His banking colleagues thought he was crazy when he left to work for shirt retailer Thomas Pink, but as chief executive Jonathan Heilbron has steered the business into uncharted territories in terms of sales and growth.
Jonathan Heilbron admits that his head office in a modest three-storey building in Battersea, south-west London, which is tucked away off a high road among industrial units, is probably French luxury goods business LVMH’s most unglamorous outpost.
“Every now and then we have a visitor from head office in Paris and it is quite fun to watch their face when they arrive,” says the chief executive of LVMH-owned British shirt retailer Thomas Pink.
It may not be the Rue du Faubourg Saint-Honoré, but the building has served Thomas Pink well and along with Heilbron it has seen the business through a prolonged period of expansion. He explains: “We started off with just one segment of this place and took over more of it as we grew.”
Thomas Pink’s growth is impressive. When Heilbron joined as finance director in 1997 it had 12 UK stores and a £15 million turnover. LVMH will not give figures for individual businesses, but in the UK alone, which represents less than half of Thomas Pink’s store portfolio, sales for the year to December 31 were £25.5m, while pre-tax profits were £1.96m, up from £1.6m in 2006, according to accounts filed at Companies House.
It is rare nowadays for an executive at Heilbron’s level to spend so much time at one business, but he says Thomas Pink has continued to challenge him. “11 years might seem like a long time but it has gone by in the blink of an eye, and since we joined LVMH it doesn’t seem so remarkable. There are quite a few people within the group that have spent more than 20 years there.”
Thomas Pink has certainly kept Heilbron busy, but he admits his colleagues in investment banking thought he was crazy when he left his job as director of corporate finance at NatWest Bank to become its finance director. At the time he says he had met a lot of entrepreneurs who had built businesses. “They were all so fired up about what they were doing. It was really energising and I wanted to be part of something like that, so when the opportunity came along I grabbed it. It gave me the chance to be a bigger decision maker, albeit in a smaller organisation, and I also got a little bit of equity in the business, which helps to concentrate the mind.”
Back then Thomas Pink was an embryonic business but as a brand it punched above its weight in terms of recognition. The business had been cautiously expanding having been set up in 1984 by three Irish brothers – James, Peter and John Mullen. Their idea was to reinvent the traditional Jermyn Street shirt, making it less stuffy and taking it to a wider audience of yuppies in their early 20s. The brand name is said to have been inspired by an 18th-century London tailor.
Thomas Pink opened its first store in Chelsea in west London in 1984, offering classic-cut shirts in bold weaves and colours. Its distinctive interiors and glossy pink-and-black packaging attracted a loyal customer base and further stores followed in the West End and the City, but the recession of the early 1990s limited its expansion. “We had pencilled in a store on Madison Avenue in New York and had grand ambitions for the brand internationally but not much of the detail about how to get there,” explains Heilbron.
He adds: “I could see that the business had enormous potential. It had created a niche for itself via word of mouth and for such a small outfit it had an almost cultish following.”
International growth was always on the agenda and since Heilbron joined the retail portfolio has grown to 71 stores in 14 countries, including Turkey, Dubai, China, Thailand, Malaysia and Singapore.
Heilbron is looking at Japan, Hong Kong, South Korea and India as well as parts of Indonesia and the Middle East for future growth via a well-established franchise model. He says: “ I get approached all the time by people wanting to open stores for us and I want to work with people who understand their local markets. That is why franchise works well – it is also less capital intensive and allows us to grow at a quicker pace. If we were opening our own stores we would only be expanding at four to five a year internationally, rather than our current 20. By working with partners we have learned a lot about how the brand is perceived around the world.
“We have strong store and product design but that doesn’t mean that we shouldn’t listen to people’s opinions. Twice a year our franchise partners come to London and those meetings generate ideas which help to grow the business.”
While he comes across as a modest chief executive, Heilbron cannot hide his excitement about the potential for the business overseas. He says: “If you look at China, Dunhill already has 70 stores there. I can’t see why we can’t do the same. British men’s style and heritage in formalwear is admired in emerging markets such as India, China and Japan, and that gives us a big advantage. We are looking at Russia as well. I think as wealth spreads we could do well there.”
Back in the UK, Thomas Pink has 31 stores. Last year and at the beginning of this year it cemented that by opening 400sq ft concessions within department stores. “We’ve been in Selfridges and Harrods for several years but have only recently started working with House of Fraser, where we opened in Bluewater, Cardiff and Belfast. We have also opened in Bentalls in Kingston and Fenwick in Newcastle as well as extending to Selfridges in Birmingham and Manchester. We have opened in Terminal 5 at Heathrow and at St Pancras International train station. We will also open a store at Westfield London in White City in west London and in Bristol’s new shopping centre Cabot Circus before the end of the year.”
UK-owned stores work to a strict 12-month payback criteria. Heilbron says the business is not at a size where it has the luxury of opening a few stores in key locations simply as a brand building exercise.“We need to choose our UK sites carefully and make sure the market is there before taking the leap. There are a lot of interesting retail developments but there may be more obvious places for us to go first.”
Thomas Pink’s customer base, says Heilbron, is a great source of inspiration when it comes to product development. Although 75% of sales are made up of shirts, the brand is pushing new product areas. “We learn a great deal from our customers which we use to push the product forward. For instance, this autumn we will grow our casual offer to include a zip-up cashmere cardigan, classic knits and rugby shirts. Cashmere and merino wools will become more important for us. This summer we sold a cricket jersey for the first time and introduced belts, and they are doing well. We trialled a tailored jacket in four stores and worked with designer Nick Holland on those. They did incredibly well so we upped it to eight stores for spring 08, and we are reviewing that to see where it can take us.”
Collaborations are a big part of Thomas Pink’s approach to product development. For the past 18 months it has been working with established bag and leather goods designer Bill Amberg on its small leather goods offer of wallets and credit card holders. Heilbron says: “We didn’t have the expertise to put together an offer and so it made sense to join forces with someone who did.”
The business is not ignoring the basics either, with Heilbron pointing to the fact that sales of socks have doubled since Pink remodelled its merchandising units and revamped the offer, adding two-tone heels and toes plus a British bulldog logo.
Womenswear does not have a large presence in store so it is a surprise to hear that it accounts for 20% of total sales. Heilbron says: “It has always been subdued as an offer and deliberately so. Thomas Pink is seen predominantly as a male brand and I want to keep it that way. Having said that, we are producing a bigger range of womenswear. We have a collaboration with designer Richard Nicoll which will hit stores this month.”
Traditionally, Thomas Pink has done well with womenswear in department stores where its Pink Woman concept sits alongside the likes of Jaeger and Hobbs. The retailer has one women’s store in Edinburgh.
Successful new products put pressure on space, and Heilbron says the brand can now support stores up to 2,000sq ft. A staggering 60% of the brand’s UK stores are in or around London. Bristol will offer a chance to further test how the retailer fares outside the capital. Heilbron muses: “With what is going on in the UK and US economy (Thomas Pink has 18 US stores), we’ll see how things develop and what happens to rates and rents before expanding in the UK. However, we will open an outlet store in Bicester in Oxfordshire later this year.”
Along with international expansion, developing a clear multi-channel strategy is, says Heilbron, his biggest challenge. The business relaunched its website last year. But the web presents the brand with similar problems to its bricks and mortar business, in that some customers want to be in and out quickly while others want to experience and have fun with the brand. “It’s a challenge to get stores on and offline catering successfully for those two very different needs,” he says.
As a result the business is looking at ways of streamlining the purchasing process in store. Conversion rates, Heilbron says, are high but he is looking at some express till systems. “We need to speed up the process for customers who want to be in and out of the store.”
Heilbron’s eye for detail is one of the qualities that made LVMH, which bought Thomas Pink in 1999, keen to keep him. The luxury goods group first bought a 75% share in the firm before buying it outright in 2002.He says the relationship has enhanced the business. “It means I can call on a support structure when it comes to things like international expansion. When I flew to Delhi recently I had contacts I could call on from LVMH who could smooth my way in terms of local intelligence, which meant that I had met 10 potential partners by the end of my trip.
“I don’t think the character of the business has changed much since the buyout. I report to a non-executive chairman at LVMH twice a year. I presented him with a three-year plan last year that is supported and sometimes challenged, as you would hope it would be.
“We are a small British business but we are a great brand and I know that is what LVMH saw when they bought it. They haven’t tried to turn it into the next Louis Vuitton, they have seen it for what it is, recognised its potential and are allowing us to push it forward with a strategy that best fits the business.”
2004 Chief executive, Thomas Pink
1997 Financial director, Thomas Pink
1986 Director, corporate finance and corporate broking, NatWest Markets
1982 Accountant, Pricewaterhouse-Coopers