WEBVTT - Businessweek Extra-Ken Hicks

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<v Speaker 1>This is Bloomberg Business Week from Bloomberg Radio. Hi, I'm

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<v Speaker 1>Jason Kelley and I'm Carol Masser. Welcome to the Bloomberg

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<v Speaker 1>Business Week Extra Eights, our weekly podcast bringing you one

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<v Speaker 1>of our favorite interviews from the week, and this week

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<v Speaker 1>it was with Ken Hicks. He's German presidency of Academy

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<v Speaker 1>Sports and Outdoors. It was recently taken public just about

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<v Speaker 1>one week ago by the private equity from KKR and Jason,

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<v Speaker 1>this is a company, a retail store that you kind

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<v Speaker 1>of grew up with. I absolutely did. I was a

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<v Speaker 1>longtime customer before I moved out of Texas, So that

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<v Speaker 1>was definitely part of the conversation that we had with

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<v Speaker 1>Ken Hicks. We're recovering. We're you know, like most of

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<v Speaker 1>the country, um, you know, learning how to live and

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<v Speaker 1>deal with the virus. People are wearing masks, um, we're

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<v Speaker 1>the hand sanitizer, the spacing and most of the places

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<v Speaker 1>are now open at some diminished capacity, ranging from fifty

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<v Speaker 1>to have any five depending on the type of business.

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<v Speaker 1>We stayed open the entire time because we were viewed

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<v Speaker 1>as as uh, you know, an essential retailer under the

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<v Speaker 1>CSIL laws, and we we learned how to operate in

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<v Speaker 1>this but I things definitely are not back to normal,

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<v Speaker 1>but we're learning how to manage through this difficult time. Well,

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<v Speaker 1>so talk to us because you know, Jason and I've

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<v Speaker 1>talked about you know, things will open, but it doesn't

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<v Speaker 1>mean people want to go. What kind of flows have

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<v Speaker 1>you seen in terms of customers coming in and out.

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<v Speaker 1>I'm sure it varies some location to location, but I'm

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<v Speaker 1>sure your managers are saying, hey, here's how it's going. Yeah. Actually,

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<v Speaker 1>our our traffic is up over last year and and

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<v Speaker 1>part of that is people's lives have changed and people

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<v Speaker 1>are doing more things that that we sell. Jason has

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<v Speaker 1>a good understanding. We have a very broad assortment of

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<v Speaker 1>a lot of of things that for experiences and outdoors

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<v Speaker 1>and people are taking up fishing there, putting together their

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<v Speaker 1>own home gyms. Uh, they're even starting back with sport, hiking, camping,

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<v Speaker 1>and so we're seeing you know, our business for the

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<v Speaker 1>second quarter was up uh and you know business has

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<v Speaker 1>has continued uh well for us into the third quarter.

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<v Speaker 1>But you know, the good thing is people are want

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<v Speaker 1>to take care of themselves, so and we're a great

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<v Speaker 1>place to take care of yourself at so if I

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<v Speaker 1>may ask you, guys went public last week thirteen dollars

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<v Speaker 1>a share. It was taken public by the private equity

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<v Speaker 1>firm kk R. The stock open below that price. They

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<v Speaker 1>think it traded around thirteen, maybe a little bit above

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<v Speaker 1>it today. Were you disappointed by the I P O D.

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<v Speaker 1>Is there some part of your story that you think

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<v Speaker 1>investors aren't completely understanding. I think the biggest issue is

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<v Speaker 1>we don't have enough Jason's in the world. Uh. Well,

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<v Speaker 1>that that's all without saying and as mother Debbi's listening

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<v Speaker 1>right now and just say, yes, that is so true.

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<v Speaker 1>We're located in the south and central part of the country,

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<v Speaker 1>and people who know us know our story and know

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<v Speaker 1>how great it is. Unfortunately, most of the investors, because

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<v Speaker 1>of COVID, weren't able to get to see the stores,

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<v Speaker 1>talk to our customers. Uh, and so they don't have

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<v Speaker 1>a full understanding of of what academy is. So I'm

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<v Speaker 1>not I wasn't really disappointed because our goal was to

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<v Speaker 1>become public, and I I have from my time when

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<v Speaker 1>I was at CEO of foot Locker and when I

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<v Speaker 1>was part of the turnaround at Pennies, back when when

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<v Speaker 1>Pennies was was doing well. I know that our performance

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<v Speaker 1>will show what Academy is to the market, and in

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<v Speaker 1>the long run, people will forget about what we opened at.

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<v Speaker 1>What they'll remember is where we're at right, So Ken,

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<v Speaker 1>let's talk about that. But because you know you, this

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<v Speaker 1>is a fairly familiar playbook. And I have to say,

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<v Speaker 1>having followed KKR pretty closely over the years, UH, I

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<v Speaker 1>have seen Edry gravitson George Roberts and their colleagues do

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<v Speaker 1>this a few times. Go get a guy who has

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<v Speaker 1>done this before, install him in a company that that

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<v Speaker 1>they have bought. What was what were the marching orders

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<v Speaker 1>that you got from from KKR? What was on sort

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<v Speaker 1>of your checklist to go through before you could get

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<v Speaker 1>to the point of of getting Academy public. Well, I

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<v Speaker 1>KKR was a great partner, they invested in US and

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<v Speaker 1>supported us, but the marching orders really were fixed the business.

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<v Speaker 1>And again, having seen you know this is my third

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<v Speaker 1>big company and part of I knew what we need

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<v Speaker 1>to do. Assembled a very strong team. I'm very fortunate.

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<v Speaker 1>I've got a great team. UH. We identified six or

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<v Speaker 1>seven priorities working on UH the omni channel we were underpenetrated.

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<v Speaker 1>Improving that improving the service level and the look of

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<v Speaker 1>our stores, localizing our assortment, targeting our marketing, UH, getting

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<v Speaker 1>our expenses and operations inline, very very specific things. And

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<v Speaker 1>starting the middle of last year our performance was good.

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<v Speaker 1>We had a good back half and a good start

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<v Speaker 1>to this year before COVID, and then when COVID hit,

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<v Speaker 1>we were able to turn on a dime and we

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<v Speaker 1>operated very well with under the COVID situation. So we

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<v Speaker 1>proved our strategy works in normal times and then the

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<v Speaker 1>most challenging of times, Ken Hicks is with us chairman presidency.

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<v Speaker 1>You have Academy Sports and Outdoors. He's on the phone

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<v Speaker 1>in Katie, Texas. So, Ken, Man, you are someone who

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<v Speaker 1>really understands retail. Former chairman CEO foot Locker. You've had

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<v Speaker 1>senior positions at J. C. Penny Payless home Shopping. Um,

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<v Speaker 1>we've also worked at McKinsey and Company. You're on the

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<v Speaker 1>board of Whole Food. So man, you see so saying

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<v Speaker 1>man a lot, sorry about that, but you see so

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<v Speaker 1>into that Texas thing. I do have a lot of

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<v Speaker 1>relatives in Texas who I love in a door, so

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<v Speaker 1>it does happen. Um, So tell me what you're seeing

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<v Speaker 1>about retail because it does feel like we're going through

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<v Speaker 1>an evolution, a revolution um that was happening even before

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<v Speaker 1>the pandemic. Yeah, you are so correct at what what

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<v Speaker 1>we're seeing is a shift in the consumer and and

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<v Speaker 1>really the connection to omni channel. And I firmly believe

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<v Speaker 1>that the winner is are going to be people who

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<v Speaker 1>are able to do both brick and mortar and online. Uh.

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<v Speaker 1>And we we were underdeveloped, and we made some significant

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<v Speaker 1>improvements to our our net business and we saw a

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<v Speaker 1>significant increase, but we expect to continue to see that.

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<v Speaker 1>But of our online business is pick up in store,

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<v Speaker 1>and of the that is sent to home, half of

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<v Speaker 1>that is shipped from store. So stores are a critical

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<v Speaker 1>part of the online business, and that's who's going to win.

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<v Speaker 1>And you can't be just breaking mortar. You can't be

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<v Speaker 1>just online. And it's quite frankly, it's I believe one

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<v Speaker 1>of the reasons why Amazon about Whole Foods was to

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<v Speaker 1>get a better understanding of that brick and mortar business. Well,

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<v Speaker 1>it's funny, we we we talked about that very topic

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<v Speaker 1>with your colleague John Mackie just a couple of weeks

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<v Speaker 1>ago here on on our air, and he was talking

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<v Speaker 1>about some of those those same learnings which obviously you've

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<v Speaker 1>seen up close and personal um through your work with

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<v Speaker 1>with Whole Foods. I do wonder, ken, how does it

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<v Speaker 1>change having seen sort of the previous world and now

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<v Speaker 1>this current world and where we're going in terms of

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<v Speaker 1>that omni channel, How does it change where you expand

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<v Speaker 1>how does it change who you hire? What? What does

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<v Speaker 1>it change about your strategy in the in the near term,

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<v Speaker 1>we obviously have to have people in the home office

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<v Speaker 1>that understand how to merchandise online and in stores. Uh

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<v Speaker 1>in the stores, it changes their focus because in the

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<v Speaker 1>past they were dedicated to the customer who was in

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<v Speaker 1>the store. Now we we have to serve a customer

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<v Speaker 1>who is coming in just to pick something up. And

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<v Speaker 1>one of the things we learned is we had a

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<v Speaker 1>little beep when somebody who came in for what we

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<v Speaker 1>call a bopus order by online pickup in store, but

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<v Speaker 1>we used the same one for somebody who wanted a

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<v Speaker 1>curbside who didn't want to come into the store, and

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<v Speaker 1>they were confused, so we changed it to a car horn.

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<v Speaker 1>So when they hear a car horn, they know somebody's

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<v Speaker 1>pulled up and they've got to get out there to

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<v Speaker 1>take care of them. What does this you know, that's

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<v Speaker 1>that's clever, right, so easy to fix. But then it's

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<v Speaker 1>very clear about who's doing what, who what customers you know,

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<v Speaker 1>you know is here? Basically what does all of this

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<v Speaker 1>do for your staffing needs? Um, it makes it more

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<v Speaker 1>challenging because you don't know when the person is going

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<v Speaker 1>to come in for the buy inline pickup in store,

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<v Speaker 1>So we have to have much more flexible staffing and

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<v Speaker 1>people who uh you know can One of the big

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<v Speaker 1>things is people who can go around the store and

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<v Speaker 1>find everything to fill our either ship from store orders

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<v Speaker 1>or the bopus orders. It's not like you can have

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<v Speaker 1>somebody who's just an expert in one part of the store.

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<v Speaker 1>They've got to be able to go all the way

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<v Speaker 1>around the store to fill out that shopping basket for

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<v Speaker 1>the customer. Yeah. In other words, your pickers, right, Like

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<v Speaker 1>I mean you've got to be like, you know, a

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<v Speaker 1>picker on steroids basically, yes, And then they've got to

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<v Speaker 1>move fast because when the customer comes in, uh, either

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<v Speaker 1>when they pull up in their car or they come

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<v Speaker 1>in to pick up that Botus order, they expect it

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<v Speaker 1>to be there and they're not. You know, it's not

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<v Speaker 1>like I'll walk around on the store and try to

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<v Speaker 1>find there. I'm here, I know what I want to do.

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<v Speaker 1>I want to get get it and get out. Yeah.

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<v Speaker 1>So what about product mix? Can I mean in this

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<v Speaker 1>sense that you know, we are living in a world

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<v Speaker 1>where people are more focused on health and wellness. Fitness

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<v Speaker 1>has you know, sort of come to the four in

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<v Speaker 1>many ways, we've seen you know, high end retailers like

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<v Speaker 1>Lulu Lemon do very well. Uh in this sort of market.

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<v Speaker 1>How have you changed the product mix and how do

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<v Speaker 1>you see that going forward? Because as you said at

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<v Speaker 1>the top, and as I know from from being a customer,

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<v Speaker 1>you guys sell a lot of different stuff. Yeah, and

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<v Speaker 1>and we've had to change some of our mix. So

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<v Speaker 1>we for example, in the UM athletic equipment or the

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<v Speaker 1>exercise equipment area, we've had to put in connected fitness

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<v Speaker 1>so people have that. UM We've had to increase certain

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<v Speaker 1>things dumbbells, you know, bicycles, they're they're worldwide shortages on

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<v Speaker 1>both of those things. But also something is as old

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<v Speaker 1>fashioned is fishing. You know, the number of people who

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<v Speaker 1>are now fishing is phenomenal to really increased and so

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<v Speaker 1>we've had to uh increase and improve our assortments there

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<v Speaker 1>because that customer has gotten more demanding and they're very

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<v Speaker 1>well educated because they can go online and they know

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<v Speaker 1>what they want. And that was Academy Sports and Outdoors

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<v Speaker 1>chairman and CEO Ken Hicks, very well healed, well experienced

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<v Speaker 1>in the retail business. This is a brand, as we

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<v Speaker 1>talked about, close to my heart. I definitely spent some

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<v Speaker 1>of my hard earned high school money they're at Academy

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<v Speaker 1>over the years. But an interesting window I think into

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<v Speaker 1>how retail is moving forward. Of course, this is a

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<v Speaker 1>guy who ran foot Locker. He was part of j C.

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<v Speaker 1>Pennies when James Pennis was still a thing, and he

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<v Speaker 1>gave us some really good insights into where retail goes

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<v Speaker 1>from here. Yeah, spent time at payless home shopping, made

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<v Speaker 1>apartment stores, and I think my favorite line of the week,

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<v Speaker 1>it was maybe my favorite line of the years that

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<v Speaker 1>he said, we need more. Jason is out there well,

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<v Speaker 1>if only, if only you've been listening to Bloomberg Business

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<v Speaker 1>Week Extra for sure to listen to Bloomberg Business Week Radio,

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<v Speaker 1>airing live Monday through Friday at two pm Wall Street Time,

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<v Speaker 1>I'm Bloomberg Radio, I'm Carol Naser, and I'm Jason Kelly.

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<v Speaker 1>This is what