Dick's Sporting Goods on Tuesday took the dramatic step of suspending sales of high-powered rifles at its stores nationwide, setting off a wave of Wall Street response to the gun control debate revived by the shootings at Sandy Hook Elementary School in Newtown, Conn.
The decision made at the chain's Findlay headquarters came as gunmakers saw stock prices plummet and a private equity firm announced it would sell the company that made the firearm used in the Connecticut shooting.
Smith & Wesson shares closed at $7.79 per share, down 86 cents for the day and more than 20 percent since Friday. Shares of Sturm, Ruger and Co., which makes several types of firearms, also fell on Tuesday, dropping $3.40 per share to close at $40.60 for a three-day loss of about 20 percent.
But Dick's stock went up 77 cents Tuesday, closing at $46.35 per share, and the company's move won praise from politicians and consumers who called on other major gun sellers to follow suit.
The industry response comes as the nation continues to reel from the Friday shooting, when law enforcement officials say Adam Lanza killed his mother before breaking into the Sandy Hook school and killing 26 people, 20 of them children. He killed himself when authorities arrived, and had several weapons on him, including a Bushmaster AR-15-style semiautomatic rifle.
Retailers responded in varying degrees to calls for suspending sales of such assault-style rifles, with some choosing to halt sales only in Connecticut in the final weeks of what had been a banner year for the gun business.
Specifically, Dick's pulled what it termed "modern" rifles from the shelves of its more than 500 Dick's Sporting Goods stores.
"Out of respect for the victims and their families, during this time of national mourning, we have removed all guns from sale and from display in our store nearest to Newtown, and suspended the sale of modern sporting rifles in all of our stores chainwide," the company said in a statement issued Tuesday.
"Modern" includes AR-15-style rifles, which are thought to be among the most popular type of rifle in America. The semi-automatic weapons are the civilian version of the military's M-16.
Some hoped Dick's move would set a precedent. "These demonstrations of corporate responsibility and leadership at a very difficult time for our nation are encouraging and are to be commended," said U.S. Rep. Chaka Fattah, D-Philadelphia, in a statement.
The southwestern Pennsylvania company did not say how long the measures will stay in place.
At the Dick's store in the South Hills Village mall, an employee cleared four shelves of products that resemble assault rifles on Tuesday morning, piling them into several shopping carts before loading them into a side stockroom. The items put away retailed between $59.99 and $239.99, and the only items left on the shelves were bottles of Zombie Antidote BB pellets.
The drop in share prices in the past few days and reshuffling of inventory deflate what had been a spectacular year for gun sales in the industry.
While Dick's doesn't specify how much of its annual sales comes from firearms, company executives on recent investor calls said gun sales had spiked before and after the recent presidential election that had enthusiasts worried about a change in U.S. firearm policy.
"We expect now that the election has concluded [that] the gun and ammunition business will move to be a slightly bigger part of our business going forward," Edward Stack, chairman and CEO, told analysts on an earnings conference call in November.
Nationwide, the number of background checks issued for gun purchases increased on a year-over-year basis through the first nine months of the year.
On Capitol Hill and on various retailers' Facebook pages, the debate in the wake of the Newtown shootings has centered on the Bushmaster rifle and other high-powered firearms.
The Bushmaster .223-caliber model used by the shooter in Newtown is available at many retailers, including Wal-Mart, which pulled the item from its online store on Tuesday but had it available in some physical locations.
Cerberus Capital Management, a New York-based private equity firm that owns the Bushmaster manufacturer, said on Tuesday it was shedding that company and the other firearm makers from its $20 billion portfolio.
"It is apparent that the Sandy Hook tragedy was a watershed event that has raised the national debate on gun control to an unprecedented level," the firm said in a statement. "As a firm, we are investors, not statesmen or policy makers."
Some investors had already questioned Cerberus's involvement with the Freedom Group, the name given by the firm to the bundle of gunmakers it had acquired over the past several years. The California State Teachers' Retirement System said earlier this week it would review its relationship with Cerberus in light of its Freedom Group holdings.
Cabela's, another major gun retailer, still had the Bushmaster on its website Tuesday, with the semiautomatic retailing in stores for between $729 and $1,039. The retailer added a note on the product page, though, that said the rifle was not available for purchase online or in its Connecticut store.businessnews
Erich Schwartzel: firstname.lastname@example.org or 412-263-1455.