The slogan ‘people count’ was first used by Pentland Group’s chairman when he stood for parliament aged 21, but it is a phrase he’s stayed true to while building his footwear and sportswear empire
Stephen Rubin, chairman of Pentland Group, sold three million pairs of shoes a week in the 1980s. That’s 156 million pairs of shoes a year. That achievement alone would make him a worthy recipient of the Drapers Footwear Lifetime Achievement of the Year Award.
But Rubin’s career has spanned far more than just footwear sales.
He trained as a lawyer and once stood for parliament. In business, Rubin floated and took private the Pentland Group; struck gold with an early investment in Reebok; rescued iconic Wellington boot business Hunter; built up countless other leading footwear brands; took a majority stake in JD Sports Fashion before the business had been turned around; and addressed the issue of ethical trading long before it was on the agenda of most firms.
Rubin may have been in the business for almost 50 years, but his multiple achievements far outstrip what most of the previous winners of this award have crammed into their significant careers.
Rubin came to the footwear business young, mainly because “I wanted to get married,” he says. After graduating from University College London with a law degree in 1959 he took a short break to campaign to become an MP for the Liberal party. He was the youngest candidate at just 21. “Obviously my political career didn’t take off, given where I am now,” he says rather smugly. He does retain a great admiration for Winston Churchill, who ran as the oldest candidate in the same year, and collects countless memorabilia.
After his failed attempt to become an MP he joined his parents’ footwear business, Liverpool Shoe Company. He says: “I wanted to get married and it would have taken me four or five years to get a legal practice - I originally had planned to join the bar and I didn’t want to be a solicitor. I think solicitors are more like businessmen in the business of law.”
Liverpool Shoe Company was a manufacturer and wholesaler that specialised in women’s fashion shoes, which it sold largely to independents. Shortly after he joined, Rubin helped change the shape of the business, demonstrating the great foresight that has punctuated his career.
“The business had been a bit of a chameleon,” explains Rubin. “But we saw the writing on the wall with the new labour rates and taxes that were coming into the UK, so we started to focus on areas we traditionally hadn’t been in, like mail-order and chain stores. And we moved into international markets.”
In 1964, the company opened its first office in Hong Kong - long before other suppliers had thought about moving sourcing overseas and by such a great distance.
The success of this strategy helped Liverpool Shoe Company on its way to its flotation in 1964, when Rubin was then managing director of the business. “It was the 1960s. Virtually everything was pointed high heels and it was the era of the Beatles, who obviously came from Liverpool. Because we came from Liverpool too, it earned us the nickname ‘Beatle Boots’ in the City.”
Rubin became chairman of Liverpool Shoe Company in 1969 when his father passed away, and in 1973 he rebranded the company to Pentland Industries. It was 1979 when the Pentland we know today started to take shape though. The company moved into the sports market when it picked up the distribution for sports fashion brand Pony. The success of this venture gave Rubin a taste for the sports sector and opened his eyes to the opportunities ahead.
In 1981, Rubin was introduced to Reebok, then a fledgling sportswear brand with a crisis. Orders had started to come in but the company had no finance to make the product. It was a gamble, but Rubin invested US$77,500 (£50,000 at today’s rate of exchange), taking a 55% stake in the brand.
Rubin says: “I thought it was a nice entry for us into the US market and a good way to sell some sports shoes. Our role was to provide the finance and do the sourcing. By 1984, we’d overtaken Nike in sales. By 1985, we floated Reebok.” Reebok took off when Rubin launched a women’s aerobic shoe under the brand. “We were the first company in the UK to make women’s sports shoes on women’s lasts. Purchase tax regulations favoured boys’ sports shoes - if you made a shoe on a boys’ last and under a size five-and-a-half in boys’ colours then there was no tax, so this is what suppliers had been doing for women’s sports shoes.
“We brought out a women’s tennis shoe with pink and yellow towelling so we couldn’t avoid the tax, so I thought ‘to hell with it’, let’s make it on a women’s last. This meant we had something unique in the market,” Rubin adds.
Some might say Rubin got lucky, but it was his shrewd ability to spot the trend for sports footwear that eventually netted him a US$770 million (£521.5m) return on his original investment when he sold his stake in 1991.
Rubin rather modestly says of the deal: “With hindsight it showed great foresight”.
The cash generated from the Reebok deal has made Pentland a hugely wealthy business. Its last accounts filed at Companies House showed it had £173 million in the bank, giving it the ability to make multiple investments.
The group itself, which generated sales of £940.9m in 2007 and profits of £68.4m, is split into three divisions: Pentland Brands, which owns or operates licences for the likes of Kickers, Lacoste, Ted Baker, Ellesse, Speedo, Mitre, Berghaus and streetwear brand Boxfresh; a retail division, which holds a majority stake in JD Sports Fashions; and a venture capital operation which has investments in non-fashion firms as well as in Hunter Boot, which Rubin helped save from administration in 2006.
The JD Sports Fashions deal came as quite a surprise to the market when it was completed in 2005. Rubin bought out the then shareholding of joint founders John Wardle and David Makin for £45m, giving him a majority stake of 57%. At the time, the business was struggling to cope with its vast store portfolio and numerous fascias and had put out several profit warnings, but again Rubin saw potential.
Rubin says: “We’d supplied JD for some time. John and David were at the stage where they wanted to sell their shares. I had great faith in the management team getting the business through the difficult period. The strategy was absolutely right. It didn’t want to be purely sports equipment and this was the only aspirational sports chain in the market”. He insists JD Sports Fashions is a long-term investment for Pentland Group.
Makin himself is full of admiration for Rubin’s achievements. He says: “[Stephen is] a man with myriad qualities whom I have great respect for. His eye for quality businesses is excellent and he usually knows how to get the best out of a purchase. When John and I decided to sell our stake in JD, Stephen was the guy we wanted to take over to give the JD culture the best chance of progressing further. He kept brilliant product and creative people in place. This has paid great dividends so far.”
Rubin is modest about his ability to spot great potential investments and insists success always comes down to the people and management within each company. Pentland Group employs more than 12,000 staff. He says: “You are only as good as the people you’ve got.”
He points out that he has stayed true to the campaign slogan ‘people count’, which was used when Rubin stood for parliament. “This is a country of enterprise and opportunity and it has a lot to offer. There is no manufacturing left and for UK Plcs to flourish we have to live by what we add on through design, brand and technical elements. You have to live by your wits and there has to be a climate to encourage that in this country,” Rubin says.
He has created a micro environment like this at the Pentland Brands office in Finchley, north London. Rubin built the office, which has a vast gym, a crèche, huge open spaces and a restaurant, to encourage creativity and loyalty among staff and to demonstrate his intention to invest in the business after he had taken it private in 1999.
Aside from looking after his own staff, Rubin has been a constant campaigner around corporate social responsibility. In 1995, when he was president of the World Federation of the Sporting Goods Industry, Rubin called a conference on human rights and as a result eliminated the use of child labour in the football-making industry in Sialkot, Pakistan. “Corporate social responsibility should just be called ‘responsibility’,” explains Rubin, who is also a founding member of the Ethical Trading Initiative.
Staff and good corporate social responsibility practices are some of the keys to Pentland Group’s success, but Rubin says the business continues to perform well, partly because of the markets it operates in. “I’ve traded through difficult times before. Fortunately, a lot of our products are for young people and a lot are for people with more spare time. Berghaus, for instance, sells walking shoes. A lot of people who walk are retired. We’ve actually specialised in two areas of the market that are really good.”
He says the future of the footwear sector is complex. “Most traditional family footwear shops have gone and it’s a very difficult and complicated environment. The internet is becoming all the more powerful.”
Rubin’s career is far from over though. He continues to look at investments. “People come to us all the time with proposals,” he says as he sits behind his antique desk, surrounded by his collection of paintings by great British artists at the Pentland Group holding offices in London’s Manchester Square.
“The greatest thing I’ve been able to do is make a difference to so many people’s lives and make sure they’ve been treated in a much better way. We all have to do a bit better for the world.”
- 2006 Invests in Hunter Boot
- 2005 Buys majority stake in JD Sports Fashion
- 1999 Takes Pentland private
- 1991 Sells stake in Reebok
- 1981 Invests in Reebok
- 1973 Rebrands group to Pentland Industries
- 1969 Appointed as Liverpool Shoe Company chairman
- 1964 Liverpool Shoe Company floats
- 1958 Graduates from university
What is one of the boldest things you have done in your career? I had an interesting love/hate relationship with the British Shoe Corporation (BSC). When Pentland bought Priestly Footwear in 1972, the BSC were doing 80% of production for the business. They said unless we dropped Stylo and Timpson as accounts they wouldn’t deal with us. As a matter of principle I refused, and BSC withdrew
all orders from the factories. It took about 10 years to make up the business.
What was it like working in the Far East so early? I remember in 1980 I went into China and I had to take my bottled water and packet of biscuits with me. We were one of the very first British companies to open there.
How do you approach an investment? My father always told me to weigh up the risk and reward. You only ever do things to get the reward, but if the risk is too great you shouldn’t do it. That would just be greedy.
What do you think the future holds for the footwear market? Most traditional chains have gone. The concept of the old all-family shoe shop doesn’t exist any more. Our job is ever more difficult. We have to make shoppers want to buy our product because of what is inherently in it.
What other issues does the industry face? If someone buys something counterfeit, then they never buy any original genuine product. I’ve fought counterfeiting for many years. It supports more crime than drugs.