The Littlewoods Organisation PLC

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The Littlewoods Organisation PLC

JM Centre
Old Hall Street
Liverpool L70 1AB
United Kingdom
(051) 235 2222
Fax: (051) 235 2670

Private Company
Incorporated: 1923 as Littlewoods Pools
Employees: 30,000
Sales: £2.37 billion (US $4.57 billion)

The Littlewoods Organisation PLC (Littlewoods) is the largest privately-owned family company in the United Kingdom, with shareholders investment valued at £753 million. It was started in Liverpool in 1923 as a football (soccer) pool business by John Moores and two partners, all of them then full-time employees of a telegraph company in that city. The name Littlewoods Pools was chosen to conceal their involvement from their employers. After a loss-making first season the other two withdrew, but Moores held on, assisted by other members of his family and, in particular, by his brother Cecil, who joined the business. John Moores entered retailing in 1932 with a mail-order business and in 1937 opened the first Littlewoods chain store. The three businesses prospered. Two more were started in 1985, as we shall see, after Sir John Mooreshe was knighted in 1972had called in non-family executives to take over the day-to-day management of the Organisation. By 1990 the groups turnover had reached £2.37 billion. At the end of 1991, the whole concern was still owned by the president, Sir John Moores, aged 95, thirty-two other members of the Moores family, and related family trusts.

In and after the 1920s, with large corporations already starting to dominate the British economy, promising niches offering opportunities for rapid growth from ploughed-back profit were relatively rare for those lacking capital. That John Moores hit upon football pools at the beginning of the 1923-1924 playing season was a most timely stroke of good fortune. The Cup Final, held at Wembley for the first time earlier that year, had drawn much attention to Association Football, which soon developed into a well-supported working-class spectator sport on Saturdays and a topic of conversation for the rest of the week. Wage earners disposable incomes, though still small, grew rapidly in those years, and a business which gavethem an opportunity to place small bets did not have difficulty in attracting some of this surplus. Sales of sixpenny postal orders reached unprecedented heights as a normally weekend sport became an even more popular weekday pastime offering the chance of winning more than even the most thrifty wage earner could ever hope to save in a lifetime: £13,000 was laid out on a penny bet in one instance during the 1930s.

John Moores was born at Eccles near Manchester in January 1896, the eldest of four sons in a family eventually to number eight children. He left school at 14 to work as a messenger boy at the Manchester Post Office but was soon accepted in a course at the Post Office School of Telegraphy. This enabled him, in 1912, at 16 years of age, to join the Commercial Cable Company as a junior operator. After World War I, in which he served as a wireless operator in the Royal Navy, he rejoined Commercial Cable and in 1921 was posted from Liverpool to Waterville, the companys base near the southwest tip of Ireland, where he started a private business on the side supplying goods to company colleagues and to the local golf club. Posted back to Liverpool, his keenness to start his own business as great as ever, he tried again, this time with two partners and with a football pool.

How this came about, and the extent to which John Moores was himself an innovator, it is impossible to say, as no biography or any serious history of Littlewoods has been written. It is quite clear, however, that he and his two partners, Colin Askham and Bill Hughes, entered the business when there was only one small, struggling competitor and little capital was neededeach partner put in £50 originally and later another £50. Having weathered unprofitable beginnings, Littlewoods Pools emerged as clear market leader because of its organizational skill and attention to detail in the regular dispatch of coupons early each week, careful checking of the results after the Saturday matches, the handling of an increasing number of small paymentsand the larger number of winnings. Growth needed to be at a pace to fund the all-important promotional expenditure required, but overhead was relatively cheap: no prestigious high-street premises were required for a postal business.

Football pools appealed mainly to men. To appeal to women, Littlewoods Mail Order Stores were begun in January 1932 when Great Universal Stores (GUS), an established mail-order business in nearby Manchester, was in trouble. Britain was soon to start climbing out of the deepest trough of depression again the timing was rightand Moores offered an element of chance in a venture aimed mainly at working-class women who were prepared to lay out a small cash sum each week to buy goods for themselves or their families. This was a logical diversification of the existing business. Besides taking advantage of Littlewoods already familiar household name, it also built upon the organization and experience gained in postal pools and on John Mooress earlier experience of direct selling in Ireland. Again, nothing was spent on retail outlets, for the business, like GUS, operated on the club principle whereby the many local organizers, working from their own homes, recruited others nearby who paid a small weekly instalment in cash for goods shown in a catalog. A £1 club, for instance, consisted of 20 members who each paid a shilling a week. A weekly draw provided the element of luck, the first winner securing her purchases at once and the others in their turn. There were also £2 and £3 clubs on the same principle. The first catalog ran to 167 pages. The initial cost of launching what was to become an extremely successful enterprise was £20,000.

Mooress venture into chain-store retailing in the mid-1930s was well-timed, too, for the British economy was moving up to a prosperous peak in 1937. Real earnings were growing fast and unemployment was falling. Entering chain-store retailing was a further logical step that took advantage of buying experience and contacts gained in the the mail-order business; but this time it did involve costly high-street premises and competition with well-established chain stores which also offered competitively-priced goods, notably Wool worth and Marks & Spencer. It was altogether a much more costly operation than the two previous postal businesses. The new stores, however, could depend not only upon the familiar Littlewoods name but also on providing basic and serviceable goods at keen prices without undue regard for passing fashion. The first store was opened in Blackpool, Britains most popular working-class holiday resort, in 1937. By 1939, 24 stores had been opened in various parts of the country.

By then the Moores family had already amassed considerable financial strength. A fine new building, put up on the outskirts of Liverpool as its Pools headquarters, became the postal censorship center during World War II. Other premisesthere were 16 by 1944produced barrage balloons, parachutes, rubber dinghies, and Wellington bomber fuselages, as well as 12 million shells and 6 million fuses.

Immediately after the war the renovation of the stores and the building of new ones were made difficult by building controls. Soon, however, shoppers habits and tastes were changed by what has come to be called the Retailing Revolution: vastly increased purchasing power and the spread of consumer durables, including motor cars. There were nevertheless 52 Littlewoods stores in operation by 1952, more than twice as many as there had been in 1939, 70 by the mid-1960s, 108 in 1984 and 122 in 1990. They are located throughout the United Kingdom, from Belfast to Norwich and from Inverness to Truro and sell hard-wearing clothing, household goods, food, wines, and spirits; most also have restaurants. Over a third of mothers with young children are said to shop there at least once a month.

In 1953 John Moores, quick to recognize the advent of the credit-buying society, launched Brian Mills, a company based in Sunderland, which supplied goods to customers before any payment was made. Not surprisingly, this made the older club method of mail-order less popular. A second credit mail-order firm, Burlington, also based in Sunderland, was added in 1958 and a third, Littlewoods Warehouses, Liverpool, in 1960, the year after the original business had been renamed the John Moores Home Shopping Service. A fifth credit company, Janet Frazer, was opened in Sunderland in 1964 and a sixth, Peter Craig, followed in 1968.

When he retired from the chairmanship in 1982, Sir John Moores brought in as his successor the first non-family chaiman, John Clement, from the dairy business Unigate. Clement, in his turn, recruited as group chief executive Desmond Pitcher, a Liverpudlian and high-technology communications expert, a former employee of Plessey. The Group Board in 1990 was comprised of Sir John, president, his four children, and other non-family members. Some of Sir John Moores and Cecil Mooress grandchildren sat on the divisional boards. The new regime reorganized Littlewoods finances and in 1985 started Index, a catalog shop operation which later became a separate division. By 1990 there were already 50 of these shops within existing Littlewoods chain stores and a further 46 on their own sites. The second new venture, also started in 1985, was Credit and Data Marketing Services (CDMS), a credit and information business that operated in retail finance, financial servicesmainly general insuranceand marketing. A property company, Centreville Estates, formed jointly with P&O Property Holdings, was added in 1990, to which each concern transferred a small number of its premises of equivalent value.

By opening two shops in St. Petersburgs main shopping street in October 1991, Littlewoods became the first major Western retailer to operate in the Soviet Union. These shops were Anglo-Russian ventures, the first selling (for Russian currency) mens and womens clothing to Western standards and the second a hard-currency business dealing in electrical and photographic goods, beauty products, clothing, wines and spirits, and food.

The relative importance of the different parts of Little-woodss extensive businessstill located in Liverpool and more dominant there not only because of its own development but also because of the disappearance of most of the citys port activitycan best be seen from a glance at its trading results for 1990. The Home Shopping Division, no longer a club enterprise but a sophisticated and highly automated credit system depending increasingly on telephone orders, produced the largest turnover, £933 million, and profit, £53.5 million. Only GUS, with 40% of the U.K. market, was ahead of it. Next came the chain stores, with £623 million turnover and £29.4 million profit. Of the new ventures, Index had the larger turnover, £153 million, but was not yet in profit. CDMS, on an income of £18.6 million, had a profit of £1.8 million. The combined retail sales for all divisions was £1,731 million, with profits of £83.6 million. Much less financial information is known about Littlewoods Pools, the foundation upon which the whole Littlewoods Organisation had been built. It could still claim 77% of the U.K. pools business. The largest prize or dividend as the company prefers to call itwhich had been paid out at the beginning, in 1923, was £2 and 12 shillings. In 1991 Littlewoods paid out over £2 million for a prize, far more than its other U.K. competitors. It distributed £170 million in prize money altogether in the season ended July 1990.

Littlewoodss football pools operations were threatened at the beginning of the 1990s by a campaign to introduce a national lottery. With over three-quarters of the British pools market, the company responded by proposing an arts and sports foundation to which it would contribute, alongside two other U.K. pools companies, Venions and Zetters. The foundation was launched at the end of July 1991 for the start of the football season in August. The Chancellor of the Exchequer reduced pools betting duty from 40% to 37.5% for an initial period of four years with the 2.5% difference being made available to the foundation and expected to be worth around £20 million a year. In addition, the pools companies will contribute roughly £40 million annually.

In the recession that marked the beginning of the 1990s, Littlewoods proved the resilience of its retailing methods by producing a 46% increase in pre-tax profits in 1990, in contrast to the downward trend of most of the major U.K. retailers.

Principal Subsidiaries

Littlewoods Home Shopping Division; Littlewoods Warehouses Ltd.; John Moores Home Shopping Service Ltd.; Brian Mills Ltd.; Janet Frazer Ltd.; Burlington Warehouses Ltd.; Peter Craig Ltd.; Imagination Homeshop Ltd.; M.C. Hitchen & Sons Ltd.; The International Import & Export Company Ltd.; Peter Harris Ltd. (Hong Kong); The Littlewoods Organisation (Far East) Ltd. (Hong Kong); Littlewoods Chain Store Division; J & C Moores Limited; Credit & Data Marketing Services Ltd.; Index Limited; Littlewoods Pools Partnership.

T. C. Barker