Zara, where art thou

My unreliable source keeps yakking on to me about the imminent arrival of Zara in Australia. Annoying as this is, I can't help listening.

He still says the Melbourne site for Zara is either the old Georges building in Collins Street or Katies in Bourke Street. But he's said all that before. What's new in the story is the proposed Sydney venue - which certainly makes sense. It is in the Westfield redevelopment on the corner of Market and Pitt Streets. Those who have viewed the plans say that a nice big space has been marked out for Zara. Furthermore, the group plans 20 other stores around Australia.

One or two Zara stores in Australia would not make sense because the legendary fast stock turn of Zara only works when there is volume going through. If we assume that Solly Lew is Mr Zara in disguise, it becomes obvious that the Just Group, of which he is the biggest shareholder, would be ideal vehicle to give birth to Zara in Australia.

Mambo moves on
After much huff and puff, and with an undercurrent of motivated vendor, Gazal Corporation has offloaded the Mambo business to a private equity outfit which goes by the opaque name of Equity and Capital Finance Australia.

The two men who have come out from behind the screen for photo opportunities are Tony Woodward (accountant) Angus Kingsmill (surfwear retailer who wears one red and one blue thong).

How muchy muchy, everybody wants to know? Because it is not a public company, Michael Gazal is keeping schtum, except to say that it was more than book value - bearing in mind that the book value could have been five dollars.

After starting in 1985 Dare Jennings and Andrew Rich sold Mambo to Gazal for a reputed $10 million in Gazal shares plus some cash. The Sydney Morning Herald guessed that Gazal sold it on for over $10 million - which I say is twaddle.
The selling price, however, in only of passing interest compared to the lesson one may draw from the Mambo phenomenon.

Dare and Andrew set it up with the idea that it would only be available from surf shops. Later jeans specialists like General Pants were offered the line. But Dare and Andrew wouldn't let department store buyers, much less chain store buyers, in the door. This limited sales but lengthened the life of the brand and built a powerful customer loyalty.

The Mambo appeal was all in the graphics. Dare rounded up the most talented, irreverent artists he could find and set them to work. He paid big money for any graphic Mambo used, plus an ongoing royalty based on sales.

The musically farting dog was drawn by Richard Allen who had a label called 'RAW'. He's since moved on to Mooks (streetwear) and is now big time.

Another artist, Reg Mombassa (his real name is Chris O'Doughety) specialised in images of furry, lumpy creatures. He was one of the early members of a band called Mental as Anything. Nowadays he's a popular artist selling through Sydney's Watters Gallery.

Paul Worstead was the artist who introduced the famous vomiting chook to Mambo gear.

There were more artists later, thus establishing another of Dare's principles: keep the art coming and keep it fresh. Rather than styles, his graphics were his collections.

It's hard to know whether Gazal maintained the rage or not, but certainly it misjudged the market when it tried to open Mambo stores overseas. Expansion locally was just as difficult. The brand's strength was in being undersupplied and not easy for consumers to find.

Although Michael Gazal will never reveal the financial performance of Mambo (I wouldn't either if I were in his shoes) it would be worth nothing as a going concern without the brand. The Mambo sale illustrates yet again that brand maketh the deal.

You may recall my story about the guy who wound up a successful business that was supplying unbranded merchandise to a couple of big budget chains. When he made an estimate of how much his company was worth he assumed that somebody would buy the trading business and that some tax losses he had accumulated would also be worth something. When neither of these perceived assets could be sold, and he received not a cent, his fellow shareholders became enraged.

Currently there is a court case looming over a similar company that has been brandlessly sourcing for big retailers and now wants to wind up. One of the minority shareholders is kicking up a nice old stink over the similar perception: that a multi-million trading business is worth something without the people who have been driving it. This minority shareholder will find that the business itself is worth nothing because it has no brand to sell.

By Fraser McEwing