Billionaire Mike Ashley Has a Message for Debenhams
(Bloomberg Opinion) -- Don’t mess with Mike Ashley. That’s the message from Debenhams Plc Chairman Ian Cheshire’s ouster.
Shareholders, led by Ashley’s Sports Direct International Plc, voted against the re-election of both Cheshire and CEO Sergio Bucher at the British retailer’s annual shareholder meeting on Thursday. The latter will stay on — just not on the board.
Ashley will no doubt be blamed for the exit of this City grandee — but it is the right outcome for investors.
From the start, Cheshire’s decision to install Bucher as CEO looked like a strange choice. While the ex-Amazon executive had an online vision, what the company needed was someone who could cut costs and reduce the number of outlets. Bucher’s plan, outlined in 2017, put “social shopping” — experiences and razzmatazz — at the heart of the group’s revival. It was too aspirational a blueprint as Britain’s economy stuttered. Debenhams has since suffered from a drip feed of bad news on store shutterings and savings, while the group’s performance and financial position deteriorated.
Just compare this with Archie Norman’s attempt to revive rival Marks & Spencer Group Plc. While the retailer’s performance might not be stellar, no one can accuse the M&S chairman and turnaround specialist of slacking.
At Debenhams, poor Christmas trading, and the decision to pull the sale of Danish department store Magasin du Nord, now mean a radical restructuring, potentially a company voluntary arrangement (a mechanism to reduce the rent payable to landlords), now looks likely.
Terry Duddy, Debenhams’s senior non-executive director, has taken over as chairman, for now. How he, or any long-term successor, works with Ashley will be crucial. Not only does he control almost 30 percent of the retailer, he has made clear just who is in charge. That means the odds must be shortening on the billionaire combining Debenhams with his House of Fraser stores.
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Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.
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