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Eight years after selling their online haircare and beauty business Ry.com.au to UK-based retailer The Hut Group, James Patten and Brad Carr are back in charge of the company they founded in 2005 with plans to pump up growth of the operation including the opening of physical stores.
The buyback has been as much a surprise for the founders themselves as it has been for the industry, after Manchester-based The Hut Group (THG) decided to pull out of Australia just two years after making a failed $122 million takeover offer for rival operation Adore Beauty Group (ASX: ABY).
“It wasn’t something that we saw coming or that we actively went for, but when we go the news that THG were pulling out of Australia it got the cogs moving,” Patten tells Business News Australia.
At the time, Patten was sailing around the Mediterranean on a yacht with his young family after exiting electric bike company Crooze more than two years earlier. His business partner Carr remains a director of online performance vehicle parts retailer Car Mods Australia as the duo look to rebuild the business that they now have a second chance at growing.
“It’s a bit like putting the band back together, honestly, but we just have to remember how to play the songs,” says Patten.
"While we have gone on to do other things, we are both emotionally connected to the RY (Recreate Yourself) brand, having started from scratch and putting it on the map in Australia.
“Time will tell if it is a good idea from a commercial sense to take it back, but emotionally I think it is a good brand and definitely worth the investment.”
When Patten and Carr sold Ry.com.au to THG in 2017, the business was running “neck and neck” with Adore Beauty.
But while Adore has scaled to deliver close to $200 million in revenue in FY24, Ry.com.au is understood to have peaked at around $30 million during the pandemic.
Patten says the Gold Coast-born business grew under THG’s ownership but nowhere near its potential.
“The fundamentals are there, but it doesn’t really matter what you do – it’s about the people,” he says.
“With some of those great relationships that we had fostered first time around, those people are still in the industry and the feedback we have been getting is that people are overjoyed to see us come back.
“It’s definitely a relationship-based business and maybe dealing with a big corporate giant on the other side of the world really didn’t sit right for everyone.
“Things have improved already with some of the brand contracts we have picked up and we are working through these now.”
The buyback includes full ownership of Ry.com.au and the management of Lookfantastic.com.au, a separate online beauty retailer operated by THG in Australia.
New store planned for Gold Coast
Prior to selling Ry.com.au, the founders had been working towards creating an omnichannel business at a time when pure online was an emerging trend. They plan to redouble their efforts with that strategy, including plans to reopen a store on the Gold Coast which was closed by THG last year.
“We opened a store just before we sold it and our strategy at that time was opening shopfronts,” says Patten.
“We had three stores opened and we purchased one more that we were about to rebrand, but as soon as (THG) took over they closed down all of them expect one at the Gold Coast and never expanded beyond that.”
Patten says Ry.com.au is currently negotiating with the landlord at Brickworks Ferry Road in Southport, where the previous store was located, with the aim of opening a store there in four to six weeks.
“Our strategy was always to be omnichannel with retail stores and we still think that holds today.”
Ry.com.au has consolidated its warehousing operations on the Gold Coast following the buyback, moving 200,000 stock items out of the THG distribution facility in Melbourne to new facilities on the Gold Coast to enhance the online retailer's logistics and customer service operations.
Patten notes that a lot has changed over the past eight years, notably that the brands they stock have themselves become more digitally aware and are going direct to market through their own dedicated online channels.
“When we sold the business, a lot of brands were relying on online retailers like us to set the strategy and the vision,” he says.
“Maybe the channels to market have narrowed a bit with brands selling their own products, but what’s really important now is the size of your customer base, how you service your customer and how quickly you can do that.”
Patten adds that Ry.com.au also plans to leverage one of its key market advantages since inception to drive business growth.
“We have always been backed by beauty and skin experts,” he says.
“Even our customer service staff over the phone are trained skin therapists which is a point of difference for us.
“We’re not just an online store – we actually do use these products. In fact, we’ve just launched online the ability to do live consultations with a beauty therapist so customers will be able to speak with them to guide them through the process.”
Patten says the deal to buy back the Ry.com.au business came around “pretty quickly” and the founders are ready to kick it into gear.
“There’s no way you could build a strategy where you sell your business, wait eight years and then have the opportunity to buy it back again,” he says.
“We’re both hands-on doing 40 to 50 hours a week. Brad texted me the other day to say he was doing a fair bit of overtime for this part-time gig that I signed him up for.
“I guess it’s incremental progress at this stage and I keep telling the staff that it’s 1 per cent better every day.
“There have been times in the last few weeks where we questioned our decision. But we know that this business has legs and it’s really starting to move quite nicely now.”
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