Firm thrives after clothes encounter with downturn
Published 21/01/2010 | 05:00
WHEN Jack Murphy director Gerry McAuley is asked whether he ever seriously doubted his company's ability to withstand the economic devastation of 2009, his response is a frank one.
"Every night," he says. "We had a lot of stock, a lot of products to shift, and certainly, up to the middle of the year, I was very concerned."
Having built its outdoor clothes brand gradually over 15 years, Mr McAuley's company was suddenly facing a 25pc collapse in orders across the "100 to 150" stores selling Jack Murphy to the Irish market.
The cost line was under serious pressure, too, as swings in the dollar drove up the amount the company had to pay its overseas suppliers to produce the clothes designed in Jack Murphy's Balbriggan headquarters.
The challenges of plummeting consumer demand and rising production costs have brought far bigger companies to their knees, but Mr McAuley and business partner Michael Murphy found a silver lining in the economic cloud of doom.
After 15 years in business, Jack Murphy's range had grown to about 75 pieces, a collection too extensive for any one retailer to blend into a mixed label store, and Mr McAuley had begun to see merits of the company following other major labels and going into retail itself.
"We wanted to get the whole range out to the public, so they could see it all together," he says. In the boom, the collection wasn't really big enough for an own-brand retail offering and Mr McAuley was put off by the "big leases and personal guarantees" retail space commanded.
In the recession, opportunity beckoned -- "one of the big companies trading in Clerys had gone bust and we were able to get in there", he recalls.
Undeterred by the dismal retail environment, Jack Murphy launched its Clerys concession last November, taking on two full-time staff and three part-timers and spending more than €50,000 on the fit out.
"We had all the stock ourselves anyway, all we needed was the footfall, so it wasn't that hard to do financially," says Mr McAuley, who cites his lack of experience in retail as his main "concern" heading into the venture.
That concern was allayed by the appointment of an experienced retail manager, and Mr McAuley says the Clery's store has been trading "well" in its early months, putting in a "very good week" before the cold snap hit in the new year.
"We were nearly picking a figure out of the air (for the 2010 sales targets), but we expect it to be covering its own costs by the end of the year," he adds with a note of confidence. The concession has also given Jack Murphy a chance to interact with the customers who actually wear the clothes rather than the resellers, offering new insights into how the range might be tweaked to garner more sales.
"It's worked really well from a marketing point of view as well," says Mr McAuley. "We had a big department store from Derry come in, they loved the range and they're interested in buying from us for the next autumn/winter season."
The early success of Clerys has spurred Jack Murphy on to set up mini-concessions in stores in Enniscorthy and Donegal where "they provide the labour, we provide the goods".
Last year also saw Jack Murphy's two-year-old Balbriggan outlet store extend its trade from two days a week to seven, but Mr McAuley is ruling out any major retail expansions in the coming year.
"It's very easy to go off and open five or six shops in six months, but then by the time you find out where the problems are, it's too late," he says. "When we've found our mistakes and improved on them, then we'll have a package [to expand with]."
While new concessions are unlikely, 2010 will mark a first for Jack Murphy, with the launch of a consumer-facing marketing website, though it won't sell online because "we've got shops for that".
The coming year is also likely to see Jack Murphy break new geographical ground. The UK is already Jack Murphy's biggest market, with a separate company selling £3m (€3.4m) worth of goods a year against the €2.5m annual sales at the company that covers Ireland and the rest of the world.
"We have a new agent getting going in France, we've people in Germany, Finland and Sweden, too, and we're talking to a distributor in the US, so we'd hope to see some answers there before the end of next month," says Mr McAuley.
All in, Mr McAuley is confident that the main Irish/international company will return to growth with an "upswing of 10 to 15pc" in 2010, while the UK arm is expected to maintain an annual growth of 15pc which held up even in the downturn. He also expects 2010 to see a return to profit after losing money in 2008 and breaking even last year, as recently introduced measures to take 10-15pc off the company's cost base pay dividends.
Having cut pay across Jack Murphy's "mid- to high-level" staff by about 10pc last June, Mr McAuley is even hoping to restore their old salaries by mid 2010.
"I'd be much more confident of surviving [the downturn] now than I was in 2009," he says. "Now we know where we're going, we're investigating retail and we're getting agents around Europe. There's lots of opportunities out there and we're taking them."