Boot’s on the other foot as shoes shine
After half a century, Munro Group is now eyeing an ASX float
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
Graham and Kerrie Munro with their sons Jay, Bill and Lee at the headquarters of their business in Melbourne