[piano intro] - Hello, I'm Nido Qubein.

Welcome to "Side By Side."

My guest today turned down a job to become an agent for the US Secret Service, just about when he graduated from college.

But instead, he embarked on a career in operations, in marketing, in sales, and in manufacturing.

He's now a denim evangelist.

That's right, he's an executive who ditched his suits to wear a denim wardrobe he likes to call cowboy cool.

Today we'll meet Scott Baxter, president, CEO, and chair of the board of Kontoor Brands.

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[uplifting music] - Scott, welcome to "Side by Side".

I gotta tell you, everybody watching us today knows the name Wrangler and Lee, and now you are the president, the CEO, and chair of the board of Kontoor Brands.

Where did that name come from and when?

- It came about six years ago, when we spun off from the parent company that we were part of.

We needed to have our own identity and our own name, so we hired- - [Nido] And it was VF Corporation?

- It was VF Corp in Greensboro, North Carolina.

So we were staying in North Carolina, needed our own name, hired an outside firm to help us do that, and after about six months of searching, painful searching, 'cause every name in this universe is taken, we finally found a name.

That's why it's a funny play in the word Kontoor with the K, because I'm telling you, Nido, everywhere you go every name is taken.

That's why you see companies come up with these crazy names.

- [Nido] Yes.

- Because if you're global, like we are, in about 70 countries, we found that so many of the names were taken.

We just, you know, had to come up with something in the spin of our own.

- And so Kontoor is the mother company for Wrangler and Lee, and these are two different brands.

- [Scott] Yeah.

- What is the difference between the brands?

- You know, not much of a difference.

They're both, you know, men, and women, and children's denim brands, but they do shirts, they do jackets.

They do a full ensemble of apparel.

They're both big global brands.

Wrangler does have the affinity and the affiliation with the cowboy culture because it was created in 1947 in Greensboro as a cowboy brand.

- It was created in Greensboro?

- It was, it was part Hudson Overall Company, which has been in Greensboro since 1904, and then they created a cowboy fit for the cowboys that were, you know, prevalent in the day and doing rodeos, and made the first MWZ Wrangler product, right in Greensboro.

- And when you say Kontoor is in 70 countries, you mean you sell in 70 countries, you manufacture in 70 countries, what is that?

- We sell in 70 countries.

- [Nido] You sell in 70 countries?

- Yeah.

and we manufacture in a couple of countries, and then we source in about 20 other countries, so we own part of our manufacturing, specifically in Mexico.

- And give us an idea how many people work at the home base in Greensboro versus other locations?

- We have about 15,000 employees globally, and then about 1200 in Greensboro, and then about 450 in Mocksville, our closest distribution center here, to the headquarters location.

- I'm a novice in this area, so I wanna learn from you.

You know, when I think about clothing, I think about fashion.

I think about fashion that changes with the times.

I think of fashion that gets trendy sometimes.

I think about jeans, jeans are jeans are jeans.

Where am I wrong?

- You would think that, right?

You know, it's really interesting, but we have jeans that cost 19.99 at some of our customers, and we have jeans that cost $300 at some of our customers.

There's embellishment- - What is the difference?

- There's embellishment, there's style, there's fabric.

All of those things come into play.

The design of the product, the fabric that we source to make it all come into play with the cost of the product.

- Is it more expensive because it carries the name of some famous person?

- No, no famous person carries their name on our denim, right?

It's always Wrangler or Lee, but it's more expensive because we might use a really tough fabric, a really expensive fabric to get, and we put a lot of embellishment into it, and also the channels that it sells in.

- Embellishment means what?

- Oh, pocket decoration.

You know, the different things, the buttons, the snaps, all those things.

- I see, and, I mean, people wear jeans all over the world.

Who's your competition in jeans?

- So our competition is Levi's, is our main competition, and some of the verticals.

So something like American Eagle would be a competitor.

Gap and Old Navy would be competitors.

- [Nido] They may not actually make it- - They have big private label lines.

- Do they actually manufacture it?

- [Scott] They source it.

- They just source it.

- [Scott] They source it, yeah.

- They just put their name on it and source it.

- Yeah, we're really the only denim company left in the world that makes our own product anymore.

We make about 40% of our product in Mexico, but we're about the only one left.

Everybody else sources it now.

- How about that?

So when you say, I'm intrigued by this, you make them for 19.95, or I could pay $300 for a pair of jeans.

- [Scott] You could.

- And sometimes I see those jeans that got lots of holes in them, and they cost more money.

- They most certainly do 'cause it's the trend and it's the style.

- Who created this concept?

- Yeah, we have designers- - More holes, it's like bathing suits, less fabric, more expensive.

- Yeah, it's really interesting.

We have a whole design team, you know, around the world that travels the world.

They'll go to Rome, they'll go to New York City, they'll go to Paris and see what people want, what people are wearing.

They'll do focus groups, they'll do studies, they'll catch onto things that, sometimes there are people who do things on their own, and those things catch on throughout the globe.

But yeah, that's a trend, a very popular one.

- But how many different styles of jeans can one have?

- Oh, we have thousands and thousands.

- [Nido] Thousands?

- Absolutely, yeah.

- Based on what?

Based on size, weight, what?

- Absolutely, size, weight, different fabrics, the weight of the fabrics.

You know, a lot of it has to do with the design and styles.

And then some of them we don't make anymore, but they're in our archives, you know, through history and years, and we'll bring those back occasionally, you know, as a retro piece, but yeah, through the years, just thousands.

- Well, let's talk about you a little bit.

You majored in history at the University of Toledo?

- [Scott] I did, yeah.

- You majored in history, and now you are the big honcho in the denim world.

- [Scott] Yeah.

- How does one go from history?

And you have an MBA from the Kellogg School of Management as well.

But give us a little idea about your history.

Where did you start, and what got you all the way to this top position?

- I'm from a small town, Sylvania, Ohio, and it's a smaller town.

And, candidly, Nido, I didn't know exactly what I wanted to do when I graduated high school, and had to kind of figure out my direction, and Toledo was a school, it was a commuter school, and so I did that and I chose a major.

I thought about being a lawyer, but what happened was, close to graduation, I didn't have any money.

I was completely broke.

Student loans to pay for school, you know?

- Did you grow up in a limited economic family?

- Yeah, I mean, my mother was a waitress her entire life, and my father worked in a distribution center, and I had six brothers and sisters.

And, you know, it was fine.

You know, everything was great.

- Were you the oldest?

- I was the second oldest, but when that's all you know, that's what you know.

- Yeah.

- And I think for me, it was going away to school, or going to school and commuting to school, and then all of a sudden, after a couple years, realizing, you know, "I can do this and I can make this work and it's not as hard as I thought."

And about my sophomore or junior year, it started to click that, you know, I can take this path and this path looks a little bit better than a path a lot of folks take, you know, from the area that I was from.

- So where did you start?

You graduated from college.

- I did, and then we had a system at our university.

A lot of schools don't do it anymore, a bunch of companies came in and interviewed.

And I had several offers after I was at the university, from companies that came in and interviewed.

I took an offer with Nestle, the Switzerland-based food company.

They had a global management program, about 24 people that they brought in every year from around the world, and I was fortunate to be one of them, and I chose that and chose them.

And that's where I got the first 10 years.

- And what did you do there?

- I was in sales and marketing for the first 10 years of my career with Nestle, and moved around- - You actually called on- - For the first couple years- - Wholesalers, or- - I did, yeah, for the first couple years, in Detroit, Michigan.

- Yeah?

- Yeah, and then rose up through management.

I was in Columbus and Philadelphia and Chicago, and places like that, and so- - And how long have you been with Kontoor?

- Almost 20 years, predecessor company in Kontoor, so with VF, starting in '07, and now it's '24.

And so between the two companies- - Right, and what was your position at VF?

- Last position was group president.

So I had brands like the North Face, and Vans, and Timberland all reporting to me.

- Yes, what challenges you?

I mean, you're in a tough business.

You're in a competitive global marketplace, there must be pressures that come onto this business, everything from supply chain, to workforce, to economic conditions that come our way.

For example, did the recession of '08, '09, et cetera, did it have a major impact on your business?

- It most certainly did.

Yeah, you know, that '08, '09, and also the pandemic, in my career were the two toughest times.

You know, things shrunk dramatically.

And you know, you have to take actions when they do, you know, the consumer was nervous and afraid, and that's a big disruption to your business.

Your consumers and customers were nervous, you know, financial markets were tight, you know, lending was tight, so it was really difficult all the way around.

So those were the two biggest periods when I look back, because, you know, when I look back before that, things operated fairly smoothly.

You'd have a little recession, we'd pop out of it, we'd move along.

Things didn't move as they do today.

- [Nido] You adjust and move on.

- You adjust and move on.

The world we live in today, the last five years, if you think about the disruption in supply chain, the pandemic, the movements that we've had, you know, work from home, bringing people back, which has been a significant challenge for a lot of CEOs, those things didn't happen in the past.

It's something new all the time now.

- No, not to mention the whole world of technology, and all this chat about AI.

Does that affect your business, and if so, how?

- No question.

No question.

So we certainly are looking at AI.

Every company is looking into AI, relative to how you can speak to the consumer, whether it's the customer service functions that you have, how you print and talk about your manuals, and sales catalogs, and just different things like that.

How your people work with, you know, our teams around the globe.

It's a really interesting, you know, point right now on how that's gonna play itself out over time.

I don't think anybody really knows.

- Yeah, nobody really knows the enormity of impact.

I was talking to a gentleman you know, who is the president of Toyota Battery, and he was explaining to me how AI affects what they do.

I asked for an example and he said, "Well, an example would be that an AI program can summarize for us all the mistakes a certain part of the production line has made historically, and come up with solutions that we can employ very quickly, and therefore create better efficiency, better productivity and less expense."

And that's something he said in the old days, would've taken months to try to figure it out, and now they can figure out a matter of minutes.

- And I think, I have a senior in high school at home, and my wife and I watch how he interacts with AI, and how he interacts with social media, and the work that AI can do for students, and I think about, wow, that is gonna be very impactful in the educational system.

I mean, these AI programs can write you a paper in, like, three minutes.

- [Nido] Yes.

- And it's just shocking.

- Unfortunately.

That's called plagiarism, yes.

- [Scott] Yeah, it's just shocking what these things can do.

- Our world is changing so fast in ways that you and I could have never really predicted, the pace of change, and to adjust to that change demands an enormous amount of flexibility, agility, grit, faithful courage, skill.

What is it that challenges Scott Baxter?

I mean, let me rephrase that.

What is it that worries you?

You have to perform, you're a public company.

You have to perform to certain levels.

I don't know if you offer guidance or not, but the market is watching your performance, your stock goes up and down based on events and trends and happenings.

And you must be under a lot of pressure all the time to perform at a certain level, to produce for your shareholders a certain level of excellence and results.

- It's every day, it's every weekend, it's every holiday.

There is no time off.

People say, "How was your weekend?"

Well, you know, most weekends involve a lot of work.

You know, or "What did you do last night?"

"Well, I got three phone calls 'cause there were three issues," you know?

So it's constant and it's global.

So if you're running a global business, it becomes even more difficult relative to the timelines and times, and time zones.

But, you know, during this job, if you're the CEO of a big company and a public company, you worry about your people.

You know, the best that you can do is have really good people that can help mitigate those issues, but there's always gonna be issues.

And the one thing I've learned in this job is everyone is looking for you to make that final decision, to assimilate all the data that comes in, and then to make a decision for everybody, to give everybody the relief that a decision is made.

And the one thing I've learned through time is experience really matters.

I've been in this job now for almost six years, and I've gotten better at it every year, for the very simple reason that I've been through those examples, and every time you go through, you learn a little bit more.

Some of the challenges don't change that much.

They have a little nuance to them, but that experience really helps.

- Yeah, I like to say that, you know, people sometimes ask me what is the number one skill a leader should have?

And right or wrong, I say that number one skill, really, honestly, when you think about it, is to master risk management, 'cause if you can master risk, you can develop confidence, you can develop communication, you can do all the rest, but managing risk when the heat is on is pretty tough.

You have to make it quickly.

You have to make the right decision.

You have to take a degree of risk.

Did I do it right?

Did I do it wrong?

But all the time that I've known you, Scott, you always seem to have your act together.

One would never say Scott Baxter is stressed or out of control.

What do you do?

Is it a certain vitamin you take?

Is it you drink fine wine?

Give us your secret.

- I think it really has to do with the fact that I think my employees look for me to be under control and to be in control.

And I always try to take it a little level up from an upbeat standpoint.

You know, look at, if I come into the office and I'm in a bad mood, it sets a tone that's terrible, but if I come in evened up every day and everybody knows, "It's gonna be all right.

We're gonna figure this out together," I think that's the tone that we need to set as leaders.

- Yeah, that's for sure.

That's called modeling behaviors, right?

If you're a little shaky, then I'm a little shaky.

- [Scott] Oh yeah, yeah.

- And if you got it under control, then I have confidence that the person at the top knows what he's doing and will lead us in the right direction.

- You can see when some of your leaders are wobbling a little bit, and then you can see what happens to the team, or you know, the function or the group, so, you know, I try to give them that guidance that, you know, "It'll be all right.

We'll figure it out."

- You know, the key, of course, is not to have overconfidence.

Malcolm Gladwell, who wrote "The Tipping Point" and other things, told me one day that one of the things he worries about in leaders is when they have overconfidence.

And he gives examples from history, in the military and otherwise, including the Great Recession in '08, '09, '10, et cetera, where leaders were overconfident, and therefore overstepped, and therefore caused massive results that were unhealthy and not very helpful.

It does help, however, you know, you are the top guy at a major public company, it seems to me it helps to be on other boards where you can be exposed to ideas, strategic thinking, experts who come in to talk about that business and so on.

I know you're on the board of a very large company called Lowe's, and you're on the board of Callaway Brands, is that right?

- You know, I retired from that board.

As a public company CEO, you can only sit on two boards, yours, which I'm the chair of mine, and the SEC requires only one more, allows only one more.

- [Nido] Yes.

- So Lowe's is the other one.

- But it's very healthy to be exposed, first of all, to other leaders who have similar issues and so on.

And then to be exposed to, you know, all the ongoings in that world.

- You know what it is, it's the governance piece.

That piece is really foundational for you as a CEO, to go in and see how another company handles all of their governance issues, and how they make their way through it with their board and their outside consultants.

It's really, really interesting and very helpful for A CEO.

- And that's becoming a bigger issue for companies, governance.

- [Scott] No question about it.

No question about it.

- You know, maybe 10, 15 years ago, it wasn't that big of a deal, but today, you know, people are watching you, you've got all kinds of external groups- - [Nido] Oh, do you ever.

- Who are watching every move, and interlocking relationships and related parties, and all that stuff that goes along with it.

Not to mention societal changes that impact workforce development- - [Scott] Oh, yeah.

- And employment.

- Yeah, there are more outside groups doing that than there's ever been at any time, and you never know which one's gonna get caught up in your business, or take on you.

It's just really interesting 'cause you can come in on a Tuesday morning and there it is, waiting for you when you get in.

- [Nido] And you gotta deal with it.

- And you gotta deal with it right away, yeah, yeah.

- Occasionally, they show up at your annual meeting and- - [Scott] Sure they do.

- And have some ideas.

Scott, how much government regulation impacts your business, if any?

- You know, it's not nearly at the point that it is in other industries, alcohol, tobacco, firearms, and that.

- [Nido] Or banking.

- Or banking, you know.

So right now we're in a pretty good place.

It's not that bad.

We are not, from a hierarchy standpoint, really, where they spend their effort and energy.

- That's a good thing.

If you're speaking to some, you know, young people in college or some new employees at Kontoor, what do you say to them are the three or four habits or characteristics or traits that have worked really well for you, or that you believe are prerequisites for excellence in leadership in this ever-changing, to use your words, global marketplace?

- I always tell them it's the attitude you come in with every day.

Everyone around you is gonna figure out how quickly you have the right attitude.

You don't have to be too up, you know, and you don't have to be Pollyanna at all, but you gotta attack every issue and every opportunity with a good attitude.

And you know, you're a leader.

You see that there are a lot of people that don't attack the day like that, and it really becomes problematic over a career.

Then you gotta put the work in.

And I always tell them, "Don't do the self-promotion piece."

We know who the good workers are.

We know who the smart people are.

We're experienced.

We can see it.

Don't worry about the other stuff.

We'll pull you up when you do the right smart work.

So I think if you do those two things, and I'll tell you, I tell my son this too, half of life is showing up.

Show up on time, a big stickler of mine, ready to go, work hard, good things are gonna happen.

- Give a little more than expected, than you're expected to give.

- Give a little bit more and people will notice.

They really will.

- You know, I learned a long time ago from my mother, who's really officially uneducated.

She had fourth grade education.

She would say, "Who you spend time with is who you become.

Pick your friends very carefully.

What you choose is what you get.

Make the right choices in life."

You learn that from- - [Scott] She's a smart lady.

- Hanging around the right people.

And later, I've added the bit, you know, how you change is how you succeed.

In other words, change is no longer an option.

It'll change all around you and about you.

How do you respond to that, makes a big difference.

Scott, I know firsthand that you are intensely involved in economic development.

That you care deeply about the community at large, Carolina Core.

You're involved with the Piedmont Triad Partnership.

You have had a seat at the table that caused some of these big companies to come to our area to create jobs, to create economic impact.

As busy as you are, why do you do all of that?

- Well, I think as a leader, it's expected, and actually it's fun.

It's kind of a diversion too.

If you can bring those experiences that you have and use those to go ahead and make things happen, it's really nice to see the outcome of it.

And we expect that from our leaders at Kontoor.

We encourage it.

We expect it.

And our leaders are all involved in different parts of the community, and all of our people are.

So we think it's just part of being a good citizen too.

- And you'll resource them to do that.

- Absolutely.

- [Nido] With time, money, et cetera.

- No question about it.

It's back to what you said earlier, those leaders can learn things about governance.

You know, on those boards, they can learn things about giving back, community, about how other people operate, make really good connections, which they do.

It's similar to being on a public company board.

- Yeah, because it's made of, you know, product process and people, right?

- [Scott] It is.

- It's a similar ingredient.

- [Scott] Yeah, with other leaders.

- Wherever you go.

- Yeah.

- So you're a young guy.

- [Scott] Thank you.

- You're a relatively young guy.

You have a long runway ahead of you.

You've achieved so much in your life.

Well, what is it that turns you on looking towards the future?

What turns you on about life, about work, about further accomplishment, attainment?

Is there something that you had hoped you would do in your life you haven't done?

- No, no.

I- - Besides playing better golf.

- Yeah, yeah, that's a struggle.

I've really enjoyed my life.

I think my family's the most important thing, my wife and son, the time I spend with them, the time I have with them.

You know, I leave the office every day to go home to have dinner with my family, and then I work at night, so we have dinner, you know, as a family together every night.

You know, so I prioritize that.

Those are the kind of things that are really important to me.

But I'm the first guy at the office in the morning, you know, and then I work every night.

You know, those things you have to do.

If you're gonna take this job, you have to do that, but I prioritize those other things.

That's the thing that gets me excited about life, that time, 'cause, you know, there's very little time, very, very little time.

So I'm a little protective of the free time that I do have, and that's what I enjoy.

- And it's about managing energy, isn't it?

- [Scott] It is too.

- It's not too just about managing time, but managing one's energy and investing it in the right place at the right time.

Do you like to read?

- I read all the time.

You know, I read four newspapers in the morning before the day gets started.

I've always got a book in my- - Online?

- No, not online.

I love a paper newspaper.

I get "The Wall Street Journal," the "News and Record," "The New York Times" physical, and I read my hometown newspaper online.

Love a physical newspaper.

It's just how I grew up and I and I enjoy doing that.

- Yeah, actually, I enjoy it as well.

- Do you?

- Yeah.

- It's kind of fun.

I love flipping the pages.

- Just like books.

I like to read an actual book.

- Yeah, I get a bunch of magazines, a bunch of industry stuff, so, yeah, I do read all the time.

- This is just to stay up on trends and- - No Question, and current events, trends.

You know, staying up on our customers, our consumers, just making sure that we're aware and ahead of time, and I'm sure you're like I am.

I get articles, papers, books every day from people.

- [Nido] From people, yeah.

- People send me articles online- - Once they know you like that they're gonna do that.

- They send a book to you at the office.

It's all day every day, so there's no shortage of information coming, yeah.

- In the summertime, when I take a little time off, sometimes I read a book a day.

- [Scott] Oh yeah.

- Because I have a stack of books that people sent me.

I prioritize the ones I wanna read.

You know, it's a lot of fun.

You think what a book is, it's what that author accumulated over a lifetime, and synthesizes all in 200 pages.

- [Scott] Yeah.

- It's all the expertise that author has on that subjects.

It's fantastic.

- [Scott] Pretty good.

- My most recent book that I'm halfway through is called "Elon Musk."

- Oh, you're reading his book?

- Yeah.

- Yeah, he's fascinating.

- [Nido] It's a fascinating book.

- Yeah, you should have him on the show.

- Yeah, I'd like to have him on the show.

- Yeah, yeah.

- He's a very complicated guy, but- - Very, he's in the news today.

- Yes, yeah.

- Yeah.

- But very, very interesting guy.

- Yeah.

- What disappoints you about associates who may work with you or have worked with you?

- I think- - [Nido] There's something that you say, "God, I wish people would be different than that."

- Yeah, it's the blame.

We've all had trials and tribulations and we're all gonna go through tough times, and it's the folks that can't rise above that.

You know, they always blame the company, they blame the other people in the department, they blame this, that and the other thing, and I think it's part of- - [Nido] Instead of owning it themselves.

- Own it, get through it.

You know, measure up and fix it yourself.

And then the civil discourse, I'm a little worried about how we're behaving as a society at large.

You know, there was a time, if you and I had a difference on something, it was fine.

We'd have a great discussion.

- We'd work it out.

- I'd respect your opinions, you'd respect mine, and we'd leave and shake hands.

- Now people cuss at each other and- - I don't get that.

- Social media, it's- - It hasn't helped.

- It hasn't helped that at all.

- I don't think people know how to talk personally, 'cause they can hide behind a cell phone.

- I think that's so true.

- Yeah.

- Scott, you're an amazing guy.

We could spend hours, you and I, talking about life and living, business and people.

I thank you for what you do professionally, and I thank you for what you do in your community and across North Carolina.

- [Scott] You bet, thank you.

Thanks for having me.

I appreciate it.

- [Nido] Thank you so much.

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