Stirling Group plc
Stirling Group plc
Atlantic Street, Broadheath
United Kingdom Telephone: +44 161 926 7000
Fax: +44 161 926 7029
Web site: http://www.stirlinggroup.com
Incorporated: 1973 as Stirling Knitting Group
Sales: £170 million ($285 million) (2003)
NAIC: 315230 Women's and Girls' Cut and Sew Apparel Manufacturing; 315220 Men's and Boys' Suit and Sew Apparel Manufacturing; 423220 Home Furnishing Merchant Wholesalers; 423920 Toy and Hobby Goods and Supplies Merchant Wholesalers; 423940 Jewelry, Watch, Precious Stone, and Precious Metal Merchant Wholesalers; 423990 Other Miscellaneous Durable Goods Merchant Wholesalers
Stirling Group plc provides clothing design and manufacturing services, as well as sourcing services for a variety of goods to retailers, especially department store groups. Stirling's clothing design and manufacturing operation, Bentwood, has long specialized in contract production of lingerie and swimwear, but also outerwear and other clothing items. After more than 50 years working in the shadows as a leading clothing supplier to the Marks & Spencer department store group—which for some time was Stirling's only customer—Stirling has begun to emerge into the spotlight through a two-pronged strategy. On the one hand, the company has begun to acquire its own range of clothing brands, although remaining close to its core specialty of lingerie and swimwear. As such, the group has targeted the swim and surf market, acquiring popular "board" brand Headworx (Europe) and the "women-only" surf brand Voodoo Dolls, together with its younger variants V Dolls and iDolls. The company also owns the Over The Top lingerie brand. The second prong of the company's strategy has been to expand into the sourcing market—that is, acting as a go-between for Western retailers for their Asian purchasing and contract-manufacturing needs. As part of this effort, Stirling owns Tamarind International, based in Hong Kong and Shanghai, which sources a variety of goods, including luggage, toys, and other items, in addition to providing support for the group's Bentwood division. Formerly a publicly listed company, Stirling was taken private in a management-led buyout in 2003. Steven Bentwood is company CEO. In 2003, Stirling's revenues reached £170 million ($285 million).
Partnering for Growth in the 1950s
By the middle of the 20th century, Marks & Spencer had already established its reputation as one of the United Kingdom's top retailers. Founded by Michael Marks in 1884 as a simple stall at the Leeds market, the business moved into its first retail shop in 1893. The following year, Marks teamed up with partner Tom Spencer, creating British retailing history.
Originally based on a five-and-dime style concept, Marks & Spencer added textile sales—starting with hosiery—in the early 1920s. By the end of the decade, Marks & Spencer had begun developing a full range of goods. This led the company, then under the leadership of Marks's son Simon Marks, to launch its own brand, St. Michael, in honor of the company's founder, in 1928. The first St. Michael-branded products were pajamas and other knitwear. With its offering of quality goods at discounted prices, Marks & Spencer had revolutionized British consumer retail. In the 1920s, Marks & Spencer revolutionized the business end of the sector as well, launching a policy of buying directly from manufacturers.
This new policy led to the growth of a new class of clothing manufacturers dedicated to supplying Marks & Spencer as it expanded throughout the United Kingdom and into other parts of the world. Among these partner manufacturers was Stirling Knitting, launched in the 1950s by George MacDonald. Based in Southport, Stirling specialized in producing women's and children's knitted clothing, such as jumpers (sweaters) and cardigans. The majority of Stirling's production was specifically for Marks & Spencer, and sold under the St. Michael label.
Marks & Spencer did not simply place orders with manufacturers. The retailer took an active interest in the production process itself, encouraging manufacturers to adopt the latest production techniques in an effort to increase quality and decrease cost. Marks & Spencer also worked with its suppliers in the introduction of new fabrics and prints. Stirling Knitting itself expanded from its clothing production to add its own fabric manufacturing operation. This expansion led the group to go public, with an offering in 1960.
Stirling Knitting remained a small company through the 1960s—by 1970, its revenues were less than £500,000. The company's intimate relationship with Marks & Spencer left it vulnerable to downturns at the retailer, and in the early 1970s, Stirling itself faced a number of difficulties, including slipping sales. By 1971, the company's revenues had dropped to just £436,000.
Acquisitions in the 1970s
Despite its problems, compounded by the loss of George MacDonald, who had served as company chairman, Stirling began to expand its operation at the start of the decade. In 1971, the company built an extension to its factory in order to expand its production capacity. The following year, the company acquired additional facilities by paying £75,000, as well as granting shares, to H&T Miller. That acquisition was followed up by the purchase of the Bodycote Knitwear Division from Bodycote Plc.
In that year, MacDonald's widow sold off the family's 56 percent stake in the business to Maurice Goldstone, who headed another fabric group, Kerrybrook Knits, in a deal that valued the entire company at £350,000. Goldstone then bought up the remainder of the company's shares, de-listing it from the London stock exchange.
Under Goldstone, Stirling continued to expand, notably through the acquisition of Bentwood Bros., owned by Peter and Henry Bentwood, for a cash and shares consideration worth nearly £600,000. Manchester-based Bentwood Bros. added to Stirling's operation by extending its range of goods to include Bentwood's women's outerwear specialty. The purchase also brought the Bentwood family into Stirling's management for the first time.
Stirling now went on an acquisition spree, starting with the purchase of Standard Knitting Company in 1973. That company, which had been in receivership, gave Stirling additional fabric knitting capacity at a cost of £100,000. Yet that acquisition proved to be only the first of many that year, as the company sought out a number of new, small-scale textile manufacturers, including Weston Street Mills, Rossiter Knitwear, Henshaw Knitwear, Gee Knitwear, Aeros Textile Exports, Rellimac, and others.
In this way, Stirling sought to reduce its costs, in part by boosting its bulk purchasing power, in part by rationalizing the production and distribution process among its new acquisitions. The series of acquisitions also allowed Stirling to reposition itself as a provider of a complete range of knitwear to retailers and wholesalers. At the same time, the company reduced its dependence on Marks & Spencer, attracting a new range of customers among department stores and mail-order businesses. Nonetheless, Marks & Spencer remained Stirling's primary customer.
Following its buying spree, the larger Stirling returned to the stock market, re-listing its shares on the London exchange, while changing its name to Stirling Knitting Group. Yet Goldstone, who had transformed the company from a small-scale operation to a full-scale and internationally operating business—including manufacturing operations in Canada—was himself forced to resign in a management shakeup at the end of 1973. Goldstone sold off his shares, which were acquired by Peter Bentwood and other members of the management team.
Stirling exited fabric manufacturing in 1974 in order to concentrate on building its clothing manufacturing operation. In support of this, the company made a new acquisition of textiles group D. Verblow, in 1978. Stirling's growth continued through the 1970s. By 1974 the company posted revenues of £4.6 million, which more than doubled to move past £10 million at the start of the 1980s. By then, the Bentwood family continued to acquire shares in Stirling and by the middle of the 1980s had gained effective control of the company.
Adding Brands for the New Century
Marks & Spencer's strong growth—which included its move into the United States with the acquisition of Brooks Brothers—in the 1980s encouraged Stirling to hitch its own growth more firmly on the retail group. In 1985, the company launched a new acquisition drive, this time targeting other manufacturers in the Marks & Spencer supplier pool. The first of these came that same year, with the purchase of B. Fortster & Co., for £3.5 million. That acquisition added a new range of women's and children's clothing and sales of nearly £10 million to Stirling. Another significant purchase came with the addition of Ritz Design—that acquisition helped transform Stirling's focus away from the general textiles market to a greater focus as a specialist in lingerie and swimwear. By the middle of the 1990s, Stirling had emerged as one of the top three suppliers to Marks & Spencer.
Stirling Group Plc has shown its commitment to expanding its product base this past year with the acquisition of exciting, vibrant brands that bring a whole new dimension to this highly focused forward-thinking organization. While the Group's core values stay focused firmly on innovation, excellence of service, and enduring business partnerships, Stirling has made a significant step towards embracing new opportunities in both its manufacturing sectors and also its move towards the consumer. Its vision, which combines multi-disciplinary capabilities in a wide range of international markets and operating environments, is to continue this expansion and acquisition objective. At the same time, quality service remains a crucial factor, and the Group will work even more closely with its long term business partners to ensure outstanding customer service and profile our unique capacity for business innovation.
Yet like much of the British clothing sector, Stirling suffered through the recession of the 1990s and its extended effect on the British economy through much of the first half of the decade. After slipping into losses during the first half of the decade, the company managed to pull back into profitability by 1996. Yet its low share price exposed it to possible takeover. Instead, the Bentwood family, now represented by Steven Bentwood, bought up additional shares in the company, shielding it from unwelcome bids.
Stirling's troubles nonetheless continued through the end of the decade. Marks & Spencer's own problems cast a shadow over Stirling, as the retailer found itself confronted with a rising number of new and more aggressive retailers, both from U.K.-based groups, and from fast-rising international businesses such as Zara, Benneton, H&M, and others. Meanwhile, Marks & Spencer's international division was failing, leading the company to exit a number of markets, such as Paris, by the beginning of the 2000s.
Stirling itself bore the brunt of much of Marks & Spencer's problems. At the same time, the company found itself under growing pressure to follow the U.K. textiles sector trend in delocalizing its production base to lower-cost marks in Asia and elsewhere. Stirling attempted to resist at first, asserting its commitment to maintaining its production in the United Kingdom, and even set out to buy up factories that had been abandoned by other manufacturers.
Yet at the end of the decade, Stirling became threatened by the loss of part of its business with Marks & Spencer. The retailer, in an effort to revitalize its operation, had decided to drop its St. Michael label—or rather, convert it as a "quality guarantee"—and instead began adopting a designer brand focus in line with the prevailing retail and consumer trend. As part of that process, Stirling found its role within the Marks & Spencer supply network reduced to just the lingerie, underwear, and nightwear sections in 1999.
In response, Stirling set out to transform its own business. The company's first move was to increase its ability to provide products from Asian markets, and in 1999 the company paid nearly £12 million to acquire Tamarind International, a sourcing group based in Hong Kong. Tamarind provided intermediary services, acting as a liaison between Asian contract manufacturers and Western wholesalers and retailers. The acquisition of Tamarind, owned by Joe Lewis, the fourth richest person in the United Kingdom, also gave Lewis a stake in Stirling. Following the acquisition, Stirling began an effort to increase Tamarind's margins by transferring the bulk of its operations to the Chinese mainland in Shanghai.
While the Tamarind acquisition enabled Stirling to reduce its reliance on its U.K. manufacturing park—the company began shutting down most of its U.K. plants in 2002—the company also had begun plotting a second prong to its future growth strategy: the acquisition and development of its own branded clothing.
The company's first brand acquisitions came in 2001, with the purchase of noted Australian surf and "board" brands, the sport-oriented Headworx and the "women-only" surf and swimwear brand Voodoo Dolls, previously owned by Mecca Group Pty Ltd. The following year, Stirling added another line, the high-end lingerie, nightwear, and swimwear brand Over The Top, which was placed under a newly formed subsidiary, O.T.T. International.
By the end of 2003, Stirling's sales were showing new growth, rising from less than £160 million to more than £170 million. Yet the company's share price remained depressed as part of an overall investor disaffection for textile stocks. In response, Stirling decided to remove its listing from the London stock exchange for a second time. In September 2003, Steven Bentwood and the management members formed a new company, Potter Acquisitions, and, backed by LDC and the Bank of Scotland, bought out the company in a deal valued at some £60 million. Free from shareholder demands, Stirling now prepared to continue its transformation into a branded products group in the new century.
Bentwood Ltd.; Headworx (Europe) Limited; O.T.T. International; Tamarind International Inc. (Hong Kong).
- Stirling Knitting forms as supplier of knitwear to the Marks & Spencer retail group.
- Stirling lists on the London Stock Exchange.
- Stirling acquires H&T Miller for £75,000; Bodycote Knitwear Division is acquired.
- Maurice Goldstone buys control of the companyand launches it on an acquisition spree that includes Bentwood Bros.
- Goldstone sells his stake in Stirling to Peter Bent-wood and others.
- The company acquires D. Verblow.
- Controlled by the Bentwood family, Stirling begins a new acquisition drive targeting other Marks & Spencer suppliers, such as B. Fortster & Co.
- Stirling acquires Tamarind International.
- Steven Bentwood leads a management buyout of Stirling, de-listing the company from the London Stock Exchange.
Burney, Ellen, and Sarah Harris, "Surfin' UK," WWD, August 7, 2003, p. 36S.
"Clothing Group Stirling Considers Going Private As It Sinks into the Red," Independent, December 5, 2002, p. 25.
Feddy, Kevin, "Stirling Put Up for Sale at BP 60m," Manchester Online, September 23, 2003.
Rivlin, Richard, "Joe Lewis Takes Stirling Stake," Financial Times, July 14, 1999, p. 20.
Robert, Patricia, "Stirling Stuff in the Lingerie Department," Manchester Online, February 10, 2004.
"Stirling Plans Life After M&S," Financial Times, December 10, 1999, p. 26.