WEBVTT - Lands’ End CEO on Hiring and Raising Wages

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<v Speaker 1>This is Bloomberg Business Week with Carol Messer and Bloomberg

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<v Speaker 1>Quick Takes Tim Stinovic from Bloomberg Radio. Well, the apparel

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<v Speaker 1>company lands End reported earnings last week and for the

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<v Speaker 1>second quarter, revenue came in at three eight four point

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<v Speaker 1>one million dollars. That was an increase from twenty three

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<v Speaker 1>point one percent in the second quarter of fiscal twenty

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<v Speaker 1>and an increase of twenty eight point eight percent from

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<v Speaker 1>the second quarter of fiscal twenty nineteen. The company's CEO,

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<v Speaker 1>Jerome Griffith, joins us now. He's joining us on the

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<v Speaker 1>phone from Long Island, New York. Jerome, it's so great

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<v Speaker 1>to have you on the show. How are you. I'm good,

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<v Speaker 1>Thank you, Thanks a lot for having me. Yeah, thanks

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<v Speaker 1>so much for joining us. Hey, I want to talk

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<v Speaker 1>a little bit about the challenges that you see, especially

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<v Speaker 1>when it comes to the supply chain and how you're

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<v Speaker 1>thinking about manufacturing right now, give us the idea of

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<v Speaker 1>the changes that you've had to make over the last

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<v Speaker 1>eighteen months as you've weathered this pandemic. Well, even even

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<v Speaker 1>prior to the pandemic, one of the things we wanted

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<v Speaker 1>to do was to sort of spread the risk We

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<v Speaker 1>have been producing about forty two our products out of

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<v Speaker 1>China up going into we get to to expand that

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<v Speaker 1>out into other countries so that we weren't really dependent

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<v Speaker 1>so much on one country at all. What's happened to

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<v Speaker 1>us over the course of the last let's a year

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<v Speaker 1>to year and a half is that products getting into

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<v Speaker 1>the States have started to slow down dramatically, and costs

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<v Speaker 1>have really risen, not just costs on shipping, but costs

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<v Speaker 1>on raw materials. So you see cotton costs and we

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<v Speaker 1>do a lot of cotton um rising pretty significantly. But

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<v Speaker 1>then you look at just the cost of shipping things

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<v Speaker 1>from any country here. Whereas containers three years ago we're

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<v Speaker 1>costing around four thousand dollars a container, the last six

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<v Speaker 1>months they've been up in the twelve of the fifteen

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<v Speaker 1>thousand dollar range, and I've heard quotes as high as

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<v Speaker 1>twenty five thou dollars for a container. And the same

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<v Speaker 1>things happened with air shipping, not not that we ship

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<v Speaker 1>a lot by air, but but those costs have been

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<v Speaker 1>going up as well. So you know, we will continue

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<v Speaker 1>to look at expanding our network to make sure that

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<v Speaker 1>we have a little bit more options than than just

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<v Speaker 1>going to one, two or three different places in order

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<v Speaker 1>to get get products made and shipped. Drowing such a

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<v Speaker 1>pleasure to have you us. I love speaking to the

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<v Speaker 1>retailers because you you have such a lens into what's

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<v Speaker 1>going on in our US and global economy. You know,

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<v Speaker 1>supply chain one thing. I want to talk a little

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<v Speaker 1>bit about the labor market. You know how it lands

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<v Speaker 1>end dealing with a pretty tight labor market. I mean,

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<v Speaker 1>how are you staffing stores, facilities? You guys seem to

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<v Speaker 1>be seeing some growth now in e commerce. What is

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<v Speaker 1>the priority for hiring? Uh? Well, e commerce really runs

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<v Speaker 1>out of our corporate office and that's of our business.

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<v Speaker 1>So that's been running along relatively well, um for the

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<v Speaker 1>last two years. Our core businesses are US direct e

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<v Speaker 1>commerce business and then if you add on the international

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<v Speaker 1>businesses and the B two B businesses which we do online. Uh,

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<v Speaker 1>it creates you know, quite a large, large annual volume.

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<v Speaker 1>What's happening with these businesses. And we've been able to

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<v Speaker 1>hire people because you know, we're in aesting company and

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<v Speaker 1>the company is also doing well, so you know that

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<v Speaker 1>tends to attract people. Where we've where we struggle somewhat

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<v Speaker 1>is just logistically how we ship goods out to customers.

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<v Speaker 1>We are based in Wisconsin. We have three major facilities there,

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<v Speaker 1>and we're a major employer in southern Wisconsin. What you've

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<v Speaker 1>seen with the labor market as of the last six

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<v Speaker 1>to nine months is people aren't working as much, so

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<v Speaker 1>it's been very difficult to entice people. We've given two

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<v Speaker 1>raises so far this year. We've put on peak um

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<v Speaker 1>peak incentives for people to come into work, and we've

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<v Speaker 1>had people working, you know, over time just to get

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<v Speaker 1>the goods out the door. What we're we have just

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<v Speaker 1>made it through our back to school peak, which actually

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<v Speaker 1>worked out okay for us, and we'll be going into

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<v Speaker 1>another hiring phase and it will be determined, you know,

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<v Speaker 1>whether the people that have been getting unemployment and staying

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<v Speaker 1>home are going to be ready to come back to

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<v Speaker 1>work because an unemployment stops to day in most places.

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<v Speaker 1>I think so, and I hope so. But I have

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<v Speaker 1>learned in the last year that I don't know when

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<v Speaker 1>you say you've had to raise wages twice, what are

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<v Speaker 1>we talking about here? Where are they right now? Depends

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<v Speaker 1>on your your average. We've raised raised them through between

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<v Speaker 1>three and four percent in May and another percent and

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<v Speaker 1>a half just this past month. Um, and obviously starting

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<v Speaker 1>salaries are over fifteen bucks. So you know, we've been

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<v Speaker 1>doing the right thing by the market. Uh. And the

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<v Speaker 1>market really dictates, you know, what you need to do

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<v Speaker 1>for the people who have been with you for a

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<v Speaker 1>long time. Because we're a fifty eight year old company.

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<v Speaker 1>You know, we've had we've had people that have worked

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<v Speaker 1>for us for thirty five years and you know, very

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<v Speaker 1>loyal employees, and you want to make sure that they're happy. Sure,

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<v Speaker 1>I'm a brit acclimatizing to life in the United States,

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<v Speaker 1>so I kind of asked this hesitantly, but should we

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<v Speaker 1>talk about the holiday seasons approaching? Everyone keeps telling me

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<v Speaker 1>fast approaching the holiday season? How's it looking from your perspective?

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<v Speaker 1>I think the holiday season is going to be depended

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<v Speaker 1>on getting goods here. Um. You know, this would be

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<v Speaker 1>my forty three Christmas since I graduated college, and everyone

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<v Speaker 1>gets just a little bit harder. But what we think,

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<v Speaker 1>and you know, we've seen pretty good demand coming up

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<v Speaker 1>until now. We haven't seen a huge slowdown in demand.

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<v Speaker 1>We think demand is still going to be there and

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<v Speaker 1>every year, you know, it ends up coming coming around

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<v Speaker 1>because people always end up going out shopping for for Christmas.

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<v Speaker 1>I think the people that are going to win, and

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<v Speaker 1>this is our mentality, are the people that service the customer.

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<v Speaker 1>If you're servicing the customer, you'll win. Yes, maybe your

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<v Speaker 1>cost might be a bit higher, but as long as

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<v Speaker 1>you can serve as a customer and keep them happy

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<v Speaker 1>and keep them coming back, you'll continue to win as

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<v Speaker 1>a brand. How early do you want consumers to order

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<v Speaker 1>from you for the holiday season? You know, people start now, uh.

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<v Speaker 1>And we saw it last year, and we saw it

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<v Speaker 1>for back to school this year. You know, people started early,

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<v Speaker 1>ordering early and back to school and they started ordering more. Uh.

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<v Speaker 1>And my sense is the same thing is going to

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<v Speaker 1>happen this year is that people will shop early and

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<v Speaker 1>they'll want to buy more because they've had ten up

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<v Speaker 1>demand and they have good savings right now, and people

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<v Speaker 1>will want to spend. I think what's going on in

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<v Speaker 1>the supply chain and what's going on with getting the

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<v Speaker 1>goods from the manufacturers to the containers, the containers to

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<v Speaker 1>the ports, trucking the containers from the ports to the warehouses,

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<v Speaker 1>and then ultimately getting it out the consumer. That's gonna

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<v Speaker 1>be the tricky part for this year. And I think,

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<v Speaker 1>you know, the market knows that obviously. It was in

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<v Speaker 1>the Wall Street Journal over the weekend, you know, and

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<v Speaker 1>it was in w w D last week talking about,

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<v Speaker 1>you know, what's going on in the industry. It's a

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<v Speaker 1>big deal, and people are working very hard to make

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<v Speaker 1>sure that they get Jerome Griffic. We're gonna have to

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<v Speaker 1>leave it there. CEO of lands End joining us on

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<v Speaker 1>the phone from Long Island, New York,