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The turnaround artist from Ancaster, Ont., has a portfolio that employs 20,000 people and generates billions in revenue. So why doesn’t anybody on Bay Street know who he is?

Geoff Fitzgerald/The Globe and Mail

DOUG PUTMAN IS A MAN TORN. From the cluttered office he shares with his mom and dad in a three-storey warehouse on the edge of Ancaster, Ont., Putman has quietly built an empire out of buying broken or underperforming companies and turning them around. His appetite for deals is unrelenting. In the past three years alone, Putman Investments has acquired more than a dozen businesses, including HMV in the U.K., where he rescued it from bankruptcy, and Toys’R’Us Canada, along with an assortment of restaurants, toy manufacturers and a U.S.-based retailer of entertainment-related memorabilia. Now he’s hungry for more. “The thrill for me is about getting into a business and making it better,” says the 37-year-old university dropout. “We’re trying to pound the pavement to see what’s out there that would be a fit for us.

There’s one problem: Nobody seems to know who Doug Putman is. “I’ll be honest,” he says, “we don’t get an awful lot of people coming to us with deals.”

Aside from talking publicly about his few blockbuster buys, Putman’s business activities have flown well below the radar. That’s by design. He tightly guards his privacy—if he could have his way, no one would pay attention to what he does. This whole process of having a story written about him was deeply uncomfortable: Minutes after I reached out to one toy industry insider, Putman sent me a text saying people had started to alert him that I was poking around. Maybe he gets it from his father, Bob Putman, a former steelworker who quit his job in the early 1990s to start Everest Toys, the distribution company on which everything has since been built; Bob refused even to be interviewed about his son’s accomplishments. “My family is just really private,” says Putman. “I think people look at you in a different way the more successful you become, and I think it’s better to have them look at you as if nothing’s changed. When no one knows you, there’s just something nice about that anonymity.”

But when no one knows who you are, it’s hard to make deals. When Putman wanted to explore buying Toys’R’Us, he resorted to cold-emailing Prem Watsa, the CEO of Fairfax Financial, which bought the toy chain in 2018 after its insolvent U.S. parent put it up for sale. It was Putman’s only option. He’s a complete outsider when it comes to Bay Street’s traditional deal-making infrastructure; he barely even takes on debt to do deals, so his relationship with the banks is confined largely to short-term operating lines of credit, along with mortgages on Putman Investments’ real estate holdings in the Hamilton region.

Nor does he believe in flipping companies for profit—a standard practice in the turnaround world—which means he has no use for investment banks. “Doug who?” responded one downtown Toronto investment banker when asked if he knows the guy. “I personally don’t know Doug Pullman,” admitted a commercial real estate broker in nearby Hamilton, butchering Putman’s last name. Even Google, which knows everything about everybody, isn’t overly helpful: Search for “Putman Investments” and the search engine unhelpfully and unrelentingly insists you must be looking for Putnam Investments, the giant U.S. money manager.

Which is remarkable, given the multinational enterprise Putman has assembled. All told, his roster of companies now employs more than 20,000 people in Canada, the United States and the U.K. As a private business, Putman Investments doesn’t release financial information, but when pressed, Putman says total sales amount to “many billions” of dollars. “If you’d have talked to me 10 years ago and asked where we’d be today, I’d never have thought this,” says Putman, clad in his usual grey hoodie and looking more likely to start selling you crypto than a Magic Mixies Magical Misting Cauldron. “Really, most days when I walk into a Toys’R’Us, I still shake my head. Like, I own this. This is pretty amazing.”

In the small pond that is the Canadian business world, Putman is arguably the biggest nobody you’ve never heard of.

SITTING IN PUTMAN’S CLUTTERED office at Everest, amid frat-boy novelties like a life-size statue of Jason from Friday the 13th and a cheeky cursive neon sign that could say “luck” if you stare at it long enough, there are almost no indicators of the stealth wealth Putman has amassed. He doesn’t pretend to live a modest life, but he doesn’t flaunt his riches, either—though Putman admits he has developed a passion for collecting luxury watches and sports a Patek Philippe Aquanaut, a five- or six-figure timepiece, under the sleeve of his hoodie. He’s also started to collect art—mostly Canadian, he says, including some Group of Seven pieces, as well as works by Saskatchewan landscape painter Ivan Eyre.

As an outsider from the world of finance, Putman has little in common with the broader turnaround world, populated as it is by MBA grads in tailored suits working at private equity firms. He launched his first venture at 16, when he got his driver’s licence and set up fruit-and-vegetable stands around Hamilton, hiring five friends to run them. He enrolled in a business program at Wilfrid Laurier University but dropped out in his first year. “I was never the best student in the world to begin with,” he says. “I wanted to be an entrepreneur, and in my mind, I wasn’t learning how to do that.”

Instead, he joined Everest, then still a five-person operation, where he toiled in the warehouse before trying his hand at sales. One of his first big accounts was Toys’R’Us. Another was Sunrise Records, a small chain of record stores in southwestern Ontario.

Geoff Fitzgerald/The Globe and Mail

In 2014, Sunrise’s owner, Malcolm Perlman, decided to sell. Putman—then 30 years old—sat down with his dad and his mom, Karen, to decide whether the family should branch into the riskier world of retail. (He still talks over every deal with his folks. Karen, he says, is always the voice of caution—the worst-case scenarioist—while Bob usually argues that any problem can be overcome if you just work harder.)

In the case of Sunrise, Karen had good reason for trepidation. The music world was changing at lightning speed, with digital downloads eviscerating the market for CDs and DVDs. But Putman knew records had started to enjoy a resurgence, and the market for pop culture collectibles and kitsch was booming. So he bought five Sunrise stores and reconfigured them to sell more vinyl—both the round musical variety and in the form of Funko Pops, the big-headed figurines whose popularity had started to explode. (Never heard of them? Go ask your kids.) When HMV Canada fell into receivership three years later, Putman took over the leases on 70 of its locations and converted them to the Sunrise banner.

An even bigger opportunity was about to fall into his lap. In late 2018, the HMV chain in the U.K.—where the retailer with its dog-and-gramophone logo got its start a century ago—was on the verge of death. Five years earlier, London-based Hilco Capital, the private equity–backed turnaround shop, had paid $75 million to rescue HMV from insolvency. But now, faced with a combination of digital disruption, falling foot traffic and uncertainty over Brexit, Hilco had filed for insolvency on the chain’s behalf.

Putman knew HMV would be going on the block just after Christmas 2018, but he hadn’t decided whether to pursue a deal. Instead, he flew to Hong Kong with his wife, Kerri, to attend a toy fair, then took her on a seven-day side trip to Koh Samui in Thailand for a “long, long, long-overdue” honeymoon. (The couple married on a Saturday in 2015; by Monday, Putman had flown to Los Angeles for toy meetings.) In the end, Putman decided the opportunity was too good to pass up. After just four days of talks, he signed a deal to acquire HMV’s U.K. operation. The cost: $1.5 million.

The price tag was misleading, as Putman points out. HMV was losing roughly $9 million a month—losses he had to absorb until he got the chain back on its feet. That meant he had to act fast.

Putman approaches every turnaround job the same way. He becomes fiercely involved for the first three to 12 months and then steps back to let the company’s own managers take over. During that initial phase, he and his right-hand man, Jesse Gardner—a former Deloitte accountant who first joined Sunrise Records as controller in 2017—meet with employees, renegotiate leases with landlords and try to strike better deals with suppliers. In the case of HMV, that meant flying to the U.K. for two weeks a month for several months and “going over the place with a fine-tooth comb to give it the treatment it needed,” says Phil Halliday, whom Putman later recruited as HMV’s managing director. “Doug is a straight talker, and he’s not overly precious with regards to tradition and the way things had been done in the past. He challenged the status quo, and HMV needed that.”

Putman’s plan was to stock stores with more collectibles, toys, T-shirts and, yes, Funko Pops. Much like his Sunrise overhaul, he also put far greater emphasis on vinyl sales, which he says the chain had been understocking. It was a prescient move. Since 2018, vinyl sales in the U.K. have climbed nearly 50% to $235 million, according to the U.K.’s Entertainment Retailers Association, leading last year to the first annual increase for physical music sales in 20 years. That’s been driven in part by young, digital natives who consider the physicality of a record player to be a novelty. (“When you hear someone say they don’t have a record player, it’s kind of weird, and everyone tells them you’ve got to get one,” a 20-year-old relative in Liverpool told me recently, before describing scenes of young people spending hours at the local HMV, sifting through albums—a scene that sounds more like 1992 than 2022.)

Under Putman’s ownership, HMV is also expanding its brick-and-mortar footprint after years of shrinkage. Last year, the chain moved out of five locations after the landlords refused to budge on rent, often moving into bigger spaces. Meanwhile, HMV opened five new outlets in 2021, including the 25,000-square-foot HMV Vault in Birmingham, the largest music and entertainment retail space in Europe. Halliday says HMV plans to expand from 110 stores to 150.

The infamously fickle British press has taken a shine to Putman. His willingness to say whatever’s on his mind helps. When Putman told a reporter for the Mail on Sunday that his wife’s initial reaction to hearing HMV was up for grabs was to say, “No ****ing way,” that became the bold-type headline for the story. (Putman says his wife was “insanely supportive” of his decision to buy the chain but had misgivings about the effect the stress would have on his health.)

For industry insiders across the pond, HMV’s transformation is a welcome relief after years of stagnation. “Doug is clearly into music and entertainment, so you could tell this wasn’t just a business transaction—some guy wanting to own all of High Street for some Machiavellian reasons,” says Drew Hill, managing director of Proper Music, the U.K.’s largest independent music distributor. “He’s made tough decisions, but he’s had a definitive idea of how the stores should look. It’s not just another version of the same old thing.”

IN AN ERA WHEN hot money is falling over itself to chase growth stories in tech, cannabis and crypto, Putman continues to zag toward unloved brands and businesses. It’s a strategy that has allowed him to buy otherwise unwanted companies at drastically reduced prices. 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. And because he doesn’t borrow heavily or face any pressure to generate short-term returns, he only needs to get businesses back to operating profitably to find success.

Putman’s acquisition of FYE (For Your Entertainment), a chain of 200 stores across the United States that sell entertainment and pop culture merchandise, is a perfect illustration of his strategy. According to regulatory filings, Putman had walked away from talks with FYE’s owner, Trans World Entertainment, at least twice since 2018, balking at the original US$35-million asking price. By February 2020, he’d talked them down to US$10 million, a price that included US$40 million in inventory. In its last fiscal year pre-Putman, FYE reported a loss of US$50.7 million. He says it’s now back in the black (though he won’t provide details) and has opened a handful of new locations, including two in Canada. The bright orange-and-white store in Toronto’s Eaton Centre, which opened in June 2021, teems with toys, games, anime, K-pop merch, collectibles, gifts, turntables, headsets, music and, of course, rows and rows of Funko Pops.

Putman is making a bold bet—that the death of physical retail has been greatly exaggerated. People, he believes, don’t just want to buy stuff off their phones; they want the kind of experiences and support best delivered in-store.

That wager has been put to the test during COVID-19. The pandemic took a huge bite out of sales at Sunrise, HMV and T. Kettle, a chain of tea shops Putman launched in 2020, when he bought 45 DavidsTea locations after the company filed for bankruptcy protection. HMV alone saw its revenue collapse by more than half last year, to $155 million, according to regulatory filings.

A plunge like that would leave most business owners staring at the ceiling all night. But Putman has the luxury of taking the long view. That’s because, unlike most businesses that expand rapidly through acquisition, Putman has done so without loading up on debt—at a time when most Canadian companies have gorged themselves thanks to ultralow interest rates. Putman, meanwhile, has an almost pathological aversion to borrowing money. He typically finances deals through cash flow generated by existing businesses or, in the case of larger takeovers, by mortgaging his company’s “significant” real estate holdings, which include warehouses, office space, retail space, and land in and around Hamilton. Even then, Putman maintains a low debt-to-equity ratio of around 20%, far below what’s typical in the commercial real estate sector. “On the one hand, leverage allows you to buy bigger things,” he says, “but if you max yourself out, you don’t have a lot of maneuverability when something bad happens.” Like COVID-19? “Exactly. Our businesses shut down, but we knew we could weather the storm for X amount of time. It just lets me sleep better at night.”

It’s hard not to notice the similarities between Putman’s investing M.O. and that of billionaire businessman Jimmy Pattison, even if one is 93 and the other is yet to turn 38. Both take a long-term view of the companies they buy, unlike traditional turnaround shops funded by private equity. “They look at the value they can get out of a business and know there is an end to the runway,” he says. “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.”

Both Pattison and Putman also operate their holding companies with a flat structure. Pattison employs 16 people who oversee his $13-billion-a-year business, leaving the day-to-day management of each division to company presidents. Putman’s operation is even leaner: Putman Investments has just six direct employees, making it one of the biggest small businesses out there.

It’s an approach similar to that of another famous value investor, Warren Buffett. Berkshire Hathaway, the company that controls Buffett’s vast holdings, has just 24 employees. Not surprisingly, Putman counts himself a Buffett fan and is currently wading through Poor Charlie’s Almanack, a dense 500 pages of speeches and talks delivered by Buffett’s right-hand man, Charlie Munger.

One of Munger’s comments jumped out at Putman. If you took away the top few deals he and Buffett had done together, they’d have a good record, but not an exceptional one. It was a reminder that it’s not always about how many deals get done, but the deals themselves.

Now the Oracle of Ancaster must make sure Toys’R’Us turns out to be not just a good deal, but a great one.

ONE THING THE PANDEMIC lockdowns did was give Putman an opportunity to be home for dinner for the first two and a half years of his daughter’s life. It’s an understatement to say family is important to Putman. He counts his father, Bob, as his best friend, has lunch with him every day, and says he strives to be as good a dad to Hadley as Bob was to him. “All of this is fluff,” he gestures around the office. “All that really matters is your family, and that’s not corny bullshit. So every decision I make could mean spending less time with my daughter.”

Last March, as Putman fired off an email introducing himself to Prem Watsa at Fairfax, he was already plotting how to balance what was sure to be a punishing initial workload and spending time with his family. “Everything in life is a give and take, so when you look at my schedule right now, the two things I try really hard to do is be there when my daughter wakes up—so I can ask her if she had any dreams—and then I’m always home for bedtime,” he says. “My workouts to lose my COVID weight are optional. Bedtime with my daughter is not.”

After five months of talks with Fairfax, Putman won the toy chain, though he won’t disclose how much he paid. “It was obviously great for us, and I think it was a good deal for Fairfax, as well. Both sides have to feel like they’re winning,” he says. (Watsa did not respond to requests for an interview.) Whatever the price, it was likely lower than what Watsa paid, since the deal didn’t involve all the real estate on which the toy stores sit. That means in some locations, though not all, Watsa is Putman’s landlord.

The deal caught the close-knit toy industry by surprise. “It was a huge deal to bite off, so I was shocked,” says Diane Goveia-Gordon, who spent 22 years running toy companies and who has known Putman for 15. “At the same time, it seemed like a Doug thing to do.” As brutal as the pandemic has been for many retailers, it’s been a boon for toys. Canadian sales increased by 8% in 2021, to $2.3 billion, according to NPD Group. That’s half the pace of growth the sector saw in 2020, when lockdowns first sent parents scurrying for stuff to entertain their kids, but it’s still well ahead of the 1% sales drop in pre-pandemic 2019. “The toy industry has been one of the most recession-proof industries out there, because in recessions parents want to spend money on their kids,” says Goveia-Gordon. “One of the big challenges is post-COVID—now that we’ve had this nice sales surge, how are we going to maintain that momentum when families go back to having camps, movies and organized sports?”

Geoff Fitzgerald/The Globe and Mail

On the distribution side, Everest represents some of the largest toy makers in the world, including Hasbro, Mattel and Melissa & Doug, in their dealings with non-toy retailers that still sell toys (think hardware stores and pharmacies). In terms of revenue, Everest is a “nine-figure business,” according to Putman. The company also owns several toy makers itself, including Crazy Forts, which sells an array of fort-building kits that were especially popular during COVID. According to Toy World Magazine, Walmart and Amazon have each been selling 100,000 of the kits annually.

Changes are already happening at Toys’R’Us. Putman says his aim is to make the stores fun again. “When I think of Toys’R’Us, the reason you come in is for the experience with your kids that you can’t get online,” he says. “Yes, your kid is probably going to have a meltdown, but a meltdown is a sign of a good visit.” (Putman is not immune: His toddler had one inside a store recently.)

He’s tapping associates for ideas. A store in Hamilton has been running scavenger hunts, an idea he plans to roll out elsewhere. He’s also adding extensive book sections. It’s a shrewd tactic: After parents break down and buy a toy for their kid, they can assuage their guilt with a book.

A more hard-knuckle turnaround is unfolding behind the scenes. Putman is negotiating with vendors at a time of supply chain bottlenecks and rising inflation. He’s also taking a tough stance with landlords. “As soon as you realize you can’t get a deal, you put up a ‘store closing’ sign,” he says, pointing to the recent closure of a Toys’R’Us in Kamloops, B.C. “One of three things always happens: You close it, the landlord bends, or you move to a new location.” In Kamloops, Toys’R’Us is now on the hunt for a new location.

Putman is already thinking ahead. He wants to expand the number of Toys’R’Us locations in Canada. And using HMV’s head office and warehouse space, he’s building a U.K. and European distribution company called DKB Toys (an acronym for Doug, Karen and Bob). He also has his eye on the U.S., where no national toy chain exists—and certainly nothing like his Canadian stores, which combine Babies’R’Us and Toys’R’Us under one roof. He won’t be using the Toys’R’Us name, however—it’s held in the U.S. by a brand management firm that recently teamed up with Macy’s to roll out 400 “shop-in-shop” locations inside its department stores.

Instead, Putman is working on a plan to launch an entirely new chain built around New Jersey–based Alex Brands. Once a fast-growing stable of toy brands, Alex shut down at the start of the pandemic, at which point Putman bought the brand and parts of the company, including Alex Craft, Scientific Explorer and Zoob building kits, and relaunched it. By the end of 2022, he hopes to have five Alex Baby and Toy stores in different states, including Florida. “We’ll open five stores, pause and digest, and see what’s working,” he says. “If it’s what I hope it is, then in 2023 we go crazy.”

How big would he like Alex Baby and Toy to get? While insisting he doesn’t have a top-line number in mind, Putman runs through some scenarios and suggests 400 locations would be the sweet spot. “If you start looking at the metrics in Canada, we do $1 billion with 80 stores. So 400 stores could be a $5-billion business,” he says, before catching himself. “This is going to be one of those ‘walk, don’t run’ situations. Parents aren’t going anywhere. Kids aren’t going anywhere. We’ve got time.”

Meanwhile, between growing his music business, launching a U.S. toy chain, rolling out a toy distributor in Europe and expanding his real estate portfolio—between all of that—if you happen to have a clunker of a business that needs turning around, Doug Putman would probably like to hear about it.

Doug Putman’s 5 rules for a successful turnaround

Buy at the right price

“If you plan to own a company long term, there’s no magic formula for calculating inventory and extracting a return, even if it busts the business. We ask, What is this going to cost us to turn around? How many people will we have to let go? What are the severance costs? How many landlords will work with us? How many suppliers? Do we believe we can raise margins? You have to map out how much the business is going to cost until you get to the busiest time. In retail, that’s December.”

Be ready to spend more than you expected

“If you think you’re going to put in $1 million, you’re going to end up putting in $2 million or $3 million. Also don’t underestimate how much more time it will take. You have to be totally honest with yourself about how bad it could be.”

Be aware

“If you sit down with the company and everything looks great but they’re losing money, be afraid, because you’re missing something, and that is going to come back and hurt you.”

Trouble is usually at the top

“In a struggling business, the top level is usually disconnected from lower levels who really understand what the customer wants. You’re going to have to make some hard decisions and move out some top people, and that comes with big severance costs.”

Get ready to fight

“When you buy a turnaround, you’re in fight mode for X number of months. You’re going to fight with landlords, suppliers, internal people. You’re going to have to be okay with knowing it’s going to get bad. It takes a certain personality to say, ‘I’m okay with the dumpster fire I just bought.’”

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