Woolworths woes continue

August 17, 2008


Troubles come not singly but in battalions. The adage might be applied to Woolworths at present as it faces financial decline, a hostile take-over bid, and a new leader due to arrive next month

In June, [2008] Leaders we deserve reported on the enthusiasm with which Mr Trevor Bish-Jones took his golden handshake and departed the company.

Since then, the company has seen further deterioration in its trading position reported in July

The replacement for Mr Bish-Jones former Focus DIY chief executive Steve Johnson was recently announced as joining the firm in September

But before Mr. Johnson could get his feet under the table, the company faced its latest challenge in the shape of a takeover bid. Which it promptly rejected.

Troubled retailer Woolworths says it has rejected a bid for its network of 815 stores, calling it “unacceptable”.
Woolworths confirmed reports that the boss of the Iceland frozen food chain, Malcolm Walker, had made an offer to buy its retail division.
However, the company’s board said the proposal undervalued its assets and involved a complex restructuring, which was not achievable.

What happens next?

In the various posts on leadership reported here, there have been a number of stories of takeover attempts. The case for takeover is easier to make if the target company is demonstrating leadership problems together with financial difficulties.

The arrival of a new leader may help signal a fresh approach. It worked magnificently in the famous case of Stuart Rose arriving at Marks and Spencer to thwart to attention of predator Philip Green.

Will the arrival of Steve Johnson increase the survival chances for Woolworths in its present form? In the M&S case, Rose quickly helped put an imaginative new strategy in place.

Maybe Mr. Johnson will also provide creative leadership at a time of Corporate crisis. The initial statement from Woolworths (according to the BBC) suggests that such a possibility is the hope of the organization.

Mr Johnson said he would be focusing on “value creation for all stakeholders” when he joins the firm in September.

The retailer said it was “delighted” that Mr Johnson was joining the company.
“His strong background in both retail and consultancy, together with his particular experience in achieving a turnaround at Focus, he brings the strategic and operational skills that the Group needs to help it move to the next stage of its development.”

But what will happen between now and September? Will the battalion of its woes be successfully kept at bay?


Have ‘Woolies’ been Bullies? The Case of Trevor Bish-Jones

June 21, 2008

Trevor Bish-Jones departs Woolworths with a smile. Is there a lesson here about the life-cycle of a Charismatic leader?

This week, Woolworths confirmed details of the departure of its Chief Executive Officer Trevor Bish-Jones. The corporate web-page provided the news at the end of an interim statement

“We have also announced this morning [18th June, 2008] that Trevor Bish Jones will be standing down as Chief Executive of Woolworths Group plc. Trevor will stay in place for the next three months as we start the search, both internally and externally, for a new Chief Executive .. We have strong operational management running each of our businesses and this, combined with Trevor’s commitment to stay while we find a successor, will ensure continuity for the Group. The Board would like to thank Trevor for the significant contribution he has made to the business over the past six and a half years.”

Six and a half years ago

Chairman Gerald Corbett reported on Trevor Bish-Jones’ appointment as follows

This financial year our priorities have been to stabilize the business post the de-merger, tackle the significant overstocking problem, reduce debt and take action on loss makers to give us a sound base for recovery in the year ahead. We are on target to achieve our stock and debt targets, albeit at a cost to this year’s profits .. I am delighted to announce the appointment of Trevor Bish-Jones. He is a highly experienced retailer with a successful record of managing large national retail chains in highly competitive markets. The performance of the Mainchain shows how much work there is to do to re-invigorate its position in the eyes of the consumer and improve retail disciplines.

We expect to see considerable further progress next year. We have a strong brand; major market positions; a national high street presence and sales of over £2.5 billion. We are continuing to strengthen our management at all levels and look forward to next year with confidence.

Neelam Verjee of the Times captured the new leader’s background:

Mr Bish-Jones never intended to end up in retailing. He studied at Varndene Grammar School in Brighton, before training as a pharmacist at the Portsmouth School of Pharmacy. His first job was as a research chemist studying oil shale in Colorado, Denver, with Tosco, a US company. He returned to Britain in 1983 to finish studying and joined Boots in its pharmacy division ..He spent the next 11 years at the health and beauty chain, first as a store manager before making the jump to buyer. He joined Dixons Group in 1994, at its PC World division, and went on to work for The Link and Currys, before taking the top job at Woolworths.

His hobbies include fast cars, especially Porsches, and motorcycles (he owns a Ducati), football (he supports Brighton and Hove Albion), spending time with family and friends and going to the pub. Mr Bish-Jones, 46, also likes horse riding and golf. He is married with two daughters.

Time passes

This week, the Financial Times noted that

Dealt a difficult hand from the outset with onerous leases and an outdated business model, Mr Bish-Jones had some success in improving the wholesale side of the business, which distributes CDs and DVDs to other retailers ..[But] the Woolworths stores have proven an uncrackable conundrum ever since they were spun out of the Kingfisher conglomerate, and he leaves with the shares close to an all-time low. [under 10p, 19th June 2008]

The demerger referred to took place in 2001, before Bish-Jones joined the company.

The Times this week updated its earlier story

Resplendent in a three-piece pinstripe suit, Trevor Bish-Jones gave a great impression of a man without a care in the world, at Woolworths’ annual meeting yesterday ..Sitting in the middle of the board of directors, the outgoing chief executive leant back and let his chairman do the talking. Mr Bish-Jones could contemplate what job offers he may consider and how to enjoy the rest of the summer.

One of the most likeable men in retailing, Mr Bish-Jones is also one of the most hardworking. In a career spanning 27 years he has never taken more than two weeks off at a time and is keen to spend a bit more time with his wife and two daughters.

The picture emerging from these reports is that of a charismatic leader, able to win hearts without necessarily winning the battle of the financial numbers. Which may indicate something about charismatics …[But see the list of hobbies above, for those fascinating discrepancies sometimes revealed in secondary data sources.]

Was Trevor a Scapegoat?

But was Bish-Jones a scapegoat, as the Telegraph asked?

Richard North, Woolworths’ chairman since last June and himself the subject of a sudden sacking by his chairman when he ran InterContinental Hotels in 2004, said that it was time for someone new to take a “fresh look” at Woolworths …Mr Bish-Jones will remain for three months while Zygos, the head-hunter, searches for a replacement, [adding] “Trevor has just completed a series of big things which in effect have come to a natural conclusion, so it is a natural time for change,”

The “big things” referred to were the reshaping the DVD and CD-making business, in the wake of Tesco dropping a lucrative contract in 2006, and a refinancing last year.

Some shareholders at the meeting supported the scapegoating view. Others were reported to be of the opinion that his departure was based on the rational considerations that it was time for a change, time to introduce fresh blood, etc.

It is certainly convenient for a business to arrange an amicable departure for its leader. One that implies no blame, rather a timely move forward. Such a rationale will always be less convincing as shares head south to record lows …