Plagued by multi-million dollar losses and sagging customer loyalty, lingerie chain Bendon Group was facing liquidation before a management buy-out this year. Bendon's co-owner and CEO Anna Johnson talks to Jane Phare about plans to breathe new life into the iconic brand.
It's been a tough five months since Anna Johnson took the plunge and bought ailing iconic brand Bendon in a management buy-out from the Australian-based Naked Brand Group.
She and co-owner Justin Davis-Rice, chairman and CEO of Nasdaq-listed Naked, got a good deal but Covid-19's Delta leaks in both New Zealand and Australia have put a major dent in the recovery plan.
Running the company from her Murrays Bay home during lockdown, Johnson doesn't mince words. It's been tough since the April buy-out. With 36 retail and outlet stores shut in New Zealand, and 23 stores in Australia affected by lockdown for three months, it's been "really difficult," she says.
Johnson and Davis-Rice bought Bendon from Naked for a token $1. It was a deal which forgave a $40 million loan and left them with Bendon stock and "some cash". They are also able to draw down on a $7 million loan facility at an interest rate that is "less than five per cent".
The sale cleaned up Naked's balance sheet, getting rid of a bricks-and-mortar operation which had run up losses of $78.9m in the previous three years, and was facing liquidation.
Johnson acknowledges it's been a rough few years for Bendon, a financial struggle for an iconic Kiwi brand launched nearly 75 years ago by brothers Ray and Des Hurley on Auckland's North Shore. Their aim was to make comfortable underwear for women.
"They wanted lingerie to 'bend on' a woman's body, and that's where the name came from," Johnson says.
They called the company Hurley Bendon, determined to free New Zealand, and later Australian, women from restrictive wire and bone foundation garments. It is that original intention that Johnson wants to revive by producing and promoting a range of lingerie that is comfortable to wear, caters for different shapes and sizes, and is good quality.
But right now she owns 25 per cent of a retail business that has been largely closed on both sides of the Tasman.
"To manage the ongoing fixed costs, which don't go away, as well as try and ensure your teams are okay and engaged, with potentially only 20 or 30 per cent of your revenue, is very difficult."
It is, Johnson says, an extremely stressful time, just when her management team had launched a plan to get Bendon Group's brands back as market leaders. As a result of the Naked buy-out deal, Bendon's balance sheet is strong, she says, but it's not going in the right direction. The three-to-five-year plan to grow the brand and the business, invest in IT and drive revenue has stalled.
Included in that plan was New Zealand Fashion Week, where a diverse range of models would showcase Bendon underwear, the first time the company had taken part in the event.
Fashion Week, cancelled last month when Covid-19 leaked into the community, was to be a relaunch, part of a "rebirth" of the seven brands including Bendon, Me by Bendon, Pleasure State, Lovable, Bendon Man, Davenport and the 90-year-old brand for the fuller cup size, Fayreform.
An "enormous" amount of behind-the-scenes work, including casting models to include a range of sizes, ages and backgrounds, is now on hold. In fact, a fair bit of the business is on hold. Bendon's 2021 message to women is 'come in and get properly fitted,' something Johnson says women should do every 12 months because body shapes change. Those fittings can't take place until the stores are fully open.
But Johnson, 50, is holding her course. The Herald interview is the first one she's done in her life and she handles it well. She's used to hard work and sees no reason that the rebuilding Bendon plan won't work.
She cut her teeth in retail with Harvey Norman for 20 years, first in Australia and later as general manager for the group in New Zealand. A working mother with a daughter and two sons, she clearly remembers the birth of her eldest son 22 years ago.
It was 1999, the year of the Y2k conspiracy theory which went along the lines of 'computers will stop working and it'll be the end of the world.' Johnson was running her first Harvey Norman computer electronics franchise in Queensland's Bundaberg when her son was born that year.
"He was born in the biggest month ever in the history of the company. So I had an emergency caesarean, unfortunately, and I was back at work in 10 days. I was handing the baby over to the customers."
Eighteen years ago she was "sent" to Auckland to sort out Harvey Norman, a household name in Australia but struggling in New Zealand. The company's six stores were losing large amounts of money so Harvey Norman sent in the cavalry.
Johnson was put in charge of Wairau Park and, in a short time, tripled the business and turned a profit. She was offered the executive general manager role in New Zealand, a job she did for five years. It was those years with Harvey Norman that prepared Johnson for what lies ahead of her now, owning and running her own business.
"It's ingrained in your DNA to treat every business that you walk into as your own, every dollar as your own, every decision as your own, and the cascading consequences. You get paid for what you deliver. It certainly hasn't done me any harm in regards to the business knowledge."
Apart from Harvey Norman, Johnson had a stint with Bendon and 18 months as executive general manager of operations with The Warehouse Group, overseeing $1 billion of revenue and 93 Noel Leeming and Torpedo 7 stores.
In late 2018 Johnson returned to Bendon, once majority-owned by embattled businessman Eric Watson, which by then had merged with Naked Brand Group. By the time she took over as Bendon's CEO, Naked had been on a major "rollercoaster ride," saved from deep trouble only by Reddit-driven mania which pushed the share price up earlier this year.
"The company bit off more than it could chew going public. It had a large amount of debt that was not retired when it listed. It had built an infrastructure globally for growth and failed to raise the capital to fund that model."
Johnson's job became part rescue mission, part rebuild. The brand was ailing, losing money, it had supply-chain issues and had lost touch with its core business.
The faces of Bendon – supermodels Elle Macpherson and, to a lesser extent, Heidi Klum – had done well for the brand but it was time to get back to the Hurley brothers' original intention: to make comfortable underwear for everyday women.
Johnson says the company never stopped doing those styles but the message got lost in the glamour.
"Under the old regime, and rightly or wrongly under a male-dominated lens, it's always been the Pleasure State or Elle Macpherson or Heidi Klum that have had most of the spotlight."
Although many of Bendon's Macpherson and Klum lingerie designs are still available as part of the Me by Bendon range, there won't be a 2021 version of "The Body." The days of the celebrity-led brand are not as relevant today, she says. "They (women) still want aspirational but they also want real women like them."
The hard work to save Bendon began before Johnson and Davis-Rice bought the company. In the past three years, operations have been centralised back to Auckland and offices in the US, the UK, Hong Kong and Sydney have been closed. Now the senior Bendon team are all women apart from one man, and the business has been simplified.
"Why do we need 12 different black lace bras in a season? What do each of them do? And how can we make the choice a lot easier and more comfortable for a woman when they come into the store or they're searching online?"
Supply chains and stock issues have also been sorted but that means the bills are "coming in thick and fast," she says. "No-one can afford to sit on working capital for a long time."
Shipping is an issue, with costs increasing enormously to bring in stock from offshore factories, and the workload has increased at the Auckland end.
"You're continuously getting bumped off boats, and having to start the whole process again of finding another ship and another container."
That means the marketing plan needs to be constantly tweaked because of shipping delays in an industry that already has long lead times.
"It's about an 18-month process from start-up design to actually seeing your product on the floor."
It's a "slow ship to turn" and although Johnson is optimistic that she can turn Bendon around and make a profit, she admits it'll be a long journey, particularly with Covid-19 in the mix.
"We need to be more robust if we're going to continue these lockdowns. In business terms, it is an extraordinary amount of time to deal with closed doors and no revenue."