In our latest CEO Talk, Jane Shepherdson speaks exclusively to BoF about Whistles’ latest trading statement and shares her plans for the future of the business.
LONDON, United Kingdom — Perhaps it’s not surprising that, in her spare time, Jane Shepherdson does flying trapeze in Hoxton, smack in the heart of achingly hip East London. Right from her earliest days in the fashion industry, Shepherdson has been known for taking risks and having her finger on the pulse of what’s cool.
After getting her start as an assistant buyer at Topshop, back in 1984, Shepherdson spent twenty years working her way up the ladder to become Topshop’s brand director, effectively overseeing the retail, product, finance, HR and property departments of a company that, under her leadership, was transformed into a globally recognised brand, emblematic of the dynamic nature of British high street fashion.
But in 2006, one week after Topshop boss Sir Phillip Green announced a now-defunct fashion collaboration with Kate Moss, Shepherdson abruptly resigned. At the time, Green said that hiring Moss had “absolutely nothing” to do with Shepherdson’s decision to leave the business. Shepherdson also dismissed any link as rumour. But so significant was her departure that it made headlines across British media.
Shepherdson’s next move was closely watched. In 2008, after advising Oxfam and ethical fashion label PeopleTree, she resurfaced as chief executive of Whistles, an ailing middle-market womenswear retailer that was part of the Mosaic fashion group. As part of the deal, Whistles was spun out of Mosaic into a separate entity in a ‘management buy-in’ that gave Shepherdson and her partners a reported 20 percent stake in the business, with backing from Icelandic retail group Baugur, which owned Mosaic, and Glitnir, an Icelandic bank.
Like Topshop many years before it, Whistles sorely needed a reboot and the company’s investors believed Shepherdson was the woman to do it. But during the global financial crisis and the implosion of the Icelandic banking sector, Whistles found itself in a serious crunch for cash. Glitner collapsed in 2008 and was nationalised, giving the Icelandic government an ownership stake in Whistles. Then, in February 2009, Baugur’s debt-fueled investment group imploded, as well. For Shepherdson, things were not proceeding according to plan.
But she managed to secure short-term financing to eke through the lean times. And earlier this year, cresting on double-digit percentage growth in sales, Whistles managed to buy back most of its shares from the Icelandic government and establish a solid footing for growth.
In her most wide-ranging and in-depth interview since joining Whistles, I spoke exclusively to Jane Shepherdson to discuss the company’s progress, get her reflections on the future of fast fashion and understand her vision for the future of Whistles, in Britain and abroad.
BoF: Let’s start with the results. Sales grew marginally last fiscal year from £38.8m to £39.9m and EBITDA increased by 34 percent to £1.6m. Meanwhile, you’ve seen double-digit percentage like for like sales growth in your retail stores and outstanding growth online over the last nine months. It seems like things are going in the right direction.
JS: The results are good. They are fine. [Last] year was more about continuing to create the infrastructure, because you know when we took this business on, we didn’t have our own logistics, we didn’t have our own IT. So last year we set up a massive systems, IT, logistics and warehousing project — and that took up a lot of our time.
Sales came through consistently and we were pleased. We opened a couple new stores. But really, all it did was give us a platform for growth, which is where this year comes in. We are doing just under 22 percent like for like sales growth, so it’s phenomenal. It’s as if it’s just taken off or hit a tipping point.
BoF: What have been the key drivers of this growth? Retail growth in the UK is generally flat and it’s not like you have opened a lot of new stores.
JS: The one overriding thing, more than anything else, is absolutely the product. Of course, I would say that because I’m a product person, but it’s true. Suddenly, we’ve found confidence. I thought it would take us eighteen months to get here and it’s taken four years, so it’s longer than I expected. If you already have a customer base, you can start off in that direction, but if they all basically say ‘I don’t want any of that,’ then you kind of have to compromise a bit. Even the bravest person in the world would have to compromise. You can’t just completely alienate every single existing customer. You have to meander and that’s what we did. And unfortunately, by compromising, we never quite got going where we thought we should be going. It diluted the offer.
I suppose with the build up of editorial and word of mouth and people finding out about us, people have started to say, ‘Actually there’s something here.’ I seriously think it’s a combination of talk about the brand and absolutely, suddenly getting that product right. It’s got so much better, it’s got so much more confident, and it’s got a real point of view.
BoF: So tell me. If you were going to describe the Whistles of the past, how would you describe it?
JS: I would describe it as a slightly boho, pretty, slightly girly-frilly brand. Most of the customers when I first went round the stores — when we bought into the brand — most of them had grey hair, which is fine, but it led me to believe that it was an older customer base and there weren’t any new, younger customers coming into the brand. And that worried me.
Even right from the start, we knew we wanted to change it from what it was to what it had once been, which was an interesting, aspirational, contemporary brand. I didn’t think it was anymore. It had lost it’s relevance. The whole boho trend was quite enduring and maybe they mistook a trend for an identity.
BoF: It’s interesting you bring up the boho trend. And you bring up that frilly, girly thing. The real proponents of that trend were Stella McCartney and Phoebe Philo at Chloé. But when Phoebe Philo took over at Céline she took a completely different approach. One might say that the aesthetic point of view of the new Whistles is a similar kind of sleek, minimalist, tailored and professional look — but at much more accessible prices.
JS: We are a team and we’ve worked together for a long time. This is the kind of aesthetic that we’ve all had for a long time. We have always fought against the overtly girly and sexy thing, because it doesn’t work for us. I think it’s a luxury that we are able to create something that’s exactly what we feel is right — and that people want to buy it. And I think there is a lack of it in the marketplace. There are not that many people doing it.
BoF: Especially at the price point…
JS: Certainly, when we started, we identified that there was a gap in the market for grown up fashion; for contemporary, effortless, laid back fashion —not classic. There were a lot of people in that premium price point that were doing classic things, but they had an identity that really didn’t change that much from season to season. We aren’t about that. We are about fashion. We are really excited by it and appeal to customers who are excited by it, not necessarily people who just want to slightly update their wardrobe each year.
BoF: It’s interesting that you say that. Conventional wisdom about this tough economic environment says that what’s performing are luxury brands at the very top end of the market and brands at the very low end, say Primark — really accessible, super cheap, fast fashion. But you’re resolutely positioned in the middle and the results demonstrate that it’s working for you. Is conventional wisdom wrong?
JS: Maybe it is? I’m a firm believer that conventional wisdom is usually wrong and you can prove it. I’ve been in this business, as has my team, for a long time and I think, instinctively, we knew that there was something that was lacking, something that women wanted that wasn’t there. You have to take risks sometimes and say ‘I think this is the case’ and try it — rely on your instincts. We did that to an extent with Topshop.
BoF: Topshop is really fast fashion. You were one of the early proponents of that model. Where do you see it going now?
JS: It’s never going to go away. I didn’t start fast fashion. Fast fashion has been with us for a long time. When I started at Topshop, they were buying from UK manufacturers and turning things around in 4 weeks. I don’t think it’s going to go away, because I think that, more and more, as people see things, they want them immediately. I don’t see instant gratification waning at all.
BoF: When you were at Topshop you were very close to the product. It’s not that common in the fashion industry that the CEO is so involved with product. Tell me, what role do you play with regards to product and design?
JS: I call myself a product person, but I’m not a designer, nor have I ever been. My role is to establish the creative direction of the brand and then to articulate that to the team. My role is very much of someone who is sort of nudging it to the left or to the right and making sure it’s still adhering to our original vision; and making sure that we are pushing a little bit further and not falling behind. That’s my role. And also articulating the message to the customer, in terms of building the brand and positioning the brand in everybody’s minds. That’s pretty much what I do, as well as considering where we think the brand needs to go next in terms of strategy.
BoF: Now that you’ve sorted out the logistics and back-end, and you’ve honed the product, it seems like the next stage is a pretty ambitious store opening and retail development strategy here in the UK and internationally.
JS: In the UK, the store portfolio that we took over was mixed. There are some great stores, but also some that didn’t work and probably weren’t the right stores for the brand. So we’ve identified gaps in the UK market and there are a lot of gaps within London itself, within London commuter towns and bigger cities throughout the UK. We’ve opened 8 stores to date this year and we’ve identified another 15 more stores in the UK and not much more than that. We have also confirmed that we will open a flagship on Dover Street [in London’s Mayfair district] in mid-January, which gives us an opportunity to really showcase the collection to international buyers.
Internationally, we have to be in Japan, because that’s the most exciting market there is. We have done a small collection that will go into Beams for Spring/Summer 2013 and then we will just sit back and watch it. It’s too soon for us to go straight in there now, so we will do that on a wholesale model. But because we are retailers we can keep dropping product — there’s always newness coming through. Our sell-throughs are always 60 to 70 percent.
We’ve been doing wholesale at Podium in Moscow for a year. Same thing. And they would like us to go into another store, Tsvetnoy Central Market. It’s fantastic. It’s like the future of shopping. This is a young, dynamic and fast moving customer. We’re also opening a concession in Printemps in Paris in December. And we are looking at America too.
BoF: How frequently are you dropping product for these wholesale deals?
JS: Every 3 weeks or so.
BoF: Really? So that’s like 15 to 20 drops per year?
JS: You have to. The only way it’ll work is if the customer is seeing something new. If we can make it as close to the model that we have in this country, then I think it’s got some chance of success.
BoF: Let’s talk about the so-called ‘Kate Middleton Effect’. Clearly, there is a brand visibility effect and people in countries where Whistles isn’t even present will all of a sudden be asking “What’s Whistles?” But I’m more interested to know about the real business impact, the impact on sales… And I don’t know the extent to which you can actually track or describe it.
JS: She wore a blouse [in the royal engagement photos] which was actually from a few seasons ago, which we weren’t running. So in that instance, it raised profile certainly, but it didn’t do anything for sales. We had a lot more people visiting our website.
I suppose the biggest impact has been on a dress she wore at the [Olympic] Opening Ceremony. It’s a style that’s been very successful for us anyway — a printed silk dress. That weekend, we sold out of it. Well, of what we had.
The thing is that we don’t do huge runs of anything. We might have sold out of it, but there might only have been 150 units. People still ask about the ‘Bella’ body con dress she wore from Whistles. We have a lot of customers who phone up and ask for it. And, to be fair, every time we have done that dress in a different print, it’s sold out, but I couldn’t say it lifted our total sales by 50 percent that week, because it didn’t.
BoF: That’s always been my hypothesis, because you see these outrageous headlines, saying things like ‘The Kate Effect’ has a 1 billion pound impact on the fashion industry and I wonder, who’s coming up with these numbers?
JS: It raises profile, it’s great, we get known in countries we’re not known in. But it’s not going to turn us into a success overnight because she wears it. Fortunately, she looks great in it and it’s a great advert, but no more than that.
BoF: So where does Whistles go from here?
JS: We are starting our international expansion. We are starting with Europe and the US. Moving into department stores, first of all, but not in a hurry. I don’t want to make any mistakes and I also want to find out which markets work and which don’t.
In five years time, I hope we would be in a department store in the US and have a couple of our own stores. I’m not sure I see the necessity to open that many stores, especially with online being as strong as it is. I think nowadays if you’re in the right department stores, you can have a couple of stores. You don’t really need to open hundreds of stores across the country.
I think that Australia has got to be a huge market for us, but we are going to leave that for another year. Online, the conversion there is already the highest of any other country. In a year, our [total] online [sales] have doubled as a percentage of the [overall] business. It just seems to keep on growing. We are doing a re-design of our site right now which will launch shortly. Our current site is good, but it lacks content; it’s basically a selling site and not much more, so we are launching a much bigger and more flexible site. I think online is tremendously exciting.
CEO Talk is BoF’s forum for in-depth discussions with the fashion industry’s global decision makers, conducted by founder and editor-in-chief Imran Amed.