about a quarter of a billion dollar hit in sales by doing this, not just from the hunt business, but from people who would say, "You know what? I'm just not shopping with you anymore because I am so angry with you." By the time we got done, it was about a quarter of a billion dollars.

Feloni: When you're trying to communicate with shareholders, how do you convey, 'I'm making this decision that might hurt in the short term, but this is critical to the mission of the business?'

Stack: We've always been just straight up. We said we're discontinuing the modern sporting rifle, which was the name of it. We're not going to sell a gun to anyone under 21 years old. We're not going to sell any high capacity magazines. Based on this, we're lowering our guidance by roughly 3%, which was $240 million. We were surprised that the stock didn't react too negatively, and it's been up since we made the announcement.

What was surprising is we didn't have any shareholder that I'm aware of, who called up and said, "You know what, based on what you did, I'm selling my shares. Just wanted to let you know." Conversely, though, we didn't have anybody there call up and say, "Hey, we love what you're doing. We're going to buy your stock."

Calling for political action

Cain: We've seen consumers increasingly expect the retail industry to take the lead on gun-control measures. Do you think we're at the peak of that phenomenon, or do you think that there's more to be done at this point?

Stack: I think there's more to be done, and I think that more will be done. There's just not much leadership coming out of Washington. The country is looking for leadership and they're getting it from the private sector right now. The house passed HR8. I'm one of the CEOs who signed on, encouraging background checks and red flag laws. It's sitting on [Senate majority leader Mitch] McConnell's desk right now. I wish he'd have the guts to bring it to a vote.

I don't understand why anybody would be concerned politically about background checks. Ninety percent of the public feels there should be background checks. I don't know how you can cerebrally think about guns and say, "Yeah, we don't need to have a background check. It's OK." Basically, anybody who's old enough can buy a gun. There are "private citizen to private citizen" and gun-show loopholes. I don't know how anybody can say, "Yeah, that's fine." There should be a background check for anybody that buys a firearm. And I don't know that McConnell will bring it to the floor. I hope he does.

Cain: You mentioned that there is more to be done in the private sector, at least. Do you have any insights on what that might be looking forward?

Stack: We've got to just keep this conversation going. After we made our announcement, we were invited down to meet some of the families from Parkland, which I talk about in the book. My wife and I went down and with a couple of other people from the company. It was one of the most emotional days I've ever had, to listen to these parents talk about what happened to their son or their daughter. When I left, I asked them, "What would you like me to do?" And they said, "We'd like you to keep the conversation going." And so part of the reason behind this book was to keep that conversation going. I thought a lot about this. I think in the country today so many rational people argue their position irrationally. Rational people argue their position irrationally.

Sitting down with those families in Parkland, they didn't say we should ban all guns. Basically what they said is, "We need to have common-sense gun reform so what happened to my family - my son, my daughter - never happens to anybody else." And as I thought about that, if there was ever a group of people who had the right to argue their position irrationally, it was them. And they didn't. That's why I can't understand why Congress argues their positions on gun control irrationally. After those families said, "We don't really think all guns should go away. We just think we need common sense reform." I thought, "If these families who've just gone through this feel this way, clearly Washington is going to get the message and do something."

And we went and we lobbied and we spent a lot of time in Washington talking to them. It was split right across party lines. I was just disappointed, surprised, and fill-in-the-blank about how people in Washington can't argue this in a rational way and come together with the intent to solve a problem. I just don't understand. It's not a political hot button any longer. Ninety-plus percent of the people feel we should have universal background checks. I don't know what McConnell's afraid of.

Adapting the business to meet a 'blessing in disguise'

Feloni: If you have to make a move like this, where one side who might not be happy with it, is it always thinking, too, of how do we adjust the business to adapt to it? You took a customized inventory model to stores like the one in Boston, where you removed guns and brought in more market-specific bestsellers like outerwear. Is that compensation something you had to communicate to shareholders?

Stack: We decided that we didn't want to sell that firearm anymore. We found out that we sold [Parkway gunman Nikolas Cruz] a shotgun two months before. When that happened I said, "This system is broken. This kid should never have been able to buy a gun." So we started to make these decisions, knowing they would have an impact. Then we said, "OK, it's going to have an impact here. Where can we try to drive the business forward to make up for that?"

Last year in the fourth quarter, we took all hunting inventory out of 10 stores to see what would happen. We were pretty clear right from the beginning that the hunt business is not as profitable as some other businesses. It's 1700 basis points below the balance of the chain from a profitability standpoint.

So we knew we wouldn't have to replace all of the sales to have the same profitability. Those 10 stores have significantly outperformed the rest of the company. In the spring, we've taken it out of another 125 stores. And so we actually think this is going to be a bit of a blessing in disguise.

We took a lot of blowback from the NRA. A number of brands that we did business with said they weren't going to sell us anymore. So we said, "OK, if this is the way it's going to go, how do we re-engineer our business?" We're pretty happy with the way things are going right now. We just sold eight of our Field and Stream stores off to Sportsman's Warehouse. It's going to be just fine.

Taking a look at the state of the sporting retail industry

Cain: In the past couple of years, there has been talk about how Under Armour's distribution expansion has caused problems on your end. Is it causing you to rethink things with Under Armour?

Stack: We've re-engineered what we're going to do with Under Armour.

Under Armour business was down for probably five quarters in a row after they made the changes in their distribution strategy. We've gone back to them. We made a big presence on Under Armour around The Rock, Dwayne Johnson, which has been great; it has really helped re-energize the Under Armour brand in our stores. We're on pretty solid footing with Under Armour now.

Cain: How do private label brands like Calia and DSG fit in with your strategy going forward?

Stack: We think private label is extremely important. We look at it as a way to differentiate our business. We're trying to do that by building brands. So for the Calia brand, we've got Carrie Underwood working with us there.

The Calia brand in five years has become the number two women's athletic brand in the store. So that's been really big.

The DSG brand we just launched has been great. We own the Top Flight brand. We own the Max Flight brand. We've got licensing agreements with Adidas, we make their baseball product; gloves, bats, all of that kind of stuff. The private brand business continues to be something that we're very aggressive on.

Feloni: What do you think is the future of youth football in terms of participation in the sport?

Stack: There's just so many parents who just don't want their kids to play football any longer because of the concussion piece. A couple of areas that are really picking up that participation are baseball and soccer. Fall baseball has gotten to be really significant. A long time ago when a lot of us were younger, there weren't many fall ball baseball leagues. But it's really gotten big. Football has really got to do something. I think they're making some good strides with what they're doing from a flag football standpoint; having kids start tackling later than they do now. Hopefully, they'll figure it out. But from a participation standpoint, they're in structural decline.

Learning leadership from his dad, the founder

Feloni: Something that is a presence in the entire book is your relationship with your father, and there's so much there. If we could just kind of even distill it down, what do you think would be the greatest business lesson that he left you with?

Stack: It would clearly be the conversation, "You have to do right by and be involved in the community," which is something that we've honored and kept really fundamental to everything we do. Whether that was around youth sports, whether it was around the Get Involved program, around the Sports Matter Foundation, the gun piece. Right from the beginning, it's always been around kids and around the community.

Feloni: How did he communicate that to you? How did you absorb that?

Stack: He talked about it a little bit, but it wasn't so much talking as how he demonstrated it. In Binghamton [New York, where he grew up and where the company started] there was the North side, the South side, the East side and the West side, but there was only one Little League team in each side of town. He just didn't think that was the right thing to do. And so he got together with his friends, insurance agents, the local grocery store, car dealerships, and had four teams on each side of town. So now instead of 60 boys, between nine and 12 being able to play organized baseball, you had 240, plus the farm league. So you have 400 kids being able to play organized baseball.

It was just that demonstration that you need to be involved in your community. If a team needed something, he sponsored a team. If somebody needed something, he made sure they somehow got it. We never sat down and talked specifically about that. My father was a complicated guy, but he had a simple philosophy. He got out of school by the skin of his teeth, got out of high school by the skin of his teeth. We didn't have these deep cerebral conversations about it. He just kind of led by example.

Feloni: And how do you see your evolution as a leader in terms of growing the company? I would think that writing a book gives you a good chance to look back at your own evolution. How do you see that? How did you grow into being a leader and what did your leadership style end up as?

Stack: Early on in the business, you do everything. My brother-in-law Tim Myers and I would buy the merchandise, we'd go meet with the reps after hours, we'd work the sales floor, we'd do the cash deposits at night - you just did everything. As we started to build the business to start to delegate some of those responsibilities, it was hard. You always did everything, you wanted to do everything. Over the years I've gotten the ability to be able to delegate more, to make sure that we've got really great people.

I always knew that we needed to have smart people around us. The first thing I did when we bought the business from my father was put together a board of directors. My uncle, the guy from E.J. Korvette shoes, and another guy in the media business; we put together this group of people, advisers that really helped us a lot.

Somewhere along the line, I realized you can't do it all yourself. You really need to build a team around you to be able to do that. Right now I think we have the best team we may have ever had in the business.

How he finds his best deputies

Feloni: What are you looking for in an executive when you're hiring someone?

Stack: When I interview someone today, my primary point that I'm trying to determine is, are they a good cultural fit?

I'm going to make the assumption that they're talented, or they wouldn't have gotten to where they've gotten in the interview process.

We did what we loosely call the DNA study, a number of years ago. We didn't take any hair follicles.

Feloni: Metaphorical DNA.

Stack: We took 50 people who we thought were our most successful people and had them talk to an industrial psychologist.

And he came back, and he said, "You know what? This might be the most competitive group of people I've ever met. But the difference is, they understand that competition is out there, the competition isn't the person who is sitting next to them on our management team."

He said, "In this team, all they want to do is win. And they really don't care what position they play as long as they win." We use a lot of sports analogies in our business, as you can imagine. So maybe the most important position in an NFL team is your left tackle. Because that's who's protecting the quarterback.

But you can't name three left tackles in the NFL. And the conversation was, "They're OK if they play left tackle as long as they win. If you boiled this down to an NFL player, this team would be a lot more like Emmett Smith."

When he scored a touchdown, he dropped the ball in the end zone, or he flipped it to the official, and he went back to the bench. That's his job. As opposed to some other players, who would catch a 12 yard pass at the second play of the game and think that they won the Super Bowl.

So we want really humble people that just want to do their job.

I talk to everybody who I interview. I say, "If you need to be the smartest person in the room on every single subject, this is not the place. If you need to have a pat on the back every time we have a good quarter or something good happens that you're a part of, and you want everybody to think that you were the one who made the play, this is not the place."

We've had enough people who say they can, but they really can't. And then the organization just rejects them. We want to make sure that we don't have much organizational rejection.

Taking a family approach

Feloni: As you elevated Dick's into this giant corporation with so many moving parts, you were also able to keep it under family control. Is that your intention, to always keep it within the family, if things go according to plan?

Stack: Yeah, we'd like to. You just never know. That's the intent, to be able to keep it controlled by our family. Having it controlled by our family, we can do the things that we think are right. We're not really concerned about a proxy fight based on how the capital is structured. It was probably a little easier for us to do what we did with the gun piece than maybe some other companies.

We went public with the two classes of stock. And if we hadn't had the dual classes of stock, we wouldn't have gone public. That was a prerequisite to be able to go because you've seen so many other companies, especially in retail, who either owned by private equity lever up too much., don't invest in the business, are worried about one quarter to the next, whether a public company or a private equity firm that's trying to, we'll say re-engineer the business and it doesn't usually work out well. And we always wanted to make sure that we had the ability to do what was right for the business longterm at any point in time. And that's what we've done. And I think that's one of the reasons why we've survived when so many other sporting goods retailers have not.

The fact that we're able to make the decisions that are right for the business longterm and not trying to manage quarter to quarter or trying to re-engineer financially, re-engineer business from a, we'll say, a cashflow standpoint.

Feloni: And has that been just through the way that you've communicated to investors from the beginning?

Stack: They knew we had the two classes of stock. I think at times it's actually been a positive from the value creation. They know we're going to do the right thing long term. Now, sometimes I may say, "OK, this is going to have a short-term impact," similar to what we did with firearms, but they're pretty confident we're not going to go do something that we shouldn't to try to goose the stock for a couple of quarters.