SBHD: With a number of rescued high street chains tucked under its wing Facia, Stephen Hinchliffe’s empire, has taken on the task of winning over the mid-market consumer via a programme of brand revamps.
It’s a brave person who stakes their future on the high street of the Nineties. But entrepreneur Stephen Hinchliffe is doing just that through his acquisitive retailing empire, recently named Facia.
Hinchliffe, a man of profoundly deep pockets, has been mopping up spare high street capacity with a string of clothing and accessory chain purchases at knock-down prices.
He is poised to embark on a programme of brand revamps for the chains, and plans to offer mid-market consumers fashionable clothes and accessories with a design edge.
First, he took over the Salisbury’s luggage and accessories chain last August for £3.2m. “Way over what we would have paid,” says one venture capitalist who had been eyeing the chain.
Fashion group Red or Dead, Colibri (the cigarette lighter brand), and now Oakland Menswear and the Contessa lingerie chain, have all fallen into Hinchliffe’s hands in just over nine months.
All these acquisitions were funded by “internal resources”, says Facia, which claims that not a penny was borrowed.
The group remains discreet about how much it has paid for its businesses, but gives no indication that the cash is running out.
Hinchliffe cannot have got much change from the estimated £10m the takeovers have cost so far. And it seems it is all his own – along with the cash created by each business he buys.
Hinchliffe, who tends to travel by helicopter, made his fortune from turning the furniture chain Wades around in 1988 and selling it to Waring & Gillow for a £7m profit. Other money has come from the pay-off Hinchcliffe received when he was ousted as chairman of James Wilkes engineering, following an acrimonious, leveraged takeover bid by Petrocon.
However, despite his acquisitiveness, bad news continues to pour in for high street retailers. Dillons, Rymans, Athena, Rumbelows and Dewhurst, the butchers chain – the death toll of failed store chains seems to grow by the week.
Consumers are not spending like they used to, and many of the glamour retailers of the Eighties are looking like has-beens. The spectacular growth of chains such as the Pentos Group, Signet and clothes retailers like the Burton Group last decade left them with a long list of stores that are hard to dispose of, carrying high rents and with poor locations.
Facia recently appointed former Signet finance director Gary O’Brien as chief operating officer.
O’Brien started out in retail seven years ago at Burton, just as the Eighties boom was turning into a slump. He knows only too well the pitfalls of over-expansion: “The lesson of the Eighties is that people expanded organically. But Facia is expanding through acquisition of businesses that are already there. If anything, the chains are under-spaced.”
Facia will avoid the problems of duplicated sites and high rents which plagued many retailers in the Eighties, he adds. A handful of sites will close, but shops can be converted into other formats within the group. Hinchliffe plans to give the chains Facia buys a fashionable edge.
A key acquisition was the purchase of Red or Dead. The fashion group’s former managing director and new head of design Wayne Hemmingway says he is already looking at ways of extending Facia’s design and merchandising across the other chains.
Hemmingway says: “Facia looks after the business and administration side of Red or Dead. We have group meetings with buyers and merchandisers of the chains where we instil enthusiasm for design. We throw off ideas they can use to add a percentage of sparkle on top.”
O’Brien says Facia’s acquisition strategy is to search for businesses which are going cheap and have strong brand values that have been neglected “for one reason or another”. The main qualification for being bought by Facia is that the business offers synergies with the existing chains.
The first seeds of the company’s assault on the high street have been planted. At jewellery store Torq, old lines have been sold off cheaply and new, more fashionable jewellery has been brought in. And accessories from Colibri have been introduced.
Most of the acquired chains will have their market position reviewed. Oakland will stay much as it is, but for the rest, Facia plans to “bring creativity and design at a price the mid-market consumers want”.
Contessa, for example, was part of Courtaulds, the manufacturing business, and did not “receive the attention it deserved”. The 130 shops targeted the 35-plus age group, but Facia plans to give it broader appeal. To that end, the stores are to be revamped, with new window displays and improved merchandising.
At Salisbury’s, gifts have been brought back into the stores, giving “double digit growth” last Christmas, O’Brien claims.
Changes are already being introduced at the Sock Shop, with merchandise being displayed in opened packages. Synergies are expected with Contessa.
Facia’s task is only just beginning and there is a lot of work to do to establish the chains’ distinct brand images on the high street.
To help the process along, the firm is looking to appoint a group marketing director with a strong fmcg and retail background. That person will put in place a structure where each chain has its own marketing chief answerable to the group director.
The marketing director will also review advertising for the chains, which may lead to the appointment of a group agency. Then again, the director may recommend that the chains go it alone.
O’Brien insists that the chains will maintain their independence, so there will be no moves to integrate buying. The risk of missing out on economies of scale are outweighed by the advantage of the chains keeping their own identities.
Facia has mooted the possibility of a stockmarket flotation but, while there is still cash in the bank, this could be some way off.
The group is mindful of the problems that can be created by over-expansion and believes it can avoid them. Many of the Eighties retailers said this, and lived to regret it.