Since taking control of German womenswear brand Passport, Frank Gouder has rejuvenated its management team, expanded the collection and helped it to build a truly international presence
Having outstripped its beginnings as a small German knitwear label from the backwoods of southern Germany, Passport has grown into an international womenswear brand with more than 2,000 doors worldwide and a rapidly rising turnover, which last year hit £28 million.
Despite having been available for only five consecutive seasons in the UK, the brand has quickly achieved high distribution levels, with 200 stockists nationwide including Fenwick in Newcastle upon Tyne and Tunbridge Wells in Kent, and Shirtsleeves in Newark, Nottinghamshire.
The man behind the brand’s swift rise is Frank Gouder, who joined the company in 1989 and led an MBO with his co-managing partner Holger Philipps in 1994. After finishing medical school, a young Gouder turned to fashion in 1984 and completed stints in the buying offices of several German department stores and at Benetton, before joining Passport as a sales director. Five years later, he and his colleague Philipps were approached by the company’s owners and asked if they wanted to buy it. They did, and with a cash injection from venture capital group 3i, the company changed hands but retained its small head office in Boblingen, near Stuttgart, where the design, accounts and logistics teams are all based. The business is now backed by Steadfast Capital.
“At that stage, the company’s strategy didn’t change,” says Gouder. “Passport still had a strong knitwear focus. The venture capitalists wanted to see profit, so we delivered that by capitalising on our strengths.”
After successful expansion into neighbouring northern European countries that shared the brand’s aesthetic, as well as roll-outs into Greece and Scandinavia, Passport’s management turned its attention more forcefully to its product.
Gouder, one of the brand’s managing partners and chief executive officer in charge of strategy, finance and logistics, says: “By 2001, the collection wasn’t right. We hadn’t moved it forward enough, because we had been spending all our energies on expansion and logistics. German brands are very good at systems and strategies, but fashion has to fulfil more than needs - it has to create a positive feeling. The brand was only concerned with needs and not wishes.” This philosophy culminated in a shake-up of the brand’s senior staff and the birth of a complete separates offer.
The brand needed a stronger sales direction to match its speedy growth, so Passport’s partners appointed Matthias Schlehaider in April 2005 as managing director in charge of sales and marketing. Having spent almost nine years at womenswear brand Apriori in a sales capacity, Schlehaider knew the market inside out. “Frank convinced me. The product was convincing, so was the vision behind it and the team-game philosophy that the managing partners were operating with,” he says.
Gouder’s decision to appoint his wife, Daniela Kromer-Gouder, as managing director in charge of design was not one he took lightly. “We looked everywhere to fill the role and simply couldn’t find somebody appropriate, so we decided to look closer to home. My wife was designing private label product at the time for Make-up and Visum, the two brands under Passport’s umbrella. Everyone around me suggested it, but I thought it could be the craziest decision I had ever made. We decided to try it, and luckily it worked.”
Spring 07 is Kromer-Gouder’s second season in the role. Overseeing a team of 10 designers, she is viewed by the rest of the board as the living embodiment of the Passport customer, as well as a barometer of taste and relevance in her role as a guide and inspiration for the label’s collections.
The changes Passport has made in terms of fashion have resulted in a 20% increase in turnover to £28m for 2006, which is forecast to rise to £33.5m in 2007. While still commercially sound, the collections have become more trend-driven over recent seasons, with fast-turnaround ranges pinpointing specific trends and regular, frequent deliveries keeping the focus firmly on the customer.
Gouder says: “It’s a tough job being a retailer, and we don’t want to gamble with their money. We ship a new programme to all of our outlets every month. They are designed to fit into each other and keep the product looking fresh on the shop floor. The whole point is to keep surprising our customers. If we don’t do that, how can we create wishes in their minds?”
Sarah Tacey, owner of Shirtsleeves in Newark, Nottinghamshire, says a lot of her customers have become loyal Passport fans over a relatively short period of time. “We have stocked Passport for three seasons now, alongside Mexx, Olsen, Bianca and Oui Set,” she explains. “Our customers like the fact that it’s out there on its own in terms of styling; it’s a bit different and yet the fit is very good. Since it developed into a separates collection, it has been much stronger and we buy in depth. The monthly delivery system is particularly useful because we always have something new. But in future we will hold back more of our budget for the trend-led flash collections.”
Passport operates on a schedule of six collections each year, delivered in 12 monthly shipments. A system is also in place to allow swift turnaround of mini-collections, which means that if an unanticipated trend comes up, the brand can create a speed range around it. Last autumn, for example, a series of three boiled-wool jackets were produced as stock and sold out several times over.
However, Schlehaider points out that Passport is anxious not to fall into the trap of trying to follow every passing trend. Citing the example of polka dots, he explains: “They were being done so well by the high street last summer, so we left it well alone. A speed collection should be a pure trend, and made only if it fits into your story. You must never forget who you are doing it for.”
Passport is represented in the UK by AP Fashion Marketing, which also sells Gardeur, and Gouder highlights the important role that an agent can play in the success of a brand. “All business is local - you must have the right partners. The first time we entered the UK market in the 1990s, our agent wasn’t working out and market conditions were poor. We were a good, reliable brand, but on its own that’s not enough.”
Passport withdrew from the UK to lick its wounds and rethink its strategy, launching back onto the scene with an autumn 04 range and a new agent. Alison Phillips, managing director and owner of AP Fashion Marketing, says: “When I took Passport on, the perception of the brand was about a year out of date. Everyone thought it was just another knitwear label.”
But Phillips and her team quickly showed that Passport had more to offer than just knitwear, and amassed more than 200 stockists in four seasons. She says the aim is to protect the brand from overexposure, and to maintain a quality over quantity approach. However, she aims to grow the brand’s account base to about 375 doors across the UK and Republic of Ireland markets. “We have considerable space to grow the brand in terms of the quality of our independent retailers and department stores,” she says. “The main thing is that our philosophy must translate to point of sale. The UK is the most competitive fashion market in the world, so we have to keep pushing to be better.”
Passport has a strong global presence, with export sales accounting for 50% of turnover, but it is in the UK marketplace that it faces the harshest challenges. One retailer explained that despite having stocked the new-generation Passport for several seasons, the store stopped buying it a year ago. “Although the pricing, fit and quality were good, we had a disappointing sell-through. The collection was simply too top-heavy. There weren’t enough bottoms or underpinnings to merchandise it properly as a separates collection, and we can’t afford the floor space for a label that isn’t performing in that way.”
For all the ideas of freedom and travel that are suggested by its moniker, ironically the name Passport also restricts the brand’s movement. Gouder shudders as he explains how the company has to regularly fight to release the brand name from copyrights and trademarks across the world. “Passport is universally understood, but the copyright issues are especially difficult in English-speaking countries. Canada is not easy, but we are trying; the US is even harder.”
Part of Passport’s long-term strategy is to develop its overseas business. The management is researching eastern European and Russian markets, where they feel there is an enormous amount of untapped potential for growth.
In tandem with these forays abroad, the next step for Passport is to invest in its retail concept following the German shop-in-shop model, where it splits the cost of a shopfit with its retail partners in exchange for merchandising support and some ad support. Gouder says: “We are still learning, and are always trying to be better. As far as I am concerned, it’s better to change and make a mistake than to just stand still. Our biggest challenge is finding the balance between having a distinct personality and always trying to innovate. It has to be about evolution, not revolution.”
PASSPORT: THE FACTS
Global turnover: £28 million
Ownership: 45% managing partners Frank Gouder and Holger Philipps; 55% Steadfast Capital Group private equity company, based in Frankfurt
Headquarters: Boblingen, Germany
Distribution: 2,000 doors globally, in Austria, Belgium, Canada, Croatia, Greece, Luxembourg, the Netherlands, Portugal, Russia, Saudi Arabia, Scandinavia, Spain, Slovenia, Switzerland and the UK and RoI. 190 doors in the UK, 35 in RoI
Staff: 60 employees, excluding sales and production
Collections: six collections a year, delivered in 12 monthly drops
Passport showrooms: two
Agency showrooms: 14.