Bestseller A/S

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Bestseller A/S

Fredsskovvej
Brande, DK-7330
Denmark
Telephone: (45) 99 42 32 00
Fax: (45) 99 42 34 99
Web site: http://www.bestseller.com

Private Company
Incorporated: 1975
Employees: 15,000
Sales: EUR 967 million ($1.2 billion) (2006)
NAIC: 448140 Family Clothing Stores; 424320 Men's and Boys' Clothing and Furnishings Merchant Wholesalers; 424330 Women's, Children's, and Infants' Clothing and Accessories Merchant Wholesalers; 448110 Men's Clothing Stores

Bestseller A/S is one of Denmark's, and the world's, leading retail clothing companies. The Brande-based company directly operates more than 1,800 shops and oversees a global franchise network of more than 3,200 stores. The company also sells its many clothing brands through more than 14,000 nonaffiliated retailers worldwide. Altogether, the company's retail operations reach 39 countries. Bestseller's store and clothing brands include flagship Vero Moda, a women's fashions line backed by nearly 600 stores; the young men's brand Jack & Jones, with 500 stores; the Vila high-fashion women's brand, with 59 stores; and Only, a chain of 139 stores targeting trendy young women.

Other brands include the children's oriented Exit and Name It; men's oriented Selected and tdk jeans; and youth brands Phink and PH Industries. In 2007 the company launched a new brand format, Outfitters Nation, for the older teen segment. With more than 15,000 employees worldwide, including 800 at the company's headquarters, Bestseller generated EUR 967 million ($1.2 billion) in 2006. More than 90 percent of these sales come from outside Denmark. Germany, Norway, the Netherlands, Sweden, and Spain are the company's most important foreign markets.

The company is also affiliated with Hong Kong-based Bestseller Fashion Group, established in 1996 as an independent company to introduce European-styled clothing to the mainland Chinese market. That company operates approximately 900 stores in China, and has adapted many of the Danish company's brands and clothing styles and developed its own clothing lines. Fees generated from Bestseller Fashion Group account for approximately 30 percent of the Bestseller A/S's total revenues. Bestseller is a privately held company controlled by the founding Povlsen family. Founder Troels Holch Povlsen remains active in the company as chairman, while son Anders Holch Povlsen serves as CEO.

SINGLE-STORE BEGINNINGS IN 1975

Troels Holch Povlsen got his start in business when he took over the Ringkøbing-based clothing company owned by his uncle in 1975. Povlsen oriented the company toward the production of fashionable women's styles, offering quality goods at moderate prices. By 1979, Povlsen was able to move the company to larger facilities in Herning, and from there added his first retail operation. At the same time, Povlsen began sourcing and importing clothing for the Danish market, establishing a second business as a wholesale supplier to the Danish retail clothing sector. The wholesale business was called Bestseller Wholesale A/S; the company eventually added purchasing offices in Turkey, India, Hong Kong, and Italy.

Povlsen also expanded his own retail network, opening locations throughout Denmark through the first half of the 1980s. The middle of that decade marked new milestones for the company. On the one hand, the company, which had focused exclusively on the women's clothing market, sought to broaden its scope to include the children's and men's apparel markets. At the same time, the company took steps to position itself within the fast-growing trend toward branded and designer-label clothing.

The development of the company's first brand, the children's clothing brand Exit, allowed it to achieve both objectives. Launched in 1986, the Exit brand targeted older children and soon became the basis for the development of a new retail chain of Exit-branded stores.

The success of Exit led the company to prepare its entry into the men's wear market as well, a move the company completed in 1989. By then, Bestseller had also developed a new flagship women's wear brand, Vero Moda, introduced in 1987. That brand quickly became the centerpiece of the growing empire of Bestseller retail stores.

INTERNATIONAL OPENINGS IN 1986

As it expanded its retail and brand holdings, Bestseller also eyed expansion beyond the small Danish clothing market. For the initial phase of its international expansion, Bestseller targeted the immediate Scandinavian market. The company opened its first foreign store in Norway in 1986. This was soon followed by the opening of stores in Sweden, then Finland and Iceland. Supporting the group's growth was its move to new headquarters in Brande in 1987.

Bestseller continued to add new markets into the next decade. By the middle of the 1990s, the company had opened stores in Ireland, Switzerland, Germany, the Netherlands and elsewhere in Europe. In order to step up its expansion, the company also developed its own franchising formula, launched in 1988. The company later expanded its presence to include locations in the Middle East.

In the meantime, Bestseller continued to expand its range of brands. The company launched its successful Jack & Jones menswear line in 1990, targeting the young men's market. This was followed by the launch of the Vila brand, adding a high-fashion women's line in 1993. The company then expanded its children's clothing line with the addition of Name It, featuring clothing for the newborn-to-toddler segment, in 1996. Also that year, Bestseller introduced the Only brand, geared toward young adult women.

CHINA PARTNERSHIP IN 1996

In the mid-1990s, Bestseller was approached by two Danish entrepreneurs working in China, Allan Warburg and Dan Friis. Warburg and Friis had developed a business plan to introduce European-styled clothing for the Chinese population and sought a partnership with a major clothing company. Bestseller declined to enter the Chinese market directly, however, on the basis that the market was still too small for the company to be profitable. Yet Bestseller had at the time been experiencing difficulties with its own Hong Kong and Chinese sourcing operations. Teaming up with Warburg and Friis, who had developed a number of business and political connections in China, offered Bestseller a means toward achieving greater efficiency at its sourcing operations.

COMPANY PERSPECTIVES

One World. Our world is built on fairness and opportunities. Cultural differences are an advantage, which will promote quality, extraordinary results and good values. Always trying to give more than we promise we try to meet remoteness with closeness. One Philosophy. We make Bestseller's 10 Basic Principles come alive. We are humble and together we work hard. We base our co-operation on trust, partnership and honesty. We treat all people as individuals but we think and act as a team. Therefore we succeed. One Family. The backbone of Bestseller is our family feeling. We help each other and have unlimited faith in our relatives. We show our identity in the good examples we set for one another. We are proud of our family. It is both our link to the past and the foundation of our future.

In 1996, Povlsen agreed to provide part of the financial backing in order for Warburg and Friis to create their own company, called Bestseller Fashion Group. Povlsen made his investment on a personal basis, in order to maintain a separation between the Danish business and the Chinese start-up. Povlsen's share of the company stood at 50 percent. Warburg and Friis then set to work introducing Bestseller's brand to the Chinese, starting with its Only brand, which was adapted to meet the specific demands of the Chinese market. The company opened its first store in Beijing in 1996.

Backed by Bestseller's clothing designs, the mainland Chinese operation grew slowly but steadily through the end of the decade, opening an average of 20 stores per year. This relatively slow roll out enabled the company to perfect its product mix, which remained for the most part based on the designs developed by Bestseller in Denmark. As the Chinese economy picked up steam near the end of the century, Bestseller Fashion Group found itself in a strong position to meet the surge in demand for European-style clothing. The company launched a more aggressive store rollout, and by the middle of the decade counted close to 900 locations throughout the mainland. Sales to the Bestseller Fashion Group grew to account for some 30 percent of the total revenues of Bestseller A/S.

NEW BRANDS AND NEW MARKETS IN THE NEW CENTURY

Bestseller A/S maintained its own successful expansion program throughout the 1990s and into the 2000s. The company continued to add new brands, such as an extensive accessories collection under the Pieces brand name in 2003. In that year, the company launched a sub-brand to its Only line, called Object Collectors Item. Also in 2003, the company moved to fill in its line of women's clothing brands with the launch of the Phink line. This brand targeted the market for 10-to-16-year-old girls, who were too old for the company's children's clothing lines, but still too young for its women's lines. Meantime, Bestseller also added to its menswear lines, launching the Selected clothing line and retail network in 1997, and the tdk brand of jeans.

After more than 25 years at the head of the company, Troels Holch Povlsen prepared his succession. In 2001, Povlsen turned over the leadership of the company—as well as 80 percent of its shares—to son Anders Holch Povlsen. The younger Povlsen had started working for the company as a stock boy while still a teenager. After completing his business degrees in Berlin and Cambridge, Anders Povlsen proved himself within Bestseller by transforming the struggling Vila brand into one of the company's most profitable brands. While Anders Povlsen assumed day-to-day control over the company, father Troels Povlsen remained highly active as the company's chairman.

Bestseller also remained focused on its international growth. The company entered a number new markets in the early years of the new century, adding franchised stores in Abu Dhabi, then entering Poland, Russia, and Canada. By 2004, the company had also added plans to expand its retail operations into Turkey.

The company's expansion into these new markets came as part of a new and still more ambitious international growth drive. Bestseller stepped up the pace of its new store openings, adding some 350 stores in 2005, then announcing plans to add 400 more stores through 2006. The company's ambitious expansion program was meant to help it maintain its competitiveness amid the increasingly intense international branded clothing market. As Troels Holch Povlsen told the Copenhagen Post: "We're crazy about projects that are a bit difficult. And our goal is to do things even better. It's exciting to compete at a global level where we are up against some highly skilled competitors."

KEY DATES

1975:: Troels Holch Povlsen takes over his uncle's clothing company in Ringkobing, Denmark.
1979:: Company opens first retail stores and launches Bestseller Wholesale business.
1986:: Launch of first international store in Norway; entry into children's clothing with Exit brand.
1987:: Launch of Vero Moda women's wear brand.
1996:: Creation of Bestseller Fashion Group as separate company bringing Bestseller brands and designs to mainland China.
2001:: Anders Holch Povlsen takes over as head of company.
2005:: International expansion drive begins, and company opens more than 700 stores over two years.

Most of the company's brands played their part in the group's ever-increasing retail network. The Jack & Jones brand, for example, celebrated the opening of its 500th store in 2007. At the same time, flagship women's apparel brand Vero Moda boasted more than 600 stores worldwide—excluding China. By then, the company's total number of directly controlled stores had topped 2,000—with close to 2,000 more operated as franchises. At the same time, Bestseller had succeeded in placing its clothing brands with more than 14,000 independent retailers throughout the world.

Part of this success came from Bestseller's continued development of its brand portfolio. The company spotted a new opportunity for growth in 2005 with the launch of the Mama-licious line of maternity clothing, based on the Vero Moda collection. That brand also provided the basis for the launch of a new luxury-oriented brand, Gosha by Vero Moda, in 2005. The increasingly segmented clothing market provided the inspiration for the company's next brand launch in 2007, when Bestseller introduced the Outfitters Nation brand. This clothing line was targeted at the older teenager, positioned between the youth-oriented Phink and PH Industries lines and the young adult lines such as Only and Jack & Jones. After more than 30 years, Bestseller had made good on its name, becoming one of the fastest-growing retail clothing groups in the world.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

Bestseller Retail Denmark A/S; Bestseller Detail A/S; Bestseller Kredit A/S; Bestseller Textil Sanayi ithalat ihracat Ve Dis Ticaret Ltd.sti (Turkey); Bestseller United China Ltd. (Hong Kong); Bestseller United India Pte. Ltd.; Bestseller United Italy S.p.A; Vila A/S (50%).