Making the Wright moves in retail

Like father, like son, they say - and some seem to go out of their way to prove the old adage true.

December 21, 1982. The New Zealand Herald reports the buyer of an 8.75 per cent stake in Hallenstein Bros has been identified as rival menswear retailer Hugh Wright. The shares were purchased as a "long-term investment", says Wright, while a Hallenstein executive says the board isn't treating the development as a "crisis situation" as it regards the move as friendly.

September 13, 2005. David Wright, son of Hugh and founder of successful womenswear chain Max Fashions, discloses the purchase of a tranche of 1.3 million shares in Hallenstein Glasson has pushed his stake to 7.1 per cent. Hallenstein shares post their biggest one-day gain since January on takeover speculation - but analysts note Wright first began buying in mid-2000 and regard his stake as a long-term investment.

For a man who has largely stayed out of the public eye, there has been no escaping the interest in David Wright that has been generated by the Hallenstein purchase and subsequent foray into the shares of ambitious vodka-maker 42 Below.

The only profile previously published on him - a Canvas cover story in 2003 - describes him as reticent. "Getting answers out of him is as laborious as getting a really bad wine stain out of your favourite cream-coloured wrap-around shirt," the reporter wrote.

Which is interesting, because despite being described as media shy, and turning down (after some negotiation) the chance to contribute to this story, Wright was forthcoming enough some months back when he bought the New Zealand master franchise for Boost Juice Bars.

"Boost was so dominant in Australia. The concepts were very strong, therefore we can roll this through New Zealand very quickly using our skill sets - which are basically branding," he told one newspaper.

Those who know him say he is no slouch when it comes to brand-building, and if his role as founder of Max drew attention to Boost, it seemed Wright was willing to set aside reticence for the cause.

The potential of a brand clearly seems to be what has drawn him to 42 Below.

Chief executive of 42 Below Geoff Ross says Wright's interest came "out of the blue". In the few brief conversations they have had since, Wright came across as a man who understood brands, fashion and social trends.

"Investors often go straight to the bottom line, but David seemed just as interested in the brand strategy and marketing," said Ross.

With Max - which will be 20 years old this December - Wright's peers say he has demonstrated a mastery few others in the industry have been able to maintain for such a long period.

"They come and go in womenswear," says Russell Sinclair, northern regional manager for the New Zealand Retailers Association. "There is a saying in the fashion industry: 'You're only as good as your last season.' If you don't hit it right every season then you're in trouble."

Wright's success in a fickle market, affected by weather and fashion trends, spoke for itself. "It has been a well-developed brand ... he has kept that positioning and been able to create good stories every season and build a good business."

Paul Young, managing director of Postie Plus, said Wright was a competent operator, well-respected in the industry, with good ethics and values."I've never heard anything bad about him - and it's an industry that gossips."

Raymond Barker, a "rag-trade associate" of Wright's and founder of the Barkers menswear chain, labelled Wright as "a very astute guy".

"I think David is a strong businessman. He's held his ground. He's certainly not someone you'd walk over - he's a good negotiator."

Barker said Wright's adherence to medium-to-high pricing, good marketing, merchandising and quality have kept him out of the dogfight between volume operators at the cheap end of the market.

"Someone said to me once: 'When the going gets tough, trade up.' It's the easiest thing in the world to drop your prices, and David hasn't."

Both have seen many other New Zealand retailers lose their hold as they have traded down, or failed to keep up with the market's pace.

One of those was Hugh Wright Ltd, the chain founded in 1904 by Wright's grandfather Hugh Wright and built into a household name by his father, Hugh Wright junior. The menswear company went into receivership in 2002. Some said it collapsed because it did not change with the times.

"The demise of Hugh Wright was probably a very valuable lesson to the retailing industry as a whole ... It got caught in a space that really wasn't profitable any more. I'm sure [Wright] learned a lot," one market observer said.

Wright's brother John had succeeded his father at Hugh Wright.

David had gone out on his own years before with Max, moulded from the failed Estelle Rose womenswear business he and John had bought. In 2003, Wright said he believed womenswear was going to be "more interesting, more exciting, more creative".

"You go look at a menswear store, year in and year out, and they don't look that different. But you go and look at a women's fashion store and they look completely different every two weeks," he said.

Wright's ability to stick with the pace has grown Max to the point it is set to open its 35th store in New Plymouth in October. Ever true to its customer, typically 18- to 35-year-old women, Wright remains the only man among its 250 or so employees.

Max is a company that prides itself on looking after staff and giving them responsibility. "Lots of decisions are made together - there are many loyal employees who have been with Max for many years," a spokeswoman for the company told the Herald in an email.

Earlier this year, Wright banked something for his efforts, selling a majority shareholding to a group led by private equity investor Direct Capital. Senior staff and Wright kept 12.3 per cent, including Wright's estimated 8.6 per cent, and he stayed on as managing director with plans to graduate to executive chairman.

How much he got for his share remains the topic of speculation, with estimates ranging wildly, from $20 million to $80 million. Wright has spent nearly $11 million in the past fortnight - nearly $6 on the latest tranche of Hallenstein shares and $4.9 million on the 42 Below shares.

What he is attempting to do is a matter for conjecture: but most believe he's putting together an investment portfolio. It fits the trend. Successful businessmen selling their businesses previously took their cash offshore. Of late they have been offering a vote of confidence to New Zealand companies.

"Strategically I think what he is doing is sticking to a few basic formulas," said one market observer. "He's starting to build a profile of sticking to the things he knows, but being prepared to take a risk.

With 42 Below that means a considered investment in a brand. With Hallenstein, Wright is investing in an industry he knows intimately, in a company with the "canny knack" of picking up trends internationally and following quickly - and cheaply.

"From what we know, his view is that Hallenstein is the best clothing retailer in Australasia. They consistently stock and supply the right products for the market."

So much so that there is talk in financial markets that its private equity owners approached Hallenstein Glasson to merge the operations, but were knocked back.

At the price Wright paid for most of his shares, Hallensteins also has a relatively high gross yield. "If you believe the brand is good and can grow from here, it's better than leaving your money in the bank," the observer said.

Both companies have international aspirations. When Wright himself dipped a toe into Australian waters with a Sydney store in the 1990s, it closed because of the commitment involved and the competition. Hallensteins is proving more successful in its second foray into Australia, with Glassons, though its first with Hallensteins went no better than Wright's.

And 42 Below? The company confesses nothing short of global aspirations for its brands.

Wright could remain one to watch as well, as he is peppered with approaches - like the 42 Below deal - said the market observer.

DAVID NICHOLAS WRIGHT

Son of Hugh Wright jnr, who built the Hugh Wright chain from a business founded by his own father, Hugh Wright, in 1904.

One of four children, siblings are Hugh, John and Elisabeth.

Attended Sacred Heart College, did a bachelor of commerce degree in marketing at the University of Auckland.

Has worked for Australian department store David Jones, as well as in the family firm Hugh Wright as a shop manager and a sportswear buyer.

Founded womenswear chain Max in 1985.

Purchased part of the Amazon surf wear chain in 2001, bought the master franchise for Boost Juice Bars in May 2005, sold a majority stake in Max Fashions to private equity firms in July.

Disclosed a 7.1 per cent stake in Hallenstein Glasson on September 13 and acquired a 6.3 per cent stake in 42 Below on September 19.