IT’s Wednesday afternoon and the Tiso store in Leith’s Commercial Street is particularly busy for reasons that one of the staff cannot explain. Perhaps it had something to do with the publicity generated by the previous day’s announcement, writes Terry Murden.
Chris Tiso, the outdoor clothing firm’s chief executive, had spent the evening and early morning responding to calls and tweets from customers and suppliers eager to know what the sale of a controlling stake in the business to JD Sports Fashion would mean for them.
“We carry on as we are now, except it will help to be part of a bigger group,” he says. “Most are just looking for some reassurance. There will always be some suspicion when you do this because people are frightened by change. I have been asked if the product will change, if the quality of service will change and if the name will change. The answer is no, no and no.”
Details of the transaction, including the price paid, were not disclosed but it will mean that listed JD Sports takes a stake of more than 50 per cent in the family firm. It is the first time since it was founded by Tiso’s father Graham and mother Maude in 1962 that control has passed to an outsider.
But Tiso insists that the new arrangement is a partnership which will benefit the business. “It was as important to JD as it was to us that we [the family] remain significant shareholders,” he says. “There is no downside because it is going to strengthen the business. It is good for our suppliers, our bankers, our customers and our landlords.”
He assumed control in 1992 after his father died in a boating accident. He was just 21 and had to learn quickly how the business worked.
“It was scary but I just had to get on with it,” he says. It helped that he is keen on the outdoors life himself, having been brought up the son of a mountaineer. Combining his leisure interests with work is something he might never have continued to enjoy had he not survived a brain haemorrhage in 1999. He was driving to Prestwick airport when it happened and he was rushed to the Southern General in Glasgow where he underwent two operations.
After several weeks in recovery he returned to work “probably a few months before I should have done” and the following year joined an expedition to climb Mount Everest, again prematurely. He suffered pneumonia and had to return home.
Now 42 he has been forced to confront a few steep business learning curves as the company dealt with downturns and structural change in the wider market. It made a £1.1 million loss on a turnover of £25.4m in the year to the end of January 2012 but until all shareholders and staff have been told he declines to say whether the latest figures, due out shortly, will show another loss. Over recent years some outlets have been closed, usually through overlap or the opening of a bigger and better store close by. But there was no threat to the business’s financial health and the need for a partner was driven more by structural shifts in the industry.
The company is an established part of the Edinburgh and wider Scottish retail firmament and it was no surprise to him that some customers and suppliers were concerned that they might be losing something when the news of the deal with JD was announced.
Tiso insists the deal is neither a takeover by JD nor an exit by the family, though he does admit that it was inevitable a partner had to be brought in. “Without a partner we would still be here, but it would be a lot tougher,” he says.
“I have seen huge changes taking place in the outdoor clothing landscape over the last 20 years. There will be more consolidation among retailers. With the exception of a few small independents most have been refinanced one way or another.”
As a result of partnering with JD it will be in a better negotiating position, have more financial, IT and other resources behind it, and therefore become more competitive.
So Tiso is following a path trodden by the likes of Cotswold, now part of Lion Capital, and Nevisport which belongs to Trespass. JD Sports already owns Blacks and Millets. Tiso itself bought Alpine Bikes, George Fisher and Blues, the ski shop. The deal with JD, however, is on a grander scale and Tiso will now become part of a stock market listed company.
“This is a long-term arrangement. I have never played the short game,” says Tiso, indicating that the private equity route, with its typical five-year exit plan, was not an option.
He was approached by several potential suitors but only held serious talks with JD executive chairman Peter Cowgill with whom he struck up a good working relationship.
“We quickly discovered we were on the same page,” says Tiso. David McCorquodale, head of UK retail at KPMG, who worked with JD on the Blacks deal, advised on the transaction.
With the future now hopefully secured for the next 20 years, Tiso can focus on the day job and on all aspects of his life, which his illness helped him to appreciate.
“I am bloody lucky to be here. I learned to enjoy simple things, like a nice cup of coffee or a walk in the great outdoors.”