Harold Tillman: Jaeger and Aquascutum
The rag trade mogul on losing a fortune, revitalising Jaeger and turning Aquascutum around
Harold Tillman, the high street’s comeback kid, tells GB about his life in fashion, making and losing a fortune, revitalising Jaeger and his plans to repeat the trick with Aquascutum.
Harold Tillman is two hours late for our meeting. When he does finally glide in to Jaeger’s offices in London’s West End, his profuse apology is disarming. He’s been meeting investors from the Far East, he explains, and their flight was delayed. “They simply couldn’t understand that I needed to be somewhere. I’m very sorry,” he says, offering his hand and a conciliatory smile.
Eyeing the photographer, the immaculately turned out rag trade mogul asks me whether I want him to look like he’s talking business or fashion. As soon as he discovers he’s likely to be on the cover, any further information about the interview is deemed redundant and he disappears to change from the suit he’s worn to his meeting – which looks pretty sharp to my eyes – into a perfectly tailored three piece affair.
If his eager charm makes his tardiness forgivable, there are also reasons to excuse his vanity; on the one hand, he’s got a reputation for being the best dressed man on the high street to live up to, and on the other, as the head of a revitalised Jaeger, and since September last year, Aquascutum, looking the part is presumably in the job description.
Tillman also controls Croydon department store Allders, deli chain Harry Morgan and a handful of bars and restaurants. Since 2008, he’s been the chair of the British Fashion Council (BFC), having replaced Sir Stuart Rose. In the past he’s been accused of spreading himself too thinly, but he insists he’s no jack of all trades: he’s only ever been interested in running businesses related to fashion. “Fashion is a way of life,” he says. “Everyone has got their own fashion. That’s what’s moulded their life.” Maybe so, but few can have felt its influence as keenly as Tillman.
He’s in fashion
The son of a milliner and a tailor, between stints of pitching in at his parents’ clothing business, Tillman initially trained as an accountant. While this gave him “skill, discipline and financial numeracy”, his true calling took him to the London College of Fashion, where he was one of the first male students. At 19, he became an apprentice at ex-military clothes wholesaler Lincroft and within three years he was the managing director, having used the company’s established distribution channels to sell his own designs, which quickly outsold its existing ranges. Access to his father’s factories allowed him to exploit his flair for design, leaving him well placed to service growing demand for fashionable suits as a swinging 1960s London became the world’s style capital. “The timing was pretty good,” the 64-year-old admits.
When Lincroft’s owners retired in 1967, he borrowed £5,000 from the bank to buy the business, and at 24, floated it on the stock market. Wasn’t his youth a barrier? “I remember doing the rounds of the brokers and getting thrown out of most of them. There’s always resistance. When you get to a certain age your experience allows people to believe in you but when you’re young, you have to prove that what you’re doing is sustainable.”
Luckily, one broker took a liking to him, and he used his access to the markets to fund a series of acquisitions, including Savile Row tailor Kilgour French and Stanbury, a deal which saw him change the name of his own business to Lincroft Kilgour. Ingenious Tillman ploys included employing a young Paul Smith and launching the UK’s first celebrity-endorsed clothing range. “I was friends with George Best and saw the adulation he enjoyed. I simply took his name and put it on shirts. It was a great success. It was a young whim of mine – but a great whim,” he laughs.
His pure fashion and retailing skills took him a long way, but he also had the discipline needed to grow the business with diligence. “At that age, one tends to have an aggressive young business so you need to put discipline in through controls. It was my plan to acquire businesses that were bigger than my company. They had infrastructures of their own. We melded them together and found the synergies.”
Merchant bank Canon Street bought the resulting firm for £1.6m (approximately £65m in today’s money), making Tillman a millionaire at 30. A non-compete clause temporarily kept him out of UK fashion, so he repeated a similar trick in the States with a business that designed, sourced and manufactured men’s clothing. “When my non-compete elapsed, I sold the business to the people who were working with me and came back to London and started again,” he says. What made him carry on with fashion once he’d proved his pedigree with a second exit? “It wasn’t a financial reason, although you can never say you don’t need money. It was in my blood.”
Back to earth
After opening the UK’s first cocktail bar, Rumours in London’s Covent Garden, Tillman spent the 80s successfully buying and selling businesses and would have been forgiven for assuming everything he touched turned to gold. If he ever allowed himself that, it wouldn’t be long before he’d be unceremoniously corrected. He acquired Honorbilt, a loss making division of Austin Reed, with a view to applying the model he’d used at Lincroft. “I got it very quickly into profit and saw an opportunity for an IPO because the ’86 stock markets were hankering for deals.” However, on this occasion, his timing was to prove less prescient; he took the company public in September 1987, one month before the global stock market crash of Black Monday.
With his tactic of going to the markets to speedily fund acquisitions derailed, he turned to a large US public company, Pentland Industries, to support a deal he was trying to secure in California. They agreed, on the condition that he bought one of their loss making divisions, Gallini Group, which would also give Honorbilt immediate access to trading in the Far East.
“We did the deal. Maybe I was too hungry to buy the business in California and I should have walked away,” he reflects. Within a month, Gallini’s stocks were found to be worth only half their book value of £2m. Worse, its Hong Kong import licences were not secure. With Honorbilt feeling the strain, Tillman turned to his bank for support. His backers, Midland Bank, had just had their worst ever year and were announcing huge losses. “They wouldn’t renew our facility. I couldn’t continue trading as the respectable officer of a company without the support of my bank. I had to call in the receivers.”
The DTI initially threatened disqualification, but Tillman struck a three-year deal whereby he agreed to apply to court every time he wanted to be a director. His applications during this period were never refused, but the episode battered his confidence and his bank balance.
“It was a very, very bitter lesson,” he says. “It was a reckoning of the mind. It taught me that I don’t walk on water. But you’ve got to turn these things into a positive experience. Keep your eye on everything and don’t believe that everything goes on forever. If you have a car accident you’ve got to drive more carefully next time.”
Nigh on cleaned out, he kept his house by the skin of his teeth. He regrets placing so much confidence in senior colleagues while he was away doing deals and admits to not doing due diligence properly: “I had always done it in the past, but I brought others in to help me. Perhaps they didn’t have the right range of expertise.”
It wasn’t a mistake he would repeat, and he set about cautiously building his fortune back up again with a series of smart deals, most notably a buyout of menswear supplier BMB. With his bank balance restored to full health following the sale of a tranche of BMB shares in 2003, he considered calling it a day. And then along came the “opportunity of a lifetime.”
“I was tempted to retire. Jaeger stopped me,” Tillman confirms. “It was one of those things that I’d seen since I was a small child and I couldn’t resist it.” The pull of the 130-year-old prestige-brand, which Tillman picked up for an undisclosed sum, is easy enough to understand, but the financial position of the fashion retailer was parlous. In its final year under previous owner Coats, it lost £11m after an attempt to widen its appeal beyond its core customer base failed. So why did he think he was the right man for the job? “I felt my background in quality tailoring and knowing that I would get a good retailer on board would turn it,” he says.
For all his emphasis on controls and his determination not to be burned by a lack of attention to detail again, Tillman is the first to admit he’s not a hands-on manager. Bringing in that “good retailer” in September 2004, namely former Debenhams chief executive Belinda Earl, was arguably his masterstroke at Jaeger.
“She did an amazing job at Debenhams and raised a fortune to try and buy it, which is no mean feat. Jaeger is tiny by comparison, but you can get your arms around it and feel a part of it. She’s a Jaeger woman, a Jaeger customer,” says Tillman. Despite an array of rival job offers, including one from Marks & Spencer, like Tillman, Earl was attracted by the prospect of turning around a once great brand that had lost its way, and presumably, a decent slice of the business too.
“Too many chief executives had gone through the company and its previous owner had directed it too far towards its own manufacturing resource instead of allowing the freedom to design and manufacture anywhere you ought to,” he explains. “It had 100 shops in the UK, many in the wrong locations. They had to be closed, refitted and reorganised. That takes years. With the products, we improved the quality, fit, pricing architecture and advertising. Those are the pure retailing skills of Belinda.”
Jaeger now has more than 140 shops in the UK and Europe plus stores in Montreal, Japan, Dubai, Taiwan, and Chile, and from an outmoded, flagging brand that was only worn by ladies of a certain age, the pair have transformed it into a trend-setting ‘affordable luxury’ label for the fashionable over-25s.
By the end of 2007, Jaeger was boasting a 22% year-on-year rise in sales to £70.6m, with profits up 45% to £5m (EBITDA). While its momentum slowed last year, with profits down by 50% to £1m, sales grew to £85.5m and more store openings are planned for this year.
Its relative resilience to the downturn is further evidence of the regeneration of its reputation and popularity with consumers. The turnaround also represented a personal triumph for Tillman; on his alumni profile page on the London College of Fashion website, he’s asked what his proudest achievement is. “A complete business reputational recovery”, he responds. When I ask the same question, his answer is different: “I always think my proudest moment was my last one.”
New kid on the block
Tillman’s “last one” was September’s purchase of the 158-year-old Aquascutum from Japan’s Renown for an undisclosed sum. The brand, famous for its trenchcoats, which have been worn by Cary Grant, Humphrey Bogart and Sir Winston Churchill, cemented his rehabilitation. When he bought Jaeger, much of the coverage harked back to Honorbilt. This time, the press celebrated Aquascutum coming back under British ownership, and into the hands of the ‘man who turned Jaeger around’.
The acquisition brought two of Britain’s oldest luxury brands together under a fashion house with revenues of more than £300m. With Aquascutum losing money at the time of the deal, it’s tempting to assume the turnaround plan would be a carbon copy of the one he used on Jaeger, but Tillman says the challenges are distinct. “It’s a very different business. Jaeger had a large portfolio of shops that needed reorganising, Aquascutum doesn’t come with that. It’s a flagship on Regent Street, some top end concessions and then wholesale.”
The Jaeger experience will prove valuable nonetheless: “The benefits to Aquascutum are the skill-sets we’ve developed. We don’t have to cut our teeth this time, which makes it quicker to turn around, but nothing is going to be an overnight dream.”
It must be hard not to look at the ubiquity of Burberry, once its arch-rival in checks and trenchcoats, with a mixture of envy and admiration, but Tillman says Aquascutum and Jaeger “don’t belong in the mass market and would be rejected by the consumer”.
“They will never be mass market brands and don’t need to be. The luxury goods market in the world is still fairly small compared to the consumables but there’s room for lots of growth.”
Tillman, who will work on the Aquascutum expansion with Earl, says he will consider opening more stores in the UK before heading abroad, with particular scope for wholesale expansion in the US, Russia and the Middle East by emphasising its British luxury heritage. Product categories will also be expanded and an improved website should increase ecommerce revenues. There’s been some inevitable restructuring, with headcount at the firm’s head office cut in November and the future of 300 jobs at a factory in Corby still uncertain, although employees will be heartened by Tillman’s track record and his general commitment to UK manufacturing.
The growth of the brands will be considered rather than aggressive. Incongruously, for an entrepreneur with an estimated fortune of £295m, Tillman’s maxim is prudence. “I invest cautiously. We could have been more profitable and more worried. But we’ve got no debt, we’re profitable and we’re not worried. If you go with other people’s money, great, quadruple your EBITDA, service the debt and hope it keeps going up. If it doesn’t, people start blaming each other.”
Earl runs the businesses on a day-to-day basis, leaving Tillman to “preside, not manage”, although he says “there isn’t a day that goes by when I don’t get involved with something”.
But he’s got enough to keep him busy. When Sir Stuart Rose approached Tillman to suggest he replace him as chair of the BFC, at first he wasn’t sure he was the right man for the job. Rose persisted, and Tillman relented. “It takes a lot of time, but I intend to make a difference,” he says.
He’s been successful in bringing British design talent back home, acting as an ambassador for British textile manufacturing and supporting young designers, initiating the Vogue BFC Designer Forum Fund, as well as a personal scholarship fund for the LCF. Tillman admits to his fair share of business mistakes, but claims he’s never made a fashion faux pas, and his passion for his industry is infectious.
“We’re a brilliant nation of retailers, especially in fashion. Sales per square foot are incredible here because everything is always challenged but we get on with it. Where do people come when they’ve got an international brand to launch? They come to England. Within a few hundred square miles, you’ve established yourself.”
In his own words
On managing Allders
“It’s a big business as a one-off store but it’s got a reputation and a brand that’s superb. I think about expanding but department stores are hard to come by and the infrastructure is hard to maintain. Maybe one day”
On being the best dressed man on the high street
“I do get praised quite a lot about my appearance. I was brought up understanding nice, good quality clothing. I enjoy it and it’s a passion”
On having his banking facility withdrawn
“I had found a formula to resolve the banking issue Honorbilt had but someone sitting in an office somewhere wanted to close the file on it. They’re not interested in 1,000 people’s jobs. It was heartbreaking”
On selling Jaeger
“I would never say never to an approach. If someone came to me and said, ‘this could be a £2bn business in our hands’, I’d study it. But at the moment, we’re enjoying it”
On the upturn
“I’m not a great believer in green shoots. There are underlying problems in the world economy. Business owners who have survived the last couple of years will probably be fine but anyone who jumps around and says it’s getting much better might get caught out”