Words & Interview: George Dean

Although all of the national retailers were shaken by the effects of lockdown and its showroom closures, Magnet has struggled more than its country-wide contemporaries to stabilise itself in the aftermath.

To the outside observer, the situation at the company was looking particularly rough by July of last year, with profits down by around 150%, and the closure of the Nobia production site in Halifax looming. 

Enter stage left: George Dymond, appointed Magnet’s head of region in the UK after his predecessor, Kristoffer Ljungfelt became CEO of parent company Nobia. 

Although he only joined the company the year before, he’s become renowned for his ability to pull off corporate turnarounds. For example, under his watchful eye, supermarket chain Planet Organic was able to survive an incredibly tumultuous period, going on to be successfully rescued out of administration when the situation looked dire.

In fact, Nobia acknowledged his specific expertise in the press release announcing his appointment, recognising he has “a track record of successful turnarounds”. 

Around the same time he took the reins at Magnet, the company announced a strategy to close so-called “underperforming” stores up for lease renewal, in addition to the launch of a new country-wide franchise model. 

And a year on from that, although the franchise business is still in its infancy, things do certainly appear to be improving for Magnet. Although not out of the woods yet, its Q1 global operating profits were up by 86%, with gross margin also said to have improved year-over-year for the fifth consecutive quarter.

But with an admittedly smaller showroom network this year, as well as plans to properly launch its franchise network before the end of 2025, Magnet still has a way to go before it’s turned around entirely…

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Magnet and Nobia’s financial results have been well-documented in recent years, but in your own words, how is the business doing?

Nobia incorporates quite a lot more than just Magnet, so I think just by focusing on Magnet, you don’t necessarily get the full picture. So we’re proudly open for business on the project side. We’ve created a B2B unit which incorporates the Commodore business, Gower business, and our projects business. And that’s a very different market that we’re serving on the B2B side. I’d say we’re making good progress there. 

Okay, but what about Magnet specifically?

On the Magnet side, I’d say we are making very good progress on our core proposition, which is proudly selling kitchens in what we call “the premium to the masses” model. So, we’ve got a real focus on quality, design and service. And that’s resulting in a particularly strong performance in our smaller retail format stores, and you can see that all around the UK. Of course, it’s been well publicised that we’ve been getting out of some of our larger legacy stores. But that’s as much a quirk of history as anything else. 

Is that what Magnet means by moving to an “asset light” model?

Yes, we’ve taken the opportunity to really look at our store estate because we’ve had 60% of our stores come up for lease renewal in the last two years. What I’m really proud of is how we’ve transformed our network. I’ll give you one example: in Guildford, where we had a long-standing 20,000 square foot store, we decided to come out of that and go into a high street location instead. So that’s the same team, but now much more focused on servicing our core Magnet customer. As a result, we’re getting really, really strong results. But clearly – I won’t paint too rosy a picture – we’re in the middle of a big old turnaround and with that it’s not always plain sailing. But I’m definitely pleased with our core performance in Magnet retail.

I remember when you were appointed as MD last year, the company said you “had a history of great turnarounds” in business, so has this been your plan since then?

Definitely. I know the asset light model works well, and we can point to the concessions we’ve opened with Selco, and the small store format there. And then we’ve got a franchise model that we’re still working to roll out. If you think of Nobia UK, we’ve definitely had the sort of business that may have been too big for itself, if you think of all the different distribution points. So becoming “asset light” is definitely where we’re headed.

After the first Magnet franchise store last summer, have any more opened since then?

Right now, that’s our one and only franchise store. It’s still a bit of a trial run – in fact, we joke that it’s our guinea pig. We’ve got good, patient partners there but we’ve definitely been taking time to make sure the back-end systems work, rather than launch without that back-end ready. But I’m sure you’ll see more franchisees to come in the year ahead.

Do you have a rough figure of how many franchisees you’d like by the end of 2025?

We’re not particularly bothered about the specific number – just getting it right and doing it right. I’m very much always thinking: “what’s the spearhead? How do you get it right starting with just a few?”. And then we can go from there. 

I know that Nobia’s performance has been a bit stronger in the Nordic countries than in the UK. Is there anything unique to our local market that’s made it more difficult here? 

I think we can point to the overall wider market for that. That’s why we’re now in this turnaround and we’re making some big plays. But at the heart of what we’re doing is harnessing the power of our brand. We’ve got fantastic loyalty, and we’re really standing behind our quality, design and service. I’ll repeat those words many, many times over because I don’t think any other company can really stand by those like we can. If you combine together our quality and our team, I think that’s a very, very powerful formula. We just need to bring that to the forefront and get out of some of the legacy stores that maybe have slowed us down over the years.

So is the plan to close bigger stores and open smaller, more targeted ones?

Not necessarily, because one size doesn’t fit all. We’ll definitely continue to review our property portfolio, but there’s no master plan that will see every single large store becoming a small store. It doesn’t work like that. We’ve got some absolutely fantastic bigger stores as well. We’re just optimising what the mix looks like.

Oh, so again, you’ve not got a target number of stores to reach?

I believe it’s dangerous to say “we’re going to have 400 stores and this is how we’ll do it”. I know we’ve got a really, really successful model, the challenge is simply navigating through and putting our best foot forward. The advantage we have, whether through Magnet retail or through a franchise model, is that we’ve got a great opportunity to step forward. But we’re being very focused in terms of cost control. Hence, I’m not going to be saying, “this is how many we can have”.

What do you think sets Magnet apart from the other national retailers like Howdens or Wickes?

At risk of repeating myself, I think the brand we have is truly amazing. And clearly I’m biased on that. But independently, we’ve got lots of stats showing how much business we get based on our quality, design and service. Without naming any names, if you were to walk into a big green building, you’re going to be sold to, but you’re not necessarily going to get great service. That’s their model and I think it’s a very impressive model. But we are the kitchen specialist distributor, so that requires a different service model, but it’s one Magnet has been doing for many years. I just think we’ve maybe been sitting too quietly on just how impressive that really is.

Aside from just the nationals, how much of a business threat would you say independent showrooms represent?

I don’t really look at the competitive landscape as much because we choose to focus on our own model. Have we got a truly compelling proposition that customers are responding to? The answer is yes. Our job is to put together the most compelling proposition possible. Again, we’ve got loads of  data points now that say we’ve got it right. It’s the people that make the difference. And our best store managers know kitchens better than anyone in the UK, I guarantee you that. And our kitchen designers do too. So it’s our job then to bring that all to life.

A lot of other franchise owners have had success by going to independent studios and bringing them on as franchisees. Will you look to that strategy too?

No, there’s no deliberate plan like that. But what we do know as part of the Nobia group, is the franchise model works particularly well in the Nordics. We know what the blueprint looks like, and I think people will be going to be attracted to the fact that we’ve got a fantastic brand. I don’t know where future franchisees will necessarily come from, but there’s no deliberate “let’s go and talk to the independents” strategy. 

So, what’s next for Magnet and Nobia in the UK?

Continuing our plan, reminding people we are the number one kitchen specialist retailer, and really doubling down on the fantastic brand that we have. We are proudly open for business in all the channels that we serve. So that’s our B2B business, our trade business, and the retail business. You’re going to see us really focusing in on our small format retail stores, and then we’ve got a partnership store opening as well so you’re going to start seeing some more exciting news stories aside from just us turning the business around.