Speaker 1: This is Bloomberg Business Week with Carol Messer and Jason
Speaker 1: Kelly on Bloomberg Radio. Our next guest, death of Groove
Speaker 1: into the sound of this, and for good reason, he
Speaker 1: does love that commercial that is the Dulca tons of
Speaker 1: Mitchell Model. He's chairman and chief executive officer of Model's
Speaker 1: Sporting Goods. He is joining us in our Bloomberg Interactive
Speaker 1: Broker Studio. Nice to have you here with Jason and myself.
Speaker 1: I always love coming here. It's a great atmosphere. I
Speaker 1: love the way you take care of the associates. It's fabulous. Well,
Speaker 1: thank you. That's nice to hear. It is a pretty
Speaker 1: cool place. Um. Talk to us about your place, because
Speaker 1: you guys have been around. It's family owned a hundred
Speaker 1: and thirty years. There is some great history in it
Speaker 1: and for those of us, especially here on the East Coast,
Speaker 1: this is where we go often for any kind of
Speaker 1: supporting sporting goods, type of equipment and apparel. So, you guys, though,
Speaker 1: like much of the retail environment, Mitchell are at a
Speaker 1: tough point. Listen, retail is tough out there. I mean
Speaker 1: you could see the apocalypse that's taking place, you know. Uh,
Speaker 1: Pier one just closed four and fifty one stores. They
Speaker 1: announced Macy's is closing stores over the next three years.
Speaker 1: From what I hear, there's gonna be about five or
Speaker 1: six more bankruptcies filing and the next two weeks. It
Speaker 1: is tough out there, and you guys are closing stories.
Speaker 1: So we decided on Thursday to close twenty four stores.
Speaker 1: We were able to renegotiate UH landlords on some of
Speaker 1: the rent structures, and so we just announced between Saturday
Speaker 1: and yesterday we reopened five of those stores that would
Speaker 1: do to close. So now we're only closing nineteen stores
Speaker 1: and so and and give us the rational the cost structure,
Speaker 1: the business just wasn't matching up. Mitchell. You know when
Speaker 1: we look at we hired b R g R Company
Speaker 1: who does restructuring. They've been running incredible models for us,
Speaker 1: looking at our four wall structures to see what's taking place.
Speaker 1: We've got to get rid of the stores that just
Speaker 1: aren't making money, the bleeding cash from the company. And
Speaker 1: so we were able to restructure some of the leases
Speaker 1: where we bring down the occupacy course where now we
Speaker 1: can make money on a going forward basis, so we're
Speaker 1: able to save jobs. So Leader and miner. That is
Speaker 1: a sustainable model for you guys going forward. Yes, you know,
Speaker 1: it's like puning a tree, right, If you pun a tree,
Speaker 1: the tree grows. If you don't, I gotta ask you that,
Speaker 1: why don't you prune sooner? You know what? Sometimes it's
Speaker 1: a great question. Sometimes, you know, you avoid making those
Speaker 1: tough decisions, but when your backs against the wall, every
Speaker 1: option is on the table. Now I'm looking to preserved jobs,
Speaker 1: you know, so you look at the landscape in a
Speaker 1: little different viewpoints. Talk to us about your customer and
Speaker 1: how that customer has changed over the years. I mean
Speaker 1: I was joking out here in Los Angeles to the
Speaker 1: got to go to mos Uh. You know, I've taken
Speaker 1: my sons there for years, whether it's or baseball or
Speaker 1: lacrosse or football or my own you know, like running
Speaker 1: shorts and things like that. And yet I know a
Speaker 1: lot of people who you know, they're going to I'll
Speaker 1: say the A word, they're ordering through Amazon, They're going
Speaker 1: to a competitor. Uh, tell us how your customers have changed. So,
Speaker 1: I mean you hit the nail on the head. I
Speaker 1: mean it's so easy. I could even tell in my
Speaker 1: own apartment building when you see FedEx packages coming on
Speaker 1: Sunday at nights. I mean, it's an easy way for
Speaker 1: people to shop, So huge initiative for us as a company.
Speaker 1: You know, the online shopping experience, but brick and water
Speaker 1: still is critically important for the kid that wants to
Speaker 1: buy a baseball glove a little league. They want to
Speaker 1: touch that clee. You want to see the smile on
Speaker 1: the face first time they pot a literal league glove.
Speaker 1: You know, you can't get that kind of emotion buying online.
Speaker 1: So we're hoping that with those kind of experiences will
Speaker 1: be able to continue and help me get me up
Speaker 1: to speed. Um, in terms of an online presence, how
Speaker 1: big it for you guys? Under develop It's still our
Speaker 1: number one stories about five percent of our sales. Our
Speaker 1: goal is to be over the next three years three
Speaker 1: years though, but you don't have three years. And forgive
Speaker 1: me because I think about I'm listening to you, I no, no, no, no, listen.
Speaker 1: I mean, I love the Brandon I love these family
Speaker 1: run businesses. Um, but I think about even a Target
Speaker 1: who kind of missed Walmart right, it took them. They
Speaker 1: played catch up big time. But you don't have three
Speaker 1: years in an environment where things change so quickly and
Speaker 1: consumers move on, they just do. So how do you,
Speaker 1: I mean, could do you think first of all, that
Speaker 1: online could be a really important part of your business.
Speaker 1: It is an important part of our business and it
Speaker 1: will continue, which is why for the first time in
Speaker 1: our company's history, we're looking to get a minority selling,
Speaker 1: a minority interest in our company. We've been privately held
Speaker 1: for a hundred thirty years, always been passed down on
Speaker 1: the torch. We'll never go public, will never sell equity.
Speaker 1: Times have changed all options on the table. And you know,
Speaker 1: hopefully we use this platform for people and say, you
Speaker 1: know what, I like this guy who's thinking outside of
Speaker 1: the box. Maybe we'll invest in him. And that's the
Speaker 1: whole purpose of me doing all these kind of interviews
Speaker 1: the lasts who's your ideal investor? Then, Mitchell, you know what,
Speaker 1: it's probably the individual guy you know, looking at let's say,
Speaker 1: at a billion it says, you know what, he wants
Speaker 1: to sell a minority interest. Maybe I'll take a shot
Speaker 1: with him. We have an iconic brand. It's not like
Speaker 1: the brand is broken. The model is broken. And when
Speaker 1: I say the model is broken, it's because our course structure,
Speaker 1: and by again bringing in b RG to analyze our
Speaker 1: course and to see how we want to move forward.
Speaker 1: Getting rid of unprofitable stories is one way to put
Speaker 1: the path on to success credited investors or anyone, anybody.
Speaker 1: So we hired RBC, who was an investment banker. Because
Speaker 1: of all the interviews we've done, we've sent a lot
Speaker 1: of investors towards them. The flushing it at as we speak,
Speaker 1: and hopefully in the next seventy hours, we'll see if
Speaker 1: there's a possible life one out there. You are listening
Speaker 1: to Bloomberg Business Week. Jason Kelly here in Los Angeles,
Speaker 1: Carol Masster in New York City, and next to you
Speaker 1: is Mitchell Model. Right. We are chairman CEO of Models
Speaker 1: Sporting Goods, and we're talking about this. This is like
Speaker 1: many retailers. They're struggling and trying to figure things out
Speaker 1: for the future, and they're taking really their story and
Speaker 1: their woes to outside investors. We're going to continue our
Speaker 1: conversation when we come back, but I do want to
Speaker 1: ask you because you and I were talking a little
Speaker 1: bit about Bob Iger in the break, just got about
Speaker 1: a minute and a half here, who's the CEO or
Speaker 1: who's a company that you really look to that you say, Okay,
Speaker 1: they figured out kind of this new world, especially when
Speaker 1: it comes to the retail space or just generally overall.
Speaker 1: I think Brian has done an incredible, incredible job at Target.
Speaker 1: He has done an incredible job to see his back
Speaker 1: against the wall when he came out with those major initiatives.
Speaker 1: How he's investing big time Brian Crenell Brian Cornell Um,
Speaker 1: And I know I've given you a hard time. Is
Speaker 1: it is a different because I was saying your friend
Speaker 1: and he's also a competitive But you know what, I
Speaker 1: have so much respect for him for what he did.
Speaker 1: I mean, he stepped out of the box. He said,
Speaker 1: I'm investing in my stories, investing in technology, investing in
Speaker 1: me in the Internet, and everyone thought he was crazy.
Speaker 1: And now three years later, I mean, his stock is
Speaker 1: through the roof and he's the Darling and Wall Street
Speaker 1: And we're continuing our conversation with Mitchell Model. He's the
Speaker 1: chairman and CEO of Model's Sporting Goods, a multi generational
Speaker 1: business familiar to many of the US who live in
Speaker 1: the New York City area. And Mitchell, I want to
Speaker 1: talk more about your potential deal. But I have sort
Speaker 1: of a parent slash dad question for you, which is,
Speaker 1: tell me what you're seeing in terms of youth sports
Speaker 1: and in terms of sports in general, what's rising in popularity,
Speaker 1: what is waning in popularity? You have one of the
Speaker 1: best windows into this that I can think of. So
Speaker 1: baseball and soccer are definitely on the uptick. Football, the
Speaker 1: course of all the um problems with you know, the
Speaker 1: brain and the tackling and injuries, injuries has has really
Speaker 1: slowed down. We can't even see in our team week
Speaker 1: sign ups that you know a lot of the teams
Speaker 1: that used to be set up three years ago, like
Speaker 1: half of them are gone already. The switching to other sports,
Speaker 1: even lacrosse is an issue with some of safety issues.
Speaker 1: So parents are more concerned about safety today than ever before.
Speaker 1: And I do wonder about, like, how do you track
Speaker 1: in terms of the changing customer base your demographics that
Speaker 1: are coming in has as much changed over the last
Speaker 1: couple of years. Oh, absolutely, absolutely So. One of the
Speaker 1: things we subscribe to is mp D, so there is
Speaker 1: search firm that gets a lot of data from all
Speaker 1: our competitors, so we could see are we bucking the trend?
Speaker 1: Are we following the trend? And you know, you our
Speaker 1: intel from the store level is pretty strong. Every week
Speaker 1: we gotta roll up a feedback from our stores to
Speaker 1: the different managers, gets fed to the merchants. So we
Speaker 1: get we're pretty on top of like what's happening trends?
Speaker 1: Why is it up? Why is it down? But but
Speaker 1: you know, because we go back and forth about a
Speaker 1: younger generation. I mean there's still the majority of shopping
Speaker 1: is on is in brick and mortar. It's just the
Speaker 1: growth is online. And I do wonder do you still
Speaker 1: see a younger generation? I mean, I guess it is
Speaker 1: right because they know that's where they go or for
Speaker 1: you know, various equipment and so on. You know, it's
Speaker 1: it's listen. I can even tell by my own kids, right,
Speaker 1: my two boys seventeen and eighteen. You know, they buy
Speaker 1: a lot online where we don't grow up like that,
Speaker 1: you know when that tech grows like they are. And
Speaker 1: so it's again it's part of the world that's changing.
Speaker 1: You know, technology is playing a huge part on the
Speaker 1: buying habits of the consumer. And so what do your
Speaker 1: stores look like going forward? Then, Mitchell, is it a
Speaker 1: smaller footprint. Is it a different sort of interactivity? Do
Speaker 1: you staff them differently? How do you create the sort
Speaker 1: of sports apparel sports retailer of the future. So a
Speaker 1: hundred percent will be smaller footprints. You know when we
Speaker 1: opened up stores and we went larger and bigger. Today
Speaker 1: with the Internet, we call it the endless aisle. So
Speaker 1: you can have the base of core assortment in a
Speaker 1: store and if someone wants to go online, they'll see
Speaker 1: hundreds of baseball bats, hundreds of ball class You can't
Speaker 1: stop that in a in a retail environment today, A
Speaker 1: it's very coarse intensive and B you have a space problem.
Speaker 1: But by order, by offering the core assortment and offering online,
Speaker 1: you could cover both both consumers. So so let's go
Speaker 1: back to you know, you really are, like I said,
Speaker 1: you know, pitching out to the public to help you,
Speaker 1: uh in terms of keeping the company going, Like what
Speaker 1: are the kind of funds that you're looking for and
Speaker 1: what kind of response have you gotten so far? You
Speaker 1: did say you're working with a firm, right, we're not
Speaker 1: allowed I was told legally we can tell like what
Speaker 1: percent we're looking for and what kind of uh A
Speaker 1: dollar amount? All I could say is if you're interested,
Speaker 1: go to Mitchell dot Model's Mitchell dot model at models
Speaker 1: dot com, send me an email. I'll pass it onto
Speaker 1: our investment banker and they'll take over from there and
Speaker 1: they'll ultimately decide in terms of figure out which investors. Well, okay,
Speaker 1: they'll flush it out. I talk to them every single day.
Speaker 1: What's happening? Who do you have? Let me hear? And
Speaker 1: it's that kind of dialogue again and only started up
Speaker 1: in the last five days. And so, Mitchell, have you
Speaker 1: thought I dare say about selling the whole thing at
Speaker 1: this stage? I would say everything is on the table.
Speaker 1: That's not our first preference. Our first preference is selling
Speaker 1: in a minority interest. But if someone came and offered
Speaker 1: us a deal, I'd have to look at everything. I
Speaker 1: owe it to our associates, I owe it to our family.
Speaker 1: Is there ultimately too, maybe just going forward and online
Speaker 1: route for you guys, rather than a brick and water.
Speaker 1: Now brock and brick and water, that's a heritage, it's
Speaker 1: our roots still a very important part. But there's still
Speaker 1: the great opportunity to build your online presence better than
Speaker 1: it is today. I have to ask you because Jason.
Speaker 1: I have a lot of um conversations with executives and
Speaker 1: sometimes we ask about, you know, people they admire or
Speaker 1: you know, if there's one thing that they you know,
Speaker 1: a mistake that they learned from. Is there anything that
Speaker 1: you would have done differently in terms of the business.
Speaker 1: I just got about probably looking where we expanded. We
Speaker 1: expanded in the northeast to like Massachusetts, Connecticut, New Hampshire,
Speaker 1: Rhode Island. We thought that would be a bridge from
Speaker 1: New York and uh, the bridge didn't work. You know.
Speaker 1: It took a lot of money, a lot of time,
Speaker 1: effort and energy to build our brand and then we
Speaker 1: were just out competed by exporting its and bobs. All right, well,
Speaker 1: we wish you well and um, hopefully you'll come back
Speaker 1: and tell us how things go. Absolutely, thank you so
Speaker 1: much for having me. Yeah, you bet, Mittell Modell. He's
Speaker 1: chairman and chief executive officer of Model's Sporting Goods. Jason.
Speaker 1: Of course, in our Bloomberg Interactive Broker's studio here in
Speaker 1: New York, and as you've said, I've shopped at them.
Speaker 1: My family has over the years that I know you
Speaker 1: are with your son, so it's certainly something. If you
Speaker 1: looked at my credit card statements, you'd see a lot
Speaker 1: of model's lines all in there. Uh. There's one of
Speaker 1: White Plaines Road Terrytown Road, uh, right between our house
Speaker 1: and White Plane so uh. And a frequent customer in
Speaker 1: New York City as well