Apparently Nigel Northridge, the chairman of Debenhams, has known since Michael Sharp was appointed as CEO in September 2011 that he was planning to stay only five years. The rest of us learned that only today (October 22).
It was, Sharp told a posse of sceptical press hacks today, a private conversation he’d had way back when. Accompanying Debs’ full-year results to 22 October 2015 today was a statement that Sharp, “now two months into his fifth year… has indicated this is the right time for the board to commence a succession planning process so that he can step down sometime in 2016.”
So to get this right, Sharp has not resigned, he has not said when he will resign and he is on a year’s notice, which he may or may not see out. Part of Sharp’s quote on the press release said: “I hope being transparent about my intentions will stop recent speculation becoming a distraction, allowing me and the Debenhams team to focus on delivering our strategy and the important Christmas trading period.”
Some hope of that as none of this seems to be “transparent”. The “recent speculation” is, of course, the pressure brought by a small cabal of disgruntled shareholders about the speed of improvement of the UK’s store group. Together Dubai-based retail magnate Micky Jagtiani, asset managers Schroders and Old Mutual speak for 25% of Debenhams shares and it looks very much like they have forced Sharp out.
Whether the long-serving executive, who has worked at Debenhams and its predecessor The Burton Group since 1985, has jumped or was pushed is still to be confirmed, but speculation now has turned to who will take over.
Sticking rigidly and somewhat uncomfortably to the statement script, Sharp refused to discuss whether he would be consulted about who should be his successor. Sitting to his right was group trading director Suzanne Harlow, who is the obvious internal candidate, having been at the store business for 21 years. Sharp forbade any questioning of Harlow’s intentions during the press conference.
Even privately, Harlow dodged the issue when quizzed by Drapers about whether she wanted the top job. She stuck, charmingly and politely, to the company line that the whole team was focused on Christmas.
Some Debenhams watchers suggest she would be an able and known safe-pair-of-hands for the business, but more hawkish voices insist that a new external broom is needed to shake up the company. The dilemma will no doubt be keeping the top retail head hunters very preoccupied.
Ironically, the results seemed to show that the strategy to improve Debenhams’ performance is working. For the first time in four years profits grew by 7.3% to £134.m on sales up 1.3% to £2.86bn. Some £41.7m of debt was reduced, but there is still a hefty debt burden of £361.5m. And Sharp pointed out that Debenhams over the past 18 months had cut 42 days from its calendar of promotional activity (without revealing how many days it is still on Sale).
The soon-to-be-former CEO said that there would be no more reduction in promotional days, but that the discounts offered would be shallower. The discount culture that surrounds Debenhams will be one of the most pressing challenges to be faced by Michael Sharp’s successor, no matter who he or she is.