CL Edwards talks about its plans for life after Signet.
Until February 26 jewellery supplier CL Edwards was owned by Signet, but after a management buyout the business is back in family hands. MD David Edwards and new shareholder Craig Skinner tell Rachael Taylor what the future holds.
It was a bit of a fluke that CL Edwards ended up under Signet control in the first place. The British jewellery supplier has been run by the Edwards family since Charles Leonard Edwards founded the company in 1956, but as the company became more successful the family began to feel the pressure, forcing it on a path that would lead to it passing control to the global jewellery group.
“CL Edwards was trading independently up to 1981 when my father and grandfather started looking at selling the company,” says CL Edwards managing director David Edwards. “They felt like they were on a galloping horse that they couldn’t get off. The company was successful, but all the money was tied into the business.”
Answering the family’s cries for help, jewellery company James Walker, which had been in the market for a distributor, bought the business. Although the company was still run by the Edwards family, James Walker became the 100 percent stakeholder.
Then ensued a chain of mergers and acquisitions that would lead to CL Edwards being quietly housed under the same parent company as high street chains H Samuel, Ernest Jones and Leslie Davis.
“H Samuel bought, or rather merged, with James Walker, found it had CL Edwards and didn’t quite know what to do with it, but as it was ticking along making a profit they left it alone,” recalls Edwards. “Then Ratners bought Signet, found they had CL Edwards and again didn’t know what to do with it but left it alone. And then in a reverse buyout, Signet bought Ratners.”
And Signet still found that it didn’t know quite what to do with CL Edwards. As one of the first British distributors to source from the Middle East, CL Edwards could always guarantee a low price on basic lines of jewellery, but as an international retail group with hundreds of stores in the UK and the US, Signet felt, quite rightly, that if a relatively small family-run business could achieve such margins then so could it, independently.
“We’d meet with the Signet buyers and show them what we had and they’d reply ‘we should be able to get what you’re getting’,” says CL Edwards head of sales and marketing Craig Skinner. “There were no preferential terms and we’ve not had a good trading year with them for four or five years. It was a bizarre relationship.”
Being part of the Signet group should have meant that by rights, CL Edwards had guaranteed access to supply the hundreds of UK stores owned by the group, but this seemingly obvious benefit never materialised. However, being tied up in the financial gains or losses of the Signet group did have an adverse effect on the business as there was no shortage of potential retail customers turning up their noses at dealing with CL Edwards because of the affiliation.
However the partnership carried on, with the interaction between the two companies boiling down to the filing of reports and two or three hours a year at board meetings. Until, that is, a “confluence of circumstances”, as Edwards puts it, just before Christmas led to the Edwards family plus Skinner tabling a bid to buy back the company.
Signet moved its primary listing to the US 18 months ago and will move certain finance teams across to the US from June 2011. And in June this year Signet finance director Walker Boyd, who Edwards and Skinner say was charged with overseeing CL Edwards, will retire.
With Walker leaving the business, the Edwards family and Skinner saw an opportune time to offer to take CL Edwards off Signet’s hands. While declining to divulge the figure paid for the company, Edwards says that the first number he threw at Signet was “at the lower end of what I thought the company was worth”, but Signet accepted.
“It was a fair offer and it was convenient for them as they wouldn’t have had the capability to oversee it,” says Edwards. “They didn’t know what to do with us. We knew that and we were almost playing on that. We’re a small drop in the ocean for Signet.”
Once Signet agreed to the sale, the soon-to-be new shareholders – Edwards and his wife, his two sisters and their husbands, his mother and father, and Skinner – set up a holding company called Adelaide Jewellery, aptly named after the street in CL Edward’s hometown of Blackpool where the business started out 56 years ago.
Then came the tricky bit: securing financing from the banks to pay for the proposed buyout. Skinner describes the banks as “paranoid” about lending money and recalls how the business was made to “jump through hoops, then jump through flaming hoops” to get the money on time.
“It was so difficult for us going to them with 56 years of history behind us that I can understand why viable businesses are going under,” says Edwards.
In the end, the money did arrive, one day before the agreed sale date. “It was like buying a house but not having your mortgage sorted out,” says Skinner.
Finally the business is back under family control, with a little bit of input from CL Edwards’ shortest-serving member of staff Skinner, who has only been with the business since July 2007. “I’m a small shareholder. It gives me an involvement and an interest,” says Skinner. Despite his stake in Adelaide Jewellery Company, Skinner will remain an employee at CL Edwards, not a director.
CL Edwards has a loyal troupe of staff members, all of who have been on board for between five and 30 years. By breaking away from Signet, they stood to lose Signet staff discount cards for the group’s retail chains and health care and insurance benefits. It also meant an end to employees’ participation in Signet’s final salary scheme.
“The staff have been very supportive since we told them early on in December,” says Skinner. “When we told them they burst out clapping as they know now our destiny is in our own hands.”
And in full command of its own destiny, CL Edwards can now start courting customer bases that were previously closed to it, such as the independent retailers who once shunned the company because of its links to Signet, a group they considered a threat to small jewellery businesses.
“One independent retailer said that he would never deal with CL Edwards while we were ‘lining the pockets of Signet’, which you can understand,” says Skinner. “But I’ve called him up since and asked if he’d do business with us now and he said he would.”
And it’s not just the independent market that the demerger is opening up for CL Edwards. It is now free to trade with multiple retailers outside of the Signet group.
“Previously we didn’t talk to the majors for strategic reasons,” says Skinner. But now the business can open up discussions with multiple retailers such as Beaverbrooks, Fraser Hart and F Hinds without having to approach them as a subsidiary of their competitor. CL Edwards is also hoping to continue trading with the Signet group. “We’ve probably got more chance of trading with them now,” jokes Skinner.
All in all, Edwards and Skinner say that Signet has treated them fairly through the sale and rather than reinventing the wheel now it is independent, it will look at getting the right ranges in place and growing steadily.
“At the end of the year we are 10 percent up,” says Skinner. “If at the end of every year for the next ten years we were 10 percent up that’s fine for me; it’s good steady growth.”
And to ensure this steady growth, CL Edwards is looking to expand the six brands under the company umbrella: design-led Exquisite, its bread-and-butter basics range Charles Edwards, pearl brand Elegance, faux pearl brand Avalon, brooch line Chic and men’s collection Edge.
It will also invest in further developing silver and Swarovski Enlightened brand Roccio Illumini, which launched at Spring Fair in 2009. Roccio Illumini is also now owned by Adelaide Jewellery Company but will be kept very separate to the other CL Edwards brands.
“We need to get people to take a fresh look at us,” says Skinner. “We’re going to carry on launching products and going down the directional route with the full branding experience, but we won’t let go of the basics that we know our customers still want to buy.”
Skinner and Edwards believe that going down the route of designer jewellery will open up a whole new market at stores such as House of Fraser, Debenhams and John Lewis – big department stores that wouldn’t have looked twice at them before.
It could also open up export possibilities. CL Edwards took a stand at Italian trade show Vicenza Oro for the first time this year and secured a new Estonian account it says will cover the cost of exhibiting. It also initiated talks with a Chinese retailer which could, if the deal goes ahead, be “phenomenal” for the business, according to Skinner.
Skinner says CL Edwards will launch more brands in the future, and wouldn’t rule out acquisitions, but adds that nothing will start moving on this until next year. “We want to focus on enhancing our range, we don’t want to lose momentum,” he says.
So after 56 years, CL Edwards is facing its biggest challenge: going it alone in a tough marketplace. But the staff are prepped, the stock is heading in the right direction, and who better to take the company into a bright new future than the family who founded it and knows it best.