Future far from bright for Britain’s wellies

This week a characteristic feature of the British countryside stumbled towards the brink of extinction: the Hunter wellington boot.

Its bleak prospects come in spite of an abundance of famous champions.

Long the favourite of the country-set, the pale-green Hunter welly helped Princess Diana to trudge across Polo fields and Kate Moss to negotiate the mud of the Glastonbury music festival.

It has become a classless and ageless brand, as seemingly British as bowler hats and queuing.

The formidable brand also attracted prominent benefactors. Shareholders in Hunter include Tory grandees and high-profile City figures.

Yet now, for all its charm, the story of Hunter is much like any other small business in administration, struggling to survive against the odds. Loyal workers have been fired and anxious investors are counting their losses as the shrill sound of recriminations fills the air.

Administrators and potential bidders combing through Hunter’s books will find a company with reasonably healthy sales growth but facing rising costs and heavily burdened with debt.

Between September 2003 and February 2005 it made a pre-tax loss of nearly £700,000. Net debt had grown to more than £2m.

Explanations for Hunter’s demise take two forms. The first highlights long term structural factors – the relatively high cost of continuing to produce in Scotland – while the second points to an over-ambitious management strategy.

At the company’s helm was Mark Sater, the former executive chairman, who built a reputation as an accomplished salesman after co-founding the Caterpillar footwear brand.

With the backing of a new group of high-rolling investors – including Conservative party treasurer Jonathan Marland and Jon Moulton, who runs the Alchemy private equity firm – Mr Sater chose an aggressive strategy to boost sales and extend the range of products.

Hunter went beyond traditional green and black to begin selling a range of colourful, often garishly patterned wellies, often linked to charities, and extended the range of branded clothing.

Mr Sater’s supporters say that, fighting in the face of Britain’s manufacturing decline, he was pulled under by an adverse shift in the business environment this year.

Making boots from rubber – described as an almost Dickensian process – was cheaper abroad; and recent surges in gas, electricity and rubber prices made Scottish production even more expensive.

“It is a small business and you don’t need a lot to blow holes in it,” says one insider. “Industry-wide production has moved to lower cost bases and Hunter was still operating in a high cost base.”

Some within Hunter believed the model of an independent producer, based in Scotland, was unsustainable. The company had either to diversify its products or build a tolerance to cyclical pressures by being part of a larger group.

Opposed are those who believe Hunter should stay an independent British brand. While universally praising Mr Sater’s enthusiasm and eye for growth opportunities, they say he simply pushed the company too far.

“He focused too much on the commercial top line and operational issues got away from him,” says one shareholder. Another source close to the company says Mr Sater “did a great job of refreshing the brand but there was no consideration for cost of sales and cash flow.”

Nearing bankruptcy, the board considered a range of proposals of how to save the business.

None of the offers won the board’s support. Mr Sater resigned and weeks later the company collapsed.

In the coming fighting for control, “anyone who hunts or fishes and has a few quid fancies themselves as the next owner,” says one insider. “It is so close to the hearts of so many people it is almost owned by the nation.”