Strategic Review
29 August 2007
Hot Tuna (International) PLC (AIM:HTT), a lifestyle apparel brand with authentic surf heritage, is pleased to give the following information on the strategic review which has now been completed by Niels Juul, who joined the Group as Chief Executive on 1 June 2007.
The strategic review has spanned the whole breadth of the Group and has resulted in the implementation of several important changes in order to drive growth in sales and continue Hot Tuna's development.
Organisational structure
Following the strategic review, the Group has been restructured, which has strengthened the team across all levels of the business, in order to build a more effective operational structure. The administrative and logistical functions were previously spread throughout the Group's operations, and these functions have now been brought together in one location.
There has also been a shift in focus for the senior management team, whose roles have been redefined to incorporate more of a sales function rather than their previous operational focus. This realigned structure will put Hot Tuna in a strong position to continue its development and to realise the future strategy for the Group.
Manufacturing and production
The review has also assessed the manufacturing process which has been streamlined by reducing the Group's reliance on 14 manufacturers to just three. Whereas previously materials were obtained from numerous sources across four countries, the Group will now use a maximum of three sources based solely in China, which will give much quicker delivery times and more reliability. Significantly, the move to fewer sources will place the Group in a stronger position to negotiate better prices for larger orders, and therefore secure better margins.
The Group's strategy with regard to production is to purchase large quantities of plain garments from a single source, and then to customise them regionally to reflect local tastes and styles.
Design and sampling process
The strategic review has highlighted inefficiencies in certain elements of the existing design and sampling process, which the Board has addressed by targeting the opening of a new sourcing office in Shanghai by the end of September, to service the needs of the entire Group. There will be cost savings as a result of the fact that the sampling process will be contained in one location, rather than incurring the costs of spreading the process globally.
The design process will be similarly streamlined, as the designers will be relocating to the Los Angeles office to allow Niels Juul and Executive Director Elle Macpherson to oversee all aspects of the design process. It is anticipated that these changes will reduce the overall design time by a total of six to eight weeks, which is significant not only in terms of reducing the cost of the process, but also as it will secure more orders by offering a quicker time to market.
Delivery
The Shanghai sourcing office will enable much quicker delivery time, and will also reduce the risk of delay, as deliveries will be shipped directly from Shanghai to their destination.
This new method of design, sampling and delivery will be implemented from the beginning of the design of the Autumn/Winter 2008 collection, which commences now, although certain elements of the new set up will be used for those collections which are already in progress.
Commenting on the review, Ranjit Murugason, Executive Chairman of Hot Tuna, said: "The changes that Niels has implemented have been extremely positive for Hot Tuna both as a brand and as a business; his creative vision and sharp business acumen have meant that he has made the whole Group more efficient in the way that it functions, whilst maintaining the strength of the Hot Tuna brand.
"The Board's focus on the Group's 'time and action calendar' will give tighter deadlines and ensure that the whole process is simplified and has clear targets."
Niels Juul, CEO of Hot Tuna, commented: "I have been focused on improving the Group's margins by reviewing and adapting the processes that were already in place. We have identified a number of areas which need to be addressed, and the next phase of my role will be to realise these changes for the benefit of the Group.
"Our production process has been simplified, offering significant cost savings and a much more efficient function. The restructuring of the Group and its operations will create a more efficient streamlined apparel operation, and this secure structure will facilitate our growth going forward."
For further information:
| Hot Tuna (International) PLC | |
| Ranjit Murugason, Executive Chairman | Tel: +44 (0) 20 7372 9378 |
| ranjit_murugason@hottunaplc.com | |
| Seymour Pierce Limited | |
| Mark Percy / Parimal Kumar | Tel: +44 (0) 20 7107 8000 |
| parimalkumar@seymourpierce.com | www.seymourpierce.com |
Media Enquiries:
| Abchurch | |
| Henry Harrison-Topham / Chris Lane | Tel: +44 (0) 20 7398 7700 |
| chris.lane@abchurch-group.com | www.abchurch-group.com |
Notes to Editors:
Hot Tuna International PLC (AIM:HTT) owns the rights to the Hot Tuna brand, a progenitor of global youth fashion, born in Australia with a heritage of authentic surf culture.
Hot Tuna is one of the world's most iconic names in surf lifestyle and can trace its roots back to 1969 when it was founded by a surfer and his fashion designer wife. Though the label had not been actively marketed over for the last decade, it retained an organic cult status among core action sports enthusiasts.
In June 2005, Hot Tuna International PLC purchased the 'Hot Tuna' brand from Frontier International (Holdings) Pty Ltd, listed on AIM in September 2005, and has since started to aggressively market the brand and reinvigorate the business. The Company now owns all intellectual property rights to its name and related iconography, and has put in place key management drawn from the executive ranks of Von Dutch, Quiksilver, O'Neill and Ocean Pacific, among others.
Headquartered in the UK, Hot Tuna operates design, marketing and distribution hubs in the USA, Australia and the UK. In its core markets, Hot Tuna sells products, which are directly manufactured in facilities principally in China.
Hot Tuna offices are maintained in Sydney, Los Angeles and London. For more information, visit www.hottunaplc.com
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