The family-owned firm is in tie ups with Lacoste and Ted Baker, large mid-market fashion brands, and is the majority owner of JD Sports Fashion, the 800-store European retailer. But Pentland Brands is just getting started.
“We have a number of brands that are just beginning their international journey,” says Andy. He’s a calmly-spoken product of Harvard Business School’s MBA program. The entrepreneur is sitting in Grosvenor House in the heart of London’s Mayfair. He’s made the journey from HQ in the North of the UK capital to talk export growth at the CBI business group's annual conference.
Pentland Brands illustrates the way successful British start-ups can benefit from shifting their focus to new markets.
It is something many entrepreneurs need to embrace by looking overseas, but UK start-ups often find it difficult to expand. The key is to find enough time and to mobilize enough resources, but it has its rewards, according to UK trade minister Lord Livingston, who spoke at the CBI conference. He says that evidence shows exporters grow more quickly than nationally focused companies.
When Andy took the reins of Pentland Brands in 1998, 80% of sales were in the UK; last year it was about 20%, he says. Total revenue was up 10% to £1.9 billion in 2013, and group profit before tax surged 36% to £85 million. “International growth has been a big driver,” Andy smiles.
It is fitting that his grandfather, who established the family business in the UK about 80 years ago, was a European immigrant. He started up a shoe shop with a £500 loan and began manufacturing.
But by the time Andy’s father joined the company, they pivoted the business model and began investing in other brands. “He [my father] realised that in order to command a premium, he needed to make sure that he had something different and unique,” says Andy.
The family’s big break came in the 1980’s when they took a punt and invested cash in a US distributor of Reebok, the sports brand which has since become a successful subsidiary of the German sports group Adidas.
“I think the advantage of a private family business is we can think long-term but we can take very vast decisions,” Andy says. He joined the firm in 1991 after graduating from the Harvard MBA. He is also an honorary professor at Lancaster University Management School and sits on their advisory board.
For other entrepreneurs, securing investment for their ventures is one of the great stumbling blocks on the road to success.
Julia Glenn, chief executive of Extremis Technology, says you need to “knock on doors till your knuckles bleed”. Tenacity and resourcefulness, Julia says, were essential to secure funding for her socially impactful business.
She founded Extremis Technology in 2012. Julia used to be a vice president at Credit Suisse but after graduating from an MBA at Norwich Business School she turned to entrepreneurship. Now she works out of the east coast of England, where her company designs hurricane shelters and pop-up transitional homes for some of the world’s most vulnerable people.
The company has received funding from the Technology Strategy Board, the Low Carbon Innovation Fund and two private investors, as well as the UK Government’s Seed Enterprise Investment Scheme. “We don’t take no as an answer,” says Julia.
There are opportunities for funding, but as a social venture, which investors often see as charities, you need to go at it “like a bullet out of a shot”, she says: “You have to be so incredibly committed.”
The idea was born out of the 2010 Haiti disaster, which resulted in millions being displaced. “We just wanted to do something better [than the shelter that was on offer],” says Julia.
An engineering company by trade, Extremis Technology has intellectual property rights on a number of shelter designs, she says, including its hurricane shelter – HuSh2 – which was shortlisted as one of the UK's top-5 humanitarian innovations. “We have evolved our range to cater for different kinds of sectors of displacement,” says Julia, who lectures in both finance and technology at the University of East Anglia in her spare time.
Extremis Technology is unique in that it explores opportunities in both the private sector and in humanitarian aid. It is close to securing a large scale order in the US, and the company is also pursuing opportunities in the Middle East, the Caribbean and South America. Julia plans to use that liquidity to enhance the company’s research and development, and humanitarian work.
Perhaps cynically, Julia says, the opportunity to export was seen in the sheer volume of the market of those who have been displaced.
Longer term, Julia is looking at a licencing model. “That’s a very easy way for us to make a clean profit,” she says.
But she stresses that the company isn't just about revenues: “We want to be able to measure our impact where we are deployed, and if we can license our production overseas... Then we stimulate businesses and economies there.”
For Andy at Pentland Brands, the number-one growth area in 2014 is China, which was the company’s fifth-biggest market last year, he says. “So our vision has to be: when will china be our number one market?”
He is exploring opportunities in sub-Saharan Africa, a region with some of the fastest-growing economies in the world, and an emerging middle class. “They’re very into sports and fashion,” Andy says.
Not that it has been easy. Often developed infrastructure to support retail growth is lacking. Entrepreneurs who hope to carve out a slice of international markets can expect further problems.
Pentland Brands works overseas through partners, but it can be difficult to find people who share the same vision. “Making sure that we’ve got people on the ground who understand our business, working with our international partners [is important] – you cannot do it by remote control,” Andy says.
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