The Oracle of Ancaster - Doug Putman of Putman Investments

The Globe recently outed a retail turnaround artist and empire builder. He is largely unknown to Bay Street, so I put together his basic info here.

Doug Putman, at his Birmingham HMV, the largest entertainment store in Europe.

I don’t buy anything if I don’t believe it has unlimited runway if run correctly. I’m a great buyer but a terrible seller. I’ve never sold anything that I’ve bought.

- Doug Putman

Starting with the acquisition of a dozen music stores in 2014, Doug Putman has rapidly assembled a sprawling empire centred on retailing. Doug is the driving force of family-owned Putman Investments, based in Ancaster, Ontario. He is a 37 years-old university dropout who owns hundreds of stores employing more than 20,000 people with total sales measured in the billions. While he is now the world's leading music retailer, Doug clearly sees himself as a generalist wheeler-dealer.

Much of Doug Putman's empire was built in the past few years by buying up broken or underperforming companies and unloved brands at fire sale prices, often out of bankruptcy. For example, HMV UK was losing $9m per month when he bought it. Putman Investments' notable holdings include:

-Sunrise Records in Canada

-The HMV chain in Canada and the UK

-The For Your Entertainment chain in the US

-The Montreal-based DavidsTea chain (rebranded as T.Kettle)

-Toys “R” Us and Babies “R” Us in Canada

Doug Putman is a deal junkie and is constantly looking for more acquisitions. A motivation for collaborating with the Globe’s recent profile was to increase his dealflow. Because of his obscurity, he had to cold-email Fairfax Financial CEO Prem Watsa to acquire Toys “R” Us. Sad! Doug also owns an assortment of businesses beyond retail, including restaurants and toy manufacturers. The origins of the family business go back to Everest Toys, now a nine-figure toy manufacturer and distributor. Everest was started by Doug's parents, Karen and Bob, who also own part of Putman Investments. All three still work closely together. The Putmans also own a lot of real estate holdings in the Hamilton area.

Putman is a fan of Buffett and Munger, so you can expect the business is run along Berkshire principles. For example, he uses very low levels of debt. Putman Investments only has six direct employees at headquarters. Doug's right-hand man and the current CEO of Putman Investments is Jesse Gardner, a former Deloitte accountant who first joined Sunrise Records as controller in 2017. Incidentally, they’re currently looking for a financial controller. This is Jesse Gardner:

Jesse Gardner, CEO of Putman Investments

Putman is betting that retail isn’t dead and that offering the right experiences and support will bring back store traffic. Like having Geoffrey the Giraffe at Toys “R” Us stores. Or having live music shows at his record stores. His retail turnaround playbook involves quick intervention to stem losses over a sixty-day period, renegotiating leases with landlords and trying to strike better deals with suppliers. Then he capitalizes on nostalgia and hot trends - like collectibles, a market that grew 28% in Canada in 2021, according to NPD Group - to boost revenue.

Doug's first venture was launching a fruit stand at age 16 and growing that to 5 spots. He eventually enrolled in the business program at Wilfrid Laurier, but dropped out in his first year because he felt he wasn’t learning how to become an entrepreneur. He then started working in the warehouse of Everest Toys. His first big move to cut his own path was to acquire Sunrise Records.

Having stabilized his latest acquisitions, Doug has a number of growth initiatives, including expanding store count, building a European toy distribution company and building a toy store chain in the US. He is also open-minded about investment opportunities, saying:

"There are few industries we aren't interested investing in. It just comes down to what is the opportunity. Obviously we’ve done well at turning some businesses around. That’s the nice thing. We can buy very strong healthy businesses but we’re also open to buying ones that are in a little bit of distress that need some help."

His past few deals have been in the $10-$20m range. His lawyer is Tony Gioia at Aird Berlis.  You can reach out to Doug Putman at doug@putmaninvestments.com

If you have something to sell him, it might also be useful to know that having moved up in the world, his hobbies include collecting luxury watches and collecting Canadian art, including Group of Seven pieces and works by Saskatchewan landscape painter Ivan Eyre. And of course, he collects vinyl records.

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