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The British (retail) invasion (pg. 2)

Jennifer Reingold, senior writer
July 3, 2008: 6:25 AM EDT

Topshop, which Green acquired in 2002, wasn't always so bold. It started in 1964 inside a Sheffield department store. For most of its history the chain - along with Topman, the men's brand that launched in 1978 - catered mostly to teenagers. But in 1998, Jane Shepherdson, a onetime buyer, became brand director. She helped make Topshop a destination, partnering with new designers to make it, in her words, "the world's fashion authority." The epicenter of it all was the now 90,000-square-foot flagship on London's Oxford Street, where assortments change at least weekly. (Gap (GPS, Fortune 500) changes monthly.)

But after clashing with Green, Shepherdson left at the end of 2006. When asked about the breakup, Green gets oddly quiet. "Sometimes you need change," he says, his face clouding over. Shepherdson, for her part, thinks Topshop will do well in the U.S., though the dollar's swoon makes the brand pricier, she notes. "It is a difficult time with the exchange rate."

Topshop is only one of the six brands that make up Arcadia, but it is by far the profit driver; with Topman it contributed an estimated $300 million in profits and $1.6 billion in sales to Arcadia's total 2007 profits of about $700 million on $3.6 billion in sales. Sales per square foot average $1,000 for the chain and $3,000 at the flagship. Since he took over, Green has expanded the chain by about 100 stores and franchises; he plans to open at least one or two more New York locations in the next few years.

Brash and quirky

Topshop is the Arcadia brand most like Green himself - brash and quirky. He has never owned a computer. He doesn't like his staff to use calculators in front of him. (They should be able to do the math in their head, as he can.) Short, round, and intense, Green walks around holding two 1980s-era gray Nokia phones - one for incoming, one for outgoing. He also likes to prove that he still has a merchant's touch, taking me to the headquarters of Bhs, his department store chain with $1.6 billion in sales, where the 2008 Christmas gift selection is on display. Pointing to a DVD, The 100 Greatest Moments in Snooker, Green says he knew instantly that it would be a hit: "I bought a quarter of a million cold. And we sold a quarter of a million. It was our No. 1 item." (No matter that snooker knowledge won't play in Peoria.)

Green is notoriously demanding to work for, say several retail experts, noting his tendency to meddle, curse, and assess later. But his most loyal executives see something very different: a generous boss who cares passionately about the business and lets you "get on with it." "What he responds badly to is if you waffle," says Mike Goring, Arcadia's retail director. "He can smell that. The penalties come if the person hasn't got a view." "I haven't got time for hours and hours of analysis," Green says of his management style. "I encourage people to make a decision."

Indeed, Green has always been in a hurry. A high school dropout, he grew up around business: His father, Simon, owned an electrical retailer before succumbing to a heart attack when Green was 11. His mother, Alma, owned gas stations and real estate. His first job was in the stockroom of a London shoe importer where, he says, his photographic memory allowed him to pull any shoe immediately. From there Green became a blue jeans trader in London. Although he could rummage through barrels of clothing for the stuff that would sell, he had an even better head for the business side and began to take over the stock of struggling retailers. Green was early to realize the importance of the supply chain and traveled to Asia for the first time in 1973, becoming famous for squeezing more out of manufacturers than others did. "He's a guy who goes directly to the factory," says Bruce Rockowitz, president of Asian supplier and retailer Li & Fung. "He'll just work until he gets the price and the product right."

By the early 1990s, Green's turnaround expertise had earned him the respect of a group of financiers - not the old guard but new, aggressive ones - who backed him in a series of acquisitions, including a failed bid for Marks & Spencer in 2004 that riveted the country. "He's one of the smartest men I've ever met," says Bob Wigley, Merrill Lynch's (MER, Fortune 500) chairman for Europe, the Middle East, and Africa. "That spans not just his retail talent but also his eye for a deal."

In 2002 he purchased the publicly held Arcadia Group, which he put ten million pounds of his own cash into - along with another 800 million pounds from HBOS bank. "Everyone thought we'd overpaid," he says of the buyout. "But I managed to turn ten million into 1.3 billion pounds." Green is referring to the whopping "dividend" he awarded himself in 2005, three years after paying himself 440 million pounds from Bhs. The Arcadia payout made headlines for being the biggest ever - surpassing the 1.1 billion pounds steel magnate Lakshmi Mittal had granted himself a year earlier. But because Green's assets are held in the name of his wife, Tina, a full-time resident of Monaco, he didn't have to pay income taxes on the dividend. (None of this cleverness derailed his 2006 knighthood.)

Every Friday, Green commutes home to Tina and their two teenagers on his Gulfstream G550. A serious gambler, he loves soccer and his toys, including a black Bentley, an $80 million, 207-foot yacht named Lionheart, and a solid-gold Monopoly set featuring his acquisitions - a birthday present from his wife. During the week, he lives in Mayfair, where he gets up at 6:30 A.M. to walk the treadmill and review the previous day's numbers.

It is Green's social life, not his work ethic, that has made him tabloid fodder. For his son Brandon's bar mitzvah in 2005 he had a synagogue built on the grounds of France's Grand-Hotel du Cap-Ferrat and hired Andrea Bocelli and Beyonc to sing. For his own 50th-birthday party in 2002, 200 guests were jetted into Cyprus for a toga party (Green played Nero) at which Rod Stewart and Tom Jones performed.

That said, it's not unusual for Green to give money away. He has donated $20 million to help create, with other retailers and the British government, the Fashion Retail Academy, which helps train teenagers for careers in the industry. And it was a charity auction - in which he paid $120,000 for a kiss with Moss - that led to his most significant deal of late. Green gave away the kiss but got something better when the two later met at a party: a commitment from the bad-girl supermodel to develop her first clothing line. "I just kind of said, sort of in the moment, 'We should do something,'" Moss says. "Every-body I know shops there, and it's refreshing not to spend thousands of dollars. He said, 'If you're serious, come to the office.' I got his idea straight away."

Topshop is hardly the first retailer to link up with a celebrity - H&M had Madonna first, and Macy's (M, Fortune 500) has since launched lines from the likes of Usher and Jessica Simpson - but Moss has just shown her sixth collection, and Green says sales are up 50% since its May 2007 debut. Green used the Moss line as a prelaunch brand builder in New York, offering it at Barneys. The move paid off in hype; market research shows that 17% of New Yorkers already know the Topshop name.

It may not be an ideal time to open in the U.S., but Green isn't concerned. He's prepared to spend more than $100 million to again prove he knows exactly what he's doing. "In terms of the big, big, big, big picture," he says, "it's not about the actual cost. This is my brand. If I had listened to all the times people told me not to do something, where would I be?" All he has to worry about now is a high ceiling and an ever fickle American public.

Shuchi Saraswat contributed to this article. To top of page

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