Kraus cleans up at Surfaces

Newsletter
Kraus cleans up at Surfaces
Q1 2015
Clipper scoops
industry award
Following on from winning the
Outstanding Customer Service
Award at the Motor Boat Awards
in January, Clipper Marine has
secured another trophy for its
expanding awards cabinet.
This year’s Surfaces, the international flooring
industry convention held in Las Vegas, was the
most successful ever for Kraus Group. The company
achieved more sales in the first day than in the
entire four day show last year, ending the event with
orders in excess of $5 million.
The new business generated at Surfaces equates to
over 110,000 square yards of required production
at Kraus’ carpet mill in Waterloo, Ontario.
Award-winning HMV tops UK charts
The British music industry recognised the success
of the revitalised HMV by awarding it Best Retail
Brand in the Music Week Awards for the second
year running. The awards, which are decided by a
judging panel comprising hundreds of senior music
industry
executives,
saw HMV beat Amazon,
Google Play, iTunes and
Rough Trade to the top
spot.
HMV also hit the headlines as research firm Kantar
Worldpanel published figures for the first quarter of
2015 showing that HMV had overtaken Amazon to
reclaim its crown as Britain’s biggest music retailer.
Fiona Keenan, Kantar Worldpanel’s Strategic Insight
Director for the entertainment sector, commented:
“HMV has been successful in attracting shoppers
in store that want to browse its extensive range
of products before deciding what to buy, which
historically was a real
area of strength for the
high street specialist.
“Spend from consumers
browsing for music
products in HMV has grown by almost 50%
compared to this time last year, helping to boost the
retailer’s share of total browsed spend in the market
to 43.4%, making it the standout player.”
www.hilcocapital.com
Garmin,
the
navigation
equipment company, presented
the Clipper team with the Motor
Boat Importer of the Year award
at its Dealer Conference in
March, in recognition of Clipper
Marine’s outstanding sales.
Costa calls in
bean counters
Whitbread Plc appointed Hilco
Profit Recovery to conduct full
accounts payable and property
reviews of its market leading
Costa coffee shop business.
The property review will
encompass rates valuations and
service charge reviews across
Costa’s 1,500 locations.
Newsletter
Hilco team runs
Homebase closures
Buoyant first quarter for Oceans Pleasure Park sold
of barbecues, coolers, fire
pits, heaters and stoneware.
The company has also made
significant improvements to its
ecommerce website over the
past few months, which has
resulted in many more customers
transacting online.
Homebase called on Hilco to
operate closure sales at three
of its stores in January. The
closures form part of the ongoing
restructuring of the Homebase
store estate.
Hilco’s team took full operational
responsibility for the Minworth,
Boston and Willesden stores,
maximising the value of the
closure process by running a
high impact sale.
Oceans Rattan Furniture, the
premium outdoor furniture
specialist, enjoyed a storming
start to 2015 with sales up
20% year-on-year, driven in
part by the introduction of
new complementary ranges
Additionally, Hilco Wholesale
provided an additional £9.5
million of premium, branded
stock in order to maximise
recoveries to the administration.
Readers of the Hilco Capital
Newsletter can obtain a further
10% off web prices by entering
the discount code HVDISC10 on
the checkout page.
The veteran fairground specialist,
whose other sites include
Treasure Island in Stourport,
was the star of the Fairground
Attractions TV series in 2011.
New funding to fuel Denby’s growth Much fanfare for
HMV event
lending
structure,
PNC responded to this
challenge and was able
to provide a size and
scale of facility that
recognised the quality
of the business, its
management and its
investors.
Hilco appointed
on Bank job
Hilco’s retail team was appointed
by Deloitte to assist with the
operation of young fashion
retailer Bank’s stores during the
company’s administration.
To browse Oceans’ range of
outdoor products, visit
oceansrattanfurniture.com
Hilco Property completed the
sale of the four acre Barry Island
Pleasure Park site to leading
funfair operator Henry Danter at
the end of the first quarter.
Hilco secured new funding for
Denby Pottery through PNC
Business Credit. With a strong
sales record and exceptional
growth in its export markets,
Denby and Hilco were looking for
a debt structure that was more
closely aligned to the company’s
asset base, cash flow projections
and future aspirations.
Utilising
2 Hilco Capital Newsletter Q1 2015
an
asset
based
Steve Buckmaster of PNC
Business Credit commented:
“With expansion comes the need
for a facility structured to fulfil
ongoing requirements. Denby
is an iconic British brand, with
growing overseas reach. We
look forward to working with
its management and investors
in continuing to build Denby’s
formidable reputation.”
HMV Canada once again hosted
the JUNO Fan Fare in March. The
perennially popular event brings
JUNO award nominees faceto-face with fans, letting 1,000
Canadian music lovers meet the
country’s biggest artists.
This year’s lineup included
Platinum-selling singer Kiesza,
EDM stars Zeds Dead and teen
heartthrob Shawn Mendes.
www.hilcocapital.com
Newsletter
Century-old design wins innovation award
The Middleport Pottery visitor attraction has already
won several awards, most recently scooping a
Europa Nostra Award, Europe’s most prestigious
heritage prize.
Burleigh, which is part of the Denby group, was
itself the recipient of a prestigious award for its
Regal Peacock design (pictured, left). The pattern,
originally created in 1913, was honoured as Tabletop
Innovation of the Year by industry
leader Housewares Magazine.
The Prince’s Regeneration Trust
(PRT) and Burleigh wowed the
crowds at this year’s Ideal Home
Show in March with the stunning
Burleigh Grand Hall Tea Room
(pictured, above). The beautifully
appointed tea room provided a
showcase to promote the PRT’s hugely successful
redevelopment of Burleigh’s Grade II listed
Middleport Pottery home, together with Burleigh’s
products which are all handmade at Middleport.
TV property guru Kirstie Allsopp, Ambassador for
the PRT, said: “Middleport Pottery is a wonderful
example of English industrial heritage, and one of
the few places where traditional handmade ceramic
craftsmanship is kept alive.”
The first examples of this pattern
were presented to HM Queen
Mary, who much admired the
design and, in keeping with
tradition, a large jug decorated
in Regal Peacock was also
presented to HRH The Prince of
Wales when he visited Middleport Pottery, the home
of Burleigh, in 2013.
Sebastian Lazell, CEO of Denby Holdings,
commented: “This was the moment of inspiration
behind the rebirth of Regal Peacock. It was a
moment of symbolism, an antique design with a
royal connection being presented to the future King.
It seemed a good time to revive the design and
share it with future generations.”
Dublin’s new home of entertainment
HMV Ireland is set to relocate its Dublin flagship to
the site of the former Grafton Picture House on the
city’s famous Grafton Street.
The Arts and Crafts-style cinema first opened its
doors in 1911 and has a rich history in Ireland’s
entertainment industry, having introduced talking
pictures to Ireland in 1914 and evolved into a folk
www.hilcocapital.com
music venue in the 60s, seeing acts such as The
Dubliners play their debut gigs.
Converted to retail premises in the 1970s, the
historic building will finally see its return to being
the home of entertainment on Grafton Street in June
when HMV opens what is set to be one of its most
spectacular stores.
Viners workout
completed
The workout of the remaining
inventory and assets of PCS
Brands Limited was completed
by Hilco’s Retail Agents team in
the first quarter. The team was
engaged by KPMG to operate
the store closure and stock
wholesaling processes.
PCS Brands was a conglomerate
of various homeware brands and
manufacturing facilities, including
Viners,
George
Wilkinson,
Samuel Groves, Mermaid, Long
Life and Le Buffet. The company
also operated 31 stores and
concessions located in garden
centres, Boundary Mill stores and
retail outlet villages in the UK and
the Netherlands.
Hilco Capital provided funding
to the administration to allow
the Administrators to continue
to trade certain parts of the
business, including the retail
outlets and RTA wine racks
division. As a consequence, going
concern sales of the Samuel
Groves and RTA divisions were
achieved, along with the sale of
all plant and machinery from the
George Wilkinson site and the
sale of the Viners brand.
Hilco Capital Newsletter Q1 2015 3
Newsletter
Meet the CEO Steve Malinowski, Kraus Group
In the first of a new series shining the spotlight on Hilco’s business leaders, we
get to know Steve Malinowski, Chief Executive of Kraus Group.
have it in them. At Kraus, when our product development
team was challenged by one of our biggest customers to
develop and sample 16 new products with a deadline of
four weeks, the team members had a general feeling of
defeat before they even started – it historically took them
four weeks for each product. However, they came up with
new methods, worked a ton of nights and weekends, and
delivered the samples on time. We celebrated – not just
because we ended up with a huge new commitment from
the customer – but because the team members amazed
themselves with their capability.
Where did you spend your formative years?
As a good Canadian, I spent most of my formative years
in ice hockey arenas in and around Toronto. For those
that have never played the game, hockey is a game of
both physical and mental agility, as the speed of the game
keeps the competitors in very dynamic motion all the
time. It teaches strategy, tactics, and teamwork, and also
the very satisfying skill of crushing other human beings by
hurtling your body at them at high speed.
Where did you study?
I have a degree in computer engineering from the
University of Waterloo (Canada), an MBA from Laurier
University (Canada), and a master’s degree in economics
from Purdue University (USA).
What was your first job?
I grew up on a farm for part of my childhood, and
anyone who’s done that knows that living on a farm is
a full time job for all the inhabitants. My first paying part
time job was lugging boxes around in a warehouse. Not
very glamorous but, about two months into my tenure,
our computer system had failed again and I asked the
warehouse manager if I could attempt to fix it. Within two
weeks, I was put in charge of the warehouse system, and
a career in computer engineering was born.
Where did you work prior to joining Kraus?
I have been in a wide variety of industries: warehousing,
auto assembly, wire and cable, electrical components,
injection moulding, lawn mowers, printed circuit boards,
ATMs and I ran one of the largest hog slaughterhouses in
North America. I most recently ran a well known Canadian
food company by the name of Janes Family Foods, one of
the largest poultry processors in Canada.
What is your favourite part of your job?
I get the greatest joy out of seeing people being
successful, especially when they thought they didn’t
What is the biggest strategic challenge to
overcome at Kraus?
The economics in the flooring industry is an interesting
case study. The industry is dominated by two giant
competitors who are mostly focused on each other.
Mid-size competitors of our size are adding productive
capacity to an already saturated market. There are
relatively few barriers to entry in most of our product
segments. Customer power is consolidating, as is supplier
power in key commodities like nylon resins. Our key
strategic challenge was to create a market proposition
for Kraus that could see us successfully differentiate and
not compete on price alone in this kind of competitive
environment. Our first two years under this new market
strategy is seeing explosive growth, so we believe our
strategy is pretty well targeted.
Where do you see the business in five
years’ time?
Kraus went bankrupt nine months before I arrived and in
the last two years we’ve improved the net profit by about
$10 million. We’re now much more financially stable and
have been gaining significant market share – we grew by
17% last year, in an industry that only grew by 2%. The
amount of organisational change that this has required
has been a shock to the company, especially the long term
employees. The next five years will encompass phases of
consolidating and stabilising the changes, creating a world
class distribution system and product/market expansion.
Five years from now, our organic growth will result in
annual sales of nearly $500 million, which will keep us
solidly in the top ten in the North American market.
How do you unwind?
In the winter, I still play a lot of ice hockey, and in the
summer, I play a lot of baseball. When I get the chance, I
love to find a quiet lake and spend the day searching for
bass, pike, or trout. Nothing better than a beautiful lake,
warm sunshine, a drifting canoe, and a fishing line trailing
in the water.
NEWS
FROM
ACROSS
THE POND
Hilco Global acquired Edinburghbased online photo journal and
social network, Blipfoto, in January.
The service has been rebranded as
Polaroid Blipfoto, forming part of
Hilco’s ongoing turnaround strategy
for Polaroid, which it acquired with
partners in 2009.
Hilco Receivables purchased
the assets of Sagger Creek
Vegetable Company in a deal with
multinational food manufacturing
giant Del Monte Foods. The Sagger
Creek business is a producer of
speciality vegetables for the food
service and retail markets.
Hilco Merchant Resources
has conducted the final phase of
RadioShack store closures at an
additional 361 locations across the
USA in one of the country’s highest
profile retail bankruptcies.
Hilco Real Estate was appointed
to sell Woodlake Country Club,
a luxury leisure resort in New
Jersey. Centred around a 1,200
acre private lake and two Arnold
Palmer-designed championship golf
courses, Woodlake Country Club
includes a clubhouse which dates
back to 1792 and over 600 lots.
Hilco Fixed Asset Recovery acquired
the assets of Fixture Finders to form
Hilco Fixture Finders. The new
company is the largest fixed asset
disposition business in the United
States.
Hilco Global has formed a
publicly-traded special purpose
acquisition company, Barrington/
Hilco Acquisition Corp. (Nasdaq:
BHACU) in partnership with New
York-based firm Barrington Capital.
Published by Hilco Capital Limited, 80 New Bond Street, London W1S 1SB · Tel (0) 207 317 2050 · Fax (0) 207 317 2051 · © 2015 Hilco Capital Limited · All rights reserved
4 Hilco Capital Newsletter Q1 2015
www.hilcocapital.com