Mecca founder Jo Horgan: private companies manifest start-up energy better, think longer-term
The deals makeup brands do with Mecca are a matter for them, Australia’s competition watchdog says, as founder Jo Horgan makes a rare public appearance admiring the start-up mentality.
The founder of Mecca, Jo Horgan, said being a private company is one of the best advantages available to a business, countering persistent speculation that the entrepreneur is open to an exit from one of Australia’s best retailers.
“I’m a huge believer in the joy of if you can keep a company private it gives you enormous leeway to make counter-intuitive decisions all the way through and you can take such a long term lens in your decision making,” she said on a podcast released on Monday. “Being an actual start-up and being an entrepreneur, that mentality never leaves you and puts you in such good stead.”
Exclusivity deals with luxury brands from overseas and a loyal customer base has driven the company’s revenue to nearly $1 billion, according to the most up to date accounts lodged by Mecca. It has also sparked curiosity around the future of the business; Ms Horgan has contemplated selling, according to a February report in The Australian’s DataRoom column.
A company spokeswoman disputed to The Weekend Australian the veracity of on-again, off-again sale talk.
Speaking on the first episode of former Domino's CEO Don Meij’s podcast, Ms Horgan — who grew Mecca from a single shop in Melbourne’s South Yarra in 1997 to 115 stores across Australia and New Zealand — showed a keen interest in how Mr Meij took the ASX-listed pizza chain overseas. Could it be a sign?
“Actually that’s another reason I first started talking to you because I’m absolutely fascinated by the way in which you have taken Domino’s internationally,” she tells Meij. “And I would actually love to be interviewing you the other way around because I feel like you have an enormous amount to share.”
But beauty influencers have become some of Mecca’s biggest critics who rue the company’s marketing tactics and lack of promotions.
Mecca is also highly protective about the way it does business. According to its most recent financial accounts in the calendar year to December 24, 2022, Mecca’s revenue was $971,524,000, up from $688,901,000 in 2021.
The Australian Securities and Investments Commission typically expects large proprietary companies to lodge their audited financial statements annually and within four months after the end of their financial year. Accounts for the 2023 and 2024 financial years are yet to be released.
Cosmetic sales soared during the pandemic, when makeup was a small luxury to indulge in and Mecca built its market share.
Its success has made Ms Horgan one of the country’s richest women. Together with husband Peter Wentenhall, the pair are worth $807 million according to The Australian’s Richest 250 list.
Mecca booked a profit of $26.9m in 2022, up from $23.5m the year before, and with Ms Horgan and Mr Wetenhall pocketing $12m in dividends. Their highest dividend was earned in 2021 when they paid themselves a cool $20m.
There are few publicly listed reference points to examine Mecca’s financial performance.
Online beauty retailer Adore Beauty, the closest proxy in terms of its core category, recorded $195.7m in revenue in the 12 months to June 30, 2024, and is yet to best its financial year 2022 result of $199.7m. That being so, Adore’s earnings last year were just $4.8m.
Similar to Mecca, Adore sells fragrance, skin care, and cosmetics, but has not matched its success – not even close – although it is moving into bricks and mortar stores under new chief executive Sacha Laing.
Then there are the exclusivity deals. A number of eagle-eyed social media users have observed Mecca’s local monopoly on retailing prestige brands like Shiseido’s NARS and Puig’s Charlotte Tilbury, and looked for parallels in the competition regulator’s scrutiny of supermarkets and supplier relationships.
The Australian Competition and Consumer Commission and chair Gina-Cass Gottlieb have sued Coles and Woolworths, alleging they promoted fake discounts on hundreds of household items amid a cost of living crisis.
Asked by The Australian if the ACCC is scrutinising Mecca’s exclusivity deals, a spokeswoman said it does not comment on complaints or potential investigations.
“Generally, businesses are free to choose whether they will supply or deal with another business,” she said. “Exclusive dealing is quite common in business arrangements and will only breach competition law when it substantially lessens competition in a market.
“This competition (SLC) test depends on the circumstances of each matter. For example, if substitutable products are available, the conduct is less likely to materially affect competition.”
Ms Horgan told Mr Meij’s Meijor League podcast that anything Mecca can test and trial first, it will. “God only knows what’s going to be happen,” she said.
By the end of next year there will be no Maxima format stores left.
“This is the vision for Mecca’s flagship in Melbourne, in the way that you fly into Sydney and you do the Bondi to Bronte walk... we want you to visit Mecca flagship.”
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