Published Feb 16, 2021 on www.shop-eat-surf.com.
We recently spoke with Stance CEO John Wilson to find out about the many changes the company made during the pandemic. We also asked how the all-important fourth quarter turned out for Stance, if any new product extensions are coming, and how the company is navigating inventory shortages.
Take us back to what it was like in March when the pandemic reached our shores and how you reacted.
John Wilson: Just like everybody at the time – we were trying to get our heads around what was happening. I think everybody’s had those moments with their business or with their career where they’re presented with a challenge or a couple of challenges. But it was the first time that I’ve ever been in a situation where every square inch of the business needed immediate attention.
This shutdown of the marketplace, and the health risk, and the impact that it was having on people not just professionally but personally, it brought everything to the forefront. Whether it was a key customer and what they wanted to do with their orders to the leases that we have with all these mall owners to our team and the structure to service providers we work with, everything needed to be tended to.
Our whole goal was to put ourselves in a position where we could thrive on the other side of this. We didn’t want to just survive and be staggering, ready to collapse and pass out.
What actions did you take to come out better on the other side?
John Wilson: It really covered the spectrum, from strategic decisions that we made around product to changes and improvements that we made with our go-to-market process. We really got after our cost structure and also financial decisions that we were making around store closures.
Unfortunately we had to make adjustments in head count, and we did everything from staff reductions to pay reductions to furloughs. That was the most awful part of the whole experience, but they were really difficult financial decisions that we needed to make in order to get through it.
There are a lot of different things that we did that cut across process, strategy and finance that have made us a better company as we go into 2021. Our product strategy, our account base and our distributor network is leaner and meaner. Our retail fleet is still challenged because of traffic declines, but we were able to close down some underperforming stores.
Can you give me some examples of changes that you made?
John Wilson: We closed five underperforming Stance retail stores out of 22 total stores. That has a real positive impact on the P&L and on cash and just the overall retail operations.
From a product perspective, we eliminated roughly 45% of the SKUs that we had across our entire product offering of underwear, T-shirts and socks.
We dug into the analytics and realized that there were a lot of underperforming products that were dragging down profit and were creating a bunch of inefficiencies. We were able to drastically refine the assortments and the offering, instituting some new merchandising strategies, get a better focus on the customer, and start building in more insights into the process.
And then, looking out at the wholesale marketplace across the globe, we reduced the account base in a pretty meaningful way, and have been going after this “win with the winners” approach. We want to make sure that the people we’re partnering with in the future are those retailers that have a point of difference.
It has allowed us to eliminate this long tail of customers around the world that were driving down profitability.
So we come into ’21 with a much tighter distribution network, and it’s a healthier one.
One thing I have heard from retailers is that they would like more Stance inventory. They’re sending me pictures of empty racks. How are you managing all that?
John Wilson: I can definitely say from summer all the way through to what we call “drop one” of 2021 – the inventory supply and demand matchup, it has been like no other, right?
When the pandemic happened, we had fall production in motion. So, of course we’re on the phone with the factories, “Whoa, we need to stop. We need to cancel. We need to adjust. How do we take some of this yarn – and how do we put some of this into holiday? Let’s reassort holiday.”
And then we reduced the size of holiday and went out and resold it. There were so many different gyrations in the offering, in the production scheduling and the overall demand forecasts.
It went from all of our customers saying in the beginning of the pandemic, “Oh, cancel this order,” or “Hold this order. We don’t need this” or “Let’s push this out ” to “Hey, wait. Actually, we need stuff. We’re having the best May we’ve ever had. Oh, we’re having the best June we’ve ever had. We need more product.”
Holiday demand was much higher than the original forecast. There has definitely been styles that we sold out of and certain key sellers that we wanted more inventory on. But all in all, when I think about the fun and variety we were able to bring with product and the collaborations and the third-party partnerships, I think we did a really good job.
Now going into the first part of this year, we have all the port congestion that everybody’s trying to navigate through. We made some really good adjustments but it’s definitely not a perfect science.
How are you feeling about 2021?
John Wilson: I definitely think it will better than 2020, barring any other unforeseen stuff that comes up. I do feel like this first half is going to continue to be tricky to navigate as we work through the political changes, as we work through the port congestion, as you work through the pandemic and the vaccinations and how all that comes under control.
At least for us, and it sounds like most people, are still in the work-from-home mode and it will probably be in that mode until June, July at the earliest.
My hope is the climate gets better around politics and vaccinations and COVID, and if more stimulus is coming, we could have a really strong second half of the year.
Especially if schools are open and kids are going back to school, whether it’s elementary, high school, kids going off to college; sports opens up where fans can go attend sporting events, they can go to concerts, people start traveling some more. I think all that could be a really big unlock as we go into summer and into the back half of the year.
Is there anything you’d like to add?
John Wilson: One thing I’m particularly thankful for is how all of the challenges in 2020 have strengthened the bond and connection of our team. Often times when you go through serious difficulties it can create division, separation, politics, rumors and overall dysfunction.
For us, the difficulties of 2020 have brought us closer and have acted as a great unifier versus a divider. It’s a testament to the quality and caliber of the people we have on the team.
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