Boot’s on the other foot as shoes shine

Af­ter half a cen­tury, Munro Group is now eye­ing an ASX float

The Weekend Australian - - BUSINESS REVIEW - DA­MON KITNEY

Ker­rie Munro’s most im­por­tant motto for life is a very sim­ple one.

“Never ever give up,’’ de­clares the ma­tri­arch of the deeply pri­vate Munro Group, the largest player in the $3 bil­lion Aus­tralian footwear mar­ket with 285 stores na­tion­wide and a turnover of more than $300 mil­lion.

Her three adult sons are now en­trenched in the busi­ness her 84-year-old hus­band Gra­ham started more than half a cen­tury ago, which could float on the Aus­tralian Se­cu­ri­ties Ex­change in the year ahead.

The pre­vi­ously un­told roadto-riches story for the 60-yearold and her fam­ily is an in­spir­ing one of a mother who brought her hus­band and her chil­dren back from the brink.

Al­most two decades ago Gra­ham Munro went broke.

The busi­ness he started in 1950 mak­ing shoes on the shop floor of Mel­bourne’s Myer Em­po­rium and which 12 years later launched Aus­tralia’s first footwear brand specif­i­cally de­signed for teenage girls grew strongly through the 1970s and 80s.

But Munro stayed in shoe man­u­fac­tur­ing too long and paid the ul­ti­mate price.

“We should have been get­ting out but we didn’t. We were stu- pid,’’ he tells The Week­end Aus­tralian along­side his wife and sons in the board­room of the group’s Colling­wood head­quar­ters in in­nercity Mel­bourne.

All he could save was the fam­ily’s fi­bro hol­i­day shack at Can­nons Creek on Mel­bourne’s West­ern Port Bay, which was also mort­gaged to the hilt.

The Mun­ros lived there for a year, strug­gling to put food on the ta­ble. They shared a sin­gle shower cu­bi­cle and reg­u­larly got up in the dark and ar­rived home at mid­night.

Gra­ham Munro learnt plenty from the ex­pe­ri­ence, but one thing stands out from the pack.

“To never for­get it,” he says bluntly.

“And I in­stilled into the boys it can hap­pen and make damn sure it doesn’t.”

His wife is far more ef­fu­sive, as are his sons.

“It taught me you don’t trust banks. The banks have treated man­u­fac­tur­ers very tough. I have al­ways taught these boys to never let them have con­trol of you,’’ Ker­rie Munro says, ges­tur­ing across the ta­ble to her three sons.

“We have worked re­ally hard

but we haven’t taken any fancy hol­i­days. We haven’t taken any money out of the busi­ness. One thing I learnt is you can’t be cash­poor. It is very hard to run a busi­ness if you are un­der­cap­i­talised.”

The now CEO of the com­pany, 37-year-old Jay Munro — who used to drive con­tainer ships at sea be­fore join­ing the fam­ily busi­ness — re­calls “go­ing to the su­per­mar­ket and hav­ing to put all the food back be­cause we couldn’t pay for it”.

“It was some­thing I will never for­get,’’ he says. “I never got an­gry. We saw how much mum worked and we al­ways re­spected it. Mum used to work seven days ... Mum is the hard­est-work­ing per­son I have ever seen. She is loyal to all of us and the rest of her fam­ily.

“Mum re­ally has been the driv­ing force be­hind the busi­ness for the past 20 years.”

His younger brother 35-yearold Lee Munro says there was one pos­i­tive that came out of the ex­pe­ri­ence: that the fam­ily got to spend time to­gether, which has held them in good stead in sub­se­quent years.

“I un­der­stand and ap­pre­ci­ate the hard times and I am prob­a­bly the most con­ser­va­tive in busi­ness be­cause of that,’’ he says.

“I re­mem­ber hav­ing a great time on the drive to and from Can­nons Creek. We each had four min­utes in the shower cu­bi­cle each morn­ing. But it was fun. We bonded to­gether. It was a fun way to grow up.’’

As Paul Keat­ing’s “re­ces­sion we had to have’’ took hold in the early 1990s and her hus­band worked through his bank­ruptcy, Ker­rie Munro looked to earn an in­come by start­ing her own agency busi­ness sell­ing shoe brands.

She paid her first visit to China and found prod­ucts that were not avail­able in the Aus­tralian mar­ket.

In 2001 she launched the Django and Juli­ette footwear brands, named af­ter her twin nephew and niece that were born the same year.

She opened a shopfront in in­ner-city Clifton Hill and used the out­side foot­path as a ware­house.

Her sons, who had once played games of Cow­boys and In­di­ans around the stock in their fa­ther’s shoe ware­house, of­ten stayed home from school to help un­load the ship­ping con­tainer straight off the docks from China. Or they were hauled out of bed dur­ing the mid­dle of night to do it.

But Ker­rie Munro says the busi­ness luck­ily had the right prod­ucts at the right time and dou­bled in size ev­ery year. It was al­ways prof­itable and all of her sons sub­se­quently joined the busi­ness. “Our suc­cess has been our prod­ucts have al­ways been wanted in the mar­ket­place. We run a unique busi­ness in China where we have a num­ber of small fac­to­ries. We didn’t have the money early on to deal with big peo­ple — we couldn’t take that risk. It has made us a very dis­ci­plined busi­ness,’’ she says.

Munro Group made seven ac­qui­si­tions in 10 years, in the process pick­ing up brands such as Mi­das, Mollini, Mount­fords, Wanted, I Love Billy and Silent D.

In 2013 the group took con­trol of the nation’s leading on­line shoe store known as Style­tread. Lee Munro be­came its CEO.

On­line is now 10 per cent of group sales and the fam­ily wants it to be 20 per cent within five years, de­spite the ar­rival of Ama­zon.

Lee Munro sees the US on­line re­tail jug­ger­naut, which launched in Aus­tralia late last year, as a pos­i­tive for Munro Group.

“We are keen to list our prod­ucts on Ama­zon and work with them. We are see­ing it as an op­por­tu­nity. Whether that comes with a lot of chal­lenges re­mains to be seen. They will gen­er­ate a lot of hype and traf­fic to their site, and that was traf­fic we would not have had,’’ he says.

“We have spo­ken to them. We are a reg­is­tered seller on their mar­ket­place and are work­ing through the tech­nol­ogy to make that hap­pen.”

His fa­ther, al­most half a cen­tury his se­nior, says he is not fright­ened about Ama­zon, “be­cause we have been heav­ily in­volved in that world for the past few years.

“If you had asked me that ques­tion be­fore we did Style­tread, I would be fright­ened to death.”

His wife, who is now re­spon­si­ble for prod­uct de­vel­op­ment and still spends six months of the year in China li­ais­ing with the com­pany’s 25 sup­pli­ers, con­curs.

“The on­line thing is in­evitable so I am with them,’’ she says, again pointing to her sons. “Join it. All our whole­sale cus­tomers are scared of it, they are wor­ried about it. But these guys (her sons) have made the busi­ness grow through their abil­ity. We (par­ents) don’t have that so I am with them. They aren’t do­ing too bad. But you’ve got to have your eyes open.”

In June last year the Munro fam­ily com­pleted the big­gest trans­ac­tion in its his­tory, the ac­qui­si­tion of Fusion Re­tail Brands, for­merly known as Colorado Group, in an all-scrip deal af­ter 15 months of ne­go­ti­a­tions with God­frey’s co-founder John John­ston’s pri­vate com­pany Couper Fi­nance.

The deal added footwear brands such as Wil­liams, Mathers, Diana Fer­rari and Colorado to Munro’s sta­ble and gave John­ston a stake in Munro Group. He is also now a di­rec­tor of the com­pany.

“For past six months we have been re­ally fo­cused on the in­te­gra­tion and it has got a long way to go. It is tak­ing longer than the other (ac­qui­si­tions in re­cent years) but we are mov­ing in the right di­rec­tion,’’ says Jay Munro.

“Fusion has had its chal­lenges in the past but it turned a profit last year and the signs are ex­tremely pos­i­tive for this fi­nan­cial year. We are track­ing well in sales against bud­get.”

This week The Aus­tralian re­ported that Munro had de­cided to close or re­brand the re­tail stores of Diana Fer­rari and wind up its cloth­ing line.

A least four will be re­branded and ne­go­ti­a­tions are un­der way to po­ten­tially re­brand other stores.

Diana Fer­rari footwear will still be avail­able on­line, as well as at stock­ists Mathers, Wil­liams and some depart­ment stores.

Jay Munro says the broader re­tail mar­ket for shoes has been chal­leng­ing for the past year and re­mains so but that the group is in a “pretty good place”. His youngest brother Bill is now gen­eral man­ager of whole­sale for the group.

“We think there is sig­nif­i­cant op­por­tu­nity in our mar­ket­place in Aus­tralia — that is a great op­por­tu­nity for us within five years. The mar­ket will con­tinue to con­sol­i­date. On­line will con­tinue to grow,’’ he says.

Look­ing at rais­ing ex­ter­nal cap­i­tal through an ini­tial pub­lic of­fer­ing re­mains an op­tion, as it has been for the past two years.

“It is some­thing we are keep­ing our eye on; it is some­thing we fore­see in our fu­ture. But we are fo­cused on get­ting Fusion back to the pow­er­house it should be in our in­dus­try,’’ he says, re­it­er­at­ing the firm has not man­dated in­vest­ment banks for any for­mal float process.

“We are learn­ing ev­ery day about it (a po­ten­tial list­ing). It is some­thing three years ago we would not have con­tem­plated. But it is def­i­nitely some­thing we are look­ing to­wards and we are try­ing to un­der­stand what it means. It is some­thing we are think­ing about.”

And there is lit­tle doubt Ker­rie and Gra­ham Munro are look­ing for some re­ward from their decades of per­sis­tence and hard work. “I think that is a fair as­sump­tion,’’ their son says with a smile, be­fore his mother in­ter­jects with a eu­phoric “Yes!”

“Mum and Dad have worked hard for a long time and they de­serve to take some risk off the ta­ble,’’ he adds.

While his mother de­clares she would like to “step back a bit” and see more of her grand­chil­dren, she says she will never be com­fort­able not work­ing. And her sons will al­ways live by an­other of her mot­tos.

“Never for­get the past,” Jay Munro an­swers when asked what is his mother’s great­est teach­ing.

“Cel­e­brate the good times but be hum­ble about them.”

‘Cel­e­brate the good times but be hum­ble about them’ JAY MUNRO MUNRO GROUP CEO

Ker­rie Munro

DAVID GERAGHTY

Gra­ham and Ker­rie Munro with their sons Jay, Bill and Lee at the head­quar­ters of their busi­ness in Mel­bourne

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