Academy Sports CEO Ken Hicks on Why the Retailer Is Back in Expansion Mode
After a more than two-year pause, Academy Sports + Outdoors is hitting the gas once again on store expansion.
This past weekend, the Katy, Texas-based sporting goods chain celebrated the grand opening of a new location in Conyers, Ga. — marking its first store launch since November 2019. The 58,000-square-foot door employs 60 people and features the company’s updated store design, incorporating more natural light and lower fixtures to help customers navigate the numerous sports and outdoor departments.
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Speaking with FN at the opening, Academy Sports chairman, president and CEO Ken Hicks said, “This format looks very different and has more visuals, more call outs of our businesses and brands, more displays. And we will add more of those to make it an exciting place to shop.”
In terms of merchandise, the store offers footwear, apparel and hard goods from top brands such as Nike, Adidas, Under Armour, Columbia and The North Face, as well as Academy private labels including Magellan Outdoors and Freely (a women’s and girls’ activewear line that launched this spring). Hicks also pointed out that each store is stocked with customized inventory to cater to individual communities, from a Fan Shop for local teams to area-specific bait in the fishing department.
Courtesy of Academy Sports
With this opening, Academy Sports now operates 11 stores in the Atlanta area and 19 throughout Georgia, and it has plans to open one more in Atlanta this year. All told, the company aims to launch eight doors in 2022, after which the team will move into higher gear, targeting 80 to 100 stores over the next five years.
Hicks said he’s confident that goal is achievable. “We’ve got 259 stores in 16 states, so we’ve got the whole rest of the country to grow in,” he explained. “We’ve got a great model. We aren’t looking to invent some new idea. This works. We do over $25 million a store. We’ve got the highest productivity in our business segment — the best brands, the best team members. It’s exciting.”
This expansion effort comes after the company recorded the most profitable year in its history. For fiscal 2021, Academy reported that net sales increased 19.1% over the prior year to a record $6.77 billion, with net income catapulting 117.4% to $671.4 million for the full year.
Here, Hicks shares a few insights into his game plan for Academy and advice for navigating today’s uncertain marketplace.
We’ve seen a lot of big-box retailers scaling back or trying out new store concepts. Why do you still believe in this model?
KH: “They’re scaling back and trying new concepts because they’re over-stored in many cases and they can’t build anymore. And they’re getting old. Ours is a fresh concept. And [the Conyers store] is a new look for us. But also, we’ve been in the Atlanta area the past 10 years and we have zero stores in Atlanta. That was something we did in the past was, we would go to a market, put up a couple of stores, go to another market, a couple more stores. And we didn’t ever have market presence. This will allow us to have market presence. There are three ways we’re looking at new stores: One, there’s a significant opportunity in our heritage markets. Two is a filling out of markets, like [in Atlanta]. And third is that we’re in 16 states, so we’ve got 34 more we can go to. And we’ve found as we roll this out that people like [our concept]. It works outside of Texlahoma (our core markets of Texas, Louisiana and Oklahoma). So we’re opening stores in West Virginia and Virginia next, and then we’ll go on to states beyond that.”
Why did it take two-and-a-half years for Academy to open a new store?
KH: “Some of our the locations weren’t the best and we needed to clean those stores up. And now all of our stores are profitable in the entire chain. We’ve got them all on solid footing. They all grew last year — strongly, every store. So, we needed to take a break [to do that cleanup]. And then COVID came and we couldn’t get out to find sites, then when we did go out, you can’t just open a store, you’ve got to go find the sites and build them. So it took a little longer than we would like.”
Courtesy of Academy Sports
Store by store is one way to grow — acquisitions is another. Is that something you’re looking at?
KH: “We look at it and study it. The challenge with acquisitions is, this is a model that works, and to go out and find somebody who has a bunch of 60,000 square foot stores — there aren’t any. So that’s difficult. And then or to go with a new concept, we don’t need a new concept. We’ve got a great concept.”
How does your strategy at Academy Sports differ from when you led Foot Locker?
KH: “The way we grew Foot Locker was we went into Europe and the Internet. The Internet part is the same. And the way we’re growing the markets [is similar to] what we did in Europe. In the United States, Foot Locker was pretty well saturated. We had five banners in the U.S., so we were plenty out there.”
And how does the experience compare for you?
KH: “I’ve worked in a lot of different retail businesses. This one is so different. People talk about labor issues, but we haven’t had a big problem because the team members recognize that this is fun. And you don’t get that if you work at a Gap store selling somebody their apparel for the office, or if you work at a McDonald’s. You work here and think, I get to handle footballs and basketballs and I can talk sports and everybody thinks that’s cool. Some people target the elite athletes, some people the extreme adventure. We target fun and everybody needs more fun. Everybody who walks out of our stores with a bag is going to do something fun.”
Courtesy of Academy Sports
Everyone’s talking about Nike’s move toward DTC. What is your sense of this shift in the market? Is it as dire as people say?
KH: “No, it’s actually good for us, because, one, they’re pulling out a lot of the players who are promotional, who are marginal. The second thing is, they realize they need us. We bring a customer that they have difficulty getting. They need sport to keep who they are, and we deliver the sport. We deliver families, we deliver young kids, we deliver a breadth of customers that they can’t get through direct to consumer. Adidas is the same way and Under Armour — they’re all doing it. But we appreciate what they do and they appreciate what we can do for them.”
Academy is considered a preferred retailer for those brands. Do you ever worry about losing that status? How do you maintain strong vendor relationships?
KH: “We do things like this [store opening]. We make our stores look better, more exciting. We draw new customers. We go to markets and expand and give them a great view of what’s going on. So it’s this. They look and say, you know, as long as we keep our relevance we’ll be relevant.”
You’ve seen a lot of different evolutions of retail over the years. What is your advice for navigating this challenging environment we’re in?
KH: “One is know what the customer wants. That’s where it all starts. Develop partnerships with your vendors, your communities to make sure that you are taking care of the customers. And you’ve got to be out in stores because what the people want might be different than what you think. Also, value is important in what we do. We’re watching our pricing very, very closely and with some things, we decided we’re not taking the price up . We’re just going to have to eat it. With others, we can afford to [raise prices]. But we need to make sure that we offer the assortment and value that the customer expects from us.”
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