By Thomas J. Ryan

Ken Hicks has earned credit for stabilizing Foot Locker Inc. and setting it back on a path towards growth. Now, he’s looking to do the same for Academy Sports + Outdoors.

Hicks, who grew up in Academy’s hometown in Houston, became chairman and CEO in May 2018.

During his six-year tenure leading Foot Locker, he helped develop and deliver on plans reversing three years of negative same-store sales. He has more than three decades of senior merchandising, marketing and operational experience in retail in leadership positions at companies including J.C. Penney, Payless ShoeSource, Home Shopping Network, and May Department Stores.

Academy’s earnings have declined over the past several years due in part to a number of external factors including the decline in firearms demand, a downturn in the oil and gas industry in Academy’s markets as well as the overall disruption caused by the popularity of online retailing.

The third largest retailer in the sporting goods space after Dick’s and Bass Pro, Academy is privately held but the company’s financial figures come out due to public debt that arrived with the 2011 leveraged buyout by KKR (Kohlberg Kravis Roberts). The rating agencies, Moody’s and S&P, lowered Academy’s debt ratings due to the company’s financial struggles and heavy debt load.

As part of the turnaround steps brought on by Hicks, Academy is ramping up investments online and rolling out BOPIS, (buy online, pick up in store), exiting certain categories, amplifying localized assortments and improving in-stock positions, and overall emphasizing the experience Academy offers.

Here, Hicks talks about what makes Academy unique in the marketplace, the progress being made on repositioning efforts and the chain’s financial stability.

Why did you join Academy? Academy’s a great company with a bright future. It’s in a similar place where Foot Locker was when I joined that chain. It will take some work, but when you look at the strong customer base that Academy has, the portfolio of products and the trends with people being active and outdoors, Academy has a tremendous opportunity. And, I looked at what they did. They sold fun and I said, ‘What’s not to like?’ 

Can you elaborate on Academy’s strengths? First of all, we’ve got a solid customer base, particularly in what we call our heritage markets. If you ask a person in Texas or Oklahoma about Academy, they’ll say, ‘I love Academy, I shop at Academy all the time.’ So a strong customer base is always tremendous. It’s one of the things that Foot Locker also had.

Second is our mission: ‘Provide fun for all through strong assortments, value, and experience.’ We sell fun. Everybody who leaves an Academy store with a bag is going to do something fun. If you like camping, fishing, playing a sport, grilling – those are all fun things. That’s what we do, and that’s one of the reasons we’re so loved.

We’ve also had a tremendous assortment across all classifications that we participate in, and we’re known for value. We don’t try to be high end, and we don’t just try to be discount – we go soup to nuts. You could be a beginning t-ball player, or you could be someone who’s playing in high school, we’ve got the bat and ball for you. The same thing is true in fishing, hunting and other areas.

Finally, it’s the experience we offer including services in-store like the assembly of bicycles and grills. I always ask people if they’ve ever assembled a bike, and the answer is always the same: ‘Once.’

We offer services like that, and that’s part of the experience. The other thing with experience comes from the products we sell and the number of people who say I bought my first baseball glove from Academy or my grandfather bought my first fishing rod for me at Academy and taught me how to fish. Those life experiences are something we can offer individuals and families that they won’t get going into a regular apparel store or a discount store. Experience is another thing we’re continuing to work on.

Can you talk about some of Academy’s recent challenges? A lot of them appear similar to other chains in the sporting goods space. I don’t think sporting goods owns the challenging retail environment exclusively. Retailing in and of itself is challenging as people spend their money in different ways through experiences, which we do offer. However, as people travel more, spend it on video games, spend it on technology, we’re competing with that, and people are shopping differently. So we have to adjust and adapt to that.

The world isn’t easy but, quite frankly, it’s never been easy. That’s the reason they call it work, but we have a foundation here. Unfortunately, for many retailers, either their market position or the products they sell, are not as desirable or not as strong.

We’ve got an excellent market position, we’ve got a very desirable offering, and we have the financial stability that puts us in a good position. That still means we’ve got a lot of work to do and a lot of things we need to improve, but as the expression goes, ‘We’ve got a good bone structure.’

What gives you faith in the sporting goods model? It’s a significant industry. The kid still wants to see how the bat feels in his hands. The dad still wants to see how sturdy the grill is—what’s the thickness of the metal, how big is the surface area. The camper still wants to know, ‘Can I still stand up in that tent?’ The fisherman still wants to do a couple casts with that rod and reel. So, that’s still important; however, the environment has made it more challenging for us because the customer is more educated and smarter, so we’ve got to make sure that we’re also educated and smarter and that we provide that experience and have that assortment.

The ratings agencies have said Academy was slow to embrace online selling. Are you catching up? We have made some major efforts. Unfortunately, one of those created a bit of a glitch for us, and we’ve been working out of that for the last several months. The good news is that we are now at a point where we’re able to move forward. We’re improving our site. That’s a requirement, and that means making it more of a shopping site, not just a place where people go to buy but where more people go shopping, where we give customers information and ratings and allow them to compare.

We’re continually adding more content to tell people how to buy a tent or how to assemble a bicycle if that’s what they want to do. We’re also further aligning the site with tour stores because the customer goes back and forth. We’re continuing to roll out programs like buying online, pick up in-store and, quite frankly, more people had it, and we now have it. However, we’re making a major effort. Whether they buy online or in the store, we want to make the experience agnostic to them.

Can you talk about changes on the merchandising side? We do have a broad assortment, but we had gotten too broad. We’ve got to focus on things that we are good at, and that people expect from us. We were selling things like luggage. We made a big deal of electronics and people don’t come to us for electronics. We have some businesses that are core to who we are, and we are one or two or maybe even three people in the whole market who sell it. We want to be the place to go for those categories, and that means offering great assortments in things like team sports, hunting, camping, fishing, etc.

The second type of merchandise we have is where we’re a powerful player, but there are a number of options, particularly in areas like apparel and footwear. You can get that many places, but we want to be powerful at it, so we’re in the consideration. Our mix may bend more towards sports and outdoors whereas somebody else may bend a little bit more toward fashion, but that’s critical to us.

The third is expected businesses. They’re not big businesses, but people expect to find outdoor games and secondary sports like lacrosse.

Finally, there are accommodations. If I’m buying a grill and the chairs for my patio, I may want Bluetooth speakers, so we have some of those. If I need shin guards for my daughter for the soccer game this morning, I may also pick up a 12-pack of water to take out to the game for the team. So we’ll sell water. But we had three different kinds of water, and you know, water is water. We didn’t need three types. I would rather spend those inventory dollars and give that space to those core businesses and those power businesses. 

So Academy exited certain categories and deepened assortments in others? And we expanded the offering of ‘good, better, best’ that we had. We were very strong in good and quite strong in best, but we didn’t have enough better. You could, for example, buy a baseball glove from us for $39.99 or $329. However, there’s a lot of dollars in between. We needed more of that $150 price point. So we’re strengthening our assortments at all three of those levels.

What about the increased emphasis on localization? We’ve got to have the right team sports for each region. In Texas, it’s football. In the Carolinas, we’ve got to have a stronger lacrosse assortment. In St. Louis, we need a stronger soccer assortment. It’s also about the team jerseys we offer and the type of bait and rods and reels we offer in different markets. The bait that people buy in North Carolina is different from the bait they’ll buy in Oklahoma or South Texas. So it’s important that we connect to the local community. We’re regional and have that ability more than some of our competition does.

Can you highlight any shifts in marketing? Value is important, and we have an emphasis on that, but we’re talking more about the experience we offer and our assortments. For example, we used to have a bunch of cuts to show the deals you could receive on a gift for Dad for Father’s Day. But when kids go back to school, they go back to sport, be it football or soccer. And they want to go back to sport because that’s a big part of school. So we’re making sure we get those ideas across, and we’re also doing more to link and traditional media. We’re stepping up what we’re doing in online marketing, talking online to the consumer and using the information that we have to communicate and help the consumer.

What about changes at the store level? We’re improving our service capabilities. We’re putting a lot more training in with our team members and trying to eliminate tasks and create more customer-facing opportunities in areas that require service like our grills or fitness equipment. We’re increasing the number of what we call, ‘enthusiasts’ or people who are all about fishing, camping, hunting, team sports, etc. Those people will be trained by our vendors and our team to understand the product so when you go in and talk to the fishing enthusiast, for instance, they can really tell what bait works best for which lake in the area.

Academy seems to be slowing its expansion. Can you talk about adjustments there? We’re still opening eight stores this year. However, one of the things we did is we probably went into too many markets too fast, and our focus now is solidifying our position in some of what we call our non-heritage markets, or newer markets. For example, we recently opened two stores in the Charlotte, NC area to strengthen our position there. We also started some markets from the outside, and now we’ve got to move in so that we’re more in densely populated areas of those markets. We’ve got to make sure we open them strongly as well. So we’re improving how we open stores and have grand openings. But, we’re far from over-stored just based on our positioning, and we feel we can continue to open stores in markets.

Every retailer seems to be asked how they compete against Wal-Mart and Amazon and I’m sure Academy is often asked how it competes against Dick’s as that chain has entered Texas. How do you see Academy competing against all three? They’re all good competitors. They’re all great companies. Amazon is Amazon, but they can’t do things we do. Amazon realizes that ultimately they need brick & mortar to be successful. The people that are going to win are going to be able to put brick & mortar and online together. And by the way, brick & mortar is harder. We’ve got that. We’ve got to grow online, but we’re making progress.

As far as Wal-Mart, sporting goods is a side business to them. That’s not what they’re about; it is for us. So we’re going to have better assortments and service and capabilities. We’ve also got the best brands in sporting goods – Nike, Adidas, Under Armour, Rawlings, Wilson, etc. and the premier brands in fishing, hunting, camping and other categories that they can’t compete with us in. So we’ll have that broader assortment, as well as the opening price. And with Dick’s, we don’t have a velvet rope at the door. We want everybody.

If you’re a novice athlete or remember when you used to be a good athlete, or you are a good athlete, we’ve got stuff for you. We also have what we think are stronger values. So if you put that together, we can compete effectively with Dick’s. If you look at the stores, we have broader assortments than Dick’s and our stores are more productive.

Do you see vendors opening their own stores as much of a threat? By definition, vendors with their own stores can only offer a limited assortment. Do you ever wonder why car dealerships all locate together? The customer wants choice. You may want to by a Porsche, but you want to check out the Maserati and the McLaren too. So that’s why they’re together. Also, what the customer likes is choice, and we provide that for them and the brands can’t.

How is your liquidity? And what’s it like being privately-held with public debt out there?KKR has been a very good partner and been very supportive, allowing us to add stores, build distribution centers and support our growth online. I’m very pleased with them. Other private equity firms aren’t as supportive of growth. With regard to our liquidity, we are in the best position we’ve been in in years. We have more liquidity than we’ve had and less debt. It’s unfortunate that the rating agencies have some of the rules they have, but we know we’re in good shape. When we talk to our vendors and our landlords, they’re pleased with the progress we’ve made in our financial stability.

What’s the near or long-term goal for Academy? Does that include an IPO? That’s up to the owners to figure out if they want to do that. Our business and our job are to be the best sports and outdoor retailer in the country by providing fun for all through strong assortments, value and experiences. That’s what we’re working hard to do. We’ve got a clear strategy to do that, and I’ve got a very good team here to help make that happen.

We’re financially sound, and we’re starting to see some good green shoots on the strategy, and in the progress, we’re making. However, we have a lot of work ahead of us. People always talk about retail being a marathon, and I say it’s not because a marathon has an end. Retail does not have an end. You keep working every day to make it better.

Photo courtesy Academy Sports + Outdoors