As a recent Retail Gazette feature highlighted, now is a good time for foreign retailers to invest in the UK and that is exactly what Dutch retail group Macintosh did earlier this year with its acquisition of shoe specialist Jones the Bootmaker.
Details of the reported £40 million deal were made public in January and the takeover was completed in the spring. Since then, the Jones team has spent the rest of the year proving what a strong business its new parent company has acquired.
Six months on from the deal completing, Retail Gazette caught up with the retailer’s Chief Operating Officer (COO) Andrew White, who is confident the 90-strong store portfolio Macintosh took on earlier in 2011 is set to swell in the years ahead.
“Jones has been opening eight to ten new stores a year for sometime now and we will continue to do that as long as we can find sites that suit our profile and our customer,” he explained.
“We want to make sure we are opening profitable shops in the first year of new ownership, so we are quite careful about the locations we go into.”
New sites for the company this year have brought some surprising results, with premium locations performing better than expected, and success in less upmarket towns giving the company hope that its brand will be welcomed by a larger demographic in the future.
“We recently opened a site in Crawley which isn’t the usual area we’d go for but it is trading well, giving us scope to go into less premium locations for expansion,” White explained.
“Opening in Fleet Street was a no brainer – we have been very strong in The City of London from day one, but our Westfield Stratford City unit has automatically become our best performing store in the country.”
White explained that in the seven full weeks since the east London shopping centre opened its doors to the public for the first time, his company’s store there has regularly taken more than £40,000 per week.
This particular shop stocks men’s, ladies’ and children’s products, with the former usually slower to fly off the shelves in the early days of a store opening, but Westfield’s high footfall since it launched has really benefited all product segments within the shoe chain.
“It’s been phenomenal and much better than I had expected to be honest,” White remarked.
From East Sussex, where the bootmaker’s headquarters is based, to the East End of London and beyond, Jones’ has an upmarket reputation thanks to its 154-year heritage as a seller of quality shoes.
Sales in the year to date have been encouraging too, although like the retail industry as a whole, October was a difficult month.
For the first ten months of 2011 total trading was up by almost four per cent year-on-year, but budgets were down. Margins are better than 2010 though, primarily because the bootmaker has not been forced into heavy discounting like other British traders.
You only have to take a walk down any UK high street and see the plethora of special offer signs in numerous shop windows, crying out to customers to spend money, to realise that Jones’ limited promotional activity goes against the grain.
Explaining the retailer’s current operations, White added: “We have focused on improving quality, but we have seen the VAT rise and the increase in raw material costs have an impact.
“We are running a boot promotion at the moment, but we’re not putting our products out on racks, we’re still merchandising them.”
Inevitably with any business takeover, a reshaping of the senior management structure is required, and things have been no different at Jones over the last few months.
Former Finance Director Jeremy Todd, who was Managing Director at the time of the acquisition, left the business shortly after it was sold, having been keen to secure a private equity deal rather than a trade sale.
Ken Bartle and Peter Phillips, who according to White are two “iconic people in the shoe trade” and were major shareholders in Jones at the start of the year, have also opted to step down, although Bartle has stayed on a consulting basis while the company is integrated into the Macintosh group.
“I have taken on more responsibilities this year, looking after more departments. At the moment I’m responsible for everything except for buying and finance,” White added.
“There are possibilities that this responsibility will increase further in the new year.”
Having been at Jones the Bootmaker for 24 years, working up from store manager to area manager, and then on to marketing and property roles, there is an argument that White is well-positioned to lead Jones on the ground in the UK under its new foreign owner.
And when commenting on his rise through the ranks, it is clear that White holds a great deal of affection for the brand and is not set to move away from the business any time soon.
“I love the company and have had an opportunity to progress within it rather than seeing my career held up,” he acknowledged.
But when pushed on his future ambitions within the company, which could feasibly include heading up Jones in a General Manager capacity, he opted to focus on areas of the business that he would rather steer clear of.
“Just don’t let me loose on the buying section – that would be a disaster!”
Having also bought Belgium-based shoe specialist Brantano in 2008, Macintosh is on a mission to stamp its authority on the UK footwear market by representing a ten per cent share of it in the not-too-distant future.
White says there are various challenges for international retailers trying to enter this particular sector of British retail, but predicts more opportunities may arise in 2012 if analysts’ forecasts of a spate of new year retail industry collapses prove correct.
“From a footwear perspective, international retailers expansion to the UK is a double-edge sword,” explained White.
“In London our trends tend to be six months ahead of central Europe, so it gives companies early reaction to ranges that they wouldn’t necessarily get in mainland Europe.
“On the other hand, some firms consider the competition is too strong, especially in the south-east when you look at concepts like the Shoe Galleries in Selfridges department store, making them think it may be a tall order to start from scratch.
“London is a great place to be from a fashion point of view, but it is also hard to break into.”