JoJo Maman Bebe: Laura Tenison
Maternity and children’s wear brand founder tells us about how she is about to take a leap into theunknown and take on an equity partner.
“Finally after 20 years of working alone as an entrepreneur I've decided it would be quite exciting to work with an equity partner.” It's a major turning point for Laura Tenison, founder of maternity and children's fashion brand JoJo Maman Bébé.
The mail order company has grown organically and very successfully for the past 12 years. But now Tenison's keen to up the pace. It's bound to be an emotional wrench. She still owns 99% of the 120-person company, with a handful of de facto directors taking care of various aspects of the business. Ultimately though, every decision still goes through her. For a £10m turnover business with 1.2m mail order customers, eight retail outlets and a strong web presence, that's quite an undertaking and a measure of her influence.
Back in 2003, when Tenison first publicly pondered taking outside investment, she appeared fairly resolute about not wanting to dilute her shareholding. And she made it clear she wasn't keen on the idea of venture capitalists telling her how to run the business.
Her stance, while understandable and common among entrepreneurs, is clearly not conducive to fast growth via funding. At the time she explored alternatives and eventually realised plans for a conservative retail roll-out. But, unable to take the ultimate plunge, it was painstakingly achieved through cashflow and didn't commence until late 2004.
There are now standalone stores or concessions in Dundrum near Dublin, London (3), Plymouth, Guildford, Birmingham and a warehouse outlet in Newport. A further five should open by late autumn and after a cooling-off period the next stage, with investment in place in early 2006, should begin.
Starting the process of letting go has much to do with her belief that the brand has potential for 60 outlets and a recognition that such growth will not happen without compromise. And not only has the fear of losing control and ownership dissipated, she's actually been inspired by the recent sale of ski and surf clothing brand Fat Face. It also reached something of a plateau before taking investment to pursue a UK-wide roll-out.
In that case the founders moved aside with investors ISIS Equity Partners placing experienced retail executive Louise Barnes in charge. Nevertheless, they retained a significant portion of the business and are still involved now that ISIS has sold its stake for an estimated £100m to another venture capital outfit.
It's a model she's keen to follow in essence, although she'll almost certainly stop short of handing over the reins. “It is always hard to let go of a business that one has built up over a period of time through hard graft and personal sacrifice,” she says. “However, over the past two years I have been making very specific moves to distance myself from the running of certain departments. We have established a strong core management structure which ensures this is no longer a one-man band company.” This acknowledgement that she's “prepared to share the burden and the glory” makes the chances of an amenable fundraising far greater.
The way Tenison has run the business from the outset should also help. She is clearly a very prudent owner. Launched with the £50,000 she made from selling her France-based property business and a £50,000 overdraft, JoJo has grown organically with no outside investment or borrowing. No equipment has been bought on credit or lease, and design, marketing, IT, customer service, warehousing and distribution remain in-house.
The company is now debt-free, aside from the remainder of a mortgage on the warehouse at its Newport base. “Unlike many mail order companies we're not just a buying office with no assets,” she says. “I've kept my finger tightly on the purse strings and run the business as if I was a market trader – if we can't afford it we won't buy it.”
She claims the company is not money-motivated and customer satisfaction and growth are reward enough. Profit is an inevitable by-product of its success. “We want people to be pleased with what they're buying – it's a very simplistic level of gratitude I get,” she says.
But while a low-risk kind of entrepreneur, she does take some chances – after all, the day we spoke she'd only minutes before sanctioned spending £250,000, mostly on marketing. The risks she does take she puts down to hunches, a lucky streak or knowing the market. “That's the way people like me – who are not particularly qualified to run businesses like ours – get by. Every now and then you get a bit of a disaster and it knocks your confidence but you then have to remember where you've come from.”
In its first year of trading JoJo turned over £30,000, expanded rapidly early on and then settled into growth of around 25% year-on-year. This has slowed down in the last couple of years, partly because the company has reached mail order saturation point, and partly due to the bite of the retail downturn and the ‘disposable' fashion of the supermarkets.
While a Welsh company, JoJo's design, marketing, retail management and fabric work takes place in London. It manufactures in Turkey and Portugal, as well as having bedding and embroidered clothing made in China.
Tenison herself splits her time between London, Newport and a holiday home in Brittany. To balance her 70-hour week with raising two sons she ensured there is only 15 minutes between home, work and school. And recently she switched from spending two days and a night a week in Newport, as well as a day a week on the road looking for retail locations, to one longer stay of four days a month at the Welsh end of the M4.
This is all part of a rationalisation of the way she operates. As well as accepting that it was taking a toll on her family life she has decided her Newport management team is so good they no longer need her daily input.
Full of appeal
This should appeal to potential investors, who can be confident the company doesn't begin and end with Tenison. Equally, the potential for growth and greater profit margins appear to make it an attractive proposition.
Tenison is positive that JoJo's customers, the vast majority of which are reasonably affluent professionals, believe they're getting a good deal. “A recent customer research survey we did found that in some cases customers thought prices were too low – people didn't expect to get that quality. I would, however, like to establish the brand to such a degree that we can up prices.”
Irrespective of whether prices are raised, she is confident doubling the 5% margin the company makes at present is achieveable within three years, explaining that once you start to manufacture runs of more than 1,000 pieces for each colour and style economies of scale appear quite swiftly. “By doubling turnover we would achieve significant savings without having to compromise on quality or raise prices. Running a small garment production company is disproportionately expensive.”
And the brand is already well established in the UK too – 70% of pregnant women or parents with prams on high streets across the UK had heard of it and 15% had purchased. Tenison claims JoJo ‘test' stores are performing reasonably well in most cases and brilliantly in others, despite poor retail conditions.
“All this adds up to JoJo being a great opportunity for an investor or group who are looking to take a niche brand with an excellent reputation into other markets at trade, licensing or franchise level across the UK,” she promises.
As attractive as the figures is Tenison's enthusiasm for the future and understanding of her likely role. “I'd be happy to concentrate on new business, innovation and marketing, and leave others to run the company,” she says. “That's the advantage for people who want to be efficient on an operations level and see the founder as someone who could get in the way.”
Unsurprisingly, following a snippet in Retail Week, there have already been approaches from venture capital outfits and some bigger retail houses, some of whom Tenison feels can add something. Talks are scheduled this month.
So what does she expect from an equity partner? “I need one who will understand that being organised and efficient is vital, but unnecessary pomp and ceremony is expensive,” she says. “So long as an outside investor can see the benefit of keeping an eye on cashflow we'll get along fine.” Hardly a surprise and Tenison elaborates on the point, saying that a Tardis-like design studio in south west London makes far more sense than something grand in the West End.
She's also adamant that any new structure will not require rounds of meetings. “If they want a lot of non-exec directors and meetings to talk about things we've already decided on it won't be a great partnership. Had I got non-execs in five years ago I think they would have slowed us down.”
Because of that the institution or company will need to understand where JoJo has come from, will believe in the existing team and will largely allow it to carry on as normal. A background in retail would also be helpful, particularly if they've already learned from the kind of expensive mistakes JoJo can't afford to make.
There is room for compromise though. “I'm not anti-change. I'm pro-change,” she argues. “It's time for the company's sake and senior employees to see a slightly more structured way forward. And having the final decision on everything is the main area I'm prepared to compromise on I suppose.”
This will include greater outside input on catalogue content, the product offering in retail shops and a willingness to try new ideas. Evidence of that was the aforementioned £250,000 commitment.
She won't be drawn on how the money will be allocated, but says traditionally the company has relied on ads in pregnancy and mothering magazines. Now, with 48% of orders coming via the web, there's more of an opportunity to do local radio and public transport in key areas to drive customers online.
When it comes to expansion plans, she's more forthcoming. “Ideally it will allow us to pursue the many expansion avenues we do not have the resources to tackle at the moment,” she says. “The investment would be used on retail locations, key personnel and some upgrading to our existing infrastructure.”
The retail roll-out is likely to involve JoJo stores appearing in various forms. While 60% of turnover is from mother and baby wear, the other 40% is more gift-based around a nautical theme.
Because of that the mother and baby stores can coexist with crew clothing in seaside resorts, its furniture range in bigger shopping centres, and niche boutiques focused on children's wear and its beach range.
The six-year lifespan of the average JoJo customer, as well as the limitations of 500,000 UK pregnancies each year, mean its forays overseas will become more permanent. It already has two licensees in Greece and Cyprus who sell via the catalogue and are turning over reasonable amounts. And Tenison reveals talks have taken place over a similar arrangement in the Middle East, although adds that holding company photoshoots in Egypt and Jordan are the extent of the company's connection with the region at present. It has also been approached by one of the largest French catalogue retailers, which is looking for a niche brand.
Europe and the rest of the world is not a priority though. By exhibiting at one overseas trade fair, which tends to secure 10 new accounts a year, the company is steadily building the brand. “When we have the funds a proper international trade department will be set up with dedicated, experienced staff,” she says. It's typical Tenison – every step considered – and you sense it will see the company through its transition smoothly
Finding sites for retail outlet expansion is always a problem and JoJo Maman B?b?s founder Laura Tenison admits she?s no expert.
It has plans for five more stores by the autumn, with more expected in 2006. Tenison says 60 stores nationwide is easily possible, but the company?s still perfecting its site-hunting technique.
?When I?m looking for new sites I look at prams, the posher threewheelers from brands like Mamas & Papas and shoes, such as Start-rite or nice leather shoes,? she says. The company also has the advantage over an independent shop wanting to become a chain of already knowing its customers well.
With 1.2m on its mail order database it has broken down every location in the country by order of spend and how many customers it has there. This database analysis can be misleading, however. ?We appear quite badly in Manchester, but then the question is whether it?s because they don?t like buying via mail order there.?
The socio-economic make-up of JoJo?s customers is also telling. With half a million women pregnant each year, half of that figure are ruled out immediately. Therefore it attempts to appeal to every one of the 250,000 remaining, although realistically her customers will be fairly affluent and aspirational.
?Alison? is the typical JoJo customer profile, says Tenison. She lives in Cheltenham, owns a house, but aspires to a larger Georgian abode. With that and her other tools the company is in negotiations on sites in four locations across the South East and the Midlands. Each one needs to promise a quick return on investment. ?Our target is a twoyear capital repayment on all new stores.?
In addition to that the business is actively seeking another 10 sites, but Tenison won?t be rushed. ?The beauty of being a private company is that we are not compelled to open five new sites before the end of the year and won?t be pressurised into signing the wrong leases.?