Leading the Alabama Publics League

Jeffry Rosenthal is CEO and president of Hibbett Sports Inc., one of the best performing companies on our annual ranking of Alabama publicly traded companies. Birmingham-based Hibbett, which owns and operates a chain of sporting goods stores in 26 states across the country, in 2011 had the highest stock performance of all Alabama public companies. The company’s stock gained more than 50 percent last year, almost 20 percent better than the next highest gainer. For the first six months of 2012 the stock has risen another 37 percent, closing July 9 at $61.35. Hibbett also had the sixth highest net income gain among Alabama companies in 2011, 27 percent.

Hibbett has been quietly doing its thing with standout performance numbers for years. It has a secret formula. It sticks to small to midsize markets—the rural route—where there is scant competition and where their stores are well appreciated.

Rosenthal has been the president of Hibbett Sports Inc. since February 2009 and its CEO since March 2011. He had been vice president of merchandising at Hibbett since August 1998 and its COO since February 2009. Prior to Hibbett, he was merchandise manager for apparel with Champs Sports, a division of Foot Locker Inc.

We’ve done a little better than most retailers, but the recession has been a tough couple of years. We are somewhat protected from the worst. We look at locations that have a county population of 25, 000 to 75, 000. We look for locations where we are needed in a community, and we like to stay away from the competition. The most important factor is that we’re needed in the community, and one of the basic principles that keeps us needed is that parents are committed to spending money on their kids even in tough times—when it comes to buying sports equipment, when it comes to putting down money on their own children.

In smaller communities, team sports are still a pretty big form of social interaction. It’s pretty strong in the smaller markets. High school sports are a little tougher, but we still see kids playing baseball every year, and they still need new equipment when they outgrow something or need something new.

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The biggest improvement we could expect is that we would like to grow the business a lot faster. It’s a matter of space being available. There is not a lot of new retail construction that is available right now with the economic downturn and the fact that new shopping centers are not being developed. Sometimes we can move into locations that have been vacated by other retailers, like Movie Galleries or Blockbusters. Sometimes we’ve been able to take their real estate with minor adjustments.

I feel like it’s getting a little better. There are a few more locations popping up than there were a year ago. And there are still plenty of new communities where we can go and put stores. There is no reason our model can’t work across all states. We’re only in 26 states now, and there is no reason we cannot be in all states. Even in the 26 states where we currently have stores, we can add an additional 400 more locations.

Yesterday I came back from an investor road show in Kansas City. They were wanting us to grow faster than we already are. That’s the primary concern of investors: how you can grow faster and keep the same pace on sales. Most of our investors are long-term investors and are looking for security. Many of them are from New York and Boston. Most of them have held our stock for many, many years, and they absolutely value the company’s long-term performance.

We look to put stores in a two-hour driving distance of each other. That gives us the advantage of knowing the customer from a product standpoint. It gives us supervision by district managers, and it gives us a strategic advantage in distributing shipments. This allows us to be consistent on our strategy and improve our people and systems.

From time to time we go external for human resources, but we promote from within as much as possible. We’ll always continue to find other ways to do business and take advantage of opportunities out there. We prefer someone from the community managing our stores. It’s a big deal for us, because they know the people and that’s an important aspect of what we do. We have less of a turnover than the industry average and part of that is making sure that we have local people in our stores.

To me it all gets back to the basics of having the right product at the right store and keeping up with innovation in new things coming out. If we keep up with what customers want, we should do well even in a bad economy. Part of keeping up is making sure that you’re shopping the marketplace and covering all the product lines. We do an inventory every day of what stores sold what products, and that’s a big part of keeping up with what the customer wants. Most of the merchandising software is licensed, and it’s something that hasn’t changed that much over time.

We don’t sell products on our website ourselves, although we have affiliate programs with some of our vendors. But the website helps us keep customers knowledgeable about the different products we carry, and it helps us do some advertising and customer interaction. We have a loyalty program that offers points for visiting information on the website. And we have a program on our website that team managers and moms can use to schedule and manage their time with youth sports, which also feeds back into brand loyalty.

We will always have to worry about the economy. Our territory includes some of the highest unemployment states, although we continue to have the best company numbers. The two don’t necessarily go hand in hand. It gets back to having the right product, and the customers seem to find the money for what it is we do.

The biggest difference between working for Hibbett and companies like Foot Locker and Champs is that Hibbett is a much smaller company and you are able to maneuver much faster. We can make decisions much quicker. 

Chris McFadyen is the editorial director of Business Alabama.

Interview by Chris McFadyen

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