Kathmandu founder invests in smaller rival Macpac
Thursday, June 9, 2011/
Retail queen Jan Cameron has taken a significant stake in up-and-coming outdoor adventure wear company Macpac, putting her in direct competition with her former company Kathmandu.
Cameron founded adventure wear company Kathmandu in the 1970s and built the business into an iconic Australian brand.
In 2006, she sold the company to Quadrant Private Equity fund for around $300 million. Kathmandu was listed on the sharemarket in late 2009, but its shares are currently trading below its listing price of $1.70.
After selling Kathmandu, Cameron purchased Australian Discount Retail as a distressed asset in 2008 for $70 million, renaming it Retail Adventures.
With almost 350 shops under its belt, Retail Adventures operates discount brands Chickenfeed, Go-Lo, Sam’s Warehouse and Crazy Clark’s.
While Cameron hasn’t disclosed what she has paid for her latest investment in Macpac, she has confirmed she will help the company with rapid expansions.
This will be achieved by leveraging off warehouse facilities and supply chains of her Retail Adventures stores, which bring in annual sales revenue of about $1 billion.
As an initial cash injection, Cameron will pour up to $20 million into Macpac, a New Zealand-based brand that has attracted a cult following among outdoor types for its signature backpacks.
“The deal has only just been signed, so it’s early days, but we’ll be looking at growth opportunities and taking on Kathmandu, Paddy Pallin, Mountain Designs and other competitors,” Cameron told The Australian Financial Review.
“I think there’s a lot of growth left in the market.”
Adventure wear has been one of the few retail categories that has remained relatively unharmed from the retail downturn, largely due to its niche offering.
Cameron is investing in Macpac with three other former Kathmandu employees, including her former husband, Bernie Wicht. Macpac is a small private company with 29 retail outlets in New Zealand and Australia, while Kathmandu has more than 100.
Macpac has welcomed Cameron’s experience, particularly her willingness and financial firepower to fund expansion, stating: “It’s got to the stage where our growth expectations are beyond what a non-equity partner should reasonably be expected to invest.”
As part of the company’s early growth strategy, Macpac will shift its warehousing operations from New Zealand to Retail Adventures’ storage facilities in China.
Kathmandu chief executive Peter Halkett says while there are similarities between Macpac now and Kathmandu in its early years, he isn’t expecting Macpac to take on Kathmandu overnight.
Michael Lonie, a spokesperson for the National Retailers Association, says while Cameron is a canny investor, the current retail climate doesn’t lend itself to success.
“I’d agree with [the claim that adventure wear has been largely unaffected by the downturn]. But how do you grow it? Once you start to multiply your stores to satisfy analysts on your performance, you run into the difficulty of not being able to manage your costs,” he says.
“It’s going to be difficult… A lack of sales combined with occupancy cots – one is going south and the other’s going north.”