Tag: matthew moulding

Etailer The Hut Group earns place in entrepreneurs’ grand final

Finalists

An online retailer from Cheshire emerged triumphant in the northwest region on Thursday, earning the last remaining place in the national final to be held next month.

Staff from The Hut Group, based in Northwich, Cheshire, roared with delight as co-founders John Gallemore and Matthew John Moulding collected the award from Adrian Grace, Bank of Scotland Corporate’s managing director at a ceremony in Manchester’s Imperial War Museum.

The Hut Group, which sells consumer products such as DVDs, computer games and electronics through its own website and will use the prize of a £5m loan, interest-free for three years, to continue its rapid expansion.

Presenting the prize, Grace said The Hut Group had been up against the toughest group of finalists of any region. The other finalists were technology-infrastructure business ANS Group; sports-nutrition and health-food firm Myprotein.com; motoring-services business National Tyres; and Pendine Park, the care organisation.

Thorough preparation in the week before their grilling in front of the judges paid off for The Hut Group’s founding pair. “We spent the week running through the presentation, running through the plan and working out exactly how to present it,” said Moulding.

“We were in it to win so we took the competition very seriously. The competition was very stiff — in fact, we would have preferred to have been competing in a different region. I feel a bit numb now but it’s fantastic to have won.”

The Hut Group’s track record of growth from its foundation in 2004 to sales of £27m this year was a decisive factor in its success. “We feel the business in its own right is strong but we also showed the judges our passion for the business and our attention to detail,” Moulding added.

The story of how he and Gallemore founded the business may also have been a factor. “In October 2003 I bought a CD online. It was fantastically cheap and it gave me the idea. We knew nothing about the internet, about retailing or about the product. It’s not easy setting a company up and we mortgaged our houses to do it. We lost £1m in the first two years. That was tough, but we showed we were survivors.

“We were both with the Caudwell Group at the time, which is a challenging environment to be in. Working with an entrepreneur like John Caudwell is an amazing experience and it rubs off on you. We have John to thank. He gave us the income and the chance to reinvest some money.”

The company’s ability to continue growing through a downturn was also part of the message The Hut Group presented to the judges.

Moulding said: “One of our strengths is working with other brands. They let us run their shops and we give them a cheque every month. We’re an aggregator, which is not a bad thing to be in these times. If we were just a small consumer brand on our own there would be a daunting few years ahead.”

Winning the award will help the company to continue its rapid expansion, he said. “We’re going to use the prize money to invest in people, invest in new categories and look at overseas expansion. Winning this award is also going to give us so much credibility in the marketplace.”

The company’s ability to continue growing profitably impressed the judges.

Matthew Riley, chief executive officer of Daisy Communications, the national winner last year, said: “I was impressed by their track record of successful execution and their past with the Caudwell Group, who are hard taskmasters; and they left well-paid jobs, which shows great entrepreneurship.”

Tim Rigg, head of commercial business for Bank of Scotland Corporate in the northwest, said: “We felt that this was a strong and complementary management team. They had been in other businesses, they were well-rounded people and very much in control of the numbers. They were also the sort of guys who would not be afraid to seek advice when they needed to.

“These are entrepreneurs who started from nothing and who showed remarkable growth in the last couple of years. Their strategy of building relationships with blue-chip customers also impressed us and we see the potential to take the business into the next league.”

The Hut Group will join the six other finalists to compete for the title of Britain’s best entrepreneurial business at the Royal Courts of Justice on December 3.

Matt builds Hut to £27m

Online retailing entrepreneur Matt Moulding has quietly built the fifth-largest online retailer of entertainment products in the UK, behind Play.com, Amazon, HMV and Game. His company TheHut.com is little known. It produces entertainment channels selling CDs, games, DVDs and other entertainment products.

In the year to the end of June, the Northwich-based company made a pre-tax profit of around £200,000 on sales of £14.1m but Moulding expects sales by the end of the year to be much higher. “We’re turning over £1.5m a month compared to £500,000 a month this last year,” he said. “Our big period is Christmas, and our run rate of the first six months suggests we’ll do £27m.”

Moulding, 36, who owns 58 percent of TheHut.com, said he began looking at the idea of an online entertainment site after buying a CD from a Jersey-based business in October 2003. When he discovered firms based offshore had been able to take advantage of a rule known as the Low Value Consignment Relief (which exempted items below £18 that are purchased outside the EU from VAT), he started planning his own launch and eventually convinced a couple of friends to chip in to help launch the site with an initial £500,000 investment.

The offshore advantage had almost disappeared prior to the site’s launch in April 2004 once HMV and Tesco announced plans to open their own offshore operations. Yet he and former Caudwell colleague John Gallemore (who has run the site since its inception and holds an 18 per cent stake) persevered.

As it is, he still expects TheHut.com site to bring in around £6m of the forecasted £27m for 2008 but admits it needs an overhaul.

The firm currently ships all CDs and games from three warehouses in Guernsey and Jersey but has recently been looking at other options including shipping from Chicago, which would be “less expensive and just as quick, if not quicker”.

He said the long term goal was to grow sales to £100m through developing new territories, customers and sales channels.

For new channels, it is planning to launch online sales of flowers, t-shirts, lingerie and perfume, among others. The latter will be done in conjunction with fellow Burnley FC fan, Brendan Flood of Modus Ventures.

He is also exploring the possibility of launching TheHut.com concessions within some of Modus’s shopping centres. The terminals would offer shoppers items at cheaper rates than neighbours, he said, as they would operate on lower overheads. It would do deals for smaller, empty units and place terminals within window spaces. The units would not need to be staffed, he argues, and window space could be sold to third party advertisers. He estimates that a small unit with a cheap fit-out would cost around £200,000 — half of which could be recouped on selling window space.

“If we don’t sell a thing, having that level of brand awareness could help towards lifting our online sales,” he said. “And if it’s crap, we could just drop it. We’re not ashamed to admit if something’s wrong. The worst that can happen is someone pees on my computer screens.”

Richard Faulkner, an area director with Bank of Scotland, which is not a lender to the company, said Moulding’s growth plans were “impressive, particularly in the light of the current retail environment”.