He had known businessman Jarrod Armitage for many years. They both noticed news reports about the closure of Treasures in mid-2020 and sensed an opportunity.
“We were talking about Treasures closing down, and there might be an opportunity to be involved. And it couldn’t have been sweeter music to your ears when you’re just sitting on your hands,” Penney said.
Penney, Armitage and businessman James Collie incorporated the JJK Group, named for the partners’ first initials, and began exploring how to relaunch the Treasures brand.
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Penney said Grant Taylor, who founded the Rascals nappy brand before his family was bought out by Zuru in 2020, was initially used as a sounding board for their plans, and there was some consideration given to bringing him on board formally as a consultant.
“If he can get involved, it’s a no-brainer, right? Like, this guy’s just built this company that’s worth $30 million. If he can help us do that, and we can do it together … Jared and James and I would have been keen,” Penney said.
Sam Lowery, acting for JJK, asked him why this plan didn’t come to fruition.
“He had a restraint of trade with Zuru, and he wasn’t able to be a part of our company.”
JJK contends it relied only on “high-level” advice and information from Taylor, while Zuru alleges this information was confidential and improperly obtained.
Zuru’s initial lawsuit also targeted Grant Taylor and his father, Keith.
Those proceedings were settled on the eve of trial, with Grant Taylor admitting breaches of confidence and restraint and paying $1m.
The soured friendship, and partnership in the Rascals nappy business, between Grant Taylor (left) and Nick Mowbray is at the heart of the case being heard at the High Court.
Zuru’s remaining claims seek more than $75m in compensation and damages from JJK.
Penney said tensions with the Mowbrays over JJK’s purchase of Treasures and the alleged extent of their reliance on Taylor began to have business consequences.
Nick Mowbray informed Woolworths of his lawsuit in 2021 and raised the possibility of an injunction that would prevent the sale of Treasures, leading to Woolworths cancelling initial orders for Treasures.
Penney said the subsequent caution exercised by Woolworths required JJK to assume warehousing and distribution costs and expenses instead of shipping directly from factories in China to supermarkets as originally planned. It was a crippling development for his business.
“It [an injunction] never did happen. It was just a threat in the end. But [Woolworths-owned] Countdown felt like they had to prepare for it. They folded,” he said.
Earlier in the week, Angela Deehan, Woolworths’ general manager of grocery non-foods, told the court the move was intended to insulate the supermarket from the risk of holding goods it was restrained from selling.
“Our main concern was being left with stock that we couldn’t sell, a million dollars’ worth of stock at our distribution centres that we couldn’t sell.”
Penney said the suddenly tense relationship with his biggest retailer was devastating: “It was a dark day for me and for the team.”
He delivered a backhanded salute to Zuru’s tactics: “It’s a great ploy, you know, it really is … First of all, you know, legal proceedings, completely drains your company. Secondly, you can’t sell your shares to anyone else because you’re in litigation, no one else wants to jump into a fight.
“And thirdly, and probably the most powerfully, is it completely changed your relationship with your customer. For us, it was Woolworths.”
Penney was asked about a conversation with Nick Mowbray in 2022 that was secretly recorded by the billionaire and played in open court during the first week of trial.
Penney said he and Mowbray had agreed that this conversation would be without prejudice, or off-the-record, and not to be used in proceedings. He was also unaware it was being taped.
“I know he got louder and louder,” Penney said of that conversation. “But just because you’re loud doesn’t mean you’re right.”
During the years the lawsuit dragged on, Penney said he had explored leaving JJK, but found himself with only one possible buyer.
“I’d even talked to some US suitors who had more money than Zuru, a lot of money, and no one wanted to touch it because you’re in litigation. So you really have no choice but to sell it to one person, and that’s the person who’s suing you. So it’s a fascinating thing to go through and, yeah, it was quite a baptism of fire.
“It’s ruthless but, gosh, it works, you know, it works.”
In mid-2024, Penney arranged to meet Mowbray at his Coatesville mansion to try to get out of JJK and the legal dispute.
“I went to his house in Coatesville, hung out. Shot some hoops with him. He’s just like, ‘Yes, yes, I’ll buy them.’ I’m like, ‘Cool, move on,’” Penney said.
He believed the whole dispute could have been avoided if either the Mowbrays or Zuru had put in a serious offer for Treasures back in 2020.
“If Nick wanted to buy Treasures, or Matt Mowbray wanted to buy Treasures, they would have owned Treasures. Let’s be real here: you’re kidding me?,” Penney said in response to questions over whether he was aware of Mowbray interest in the brand.
“There’s a nonchalant email a couple of weeks before we ended up settling, but they didn’t [bid high enough], and he probably should have bought it. None of this would have happened.”
JJK won the bid for Treasures with an offer of $300,000. The court heard earlier that Zuru offered just $200,000.
Matt Nippert is an Auckland-based investigations reporter covering the intersection of politics and business. He has won more than a dozen awards for his journalism – including twice being named Reporter of the Year – and joined the Herald in 2014 after having spent the decade prior reporting from business newspapers and national magazines.