Filling your dad's shoes is never easy. It's particularly hard when your father is a larger-than-life figure in a competitive industry and the family business suddenly becomes your responsibility at the young age of 27.
Michael Gazal found himself heading up Gazal Corporation in 1989 after the sudden death of his father, Joe Gazal - affectionately known to friends and competitors alike as Uncle Joe. "At the time, it was extremely overwhelming," says Gazal. "I took three or four years to find my feet in the business and work out with the senior team and my brothers what direction to take the business going forward." Fifteen years later, Gazal is well and truly on his feet, having steered the company through a restructure, a change in direction and consistently strong economic results. In the 2003-04 financial year, Gazal Corporation delivered an 11.5% rise in net profit to $10.84 million. Other financial highlights included a 5.7% increase in sales (not including growing markets in Asia) to $192.97 million and a healthy cash flow from operating activities of $18.8 millions (up $7 million). Gazal attributes part of the success to the stronger Australian dollar, although strong performances from key brands such as Van Heusen, Nautica, Maui & Sons, Lovable, Oroton, Crystelle and Kookai obviously didn't hurt. "2003-04 has been a good year for consumer spending," Gazal says. "The competitive environment between Myer and David Jones created more activity and therefore more business for a number of our brands [stocked by the retail giants]. It's a great market at the moment . . . we don't see any major clouds on the horizon to affect consumer spending." The one brand letting down the team, however, was Mambo, which had a disappointing year. Gazal Corp acquired Mambo in 2000 for $10 million and is attempting to reverse the surfwear business' downward decline by snatching the brand away from aging devotees and shifting it back to its core target market of 16- to 24-year-olds. "We brought in a whole new team in the past few months. They will take a bit of time to settle in and start to produce positive results," Gazal says. Unlike most brand owners, however, he is not looking for quick results, understanding it takes time to build brands. "We take a long-term view on the business and we're prepared to invest in our brands," he says, adding that too often marketers expect short-term results. "With image building advertising you sometimes don't get return in year one, or even two or three - it can be in year five. "Maybe it's because our business is fashion-related or maybe it's the approach we tend to take as a company, but most of our advertising dollars go into image building advertising. We want to make sure people will be buying our brands in 10 to 15 to 20 years." His strong understanding of brands was evident early on in his career. One of his first business decisions as managing director Gazal Corp was to redirect the company away from being a private label business to focus on brands by snapping up the licences to a number of desirable brands now part of its stable - Mambo, Nautica and Kookai among them. He has been instrumental in building the company's brands and is not averse to pumping money towards an ailing brand, as he did three years ago when Lovable begun to lose favour among young lingerie-buying women. The relaunch of Lovable was led by a highly talked about campaign from George Patterson Partners featuring Secret Life of Us star Samuel Johnson at the height of his fame. The second campaign, again starring Johnson, featured the line "Great tits" and went to air after 8:30pm. "That got a lot of people talking," Gazal says. "There was a debate on [Seven Network's] Sunrise for seven days running." Approving a line like that, and choosing to use a man as the face of a lingerie brand, is part of Gazal's tendency to think outside the square. Agencies that work with him say he has a strong trust in his teams and his suppliers, and he's not afraid to take risks. "He's let us be brave, especially with the Van Heusen brand," says Stuart O'Brien, managing director of Moon Design, which handles the Van Heusen and Trent Nathan brands. "Before we picked up the Van Huesen account, [the advertising] pushed the pragmatic benefit of the shirts and hadn't done any branding before. "Michael came along and said 'we have to build the brand and open up the target market'." Moon expanded the brand's appeal by developing the current "Business Pleasure" approach, successfully repositioning Van Huesen shirts as aspirational. "When we took over, the shirts retailed for $49 and now they start at a $99 price point," O'Brien says. Apart from Gazal's willingness to take calculated risks, his ability to get the best out of his team is another of his strengths, adds O'Brien. "He's a great client, he's extremely fair and he's really supportive. He's very focused on what he wants to achieve. He has a fantastic team of generals and divisional managers around him." John Goumas, managing director of Lovable's PR agency Colvin Communications, agrees. "He is a great employer. He empowers his divisional people to do the job at hand," Goumas says. "He's been able to choose the best people for the job and he has a lot of trust in them. As a client, he's fantastic because he lets us get on and do the job." Walking around Gazal Corp's Banksmeadow headquarters, Gazal seems to be on first-name basis with everyone, including staff in the extensive storage warehouse, stopping to say hello to many of them. This is no mean feat considering the group employs more than 700 people. Presiding over 16 brands, Gazal says they are all an important part of the company's future. "I love each brand equally, as you do when you're a parent," he says, only half joking. "I tend to be involved in the marketing side where I need to be. For example, with relaunches such as that of Lovable in summer 2002, I tend to be heavily involved. "It depends what the strategic objectives are of each brand and whether a brand needs extra attention. [Marketing] is a part of the business I like." O'Brien says Gazal's interest in marketing is encouraging from the agency's perspective. His only complaint is Moon didn't get a crack at the Mambo account when it appointed an agency for the first time in May (the business went to youth agency Smart). "[Gazal] likes to have different agencies working on different brands," reasons O'Brien, "to keep us on our toes and doing the best work we can for the brands." "We don't want to lock ourselves into one agency for all our brands," Gazal admits. "That tends to limit the creative ideas." Gazal is now keen to take on rival Pacific Brands. To do so, he must grow the business significantly. In June, he appointed Rothschild as a financial advisor to the company to spearhead an international search for a potential strategic alliance partner to guide future growth. "We are looking for an international partner that can help us in the industry in a similar way Walmart helped grow Big W and Woolworths . . . to act as a big brother," says Gazal. "We are in a number of discussions with a few firms in the US and we are also looking at opportunities in Europe and Asia." Acquisitions are also very much on the agenda. "We are looking for other brands that complement out portfolio," Gazal says. "[Rothchild] is helping us look for local business as well. "I started thinking about it in the first half of this calendar year. The catalyst was the listing of Pacific Brands. Now that it's a public company, it will need to grow its business quite actively because the market will dictate that." Gazal admits Pacific Brands is a mighty adversary and it make take some time for Gazal Corp to catch up. "We're almost hitting $200 million (is sales) this financial year and Pacific Brands is on target to do $1.6 billion," he says. Pacific Brands has a more diverse portfolio than Gazal Corp, including a large footwear business, bedding, sporting, and socks and hosiery. "We're a lot more sportswear and fashion focused," says Gazal. "We're not going down that route. We want to stick to apparel and stay true to that." He cites Bonds as one Pac Brands brand he'd like his stable to emulate. "The Bonds Sarah O'Hare campaign is extremely consistent. All advertising and imagery is consistent, the product is hero, Sarah always looks fantastic and fresh and has a smile on her face. That's the sort of consistency I think about when I think about how we should approach the business. It's a winning formula."
GAZAL BRANDS
OWNED BRANDS Mambo Bisley Work Wear Midford Lovable Crystelle Davenport Trent Nathan
LICENSED BRANDS Maui & Sons Van Heusen Nautica Kenneth Cole Clavin Klein Kookai (Lingerie, swimwear, sleepweal) Oroton Body Nancy Ganz Playboy
RETAIL Brands United (seven stores) Trade Secret (five stores)
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