by Ed Stack
I met with Glenn, told him about our business, showed him all of our figures. “I think we can do this,” Glenn said. “We need to go through the Credit Committee, but I think we’ll be fine.”
I didn’t understand the whole regulatory process at the time. I sold socks and jocks for a living, you know? But I recognized that had it not been for Glenn Small, we might have gone out of business right then, just as we were starting to grow as a company. Despite the fact that we’d always been a good credit risk, some artificial metrics in a bank regulation could have strangled us. If we hadn’t found a new credit line with Glenn and Binghamton Savings Bank, we’d have had nothing to sell.
I’ve thanked Glenn many times for saving us. He’s a humble guy and invariably comes back with, “I didn’t do it—you did.” As we got bigger, and for as long as Glenn was with Binghamton Savings Bank, I made sure we kept it in our consortium of lenders. Our bigger banks didn’t want to have such a small bank involved, but we insisted that it get a piece of the action.
There was a lesson in our near-failure: you have to be prepared for the unexpected, have to build yourself a cushion so that you’re able to survive challenges, those both within and outside your control. I’m not saying we took that lesson to heart right away. Unfortunately, we’d have it hammered home to us again before it stuck. But still, the lesson’s a good one.
It was not long after that that we experienced a short-term cash crunch. A lot of our bills came due in early November and December, and while I knew we were doing well, and we’d be fine once Christmas was behind us, we were bumping against our credit limit. To pay the bills I borrowed $100,000 from my dad. He worried about that loan from the second he made it, and I was sitting in my office on my birthday two days after Christmas when he called and screamed at me that he wanted his $100,000 back, and he wanted it back that very day.
Hillcrest had again ballooned in his mind to blot out everything else. A couple of days later, with the Christmas receipts in, we repaid his loan. I never asked him for another.
* * *
Another big development from that period was much happier. For a few years after college, I’d fallen out of touch with my friend Bill Colombo. This was long before the Internet made connections easier to maintain, and we were both busy with our careers, but I thought about him now and then and wondered what he was up to. Bill was from Brooklyn, but even so had apparently lived a sheltered life before we ended up in the same dorm at St. John Fisher, and on arriving there he’d gone hog wild in the style of 1973—bong hits, hippie chicks, long hair, loud drums, howling at the moon. He was a tremendous amount of fun. Beneath all that wildness, he was smart, compassionate, loyal, and trustworthy. I thought the world of him.
Bill had settled down as a senior and gone to work at J. C. Penney shortly after he graduated, first as a management trainee. It was his first brush with retail, and it surprised him that there was real science behind running stores. That was especially true at Penney, which had developed sophisticated systems and a unique structure. At the time J. C. Penney was one of the most well-respected and well-run companies. Its stores operated semi-independently, each handling its own buying, marketing, and hiring, while staying within the boundaries of an overall corporate program. The arrangement enabled a store to groom its selection of products to its community, and it encouraged middle managers to become merchandisers. At the same time, a J. C. Penney store had to meet corporate objectives for income, salary cost control, shrinkage, and a host of other measures of performance, and those filtered down to department heads and, ultimately, everyone in the company. It was an enormously disciplined operation. The former wild man thrived in that environment.
Penney moved him every two years, through jobs in merchandising, human resources, and systems. He’d worked in Utica and Syracuse, and was now in Buffalo. He was on a fast track, and by about the time we’d opened our second Syracuse store, it was apparent that the company was considering him for a big promotion to the regional office in Pittsburgh. He didn’t want to go. The aspiration of everyone at Penney in the 1970s was to run a store, and he knew that if he went to the regional office before they gave him his first store, he might end up somewhere he didn’t want to be.
That’s about when we reconnected. We at Dick’s had ambitions to expand further, and faster, and I knew I needed help. And of all the people I’d met in my life, Bill was about the smartest, and most serious, and most capable. Ten years had passed since graduation. One day when I was talking with his brother-in-law, Jerry Harper—who happened to be our Nike rep—I asked, “Do you think Bill would ever come work for us?” Jerry replied that I could ask him, but he doubted it because Bill was rising fast through the ranks at Penney.
I called him anyway, told him what we were doing, and nosed around about whether he’d want to be part of it. “We can talk,” Bill said. Looking back, he said that only because we were friends. He didn’t want to tell a buddy from college to hit the bricks. We talked by phone again and set a date to meet in Buffalo. That face-to-face conversation made it clear to me that Bill had little interest in joining our business; he was playing in the big leagues, and we were Double-A. I offered him a great salary and a piece of the company, but I just couldn’t get him over the hump. Finally, I said: “Billy, what else can I do? Why won’t you do this?”
He smiled. “I understand your plan,” he said, “but it’s such a small company. I’ll be a divisional president someday at Penney. I’m on the fast track. I don’t know that there’d be enough for me to do at Dick’s.”
It took a lot more talking—altogether, this courtship went on for more than six months—but I eventually convinced him that there’d be plenty for him to do. He told me later that he spoke to his brother, who asked him, “Do you think Dick’s is going somewhere? And if it doesn’t, could you get another job?” He answered yes to both questions. His brother said, “Then why wouldn’t you do it?” He called one day to say he’d come aboard and started at Dick’s in June 1988, shortly before we opened in Rochester.
We started him as a district manager to get his feet on the ground, but it was just a few months later that he became our director of stores. Bill brought the discipline he’d experienced at Penney to our seat-of-the-pants operation; until he came along, we hadn’t developed any systems for buying or much of anything else—our style, though a bit more grounded in reality than my dad’s had been, was still have a hunch, buy a bunch. He changed our in-store product presentation and signage. He was an expert at store operations. But more than that, he would serve as my partner in guiding the company’s growth. I trusted him completely, and we complemented each other. I was the visionary; Bill was the executor. I could get emotional at times, could be a bit of a hothead; Bill could calm me down and play the intermediary when I needed one.
He stayed plenty busy. Over the years to come I’d stop by his office, and I’d always ask, “You got enough to do in here?” To which he’d always respond: “Fuck you.” It always made me laugh.
* * *
I wish I could tell you that our every move was intentional and that we were thinking strategically as we opened each of these new stores. Fact is, we didn’t think strategically at all. Tim and I would drive around a new town, counting swing sets in people’s yards, and if we figured an area had lots of kids, we were good to go. We picked the specific locations for our stores based on what space was available and what other retailers were nearby. We bumped up the square footage to twenty-five thousand because we were always cramped for space for apparel. We were lucky that we had only so much money in those early days and couldn’t get too far ahead of ourselves. As undisciplined and excited as we were, we could have worked ourselves into trouble.
As it was, these new, bigger stores presented challenges that we didn’t see coming. They required much bigger staffs than we’d had on Court Street and in Vestal, and the employee turnover was higher: people weren’t taking up careers in retail as they had just a few y
ears before. Plus, the size of the stores meant more aisles to walk, more customers to help, and more merchandise to keep track of. That last part required some education because in these bigger cities we found that a lot more of our merchandise vanished. We got beat up pretty badly on “shrink,” the retail term for stuff that leaves a store unpurchased. The biggest source of shrink is theft.
Our shoplifters didn’t limit themselves to clothes. They stole athletic shoes, baseball gloves, even golf clubs. Graphite-shafted clubs had entered the market and created a sensation, but despite the hoopla, the value wasn’t in the shafts, it was in the club heads. Thieves would loiter in the golf department until no one was looking, then take a razor blade to the graphite shafts, stuff their pockets full of heads, and walk out. Then they’d go get the heads reshafted—in essence, they’d put a $25 shaft on a $200 club and sell it on the black market.
Our expansion to Syracuse and Rochester saw our shrink numbers balloon to 2 percent of total sales. But Bill put a special loss-prevention group to work. It nipped the problem. In eighteen months, Bill and the group cut our shrink number by more than half.
* * *
It was in one of these new, big stores that I had an experience that remains vivid and important to me thirty years later. My dad was living almost full-time in Florida when this happened, enjoying his life in the sun, and he hadn’t seen the changes we’d made to our layouts after that first store in Syracuse. I called him and said, “Look, we’re opening this store, and it’s really something. Why don’t you come up to the grand opening? You haven’t seen anything like this.”
“No,” he said. “Too expensive.” He had plenty in the bank, but he still worried that it could disappear at any time and that he wouldn’t know where to scrounge his next meal.
“We’ll pay for your flight and the hotel,” I told him. “Why don’t you come up?”
Without missing a beat, he said, “Love to be there.”
So I picked him up at the airport at dusk, and we drove to the new store. Snow was falling gently as we got out of the car. His name shone enormous above the doors and cast a glow on the snow one hundred yards away. I could see he was surprised and moved by the sight.
Then we stepped inside, to a new design we would use as a model for the next several years. It was a wonderland for someone who loved sports, and I could see he was getting choked up. I walked him into the driving range, closed the door, and he burst into tears. His little store, transformed into such an incredible place. His humble beginnings, memorialized with his name in lights ten feet tall out front. He cried like a six-year-old.
And in that moment, I realized that for all of his hard-ass ways, his stubbornness and the hot temper that he’d directed my way over the years, he was my father, and I loved him. I’d wanted to please him since I was a kid, and his opinion still counted with me.
And though he didn’t say so, I’d just made him awfully proud.
CHAPTER 9 “IF YOU TEE OFF ON NUMBER ONE, YOU PUTT OUT ON EIGHTEEN”
Two years after Rochester, we set our sights on New York State’s second-biggest city, Buffalo. Located in the far northwest corner of the state at the eastern tip of Lake Erie, it was a long way from Binghamton. But like Syracuse and Rochester, it was just off Interstate 90—the New York State Thruway—which simplified the logistics of getting merchandise into a store there. Plus, Buffalo was home to a vibrant fishing community on Lake Erie, and a lot of hunters, and had some of the coldest, snowiest winters in the Lower Forty-Eight. All of that made it our kind of town.
This time, our build-out did not go as planned. A developer out of Syracuse was building the new Walden Galleria Mall just off the interstate, and we struck a deal to put a forty-thousand-square-foot store in the development. Construction got under way. We didn’t see much going on where our store was supposed to be. We checked with the developers to make sure everything was in place. Yeah, yeah, they said. No problems. Still, there didn’t seem to be much progress. We checked again with the builders. They told us everything was fine. They weren’t being straight with us. It wasn’t long before we learned they’d leased our planned location to a clothing retailer, the Limited.
They evidently figured that little Dick’s Sporting Goods, with five stores in its portfolio, didn’t have the stones to make an issue of it. We met with the developers and made it clear that we wanted that space. Sorry, they replied. Can’t do it. Well, we countered, that’s a problem, because we have a signed lease. They basically dismissed us with a “So what?”
We didn’t have a lot of available cash at the time. We were undercapitalized, all of our money tied up in inventory. My own house, and Kim and Tim’s, too, was pledged as collateral to the banks. But I was pissed and didn’t feel I could let the situation stand. I have never been litigious, but the breach of contract demanded we fight. I went back to the board and spoke with my uncle Joe and Larry Schorr. “We have to sue these guys,” I told them. “We have to make them perform on this lease.”
My uncle Joe, in sharp contrast to most of the Stack bloodline, never lost his cool. “Look,” he said, “they’re going to offer you a check to walk away from this. And I know you’re upset, and you have every right to be, but if they offer you half a million dollars, don’t you dare turn them down.” With that advice in my pocket, I returned to the developers and met with one of their decision-makers. Listen, we’re not going to build your store, he told me. We’re sorry about that. But we’re willing to offer the Ed Stack Children’s College Fund $300,000.
That sounds like a bribe, I told him. That’s not going to work. After a couple more conversations, they apparently realized I wasn’t going to back down and offered a half million. Per Uncle Joe’s instructions, I had to say yes. They wrote us a check for $500,000, and we opened a forty-thousand-square-foot store across the street. It was a huge success—Buffalo had never seen anything like it, and half the city seemed to squeeze through the doors the day we opened. I remember standing in the footwear department on our second day, bone tired, watching the front doors as customers just kept pouring in, and thinking: I know we want people to come, but please, just give us a break. Just ten minutes of rest. It never came. More customers did.
The store had a display of baseball gloves that stretched across thirty feet of wall, and I was standing near it when this little boy and his mom approached. The kid, maybe nine years old, was wide-eyed as he took in this wall of gloves, looked at his mom, then looked back at the wall. “Mom,” he gasped, “I’ve waited for a store like this my whole life.” A thrill ran through me, hearing that. I smiled as I thought about what a great commercial the scene would make. As it turned out, much of Buffalo felt the same way that little boy did, because we did $12 million in sales our first year there.
With six stores up and running, we were starting to make some money. We still went deep into debt for our inventory, but we were feeling pretty excited about the way things were going. Our run continued, because we then got an unexpected offer from Wegmans, the Rochester-based chain of high-end grocery stores, where I’d worked briefly while in college. Their head of real estate, Ralph Uterro, called to say that he had an opening in a shopping center they owned in Greece, a neighborhood on Rochester’s northwest side, clear across the city from our store there. Wegmans owned a chain of home improvement and gardening stores called Chase Pitkin, and one of these stores occupied about forty thousand square feet in a strip shopping center in Greece. We’re relocating the Chase Pitkin, Uterro told me. We don’t want the space to sit empty. We’d like to make a deal with you.
More as a courtesy to him than anything else, I drove up to Rochester to have a look. It was a nice space, and far enough away from our first Rochester store that he didn’t think there’d be much cannibalization. Problem was, we were already stretched thin, from a cash standpoint. We’d opened four stores in five years, all significantly bigger than Court Street, and we needed to take a year off, take a deep breath, and reduce our debt. “We c
an’t do it,” I told Ralph. “I wish we could, but we’re undercapitalized. We can’t make it work. It would be too risky.”
He pressed. “What would it take for you to say yes?” he asked.
What it would take was well beyond what I thought he’d agree to, and I told him so. He wanted to hear our terms. “Ralph,” I said, “you’d have to build out the store for us. You’d have to buy all the fixtures for us. And on top of that, you’d have to loan us more than a million dollars for inventory.”
“Ah,” he said with a smile. He was a good guy, and I liked him. “Well, we can’t do that.”
“I understand,” I told him. “That’s no problem. I hope we can do business together at another time.” We parted on friendly terms.
Two days later he called me. “I talked to Mr. Wegman,” he said. “We’ll do it.”
With that, Wegmans built out the store, bought about $200,000 in fixtures, and lent us $1 million for inventory. Besides that, they were wonderful landlords. The store did well—not as well as our other Rochester store, but then, we had virtually no skin in it, so it didn’t have to break any records. What it did do was solidify our presence in Rochester.
We’d long since outgrown our Binghamton headquarters and warehouse—we couldn’t take in all the merchandise we needed to service our new and larger stores, and now we had a group of full-time buyers, a team of accounts-payable clerks, accountants, and all the other people who kept the stores full of product and customers. Shortly after Bill Colombo moved down, we built a new distribution center in Conklin, a small town just above the Pennsylvania line. It seemed vast—sixty thousand square feet of warehouse receiving and storage, along with twenty thousand square feet of office space.
