Peter Corsa remembers well the text message he received from Lewis “Lee” Bird III that changed the course of his future. It was December 2012, around the holidays, and Corsa was in California at the time, working for KSL Resorts. Bird “texted me and said, ‘I just signed on as the CEO of Garden Ridge … You’re next,” Corsa recalls.
Bird and Corsa, whom Bird hired in April 2013 to be the home decór retailer’s COO, first met about 15 years ago when they both were working for Gap’s Old Navy brand. Now the two are together again, orchestrating one of the nation’s fastest-growing brick-and-mortar retail expansions, challenging perceptions that the future of retail is in e-commerce—the store doesn’t sell online—and growing rapidly amid the backdrop of iconic brands shuttering stores and going bankrupt.
The two have tapped into a wealth of experience and knowledge gained from their time with quintessential brands such as Nike, Ford, Stuart Weitzman, Gap, Old Navy, and Honeywell to revamp and rebrand the cluttered and tired—yet profitable—Garden Ridge brand into a national powerhouse now known as At Home.
Plano-based At Home Group, which went public in August 2016 and posted revenue of $765.6 million last year, had just 58 stores when Bird came aboard. It now has 137 in 33 states and was scheduled to open nearly 30 stores this year alone, on its way to becoming a 600-store big-box retailer.
The company produced better-than-expected second-quarter results in September, delivering its 13th consecutive quarter of 20-plus percent sales growth, and its 14th consecutive quarter of positive same-store sales increases.
Bird, hired as CEO in 2012, rebranded Garden Ridge—which was founded 39 years ago—in 2015. He spent $20 million to revitalize and reintroduce the retailer as At Home, a home decór value player offering customers more than 50,000 unique items and at least 20,000 new items every year. With 70 percent of its inventory private label, unbranded, or specifically designed for At Home, it manufactures overseas and keeps its regular prices below the sales prices of its many competitors in the highly fragmented, $200 billion home goods industry.
Bird and Corsa recently sat around a table at the company’s 230-employee corporate headquarters—a nondescript, low-slung building in East Plano—and talked about how the two began the process of refurbishing and remaking the retailer.
Setting The Stage
Bird left Nike in 2009 in an amicable split after he wasn’t selected for the short list to be the company’s next chief executive. He then spent the next two years unemployed—on purpose—to do some introspective thinking about what he wanted to do next.
Instead of helping to scale big companies to be even bigger, Bird says he decided he wanted to take something still relatively small and “make it take off and grow.”
After deciding his path, Bird worked as an adviser to a private equity firm, looking for a possible deal. He found Garden Ridge in 2010. The first Garden Ridge store opened in a small town near San Antonio in 1979. A second store was added in the mid-1980s in Houston. The original owner sold his two stores to investors in 1988. They made Houston the company headquarters, took the retailer public, and quickly expanded outside of Texas. It didn’t work. By 2004, Garden Ridge was in bankruptcy and owned by private investors.
Over an eight-month period, Bird assembled a group of private equity investors to buy the retailer, raising $700 million to get the deal done. But the transaction fell through when one of the PE firms got cold feet. Defeated, Bird, who’d invested about $100,000 of his own money to bring the deal together, joined a PE firm in Los Angeles and moved on.
In 2011, about a year after his failed attempt to buy Garden Ridge, the company was sold to AEA Investors, a New York private equity firm, for $715 million. Bird soon ended up reconnected with the retailer after investment banker Marc S. Cooper, who’d worked with Bird to put his earlier deal together as head of Peter J. Solomon’s global retail group, told the new owners that Lee had a great plan for the retailer and that they should look him up. They did.
The owners agreed. Bird was hired, and Peter Corsa got his text—and shortly thereafter, a job offer.
Starting the Turnaround
One of the key issues Lee and Corsa needed to handle immediately was appalling employee morale. “Turnover in the stores was close to 400 percent, meaning everyone quit every 90 days,” Bird says.
The previous owners, who’d taken the retailer out of bankruptcy, had orchestrated a turnaround, and Garden Ridge was profitable when the current owners bought it. However, they had left behind a culture stressing profits over people.
To turn the corner on employee morale, the new executive team did what they thought needed to be done. They said they were sorry. “First, you apologize,” Bird says. “You say, ‘This isn’t right, and it isn’t how I’d want to be treated. We are going to shape a company on treating you the right way.’ ”
Then, the team worked on backing up the apology with action. It surveyed employees to see what they wanted. Answers included better pay, better benefits, time off to do charitable work, and tuition reimbursement.
At Home’s executive team made changes, but not all of them occurred immediately due to cost. Tuition reimbursement, for example, was added just this year.
The changes included an overhaul of hiring practices to bring in employees who would fit in with the new, collaborative culture that Bird and Corsa were establishing.
“It’s OK to make a mistake in our company,” Corsa says. Employees, he says, are encouraged to always do the right thing in a work atmosphere meant to empower them.
“As we promoted that and lived by that,” Corsa says, “the culture began to gain ground, and people started to get excited, and you start to get a bit of wind at your back on your brand.”
As part of the cultural shift, the company spends a full day determining whether a prospective corporate employee fits with the culture, before interviewing them on a second day for other things, such as job skills and leadership potential.
“I tell a candidate, ‘You’ve got a great résumé. We want to see if you fit with us. Come and spend a day and meet as many people as you can,’ ” Bird says. “And, by the way, everyone you meet has to agree that you are a good culture fit for the next level. It’s a 100 percent yes. If one person says ‘No,’ you are knocked out.’ ”
Bird gives credit to Chief People Officer Valerie Davisson, who promotes people as the company’s best asset. It’s an approach focused on growth over typical HR functions such as handling benefits, Bird says. Davisson and Corsa combined to develop an innovative approach to hiring in the field—one in which district managers hire and develop talent while operating the stores. As a result, At Home has no regional HR managers, something considered somewhat unusual in the retail sector.
As part of the people-centric culture, At Home also puts people in charge of their own performance reviews and provides transparency in pay. “We tell everyone the value of their job in the market in which they operate,” Bird says. For example, if they’re an IT manager, they are given data showing the average salary, plus the salary at different points along the spectrum. Then they talk about how the person is performing in that range, and set their salary appropriately. “If the salary for an IT function in Dallas goes up 20 percent from one year to the next, we give everyone a 20 percent raise,” Bird says.
Marking everyone “mark-to-market” avoids turnover based solely on someone leaving for better pay. That was something Bird says he did at a previous employer because he had eight kids, needed to make more money, and believed his value was twice what he was earning.
The brand’s growth, and the improvements in employee morale, have propelled the company to the top of several “Best Places to Work” listings. EY named Bird a 2017 Entrepreneur Of The Year for the Southwest region in the retail and hospitality category. The company’s CFO, Judd Nystrom, was honored by D CEO this year as a top financial executive.
In the midst of turning the corner on employee morale and defections, the company also was working to bring aboard an all-star executive team and a world-class board. It used search firms to find Davisson and Nystrom. In January it hired a chief marketing officer, Ashley Sheetz, who came to the retailer from Sally Beauty, where she led a turnaround strategy to reposition and modernize the brand.
Bird tapped a who’s who list for the board, including Allen Questrom, the former CEO of J.C. Penney, Neiman Marcus, and Macy’s; Wendy Beck, the CFO of Norwegian Cruise Lines, who was formerly with Domino’s and Whataburger and now heads up At Home’s audit committee; and strategic planning expert Larry Stone, who was president and COO of Lowe’s Cos. from 2006 until his retirement five years later.
A Bright Future
With the executive team in place, a solid board, a culture taking root, and a strategy to take the company to 600 stores, the retailer is moving at lightning speed. Yet it isn’t following the herd into e-commerce or downsizing its store footprints, which average about 120,000 square feet. While At Home does have a presence on the web, customers can’t buy anything online. For now, Bird says, that strategy is working.
The company is constantly asked about e-commerce in a world dominated by Amazon, executives say. Wayfair, an e-commerce home furnishings and home décor website, is an At Home competitor, but Bird says At Home is about to beat Wayfair on price by 30 percent. “Our answer is, not now,” he adds. “In the category of home goods, our customers want the lowest price and the largest assortment. They want to see, touch, and feel it, and they want to buy it today. We can do all of those things in our stores.”
With a solid board in place and a strategy to take the company to 600 stores, At Home is moving at lightning speed.
Meantime, At Home is able to open stores at an impressive clip because of a two-pronged approach: It has a real estate team identify where the best national markets are for retail. Then it uses the customer analytics of Buxton, which takes data from At Home’s existing stores and lets the company know things like average household income and the number of households near a potential site. The model also analyzes 300 other stores and restaurants to show At Home how it would perform relative to what is located nearby. The model can go as far as predicting the sales at each prospective location studied.
Because At Home often goes into existing real estate, it has scored all 20,000 still-operating big boxes in the entire country. So if a Home Depot, Walmart, Target, or Kohl’s were to decide to close a store, At Home can obtain the analytics to decide within two days whether the site would good for a new At Home. Its store in Farmers Branch is in a former Walmart, for example, while its store in Plano was formerly a Kohl’s.
Buxton has also helped At Home determine how many stores it should have in the lower 48 states, and the appropriate distance between each store. While Bird originally thought that number was 500, he now believes it is 600.
From that, At Home has formulated a plan for every U.S. market. In Dallas-Fort Worth, the retailer has eight stores, but believes it should have 16. It’s making plans to open a new store next year near Legacy in Plano, another in Mansfield near a planned Dr Pepper StarCenter, and another in Garland.
The strategy is to continue expanding in existing markets while identifying new ones. Bird personally travels to each site to approve new stores. The day before he met with D CEO, he traveled to Madison, Wisconsin; Chicago; Evansville, Indiana; and Nashville, approving three of the four sites.
While about a third of its locations are being built from the ground up—mostly in existing (versus new) markets—the company prefers to enter a new market cost-effectively, by going into an existing box. Then, if the store performs well, the company will reposition it with new construction in the exact location it needs to be.
At Home’s breadth and depth strategy appears to be working. “People have asked me what has made us successful,” Bird says. “What I say is the same thing that makes us successful is the same thing that should make any business successful: You have to have a great customer value proposition; you have to have a great business model to fund that; and you have to have a really great employee promise. We focus on all three. You have to work on all three in balance.”
The company’s success also has been fun, Corsa adds. “It’s fun to think of this company and where it’s been. It’s fun to think of where it is now, and it’s even more fun to think of where it can be as a national brand,” he says. “Working toward that future is a blast.”