Stefan Preston, it has to be said, has an office many men would kill for. Above his desk is a large framed print of a woman in sexy pink lingerie that could have been lifted from a soft porn magazine. And there is plenty more where that came from. The clean white walls of his spacious office feature quite a few framed images of gorgeous girls in gorgeous knickers that, in any other company, would probably land the occupant in trouble with HR.
In fact, it's hard to know quite where to look when visiting Bendon's flash new headquarters on the outskirts of the aerotropolis that now dominates Mangere. Almost every surface is decorated with an image of a naked or semi-naked woman - some larger than life-size.
"There were some moments early on that were interesting," Preston grins. Like the time one of the models in a lingerie show took exception to the chief executive slaving away on his laptop while she strutted her stuff. She grabbed Preston's computer, thrust her boobs in his face, and cooed: "What are you doing that's so important that you're not looking at me?"
Five-and-a-half years after taking on the top job at New Zealand's favourite lingerie company, pert breasts and firm buttocks no longer faze the 44-year-old. In fact, you get the impression the saucy side of the business is a bit wasted on Preston, who has done such a superb job of trying to understand his overwhelmingly female customers that he probably knows far more about women's complicated relationships with their bodies than his own wife.
He was originally a structural engineer who, after completing an MBA at Stanford, somehow ended up being Eric Watson's fix-it man for companies as various as U-Bix, Cogent Communications, Whitcoulls and Pacific Retail Group. And, ahem, the dotcom disaster that was online retailer Flying Pig. A much more revealing insight into his psyche than his office art is the pile of management books stacked on his impeccably tidy desk. They include, of course, Jim Collins' Good to Great, as well as rather more dreary titles such as Customer Experience Management and The Experience Economy.
His children's masterpieces are also proudly displayed, and the kids - who are primary school age - are in fact one of the main reasons he announced to staff yesterday that he was leaving. "I've given it a fair shake and I've achieved what I set out to do," he explains. "You have to sit there and say 'I've got to commit myself to the next five years and the sort of life that will represent'. I've got young kids and, realistically, it's going to be more of the same now. The back's been broken, we've built the infrastructure, we've broken into the markets we needed to, we've developed a profitable position in those markets, and now you have to take a deep breath and run a different game to get that benefit out. "And it requires me to spend more and more time in the Northern Hemisphere and so on. There are probably people in the world who can do that job better than me because they've got more experience and more focus and more connections in those markets."
A global search is already under way for a new chief executive, who might even be based overseas. It's unclear whether it will happen in the short term, but it certainly looks as though yet another iconic Kiwi brand might eventually be headed offshore. Could New Zealand really be about to lose Bendon? "It depends how you define New Zealand," Preston replies. The turnaround in Bendon's fortunes in recent years is indeed a textbook example for other New Zealand companies of how to go global.
When Watson's Pacific Retail Group took over the company in 2002, by a somewhat messy manoeuvre, it was in a "reasonably parlous" state, says Preston. Watson had originally invested in the company because he could see it had enormous potential. "Clearly it hadn't had anything spent on it. It had been through five pretty tough years of manufacturing and exporting and it had been one of those businesses where people had tried to rescue the profit margin by cutting costs, and of course the costs they cut were the very costs that support the revenue - things like training, and so on."
Its warehouse was old-fashioned, and management worked in an executive suite with big windows, while the rest of the staff toiled in a semi-air-conditioned space. "We were based out in East Tamaki, and I don't know what vintage the building was, but it looked like it hadn't been touched since the 70s. The computer system was 12 years old and, if something went wrong with it, people would switch it off at the wall, and switch it back on and pray. There was only one person alive who knew anything about it."
What the company did have, however, was some strong brands, including a potentially huge partnership with Australian supermodel Elle Macpherson. Preston fell into the top job after getting involved in doing due diligence for Watson. He took over temporarily when managing director Hugo Venter parted ways with the company, and after a few months decided he wouldn't mind staying.
Unlike most other turnarounds Preston has overseen, Bendon was complex. It not only designed and made its own products, but also sold them through various channels in various countries, including wholesale, third-party retail, franchise stores, its own shops, and discount outlets. On his first day, he got a letter from Bendon's largest customer, saying it would no longer be stocking the company's flagship brand, Elle Macpherson Intimates. And Macpherson herself was not happy that sales of the brand were declining, while private label products were growing.
It was clear what had to be done: he needed to stabilise and fix the domestic business, then build the infrastructure to support growth, then grow the business internationally. First off, it was a matter of working on some fast-moving lines and sorting out delivery issues. This had a "surprisingly quick" effect, he says.
Working on Macpherson took a bit longer. The Aussie icon told the Australian Financial Review recently: "I explored other avenues before I decided to expand with Bendon. But I chose the company because it has a young attitude, it is interested and open to my ideas. It doesn't have brand image baggage." One of the tricky issues was working out how to develop the Elle Macpherson brand without having her continue to be "The Body" who modelled the products. "I guess what we thought is, if the brand is dependent on her being in the photography, then we're in trouble, because she's not going to be in the photography forever," says Preston. "But if Elizabeth Arden can be dead and her brand is alive, then it doesn't really matter."
The answer was a deliberately controversial ad campaign which, Preston admits, was "almost queasily voyeuristic". The campaign was spectacularly successful and won a swag of awards in Australia and Britain (where Bendon spent just £70,000 ($199,000). Even now, he says, there is strong demand for the Elle Macpherson brand in countries where Bendon does not yet sell.
Hiring the right people was also a crucial part of the strategy. Almost the entire senior team was replaced. In order to turn the business from a manufacturing-led culture to a marketing culture, he hired marketers with a background in fast-moving consumer goods. An enormous amount of research was done to improve the company's retail experience, for example. Initially, its flagship store, Bendon on Broadway, existed just to build the brand, says Preston. But all its stores have now been revamped as separately themed, upmarket boutiques with excellent service and customer-friendly changing rooms. The stores won the fashion, apparel and footwear category in the Top Shop awards last year.
The next growth spurt required another change, to a more design and marketing-led approach. In other words, rather than asking consumers what they wanted and giving it to them, the company had to use its own knowledge of the industry and its customers to create products no one had yet thought of, like the Bendon sports bra. The latter approach has required a much more collaborative culture, and has meant the company has undergone two cultural transformations in just five years. However, Preston is now very happy with the team that's in place. "The core group of people here work together really well. We felt we were on a great adventure - this plucky, irreverent group of New Zealanders who just want to have a go, but with the brains and experience to make the right calls."
Bendon's determination to break into the hypercompetitive United States market is a case in point. "You've got to start out with a bit of recklessness," he says. "You've got to be willing to get on the plane and give it a go. But you won't get anywhere unless you're fully committed to it. A lot of New Zealand exporters think they can develop their brand overseas through distributors, and not really fly anywhere and not really put any staff on the ground. They see some orders come in and think they can build a business, but all that is is a bunch of retailers looking for something new. Unless you're willing to be on the ground and commit, it's not really going to happen."
It also goes without saying that you need to have a unique selling point. In Bendon's case, he says, that is a surprisingly uncommon blend of comfort and creative design. Most lingerie, he insists, either looks good but doesn't fit, or fits but doesn't look good. It took a year of listening, networking and radically transforming what it was doing in the US before the company's patience began to pay off. And again, clever and inexpensive marketing was crucial. One of Bendon's stunts was to clad a 16-storey building on the Long Island Expressway with a giant billboard during New York Fashion Week. The billboard gave the impression that the brand was much bigger than it was - it also helped that a planning violation was committed, which meant that it made the TV news.
Bendon now sells in several top department stores in the US, and has an office in New York that also services Canada. But its initial efforts did require bravery on the part of the board, he concedes. "I think a lot of boards lack the vision ... You can't write a business plan that tells you exactly what's going to happen. You just know you've got to reach a break-even position in one of the world's largest markets. What you do with that later is going to be subject to what you learn, but you have to have the willingness to commit to get to that level."
That said, Preston admits he's deliberately kept a low profile during his tenure at Bendon because of some of the risks the company has had to take. Its biggest hiccup was when it introduced its global enterprise resource planning system, intended to integrate all its data and processes into a unified system. He's glad it wasn't a public company at that point. Other infrastructural investments have included a $14 million state-of-the-art distribution facility at its new headquarters in Mangere. The 7000sq m facility, which opened a year ago, handles up to 1 million packages a month. The company also has a warehouse in Seattle, and China.
So far, all the company's growth has been funded from retained profits. "Since we've grown the business we've been able to lever it up as well, so it's been reasonably efficient." Five years ago, Bendon's turnover was around $80 million, and the kiwi was hovering around US40c. Last year turnover was $154 million, and the kiwi was around US70c. More than two-thirds of its products are now exported, and that's all organic growth. In the previous companies he's been asked to turn around, the task has been relatively straightforward, says Preston: "You replace most of the management team, fix up all the basic operating parameters, put a bit of leadership into it, think up some fairly basic ideas about how to market it, and off you go."
But Bendon has been much more interesting, he says, because the possibilities are almost endless. "The company is in an interesting position now because it's developed a global reputation, and it's done that on the back of successful retail, off the number one position on the floors of some of the top-level department stores in Europe and the US. There is no theoretical limit to how you want to grow it, because you can take on the whole world if you want to - the only limit being your creativity and ability to come up with products that are differentiated in a meaningful way."
But unlike some other local export success stories, such as Icebreaker clothing, there is actually nothing about Bendon that is intrinsically Kiwi, other than perhaps its design aesthetic and its attitude, he muses. Its sales in Australasia are run from Melbourne, and its European sales are run from London. It also has a chain of retail stores in the Middle East, run by an Arab partner. As a result of its latest licensing agreement, with top British fashion designer Stella McCartney, it will be exporting to 16 countries from the beginning of next year, including Italy, Germany, France and Russia. Only 200 of its 500 staff worldwide are based here.
Preston admits it has become increasingly difficult to find in New Zealand the skilled staff the company needs, simply because New Zealand no longer has any apparel industry of any note. "In New York I can hire the people I need just like that."
Which is ironic, given the company has been hailed as the future of manufacturing, whereby thousands of low-skilled workers would be replaced by high-skilled ones. He insists that the country is still better off than when Bendon employed hundreds of machinists on low wages. "Now it's full of marketers and designers and product engineers, and the value per capita that we're generating is far greater."
But by the same token, he concedes he can already feel the centre of gravity in the company moving north, especially now that it is establishing a design team in New York. Hence his desire to finally end his relationship with the London-based Watson, and find another local challenge in which to immerse himself. "The one thing that would attract me to going overseas is a more interesting, more scalable, more remunerative business environment. But I love this country. I was born here and I just love living here. I love the outdoors, the sea and the fishing and the boating and the mountains and the hiking and skiing, and I think my children love it."
Between running Bendon, and keeping fit with various sporting activities, he is involved with New Zealand Trade and Enterprise's Beachheads programme, which helps exporters break into new markets, and also Better by Design, which is obviously design-focused. They are both fantastic programmes, he gushes, for companies wanting to grow. While he has found the experience a little depressing, because of companies' conservatism and New Zealand's lack of commitment to exporting, he has also been encouraged by some "tremendously cool" examples of companies doing some "really amazing" things, like Icebreaker, Pumpkin Patch, and Phil and Ted's buggy company.
And it upsets him that New Zealand seems to lack role models for people who've been able to create intrinsic value and successfully export their wares. "Our business heroes tend to be people who are just ripping off public assets, or rearranging the deckchairs on existing companies or whatever, and then taking the money and going overseas."
And he's even prepared to commit sacrilege and slag off 42Below. "It's a good example of branding, but it doesn't make much money, and now it's gone so it doesn't help New Zealand any more. "I think we need to have a bit more intellectual rigour about how we judge a business that's good for New Zealand or not."
What we need are more Icebreakers, he enthuses. "I'm quite passionate about businesses like that and I think there are more businesses in New Zealand that could blaze that trail as well. But unfortunately many of them are stuck with owners who do not have the skills, experience, commitment or capital to take them any further than they have."
In the creative industries, in particular, there are many companies that hit $10-$15 million in revenue, then stop. "I could name eight companies like that. Each one, I believe, could be turned into a $200 million business, but they've got the wrong owners, the wrong management ... " At the risk of sounding a little like Linda Clark, he is keen for his next project to be working alongside people "who believe in the vision of New Zealand, of growing this country, and contributing to this country".
He is, after all, a cerebral fellow. While he was able to create the intellectual stimulation he needs through Bendon, "I don't see any reason why I couldn't create it through some other project, and I can afford to spend the time working on that - and who knows what will come of it?" So far, he has nothing specific in mind. But he is also clearly ready for a new, uniquely New Zealand challenge. "My passion is New Zealand and I look around and think, 'What if I had some spare time and I could go and look at solving some of those problems?'
"It's just so exciting to me to think I could learn how to take some New Zealand company and learn how to make it a global business. What about the other ones out there that I could work on? I have just no idea what form that would take, but I think that's just an interesting thing, and I need a new project and something to get excited about." Because frankly, stars in their bras no longer cuts it, it seems.
Bendon - a brief history
1947: Ray Hurley, a demobilised naval officer, joins forces with his pattern cutter brother Des to found Hurley Bendon. The new company offers lingerie that can literally "bend on" to the body, freeing women from heavy wire, steel and bone foundation garments.
1963: Introduces stretch strap bras and stretch bodyfashions.
1964: Sales top $1 million.
1966: Becomes the market leader in intimate apparel in New Zealand.
1977: Bendon range introduced to Australia.
1982: Publicly floated on the New Zealand stock exchange.
1986: Begins manufacturing in China.
1987: Merges with Ceramco Corporation.
1989: Strikes licensing agreement with Australian supermodel Elle Macpherson.
1999: Announces nearly 400 staff will be laid off as manufacturing moves to Asia.
2000: Buys the insolvent retail chain Bennett & Bain, as well as the Fayreform brand.
2001: Breaks into the United Kingdom.
2002: Management buyout fails. Acquired by Pacific Retail Group for $59 million.
2004: Revamps its retail stores as upmarket themed boutiques.
2005: Breaks into the United States, Canada, Middle East, and Hong Kong. Turnover reported to be $113 million.
2006: Auckland headquarters moves from East Tamaki to Mangere.
2007: Buys chain of independent retail stores in Australia. Strikes licensing agreement with UK fashion designer Stella McCartney. Turnover reaches $154 million.