Speaker 1: This is Bloomberg Business Week from Bloomberg Radio. Hi, I'm
Speaker 1: Jason Kelley and I'm Carol Masser. Welcome to the Bloomberg
Speaker 1: Business Week Extra Eights, our weekly podcast bringing you one
Speaker 1: of our favorite interviews from the week, and this week
Speaker 1: it was with Ken Hicks. He's German presidency of Academy
Speaker 1: Sports and Outdoors. It was recently taken public just about
Speaker 1: one week ago by the private equity from KKR and Jason,
Speaker 1: this is a company, a retail store that you kind
Speaker 1: of grew up with. I absolutely did. I was a
Speaker 1: longtime customer before I moved out of Texas, So that
Speaker 1: was definitely part of the conversation that we had with
Speaker 1: Ken Hicks. We're recovering. We're you know, like most of
Speaker 1: the country, um, you know, learning how to live and
Speaker 1: deal with the virus. People are wearing masks, um, we're
Speaker 1: the hand sanitizer, the spacing and most of the places
Speaker 1: are now open at some diminished capacity, ranging from fifty
Speaker 1: to have any five depending on the type of business.
Speaker 1: We stayed open the entire time because we were viewed
Speaker 1: as as uh, you know, an essential retailer under the
Speaker 1: CSIL laws, and we we learned how to operate in
Speaker 1: this but I things definitely are not back to normal,
Speaker 1: but we're learning how to manage through this difficult time. Well,
Speaker 1: so talk to us because you know, Jason and I've
Speaker 1: talked about you know, things will open, but it doesn't
Speaker 1: mean people want to go. What kind of flows have
Speaker 1: you seen in terms of customers coming in and out.
Speaker 1: I'm sure it varies some location to location, but I'm
Speaker 1: sure your managers are saying, hey, here's how it's going. Yeah. Actually,
Speaker 1: our our traffic is up over last year and and
Speaker 1: part of that is people's lives have changed and people
Speaker 1: are doing more things that that we sell. Jason has
Speaker 1: a good understanding. We have a very broad assortment of
Speaker 1: a lot of of things that for experiences and outdoors
Speaker 1: and people are taking up fishing there, putting together their
Speaker 1: own home gyms. Uh, they're even starting back with sport, hiking, camping,
Speaker 1: and so we're seeing you know, our business for the
Speaker 1: second quarter was up uh and you know business has
Speaker 1: has continued uh well for us into the third quarter.
Speaker 1: But you know, the good thing is people are want
Speaker 1: to take care of themselves, so and we're a great
Speaker 1: place to take care of yourself at so if I
Speaker 1: may ask you, guys went public last week thirteen dollars
Speaker 1: a share. It was taken public by the private equity
Speaker 1: firm kk R. The stock open below that price. They
Speaker 1: think it traded around thirteen, maybe a little bit above
Speaker 1: it today. Were you disappointed by the I P O D.
Speaker 1: Is there some part of your story that you think
Speaker 1: investors aren't completely understanding. I think the biggest issue is
Speaker 1: we don't have enough Jason's in the world. Uh. Well,
Speaker 1: that that's all without saying and as mother Debbi's listening
Speaker 1: right now and just say, yes, that is so true.
Speaker 1: We're located in the south and central part of the country,
Speaker 1: and people who know us know our story and know
Speaker 1: how great it is. Unfortunately, most of the investors, because
Speaker 1: of COVID, weren't able to get to see the stores,
Speaker 1: talk to our customers. Uh, and so they don't have
Speaker 1: a full understanding of of what academy is. So I'm
Speaker 1: not I wasn't really disappointed because our goal was to
Speaker 1: become public, and I I have from my time when
Speaker 1: I was at CEO of foot Locker and when I
Speaker 1: was part of the turnaround at Pennies, back when when
Speaker 1: Pennies was was doing well. I know that our performance
Speaker 1: will show what Academy is to the market, and in
Speaker 1: the long run, people will forget about what we opened at.
Speaker 1: What they'll remember is where we're at right, So Ken,
Speaker 1: let's talk about that. But because you know you, this
Speaker 1: is a fairly familiar playbook. And I have to say,
Speaker 1: having followed KKR pretty closely over the years, UH, I
Speaker 1: have seen Edry gravitson George Roberts and their colleagues do
Speaker 1: this a few times. Go get a guy who has
Speaker 1: done this before, install him in a company that that
Speaker 1: they have bought. What was what were the marching orders
Speaker 1: that you got from from KKR? What was on sort
Speaker 1: of your checklist to go through before you could get
Speaker 1: to the point of of getting Academy public. Well, I
Speaker 1: KKR was a great partner, they invested in US and
Speaker 1: supported us, but the marching orders really were fixed the business.
Speaker 1: And again, having seen you know this is my third
Speaker 1: big company and part of I knew what we need
Speaker 1: to do. Assembled a very strong team. I'm very fortunate.
Speaker 1: I've got a great team. UH. We identified six or
Speaker 1: seven priorities working on UH the omni channel we were underpenetrated.
Speaker 1: Improving that improving the service level and the look of
Speaker 1: our stores, localizing our assortment, targeting our marketing, UH, getting
Speaker 1: our expenses and operations inline, very very specific things. And
Speaker 1: starting the middle of last year our performance was good.
Speaker 1: We had a good back half and a good start
Speaker 1: to this year before COVID, and then when COVID hit,
Speaker 1: we were able to turn on a dime and we
Speaker 1: operated very well with under the COVID situation. So we
Speaker 1: proved our strategy works in normal times and then the
Speaker 1: most challenging of times, Ken Hicks is with us chairman presidency.
Speaker 1: You have Academy Sports and Outdoors. He's on the phone
Speaker 1: in Katie, Texas. So, Ken, Man, you are someone who
Speaker 1: really understands retail. Former chairman CEO foot Locker. You've had
Speaker 1: senior positions at J. C. Penny Payless home Shopping. Um,
Speaker 1: we've also worked at McKinsey and Company. You're on the
Speaker 1: board of Whole Food. So man, you see so saying
Speaker 1: man a lot, sorry about that, but you see so
Speaker 1: into that Texas thing. I do have a lot of
Speaker 1: relatives in Texas who I love in a door, so
Speaker 1: it does happen. Um, So tell me what you're seeing
Speaker 1: about retail because it does feel like we're going through
Speaker 1: an evolution, a revolution um that was happening even before
Speaker 1: the pandemic. Yeah, you are so correct at what what
Speaker 1: we're seeing is a shift in the consumer and and
Speaker 1: really the connection to omni channel. And I firmly believe
Speaker 1: that the winner is are going to be people who
Speaker 1: are able to do both brick and mortar and online. Uh.
Speaker 1: And we we were underdeveloped, and we made some significant
Speaker 1: improvements to our our net business and we saw a
Speaker 1: significant increase, but we expect to continue to see that.
Speaker 1: But of our online business is pick up in store,
Speaker 1: and of the that is sent to home, half of
Speaker 1: that is shipped from store. So stores are a critical
Speaker 1: part of the online business, and that's who's going to win.
Speaker 1: And you can't be just breaking mortar. You can't be
Speaker 1: just online. And it's quite frankly, it's I believe one
Speaker 1: of the reasons why Amazon about Whole Foods was to
Speaker 1: get a better understanding of that brick and mortar business. Well,
Speaker 1: it's funny, we we we talked about that very topic
Speaker 1: with your colleague John Mackie just a couple of weeks
Speaker 1: ago here on on our air, and he was talking
Speaker 1: about some of those those same learnings which obviously you've
Speaker 1: seen up close and personal um through your work with
Speaker 1: with Whole Foods. I do wonder, ken, how does it
Speaker 1: change having seen sort of the previous world and now
Speaker 1: this current world and where we're going in terms of
Speaker 1: that omni channel, How does it change where you expand
Speaker 1: how does it change who you hire? What? What does
Speaker 1: it change about your strategy in the in the near term,
Speaker 1: we obviously have to have people in the home office
Speaker 1: that understand how to merchandise online and in stores. Uh
Speaker 1: in the stores, it changes their focus because in the
Speaker 1: past they were dedicated to the customer who was in
Speaker 1: the store. Now we we have to serve a customer
Speaker 1: who is coming in just to pick something up. And
Speaker 1: one of the things we learned is we had a
Speaker 1: little beep when somebody who came in for what we
Speaker 1: call a bopus order by online pickup in store, but
Speaker 1: we used the same one for somebody who wanted a
Speaker 1: curbside who didn't want to come into the store, and
Speaker 1: they were confused, so we changed it to a car horn.
Speaker 1: So when they hear a car horn, they know somebody's
Speaker 1: pulled up and they've got to get out there to
Speaker 1: take care of them. What does this you know, that's
Speaker 1: that's clever, right, so easy to fix. But then it's
Speaker 1: very clear about who's doing what, who what customers you know,
Speaker 1: you know is here? Basically what does all of this
Speaker 1: do for your staffing needs? Um, it makes it more
Speaker 1: challenging because you don't know when the person is going
Speaker 1: to come in for the buy inline pickup in store,
Speaker 1: So we have to have much more flexible staffing and
Speaker 1: people who uh you know can One of the big
Speaker 1: things is people who can go around the store and
Speaker 1: find everything to fill our either ship from store orders
Speaker 1: or the bopus orders. It's not like you can have
Speaker 1: somebody who's just an expert in one part of the store.
Speaker 1: They've got to be able to go all the way
Speaker 1: around the store to fill out that shopping basket for
Speaker 1: the customer. Yeah. In other words, your pickers, right, Like
Speaker 1: I mean you've got to be like, you know, a
Speaker 1: picker on steroids basically, yes, And then they've got to
Speaker 1: move fast because when the customer comes in, uh, either
Speaker 1: when they pull up in their car or they come
Speaker 1: in to pick up that Botus order, they expect it
Speaker 1: to be there and they're not. You know, it's not
Speaker 1: like I'll walk around on the store and try to
Speaker 1: find there. I'm here, I know what I want to do.
Speaker 1: I want to get get it and get out. Yeah.
Speaker 1: So what about product mix? Can I mean in this
Speaker 1: sense that you know, we are living in a world
Speaker 1: where people are more focused on health and wellness. Fitness
Speaker 1: has you know, sort of come to the four in
Speaker 1: many ways, we've seen you know, high end retailers like
Speaker 1: Lulu Lemon do very well. Uh in this sort of market.
Speaker 1: How have you changed the product mix and how do
Speaker 1: you see that going forward? Because as you said at
Speaker 1: the top, and as I know from from being a customer,
Speaker 1: you guys sell a lot of different stuff. Yeah, and
Speaker 1: and we've had to change some of our mix. So
Speaker 1: we for example, in the UM athletic equipment or the
Speaker 1: exercise equipment area, we've had to put in connected fitness
Speaker 1: so people have that. UM We've had to increase certain
Speaker 1: things dumbbells, you know, bicycles, they're they're worldwide shortages on
Speaker 1: both of those things. But also something is as old
Speaker 1: fashioned is fishing. You know, the number of people who
Speaker 1: are now fishing is phenomenal to really increased and so
Speaker 1: we've had to uh increase and improve our assortments there
Speaker 1: because that customer has gotten more demanding and they're very
Speaker 1: well educated because they can go online and they know
Speaker 1: what they want. And that was Academy Sports and Outdoors
Speaker 1: chairman and CEO Ken Hicks, very well healed, well experienced
Speaker 1: in the retail business. This is a brand, as we
Speaker 1: talked about, close to my heart. I definitely spent some
Speaker 1: of my hard earned high school money they're at Academy
Speaker 1: over the years. But an interesting window I think into
Speaker 1: how retail is moving forward. Of course, this is a
Speaker 1: guy who ran foot Locker. He was part of j C.
Speaker 1: Pennies when James Pennis was still a thing, and he
Speaker 1: gave us some really good insights into where retail goes
Speaker 1: from here. Yeah, spent time at payless home shopping, made
Speaker 1: apartment stores, and I think my favorite line of the week,
Speaker 1: it was maybe my favorite line of the years that
Speaker 1: he said, we need more. Jason is out there well,
Speaker 1: if only, if only you've been listening to Bloomberg Business
Speaker 1: Week Extra for sure to listen to Bloomberg Business Week Radio,
Speaker 1: airing live Monday through Friday at two pm Wall Street Time,
Speaker 1: I'm Bloomberg Radio, I'm Carol Naser, and I'm Jason Kelly.
Speaker 1: This is what