F. Hinds was hailed Multiple Fashion Jewellery Retailer of the Year at the 2018 Professional Jeweller Awards, with the night recognising the company’s ability to grow during turbulent times, particularly through the use of omnichannel initiatives.
According to the latest accounts filed with Companies House, the six generation family jeweller experienced steady growth during the 12 months ending March 25, 2018.
Turnover during the year increased from £61.43m to £62.07m, while operating profits rose to £3.16m.
Past these results, company director, Andrew Hinds, says the business has continued to see growth, with 2019 getting off to a promising start so far.
2019 has also got off to an exciting start for the retailer as it saved another jewellery retail firm, Chapelle, from administration by acquiring several of its stores and the e-commerce site.
The national jeweller struck a deal to buy the stores in February after trading losses meant that Chapelle could no longer meet its ongoing liabilities.
Chapelle Jewellery was founded by husband and wife team Paul and Margaret Mortimer in 1979 as a retail business selling jewellery and watches at discounts of at least 30% against RRP.
In April 2015 it was sold to the restructuring and investment firm Hilco UK — the owner of the entertainment retailer HMV, which has also recently collapsed.
Now, as of February this year, the business is in the hands of F Hinds, who has stepped in to save 12 out of 21 outlet stores and over 80 jobs.
Here, Andrew Hinds, talks Professional Jeweller through the decision to invest in Chapelle Jewellery, and reveals what the first moves will be, whilst also touching on plans for F. Hinds.
How have you been finding business so far this year?
It’s not too bad. We are smidge up on last year, which in the current climate is probably all we could ask for because last year we were a little bit up on the year before. So we are still making progress albeit slow and steady progress.
Has F. Hinds been experiencing any specific challenges on the high street over the last 12 months or so?
Not specifically. It has been geographically patchy. We are not suddenly doing really well in big cities, or big centres, or small towns, or whatever, it’s been really individual stores that have been doing a bit better or struggling a bit more, and the overall result has been just about all right.
How are you feeling about the year ahead?
We are quite excited because we’ve got the Chapelle shops joining the business. That acquisition has given us a lot to do and hopefully we can get that business back into shape. I think there is a good business in there and hopefully we can prove that, and it is actually quite exciting for the business in general. It has sort of energised everybody here, which is good.
Could you tell me more about the decision behind acquiring the stores?
Well we knew of the business because it is a fairly small industry and you tend to know most of the other companies in the industry. And we were aware when the Mortimer’s who used to own it retired a few years ago. They made contact with a lot of people in the industry so we had a look at it then and had a reasonable understanding of what was involved but decided not to go for it at that point, and then when the news came that they had gone into administration we thought we would have another look, and we were delighted to strike a deal because I think the most likely alternative was there would have been no business there at all at the end of it. So, as much as it is a shame some of the shops have to close, we are delighted we have managed to save 12 of them.
Why did you decide on only 12 of the stores?
It was a combination of what the stores were taking and what they were making and the others just didn’t add up for us. Most of them it was because they weren’t taking enough money and/or the cost structure was unsustainable.
Where are the Chapelle stores you have acquired?
They are nationwide. They had a couple in Scotland and in Northern Ireland, but the way it has worked out, the ones that worked for us are pretty much in England and Wales. One is in South Wales, and the other 11 are all in England and they go from as far south as Ashford in Kent up to County Durham.
Are you allowed to reveal to us how much you paid to seal the deal and acquire Chapelle?
I’m not sure I can tell you the figure. With administration it is always a very quick process, you’ve got to be in a position to complete the deal quickly and fortunately we are in a reasonably strong financial position so we were able to do that, which I know counted in our favour.
Did you have any competition going for it?
There was some but the administrator obviously has to look to maximise money for the creditors but also end up with a viable business at the end of it and our understanding is that we put a particularly strong case forward in terms of being able to make a success of the remaining shops.
How do you think you can make the business profitable? Have you put any systems in place?
We are in the middle of all that at the moment. Because we bought the whole stock from all the business, all the stock from the closed stores have appeared here so we are in the process of dealing with that. We are putting our own IT systems in but other than that we are not going to make any instant dramatic changes because you are best learning about the business properly before you go in and try and change everything otherwise you are just as likely to change something that works well for good reason as you are to make something better.
Have you pinpointed anything that you think could improve the Chapelle business?
I think there will be a little bit of cross-fertilization because although we are in a broadly similar part of the market, the mix of brands isn’t exactly the same, so there might be opportunities for us to put one or two more things into the Chapelle stores. That is probably more likely than in the other direction because most of the brands that are selling through Chapelle in the outlet centres have got their established retail networks already. Most of them actually sell to us already but not all of them do. So yes, there may be opportunities for us to put one or two other product areas into the Chapelle stores.
How do you think having Chapelle will help F. Hinds?
We already occasionally buy some ends of ranges so we will be more of a one-stop shop for suppliers that are looking to move product on. Obviously having a bigger store network means that our central expenses are spread amongst a larger number of stores, which instantly makes the burden on the rest of the stores a little bit smaller.
How do the Chapelle staff feel about the takeover?
I am glad to say all the Chapelle staff we have taken on seem obviously relieved but also delighted and excited which is good. There was obviously a lot of concern, when your employer goes into administration you are completely uncertain about the future but with the 12 stores we have taken they are understandably greatly relieved they have job security now – hopefully with a financially stronger employer than they had before – and they are excited about the opportunities. They seem to be delighted to be part of the team and we are delighted to have them.
Would you ever change Chapelle’s name to F. Hinds?
We will be keeping the two brands separate. It won’t be a secret that the two are connected but we will be keeping them separate, mostly for the reasons that some brands will be sold through one and some through the other and we don’t want to cause any confusion.
Any other plans for Chapelle you can mention?
At the moment it is definitely stabilise and then start to make progress because the business is in administration so it needs to be stabilised first. So we will work with the landlords and the suppliers and all the rest of it, and get everything back in the right direction, and then we will look at further plans I would say. Once we have established everything and got it going the right way we would then be looking at opportunities, whether that’s to open more F. Hinds stores or more Chapelle stores.
As for the F. Hinds side, what are your plans for 2019?
Exactly the same as before. We are certainly making sure that F Hinds is still 90% of our store network, so that’s the one that has to take most of our focus and we have to make sure we don’t get distracted from that. We are not actively looking to expand our store network by any huge number but we are always out there looking. If we find the right shop on the right terms we are very happy to add shops to the network. We are just trying to do what we do better all the time.
If you could single something out, what would you say is F. Hind’s competitive edge on the high street?
I would say probably, and it is a combination of various things, like one or two other companies, the family business aspect is certainly something that seems to be valued by staff and customers. I would say we try to offer a breadth of range when we do something rather than just cherry picking. And I suppose, again, connected to the family business point, we tend to keep staff for a long time and we train our staff quite a lot and hopefully that pays off in the long run because you have staff who are very capable of dealing with customers and always selling the right thing and even just making sure we do sell customers something.
Keeping staff is really key for survival isn’t it?
It is. And it is more of a challenge in bigger cities because the bigger the city the more alternative employment opportunities there are. But yes, you only really notice it when you are not keeping your staff. When you are keeping your staff you can take it for granted, but when you are not keeping your staff you realise just how much of a challenge it is to stand still, let alone make any progress because you are spending your whole time trying to get people up to the standard you need.
What areas of the business do you hope to improve this year?
There’s no sort of huge projects or grand plan in place but everybody in their own areas will be looking to add some incremental gains. Obviously Chapelle is going to be an integration challenge, but that’s well in hand already. We’ve got IT systems in place and once you do that you start to have everything on the same platform and it gets a lot easier to manage the whole operation. So I would say there are no major plans at the moment for the business, other than dealing with the 12 extra stores that we’ve suddenly taken on in one go.
The British high street is becoming increasingly challenging, what’s F. Hinds doing to stay on top and remain profitable?
Running a reasonably tight ship and making sure that customers can shop with us anyway they want. Like a few other multiples, we are discovering the benefits of being a multi-channel operator. Obviously there are benefits in some respects of having no foot print at all, being online-only, in terms of low cost base, but you’ve always got the expense and challenges of visibility, but by having an established store network there is obviously benefits to that too in terms of people doing things like click and collect, which half the time is a web sale which someone is choosing to pick up locally, and the other half of the time it would have always been an in-store sale but they are just using the website to effectively reserve something they would have always bought in store. So actually it works both ways and that, along with the online increasing quicker than store sales, is why omnichannel is important. Click and collect plays an important part of online, but obviously it also means that the stores remain relevant too.
Have you seen the online side of the business growing?
We were probably the first of the multiples to actually have an online presence, we are 22 years and counting now. It has been growing. I would say sales in the first few years were very small and then a few years ago, if you looked at the rate ecommerce was increasing, ours wasn’t particularly exciting but I think that was because of so many new entrants to the market, but in the last few years online sales have actually made good progress, we have been very happy with it. A lot of the sales are from customers that know us, but there are actually increasing numbers outside our area as well who are choosing to shop with us online who would never have been an in-store customer.
Do you have any online initiatives planned this year?
Most of our marketing is in line with the store marketing because you have to present a consistent face to the world really otherwise you cause real customer confusion but we will do some additional things in terms of communication with the customers, such as email communication and social media. But the promotions are mostly mirroring what’s in stores so wherever the customer goes they see the same story and the same message. You don’t want one channel to be under cutting another because you lose credibility.
Is there anything else you would like to add about the year ahead?
No that’s it. I’m sorry there’s nothing more exciting to share but we’ve got our hands full with Chapelle. It should be a good year though. There seems to be a compatibility between our businesses in the fact that they were a family business until very recently and a lot of people who work there worked there when it was a family business so they remember it and they seem pleased to be back in that situation and there is a natural overlap in terms of the product ranges — there’s more similarity than difference there. But we are totally aware that we are going to have to learn some of the specifics of outlet retailing because obviously it is a little bit different, even from selling one-off products in a conventional environment there are different things you need to do and different ways you need to do it, so we are going to try and make sure we learn those lessons rather than slip up because we’ve got to grow the business.