Received wisdom dictates that if you want to turn round a loss-making business, it is essential to appoint an outsider, with an Accenture, a Deloitte or a CapGemini perfectly placed to see where things are going wrong.
But when St Ives recorded the first loss in its 45-year history, back in 2009, the company took a more novel approach by appointing a man who had been in the business since he was a 16-year-old apprentice, to lead the team.
And, although chief executive Patrick Martell concedes hauling the firm into the digital age has not been easy, the company’s transformation – from an old school printer to a marketing services group with Creston in its sites – seems to be paying dividends, for both customers and shareholders alike.
The young apprentice
For Martell, the story started in 1980 when he joined his local printing firm as an apprentice straight from school. The company, Fletcher & Sons in Norwich, was part of Clays, the 200-year-old business specialising in books.
He found himself thriving in the work environment and went to college to learn letterpress printing. Martell explains: “I didn’t like school, but I got on well at work and found it more motivational.”
In 1985, Clays was bought by St Ives and these days still produces more than 180 million books a year, with a wide range of titles from the Bible to bestsellers by authors such as Dan Brown and Martina Cole.
Back then the economy was in the throes of the Eighties’ boom, and the print sector was reaping the rewards. The St Ives buyout also enabled Martell to take his first step on the management ladder, although he was forced to take a pay cut to do so.
“You need a lot of luck to get on,” he says, “and I was lucky enough to join a great company which was acquired by another great company.”
In 2000, Martell switched to the Bungay office of St Ives where he moved up the ranks through waste and paper management, then customer services, and business systems. Some 20 years after he had joined, Martell became managing director.
Sadly by then the writing was on the wall for the print sector as the digital world started to take shape. He explains: “Print had always been an inward looking industry and the sector didn’t realise change was happening. Instead of taking stock, printers carried on investing millions in new machinery to deliver more print, more efficiently, and more quickly.”
Promoted to the top role
After joining the executive board in 2003, Martell was promoted to managing director for UK operations two years later. Then in 2009, the company revealed its first loss, of £7.2m. This sparked the departure of then boss Brian Edwards, with Martell succeeding him as chief executive of the group.
His rescue strategy, to rein in on print and acquire associated businesses – offering data, insight and a broader range of marketing services – was duly put in place.
Under Martell’s leadership, St Ives set about restructuring the business, consolidating some divisions and selling others. This not only brought cost-savings, it also boosted the acquisition kitty. The sale of its magazine printing arm, for instance, raised £20m.
He says: “In a way it would have been nicer to be CEO when print was on the rise, rather than in decline. I had spent my whole career building up expertise that, once I had become head of one of the UK’s leading print firms, I had to volunteer to become an ‘amateur’ in the businesses we were acquiring.
“But it made me focus on buying the right businesses, with the right people, as we knew it would be those management teams which would drive the group forward.”
The first deal the company struck was for Occam, which it bought for £12m in June 2010. Further acquisitions – including those for Response One, Incite, Forward Thinking and digital agency Amaze (above, right) – followed, the most recent being last week’s £10.7m deal for search agency Branded3 Search.
St Ives has now bought six businesses and taken minority stakes in two more, spending more than £70m in the process. But rather than hand over the cash, all deals include a third of the asking price in shares. This, says Martell, means the existing management is incentivised to remain within the group and make the deal work.
He adds: “Of course not everyone is keen on that and it can be a labour-intensive process to make sure they are a good fit. We have spoken to in excess of 130 businesses so far to get to the position we are in today.”
Hands-off approach to acquisitions
And Martell is the first to admit this hands-off approach is good for both parties. “We are experts in print, they are the experts in their fields. Together we can build the business.”
The company now runs under the ethos of “thinking and doing” – supporting its print heritage with a strategic approach to insight, without losing its expertise in execution.
He explains: “Direct mail is classic example of where print was and where it’s going in the future. Back in the day if you wanted to sell car insurance you carpet-bombed the whole nation. These days you only target the people whose car insurance is due to expire. If you went to an insurance firm now and said ‘let’s do a mass mailing’ they’d think you had gone mad.”
The challenge now lies in cross-selling St Ives’ services to new and existing customers. Nearly 50 clients, including Sainsbury’s and HSBC, use several of its divisions, although achieving its ambition of deriving 40% of its profits from marketing services may yet require more acquisitions, and more change.
Since Martell became chief executive, St Ives has transformed itself from a business which employed more than 5,000 printers to a marketing services group whose head-count is nearer to 3,500; only 2,000 of whom work in print.
“There have been some tough decisions along the way,” Martell concludes, “and, at times, it’s not been easy, but we have to concentrate on what’s best for our customers.” And that is a sentiment even a management consultancy would be hard-pushed to argue against…