This week a British road haulage firm was involved in what is technically a reverse takeover. Boring? Not when a cultural icon like Eddie Stobart is involved. We look at the business realities behind the brand that turned trucking into a motorway fashion show.
Eddie Stobart is a very English organization with amazing brand recognition. Even more remarkably, that status has been achieved largely not by customer satisfaction, but by non-customer satisfaction. The haulage firm has established itself in the affections of the public by an unrivalled charm offensive.
Edward Stobart Jnr took over his father’s haulage business delivering agricultural products to Cumbrian farmers. The firm grew, and Eddie’s imaginative leadership style created a unique business. For example, he personalized each of his trucks with a female name starting with the then super-model Twiggy, and following up with the musical pop idols of the day (Tammy, Dolly and Suzi). Eddie’s business values required trucks and drivers to present shiny clean appearances. As time went by Eddie Spotting became a Motorway pastime. Children kept notebooks with the details of the times they had caught a glimpse of Tammi or Twiggy. A cult was emerging.
In 2002, following difficulties caused by the fuel crisis, Edward Stobart sold the company to his brother William and his business partner Andrew Tinkler who own a civil engineering company specializing in railway maintenance called W.A. Fans and fantasies
Since 2002, ES has remained a fantasy company in the public eye, symbolized by the thousand or so A-list celebrity models cruising up and down the motorway catwalk. But there was another and hidden side to ES. Fans are generally avid for every detail of what lies behind the glossy exteriors of their fantasies. The ES fan club members were content to tick the boxes, buy the merchandise, watch the TV animation (‘Steady Eddie’). They were not interested in the commercial story behind the fantasy.
The trucks were struggling to pay their way. For all the brand recognition, trucking is part of that modern notion a supply chain. And in the retail supply chain, the profit carve-up leaves big retailers with the lion’s share of the goodies, with the worker ants well down the food chain. Truckers are down there with the worker ants, producers and beasts of burden. Less metaphorically, the transport business is at risk from uncontrollable costs, including fuel. As fuel prices rise, so truckers struggle to remain profitable. The owners of those glossy trucks began to look for ways of transforming the business.
As the BBC put it
By the turn of the [20th] century, the Carlisle-based company had a fleet of about 800 trucks, a massive property portfolio and a turnover of some £150m. But although the company was at its peak in terms of size, it made its first loss in 2001 in the face of rising fuel prices, a shortage of trained drivers and tougher demands from its customers.
Now ES is heading for a stock market quotation.
The move follows after the firm announced plans to join with property and logistics group Westbury Property Fund in a complex reverse takeover. While Westbury is paying £138m to buy Eddie Stobart, Stobart’s owners are buying Westbury’s property portfolio for £142m. The merged group will be called Stobart and take up Westbury’s share listing
What happens next?
The deal is expected to be legally confirmed by Westbury later in the year. Overall, the case will offer considerable insights into the outcome of a strategy claimed to be one that will protect and transform a much-loved brand. Beyond that, the story promises more twists and turns. Will the unique branding of the former Eddie Stobart operation have much value in a few years time? Whatever happens, professional investors will take care to distinguish the fantasy from the financials.
A blogger’s question
Blogger Jon Howard asked a question worthy of a business school marketing examination:
Eddie Stobart has created a discrete community of fans whose relationship with the brand has absolutely nothing to do with its core business (and probably never will), and may have little provable impact on the bottom line. But they encourage and support it any way. And it feels like a good thing. So are there other examples of brands who have done something similar?
It’s not similar in one respect, but I mention it anyway. Once there was another British icon on the pre-motorway roads. The firm always had immaculate vehicles and smartly-dressed drivers who saluted. It expanded mightily from its origins. It was the Royal Automobile Club later known as the RAC. It is still a fine organization. Competition and change, however, have also hit the RAC. Do its drivers still salute? Like ES, the RAC was forced into diversification, cross-selling and all that stuff. It is now part of a large insurance group. Its main rival, the AA, has fallen into the hands of a private equity organization.