Rodd & Gunn on the hunt for capital
New Zealand menswear label Rodd & Gunn is searching for capital partners to help fuel its ambitious global expansion plans.
Established in 1946, the company expanded to Australia two decades ago. The business there now accounts for 70 per cent of its $80 million annual turnover. In 2012 it began wholesaling to the United States market, and now has product stocked in 44 states.
Managing director and majority owner Mike Beagley, who joined the company in 2000, said the plan was to start building a network of as many as 40 to 50 standalone retail stores in the US.
That would complement partnerships with department stores and a strong online presence, he said.
"You're talking about several hundred million dollars worth of turnover. There's a huge opportunity for us, if we play our cards right."
Next month Rodd & Gunn opens its flagship showroom in New York, within the 2400 square metre complex of the Trunk Club on Madison Avenue.
Beagley said the United States was highly competitive, but a crucial stepping stone to other markets.
"A lot of countries [in] the Middle East and Asia look to where you are in America, where are you in London. They give you credibility," he said.
Beagley said the advantage of retail stores over wholesaling was having complete control over the environment and brand positioning. On the flipside, long-term lease commitments meant retailing also increased capital risk and long-term liabilities.
"At the moment we're funding everything in the US ourselves, and that's a huge beast," said Beagley.
The veteran retailer has an 80 per cent ownership stake in the business, with the balance held by chairman Howard McDonald.
Beagley said he was personally against a public listing, but was looking into other opportunities to raise money. A partner who could offer both capital and expertise, ideally American, would probably need to be brought into the business over the next few years.
Similar partnerships would be sought in other potential markets in the Middle East and Asia.
"There's so much capital looking for a home [in the US], but it's trying to find the right person," he said.
Beagley said coming from New Zealand was a big selling point overseas, although the company played that down in Australia.
Design work was based out of the Melbourne head office, while fabrics were sourced primarily from Italy and manufacturing took place in China, Peru, Turkey and Mauritius.
"It's good to have a quirky edge from a far off country . . . but we have to prove we're sticking around, keep a strong focus on quality, and deliver on time, at the right price," said Beagley.
While the company now has a full management structure in the US, Beagley said he had racked up two million kilometres of travel in the last two years.
"People expect to see me there," he said. "In reality you've got to be on the ground to build real relationships with retailers and to ensure you're 100 per cent happy with how the brand is being represented."
However, he said he would definitely remain based in Auckland's Herne Bay, with his family around him and the lifestyle factors he enjoyed.
"I love it here."