Singapore's Star 360 Holdings Onitsuka Tiger Mid Runner Black Creates a Global Footprint
Andy Chaw was in the car park of a Los Angeles beach hotel, heading to dinner in May of last year, when he got a game changing phone call from Zurich. It was a former manager at Swiss shoe brand MBT. The footwear pioneer's parent had filed for bankruptcy, he said, urging Chaw to save the company. It was a tough decision for the Singaporean shoe distributor and retailer it would double the size of his business overnight. But he was ready with his answer the next next day.
The next two months were a blur of intercontinental negotiations. Ultimately Chaw bought the parent, Masai Group International, and its iconic brand a household name in Europe at a fire sale price. Recent owners had sunk hundreds of millions into the beleaguered outfit, but he was able to buy it without taking on any of its more than $200 million in debt.
Within six months he had it back in the black by cutting costs and dramatically boosting sales in Asia. And the deal gave him shelf space in Europe and North America, transforming his Singapore based group, Star 360 Holdings, into a global player. coming online by next month.
Star 360 supplies 20 powerhouse brands including Asics, Nike and Onitsuka Tiger, as well as MBT to 6,700 points of sale. It also owns and operates 100 retail stores around Asia, and Chaw has his own comfort footwear brand, Ergo Lab, while holding two patents for shoe design.
With the region's shoe consumption racing ahead, Chaw expects revenue for the year ending in March to exceed $130 million, up 60% in 12 months, with a net profit of $20 million; Asics Gel Noosa Womens Purple more than half of the top line will come from MBT sales. Owning 100% of Star 360, Chaw boasts a $300 million net worth, FORBES ASIA estimates.
Chaw, 46, started selling MBT shoes in Southeast Asia and Hong Kong four years ago. In 2011 his MBT sales grew 300% despite the brand's slumping sales elsewhere, and he was named Masai's top distributor. "They actually used us as a case study to show how the brand could be managed and marketed," he says.
MBTs certainly had a story to tell. They have a destabilizing curved sole, developed in 1996 by Swiss engineer Karl Muller, who founded Masai. According to company lore, he sought to emulate the podiatric health of the Masai people, who walk barefoot on East Africa's soft, uneven terrain. The wearer's instinctive effort to regain balance, the maker says, helps increase muscle activity, improve posture and reduce back pain. (MBT stands for Masai Barefoot Technology.) Sales took off, reaching nearly $300 million in 2007.
But the 2008 financial crisis slowed sales worldwide while at the same time counterfeiters and cheaper and more fashionable copycats hit the brand hard. shoe giant Skechers launched a rocker soled shoe in 2009, backed by an aggressive advertising campaign, and was soon joined by Reebok, New Balance and Avia, among others. Then Skechers settled claims that it overreached in promising health benefits in its advertising. "Consumers started to doubt the benefits for all the brands, including MBT," says Eugenio Di Maria, editor of French newsletter Shoe Intelligence.
Chaw won't say how much he paid for Masai due to a nondisclosure agreement, only that it was higher than the $8.5 million reported by the media in Europe. Muller mounted a legal challenge to the sale, but that ended in April, clearing the last hurdle for the acquisition.
In the 18 months since he decided to bid on Masai, Chaw has invested tens of millions of dollars in the turnaround. He hired shoe business veterans for his new management, cut operating costs by 80%, introduced technology to prevent counterfeit sales, redesigned the shoes to make them lighter and trendier, and closed or downsized underperforming subsidiaries.
Also important, he says, has been persuading top suppliers to continue making MBTs, even after some got burned by the bankruptcy. And the company has been careful to avoid overhyping what the shoe can deliver in its new marketing campaigns. Soft retail sales in Europe aren't necessarily a concern. "My bed will be in Asia," he says. The region will account for 35% of sales this year and 50% by 2015.
There's more potential with MBT running shoes, children's shoes, apparel and accessories. "When I look back now, I realize my past 23 years of different experiences put me in the perfect place to acquire the brand, restructure the brand and build the brand," he says. "I think the timing is perfect."
Chaw started in retail from scratch and without any financial support from his father, a successful Singaporean property developer. Number seven out of ten kids, he says he learned good management skills from his mother, a homemaker. His first job was at McDonald's McDonald's at age 15, where he learned the tricks of the franchise trade.
He tutored for extra cash, and whenever he had enough saved, he picked up his backpack and traveled. But a career in sales was always Onitsuka Tiger Mid Runner Black in the cards. Chaw, Asics Cyber Monday Sales who represented Singapore in the long jump and high jump in high school at the 1986 Asian Junior Athletics Championship, was sponsored by Japanese sports Onitsuka Tiger Mid Runner Black equipment company Asics and given a discount on shoes, which he would buy and then resell to his classmates for a small profit.
After Chaw finished his military service in 1989 he decided against university ("I'm too impatient") and instead began supplying perfume to duty free shops in Myanmar and Batam, an Indonesian island just off Singapore's south coast. This led to him helping a group of Batam retailers import shoes from South Korea and China. He made $10,000, and his wholesale business was born.