Bold Strategic Move 4: Booting up the brand

Aussie icon R.M. Williams holds the reins on its heritage as it expands its horizons.

Hearts might have sunk a little in April when it appeared that R.M. Williams, one of Australia’s iconic brands, was to pass into foreign hands.

But in a move that has secured the future of the bush outfitter, French luxury goods group Louis Vuitton Moët Hennessy (LVMH) bought a 49.9 per cent share in the company, with Ken Cowley, its chairman, retaining a controlling 50.1 per cent.

With production set to continue in South Australia and jobs there assured, R.M. Williams has the best of both worlds.

“R.M. Williams will always manufacture quality product in Australia. Our new partners share our commitment to protect and develop this fundamental element of our business,” Cowley says.

Interest in buying into the 81-year-old company – set up by Reginald Murray Williams, a bushman and entrepreneur – also came from Oroton, the Australian luxury leather goods firm, and retailer Myer.

But the deal, financed by private equity fund L Capital Asia that is sponsored by LVMH, was worth A$52 million, about 10 times R.M. Williams’ earnings before tax.

Although R.M. Williams is described by its chief executive Hamish Turner as a “casual luxury brand”, luxury isn’t just about high prices anymore, says Ravi Thakran, managing partner at L Capital.

Legend: Company chairman Ken Cowley with a portrait of R. M. Williams.

Legend: Company chairman Ken Cowley with a portrait of R. M. Williams.

“The whole heritage effect, the appeal of it and the genuineness of the company, is the premium part of it,” Thakran told The Wall Street Journal.

Investee companies understood that their brand identity would be protected, says Thakran, because LVMH is an umbrella for 60 distinctly different brands, some in competition with each other.

Melinda O’Rourke, managing director of luxury-goods consultancy MO Luxury, agrees that “it’s the methodology and artisanal qualities, fabrics and heritage that lift R.M. Williams into that luxury bracket”.

The company exports to 15 countries and has stores in New York and London, but LVMH will certainly be expecting to build on that.

“LVMH’s expertise in managing brands, as well as its infrastructure and global presence, will give R.M. Williams access to new markets, particularly in Asia,” says O’Rourke, adding that the strong inbound tourist market to Australia from China and South-East Asia had a lot to do with R.M. Williams’ resilience throughout the global financial crisis.

O’Rourke predicts that LVMH will move the brand further upmarket. The classic R.M. Williams dress boot, retailing at A$425, has been at the core of the company’s success.

But leveraging the brand into other categories such as apparel hasn’t had the same impact, says another industry insider, who thinks it’s likely that LVMH will bring sharper luxury definition to the company’s  other products.

With Thakran stating publicly that R.M. Williams has the potential to grow into a billion-dollar company, other Australian luxury manufacturers are paying close attention.

This article is from the October 2013 issue of INTHEBLACK magazine.


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