The Officers’ Club: David Charlton
David Charlton exemplifies the entrepreneurs’ dictum: if at first you don’t succeed, try and try again
Name: David Charlton Company: The Officers' Club Sector: Clothing Retailer Founded: 1992 Annual Turnover: £91.4 million
David Charlton exemplifies the entrepreneurs' dictum: if at first you don't succeed, try and try again. When his first business, an upmarket clothing retailer, went into receivership in 1992, he secured a loan on his house and promptly started another business at the opposite end of the market.
“In the recession of '92 the banks decided they didn't like retailing and they withdrew my facility, so my first company, Fiori, went into receivership. From then on I decided it would be great to have a business model that didn't need any bank funding,” he recalls.
The dream of every entrepreneur – a start-up that funds itself, but Charlton made his dream come true. The business model that he hit on was The Officer's Club, a discount clothing retailer selling similar lines to well know high street brands such as Next and River Island, but at up to 70 per cent discount. From that first shop in 1992, The Officers' Club now has over 180 stores nationwide and is on target to break the 200 mark by the end of this year. Last year it turned over £91.4 million.
A qualified accountant, David spent several years in the clothing industry for Jacksons the Tailor, now part of the massive Arcadia Group. When that business was closed down by the parent company, several of the factory managers left and set up on their own. David went with them. “These guys were designing their own garments, bringing in the material from Europe and getting the garments made up in the UK under their own brand, then retailing them in their own shops. It was a true vertical operation and I was pretty envious that they were making a lot of money through it.”
His brother's redundancy was the spark that set off his own entrepreneurial adventure. He convinced his brother to put his £4,500 redundancy cheque into setting up their own clothing operation, Fiori. “That was in 1979. I bought my brother out in 1987 and at the same time a venture capital group took a 10 per cent stake,” he recalls. That stake was later increased to 13 per cent and everything seemed to be going well, but in the recession of the early 1990s his bank withdrew their support and the company went into receivership.
A new market
That might have been enough for many business owners, but belying the cautious accountancy stereotype he decided to take another risk. On a visit to the United States David had noticed that the busiest shop in the mall was a discount shoe retailer, doubling the trade of any other shop. Realising that a stock churning, fast turnover business would release him from dependency on the banks, he made the decision to change his market focus: he moved from luxury fashion garments to discount retail and set up The Officers' Club.
Despite the trauma of the receivership of Fiori, he had managed to salvage something from the business that proved crucial in setting up The Officers' Club: his relationships with suppliers. They were confident enough in his new project to supply the stock for him to start trading and the landlord allowed him to pay the rent one month in arrears. “I didn't have the comfort zone of any additional funding. I had to make money from day one, which led me into deep discounting. I had to have something that would really turn the customer on and make sure they came through the door and spent from the very first day. It was a business model born out of necessity,” he says.
Forefront of fashion
It's a model that is now a common site on most high streets. Discount clothing is one of the fastest growing sections of the retail industry, but in 1992 The Officers' Club was at the forefront. It was a classic niche and David's timing was perfect: “I don't think we ever had stage where we were close to the edge, we were successful from day one, it was just a matter of managing the growth.”
“We had a formula where in the early days we could open a store and pay it back in three or four weeks, so we didn't actually need any financing. We were very fortunate.”
After six years of organic growth the company already had 25 stores and in 1998 he decided that it was ready for its first acquisition. He bought ten stores from Fosters Menswear. That was followed in 1999 by the acquisition of another 16 stores from Blakes Menswear and in 2000 with 65 Hammells ladieswear sites from C&A. Turnover has grown from £10.6 million in 1997 to its current level of over £90 million and it now employs around 2000 people.
Knowing your limits
As the company grew, David brought in more people to help him manage it. “As an entrepreneur you've got to recognise your own limits and I came to the conclusion that I wasn't actually any good at anything,” he laughs. “First of all I brought in people on the operations side who were better retailers than I was. Then I brought in a buyer who was a better buyer than I was. Lastly, I brought in a finance director and, lo and behold, he was a better finance director than I was.”
He's now chairman of the company. Giving away responsibility is easy he laughs, as he is essentially a lazy person, but that doesn't mean he's prepared to take a back seat. He still looks after the property side of the business, finding, acquiring and opening new stores, and with a target of 30 to 50 store openings a year, that's very much a full-time job.
“You hear so many stories about successful people who've given it all up and gone off golfing or away on their yacht, but then 18 months later they come back and start again. It's in the blood, it's what they enjoy doing. I enjoy doing business; it challenges and stimulates me. I get a kick out of doing deals and negotiating with people and I just couldn't get that anywhere else.”