Modell's CEO Still Believes Shoppers Will Come to Stores

love the way you take care of the associates. It's fabulous. Well, thank you. That's nice to hear. It is a pretty cool place. Um. Talk to us about your place, because you guys have been around. It's family owned a hundred and thirty years. There is some great history in it and for those of us, especially here on the East Coast, this is where we go often for any kind of

supporting sporting goods, type of equipment and apparel. So, you guys, though, like much of the retail environment, Mitchell are at a tough point. Listen, retail is tough out there. I mean you could see the apocalypse that's taking place, you know. Uh, Pier one just closed four and fifty one stores. They announced Macy's is closing stores over the next three years. From what I hear, there's gonna be about five or

six more bankruptcies filing and the next two weeks. It is tough out there, and you guys are closing stories. So we decided on Thursday to close twenty four stores. We were able to renegotiate UH landlords on some of the rent structures, and so we just announced between Saturday and yesterday we reopened five of those stores that would do to close. So now we're only closing nineteen stores and so and and give us the rational the cost structure,

the business just wasn't matching up. Mitchell. You know when we look at we hired b R g R Company who does restructuring. They've been running incredible models for us, looking at our four wall structures to see what's taking place. We've got to get rid of the stores that just aren't making money, the bleeding cash from the company. And so we were able to restructure some of the leases where we bring down the occupacy course where now we can make money on a going forward basis, so we're

able to save jobs. So Leader and miner. That is a sustainable model for you guys going forward. Yes, you know, it's like puning a tree, right, If you pun a tree, the tree grows. If you don't, I gotta ask you that, why don't you prune sooner? You know what? Sometimes it's a great question. Sometimes, you know, you avoid making those tough decisions, but when your backs against the wall, every option is on the table. Now I'm looking to preserved jobs, you know, so you look at the landscape in a

little different viewpoints. Talk to us about your customer and how that customer has changed over the years. I mean I was joking out here in Los Angeles to the got to go to mos Uh. You know, I've taken my sons there for years, whether it's or baseball or lacrosse or football or my own you know, like running shorts and things like that. And yet I know a lot of people who you know, they're going to I'll say the A word, they're ordering through Amazon, They're going

to a competitor. Uh, tell us how your customers have changed. So, I mean you hit the nail on the head. I mean it's so easy. I could even tell in my own apartment building when you see FedEx packages coming on Sunday at nights. I mean, it's an easy way for people to shop, So huge initiative for us as a company. You know, the online shopping experience, but brick and water still is critically important for the kid that wants to buy a baseball glove a little league. They want to

touch that clee. You want to see the smile on the face first time they pot a literal league glove. You know, you can't get that kind of emotion buying online. So we're hoping that with those kind of experiences will be able to continue and help me get me up to speed. Um, in terms of an online presence, how big it for you guys? Under develop It's still our number one stories about five percent of our sales. Our goal is to be over the next three years three

years though, but you don't have three years. And forgive me because I think about I'm listening to you, I no, no, no, no, listen. I mean, I love the Brandon I love these family run businesses. Um, but I think about even a Target who kind of missed Walmart right, it took them. They played catch up big time. But you don't have three years in an environment where things change so quickly and

consumers move on, they just do. So how do you, I mean, could do you think first of all, that online could be a really important part of your business. It is an important part of our business and it will continue, which is why for the first time in our company's history, we're looking to get a minority selling, a minority interest in our company. We've been privately held for a hundred thirty years, always been passed down on the torch. We'll never go public, will never sell equity.

Times have changed all options on the table. And you know, hopefully we use this platform for people and say, you know what, I like this guy who's thinking outside of the box. Maybe we'll invest in him. And that's the whole purpose of me doing all these kind of interviews the lasts who's your ideal investor? Then, Mitchell, you know what, it's probably the individual guy you know, looking at let's say, at a billion it says, you know what, he wants

to sell a minority interest. Maybe I'll take a shot with him. We have an iconic brand. It's not like the brand is broken. The model is broken. And when I say the model is broken, it's because our course structure, and by again bringing in b RG to analyze our course and to see how we want to move forward. Getting rid of unprofitable stories is one way to put the path on to success credited investors or anyone, anybody.

So we hired RBC, who was an investment banker. Because of all the interviews we've done, we've sent a lot of investors towards them. The flushing it at as we speak, and hopefully in the next seventy hours, we'll see if there's a possible life one out there. You are listening to Bloomberg Business Week. Jason Kelly here in Los Angeles, Carol Masster in New York City, and next to you is Mitchell Model. Right. We are chairman CEO of Models Sporting Goods, and we're talking about this. This is like

many retailers. They're struggling and trying to figure things out for the future, and they're taking really their story and

their woes to outside investors. We're going to continue our conversation when we come back, but I do want to ask you because you and I were talking a little bit about Bob Iger in the break, just got about a minute and a half here, who's the CEO or who's a company that you really look to that you say, Okay, they figured out kind of this new world, especially when it comes to the retail space or just generally overall. I think Brian has done an incredible, incredible job at Target.

He has done an incredible job to see his back against the wall when he came out with those major initiatives. How he's investing big time Brian Crenell Brian Cornell Um, And I know I've given you a hard time. Is it is a different because I was saying your friend and he's also a competitive But you know what, I have so much respect for him for what he did.

I mean, he stepped out of the box. He said, I'm investing in my stories, investing in technology, investing in me in the Internet, and everyone thought he was crazy. And now three years later, I mean, his stock is through the roof and he's the Darling and Wall Street And we're continuing our conversation with Mitchell Model. He's the chairman and CEO of Model's Sporting Goods, a multi generational business familiar to many of the US who live in the New York City area. And Mitchell, I want to

talk more about your potential deal. But I have sort of a parent slash dad question for you, which is, tell me what you're seeing in terms of youth sports and in terms of sports in general, what's rising in popularity, what is waning in popularity? You have one of the best windows into this that I can think of. So baseball and soccer are definitely on the uptick. Football, the course of all the um problems with you know, the brain and the tackling and injuries, injuries has has really

slowed down. We can't even see in our team week sign ups that you know a lot of the teams that used to be set up three years ago, like half of them are gone already. The switching to other sports, even lacrosse is an issue with some of safety issues. So parents are more concerned about safety today than ever before. And I do wonder about, like, how do you track in terms of the changing customer base your demographics that are coming in has as much changed over the last

couple of years. Oh, absolutely, absolutely So. One of the things we subscribe to is mp D, so there is search firm that gets a lot of data from all our competitors, so we could see are we bucking the trend? Are we following the trend? And you know, you our intel from the store level is pretty strong. Every week we gotta roll up a feedback from our stores to the different managers, gets fed to the merchants. So we get we're pretty on top of like what's happening trends?

Why is it up? Why is it down? But but you know, because we go back and forth about a younger generation. I mean there's still the majority of shopping is on is in brick and mortar. It's just the growth is online. And I do wonder do you still see a younger generation? I mean, I guess it is right because they know that's where they go or for you know, various equipment and so on. You know, it's it's listen. I can even tell by my own kids, right,

my two boys seventeen and eighteen. You know, they buy a lot online where we don't grow up like that, you know when that tech grows like they are. And so it's again it's part of the world that's changing. You know, technology is playing a huge part on the buying habits of the consumer. And so what do your stores look like going forward? Then, Mitchell, is it a smaller footprint. Is it a different sort of interactivity? Do you staff them differently? How do you create the sort

of sports apparel sports retailer of the future. So a hundred percent will be smaller footprints. You know when we opened up stores and we went larger and bigger. Today with the Internet, we call it the endless aisle. So you can have the base of core assortment in a store and if someone wants to go online, they'll see hundreds of baseball bats, hundreds of ball class You can't stop that in a in a retail environment today, A it's very coarse intensive and B you have a space problem.

But by order, by offering the core assortment and offering online, you could cover both both consumers. So so let's go back to you know, you really are, like I said, you know, pitching out to the public to help you, uh in terms of keeping the company going, Like what are the kind of funds that you're looking for and

what kind of response have you gotten so far? You did say you're working with a firm, right, we're not allowed I was told legally we can tell like what percent we're looking for and what kind of uh A dollar amount? All I could say is if you're interested, go to Mitchell dot Model's Mitchell dot model at models dot com, send me an email. I'll pass it onto our investment banker and they'll take over from there and they'll ultimately decide in terms of figure out which investors. Well, okay,

they'll flush it out. I talk to them every single day. What's happening? Who do you have? Let me hear? And it's that kind of dialogue again and only started up in the last five days. And so, Mitchell, have you thought I dare say about selling the whole thing at this stage? I would say everything is on the table. That's not our first preference. Our first preference is selling in a minority interest. But if someone came and offered

us a deal, I'd have to look at everything. I owe it to our associates, I owe it to our family. Is there ultimately too, maybe just going forward and online route for you guys, rather than a brick and water. Now brock and brick and water, that's a heritage, it's our roots still a very important part. But there's still the great opportunity to build your online presence better than it is today. I have to ask you because Jason.

I have a lot of um conversations with executives and sometimes we ask about, you know, people they admire or you know, if there's one thing that they you know, a mistake that they learned from. Is there anything that you would have done differently in terms of the business. I just got about probably looking where we expanded. We expanded in the northeast to like Massachusetts, Connecticut, New Hampshire, Rhode Island. We thought that would be a bridge from

New York and uh, the bridge didn't work. You know. It took a lot of money, a lot of time, effort and energy to build our brand and then we were just out competed by exporting its and bobs. All right, well, we wish you well and um, hopefully you'll come back and tell us how things go. Absolutely, thank you so much for having me. Yeah, you bet, Mittell Modell. He's chairman and chief executive officer of Model's Sporting Goods. Jason.

Of course, in our Bloomberg Interactive Broker's studio here in New York, and as you've said, I've shopped at them. My family has over the years that I know you are with your son, so it's certainly something. If you looked at my credit card statements, you'd see a lot of model's lines all in there. Uh. There's one of White Plaines Road Terrytown Road, uh, right between our house and White Plane so uh. And a frequent customer in New York City as well