Academy Sports & Outdoors

views updated

Academy Sports & Outdoors

1800 North Mason Road
Katy, Texas 77449
U.S.A.
(281)579-1555
Fax:(281)646-5204
Web site: http://www.academy.com

Private Company
Incorporated: 1973
Employees: 4,000
Sales: $435 million (1998 est.)
SICs: 5941 Sporting Goods, Retail; 5661 Shoe Stores

Privately owned by the Gochman family, Academy Sports & Outdoors operates the fourth largest chain of retail sporting goods “megastore” outlets in the United States. In 1999, it had 35 stores in Texas, three in Oklahoma, two in Alabama, three in Louisiana, and one in Florida. The majority of these are “superstores,” ranging from 35,000 to 50,000 square feet in size. In them, Academy carries an extensive line of name-brand equipment and clothing and shoes for competitive sports, physical fitness training, and outdoor recreational activities such as camping, hunting, fishing, and boating. Included among its name brands are Champion, Jantzen, Justin, K-Swiss, Nike, Reebok, Rollerblade, Spalding, and Wrangler. Academy’s company headquarters are located in Katy, Texas, a suburb of Houston, where it also owns a large warehouse used for effective inventory control and distribution.

1970s: Early History and Directions

Academy Sports & Outdoors came into existence in 1970, when Arthur Gochman and his business partner purchased Southern Sales, a Houston-based army-navy surplus chain comprised of six stores that were by that year no longer making any profit. At the time, Gochman was a practicing attorney in San Antonio. He had not been formally educated as a businessman, but he had learned much about the surplus retail business from his father, Max Gochman, who had owned a surplus goods outlet in San Antonio and in 1970 still owned and operated a small chain of stores in Austin.

Gochman bought out his partner in 1973 and changed the company’s business name from Southern Sales to Academy Corp. The Academy name was borrowed from his father’s stores. It came from a now-defunct San Antonio Catholic school named St. Henry’s Academy. Max Gochman had opened his first store across the street from the school in the 1930s, selling pre-World War II surplus goods. Later, when he moved to Austin, he used the name for his four army-navy surplus stores. Because many University of Texas students and graduates lived in the Houston area and were familiar with the Austin stores, Max Gochman permitted his son to use the name, knowing that it would help his son’s business.

For the first few years of Academy’s operation, Arthur Gochman’s involvement was, in large part, passive. He continued to practice law in San Antonio until 1978, when he gave up his practice and moved to Houston to assume active control of the company and complete the overhaul of its basic merchandising policies.

1980s: From Surplus to Sporting Goods

Gochman made streamlining the chain’s image his first priority. He closed two of the original stores and completely discontinued the sale of military surplus goods, responding to market changes reflecting new tastes and lifestyles. Academy already had begun refurbishing its image in the late 1970s, when, prompted by the increasing popularity of athletic shoes and leisure wear, it had begun selling sporting goods and clothing. In the 1980s the company’s management completed the Academy changeover into a chain of outlets offering a wide and competitively priced range of brand name, top quality sporting goods and clothing—creating the company image that it has since retained.

Under Gochman’s tutelage, the company began its continuing growth cycle. At first it widened its in-state operating area, in part as the result of family loss. Max Gochman died in 1985, and Arthur Gochman took over his father’s four Austin stores, refurbishing them in Academy’s new image as sporting goods megastores. The Austin market was both reliable and profitable, and it helped Academy’s gradual “transition from ’giant killer’ to a retail giant in its own right.” It also brought the number of stores in the chain from eight in 1980 to 12 in 1985.

Smart responses to market realities also helped the company’s growth. In the 1980s, through surveys of his customers, Gochman realized that the great majority of them were men. To encourage women to shop in Academy outlets, he introduced lines of women’s casual clothing and aerobic wear. It was a wise policy move, for within a few years women would account for 50 percent of the chain’s shoppers.

Starting in 1986, Academy also adopted an EDLP (Every-Day Low Pricing) sales philosophy, rejecting the widely used deep discounting of select items to attract customers. That policy assures Academy shoppers that they will pay low prices across the entire line of merchandise and not be penalized by the higher markups many stores put on nonsale items to offset the deep discount prices on their “specials.”

Wisely, too, Academy retained much of a regional identity, offering the company’s home base Texas customers several lines not carried by other sporting goods outlets. An important example is Western footwear. By 1990 the company was selling more cowboy boots than any other chain in the United States. In that year alone, its sale of women’s Western-style boots increased by a full 70 percent over the previous year.

By the end of the 1980s Academy had become a very popular Texas chain. Among other things, its outlets sold more state fishing licenses than its chief competitor, Oshman’s Sporting Goods, or any other group of stores in the state. But its success in Texas also raised new possibilities. In the mid 1980s the company began an impressive sales record, with yearly increases in revenue matched with stable margins and excellent cash flow. The health and stability of the company encouraged its expansion, both in Texas and, starting in the 1990s, beyond.

1990s: Expansion, Managerial Changes, and Successful Strategies

By 1990 Academy had grown to 18 stores. It also began a period of more rapid expansion, jumping to 34 stores by 1995, the year after it first moved into two adjoining states. It opened its first store outside Texas in Edmond, Oklahoma in June of 1994, then added a store in Lafayette, Louisiana the following November, thus ending the company’s exclusive Texas identity.

Academy’s roots will remain in Texas, though, no matter how far away it locates new outlets. The epicenter of the company’s business always has been the greater Houston area. Almost half of its stores are located there, as are the company headquarters and its distribution facility. As it has expanded beyond its home base, Academy has sought “hot-market” locales, places that from careful market analysis offered the promise of high-volume sales. The result has been that it has never had to close one of its new stores, all of which have been profitable since their first day of operation.

In 1995 David Gochman, the founder’s son, joined Academy on a full-time basis. By that time his father, then 65, had built Academy into a $350 million retail chain and was ready to turn control of the business over to his 30-year-old son. David Gochman initially served as vice-president of store operations and general counsel, but in the following year he succeeded his father as Academy’s chairman, president, and CEO.

Like his father’s, David Gochman’s formal education indicated that his career plans would take him in some other direction. He completed an M.A. in East Asian Studies at Harvard before earning a law degree from the University of Texas. Yet David Gochman has found the business fascinating. He and his sister Molly, 13 years his junior, now own a controlling interest in the company. Arthur Gochman has continued to handle some of the firm’s legal work and remains the chief of store operations, but he prefers to remain in the background, giving son David and his team a free hand. He deferred to David’s decision to change the company’s name from Academy Corp. to Academy Sports & Outdoors. It has been both an important and successful change, necessitated by the company’s move outside its home territory of Houston, to locations where “Academy” alone had no name recognition and could easily be confused with a private or technical school or even a dance studio. The full Academy Sports & Outdoors name both reflects the range of goods that the company markets and identifies the basic nature of its stores.

It is, in fact, the variety and range of merchandise that makes Academy Sports & Outdoors unique. Its strategy has been to provide “one-stop shopping” for all family members, including women and children. It has proved to be a very successful strategy, especially in light of the fact that domestic sales of women’s casual wear and shoes surged upward during the 1990s. By 1997 women’s purchases accounted for 44 percent of Academy’s annual sales, up from 30 percent two years earlier, prompting the company, for the first time, to run print and TV ads aimed specifically at women customers.

Just as important, Academy stocks its outlets with much more than the standard equipment that typical sports equipment stores sell, and it makes sure that each of its outlets maintains a full stock. As the “Outdoors” part of its name suggests, Academy meets the needs of almost any outdoor activist, offering, for example, not just bats and gloves but barbecue pits and cooking gear, not just rods and shotguns but boats and motors and duck blinds and decoys. The name change has already successfully helped identify the company’s business in its new markets.

Company Perspectives:

While there are retailers in the market who sell lower quality goods at discount prices, and those who sell the absolute top of the line equipment and products at premium prices, we strive to consistently offer everyday low pricing on comparable products. In conjunction with price and quality, we stress service. Our strategy is to have knowledgeable and friendly salespeople assisting customers and to make returning merchandise as pleasant as purchasing it.

The one-stop strategy is also reflected in Academy’s selection of locations and in its store design. A key concept is customer convenience. Potential sites without an easy-in and easy-out accessibility and ample parking, even if in promising neighborhoods, are dropped from consideration. The interior layout of the stores is also important, designed for efficient shoppers who, from a single visit, know where to find things. According to David Gochman, Academy stores “arrange things where people can get in and out in about five minutes if they want to.”

Both its merchandising efficiency and range and quality of merchandise have helped ensure Academy’s great success. It has managed to keep its prices competitive through an effective control of inventory and distribution at its 775,000-square-foot facility in Houston. Through computerized monitoring of sales and accurate and efficient inventory control, the company can restock any of its outlets’ depleted items within a day or two. As soon as a store sells an item, its replacement is ordered and virtually on its way.

Beyond the Houston epicenter, some urban communities have encouraged Academy to open two or more outlets. For example, in early 1999 it opened an additional Austin store, which, added to the four stores originally owned by Max Gochman, brought the total number of Austin outlets to five. The new 52,500-square-foot facility reflected the rationale behind the company’s site selection. As CEO David Gochman explained, the locale was chosen because “demographically it’s a very strong area, in terms of population and income.” It is a site with a cluster of retail stores and other businesses, an area that promised to draw many “drop in” shoppers. As in the case of all of Academy’s new stores, its accessibility was also a major factor.

Academy’s low-price, high-volume formula has resulted in a steady increase in retail sales and earnings through the 1990s, which, respectively, grew at an average rate of about 25 percent and 35 percent per annum. Its rapid expansion also is seen in its increase in the number of its employees. In 1997 alone there was a 14.3 percent boost in that number. In 1998 that sustained growth propelled Academy into the ranks of top 100 specialty stores in the nation, moving it past 19 other companies to rank 81st. In that year its total number of stores numbered 44.

Future Plans

Academy has plans for cautious but continued expansion and seems well positioned to meet its current projections of a rate of expansion equaling that of the 1990s. In addition to opening new outlets in four of the states in which it currently operates—Texas, Oklahoma, Louisiana, and Alabama—it intends to expand its market into additional states in the Southeast. One selected location outside its current four states is in Franklin, Tennessee, where the company hopes to open a new store in the summer of 1999. In all, management anticipates that five to eight new stores will be opened each year for the next several years. If the rate of growth that occurred in the 1990s is any indication, Academy’s should remain an ongoing success story for a long time.

Although David Gochman has stated that going public is not impossible, the company is likely to remain private for the immediate future. It has always been able to finance its operations and growth from its profits and from loans from the Chase Bank of Texas, with which it has maintained an excellent business relationship.