Industry experts have heralded the appointment of Primark chief operating officer John Lyttle as Boohoo Group chief executive, announced today, as a “clever move” that will bring more credibility to the fast-growing etailer.
During his eight-year tenure at the Associated British Foods-owned value retailer, Lyttle has helped spearhead its global expansion, including launching in the US three years ago and rolling out stores in Spain, France, the US and Italy, as well as in the UK and Ireland.
Starting the new role in March next year, Lyttle will take over from joint CEOs Mahmud Kamani, who will become group chief executive chairman, and Carol Kane who will take up an executive director role. He was wooed with an impressive package which includes a salary of £615,000, with a bonus of up to 150% of annual pay. On top of this package, Lyttle could be in line with a bonus of up to £50m if the company’s share price increases by 180%, raising the market capitalisation from about £2bn to £5.6bn.
Bringing a wealth of experience as a former buying director at Matalan and one of the most senior staff members at Primark – one of the most successful clothing retailers in Europe with sales of more than £7bn in the year to September 2017 – industry insiders believe the hire is a coup for Boohoo as it continues its growth story.
“It’s a really clever move,” said Harveen Gill, managing director at recruitment consultancy HGA Group. “It will bring some grey-hair credibility [to Boohoo]. John has worked in big blue-chip organisations. He brings fast fashion experience and not only a handle on product, but commerciality, and driving revenues and profits. He can come to Boohoo and work on the next stage of the business cycle, and develop and expand. He’s a great person to have at the helm.”
Katie Thomas, partner at executive search firm Ridgeway Partners, described the appointment as a “sensible move” at Boohoo’s “stage of evolution”: “He brings experience of scaling up a very successful fashion business, not just in the UK but internationally. He has worked very closely with the CEO and top team to build capability around fast growth.”
Richard Hyman, an independent retail analyst, said the appointment will give Boohoo extra ammunition to develop into a stronger company: “Primark is underrated as a retailer. It’s an effectively well-run retailer.
“It’s very easy to assume with value players that they’re just buying in vast quantities and chucking it out the front door, but it’s extraordinary what they do – and he has played a big part in that. Primark is a big business with an outstanding team and he’s been right at the heart of it. He’s been a key figure in the top team and will have been involved in everything.”
However, Lyttle is jumping ship from an ecommerce-averse retailer – Primark does not operate a transactional website – to leading an online only operator with a portfolio of brands – Boohoo, BoohooMan, PrettyLittleThing and Nasty Gal.
“The only unknown is that he hasn’t worked in a digital model and Primark isn’t an online retailer – that’s probably the main question,” admitted Thomas. “But he has brought other skills: he has a background in merchandising and planning, and can help them develop systems and processes around their business model.”
Hyman is not alarmed at Lyttle’s lack of ecommerce experience: “It’s fast fashion at the end of the day. I think this is often understated but at the end of the day it’s about flogging stuff – online or offline. It’s still about driving sales.”
However, compared with Primark, Boohoo is a small operation (sales hit £579.8m in the year to 28 February 2018) and ramping it up into a huge global player will bring its own set of challenges.
“As Boohoo gets bigger and bigger, I think the challenges of scale will be inevitable and need to be addressed,” said Hyman. “Boohoo has gone like a train and Lyttle’s priority will be to keep that going. A key challenge for him will be to respond quickly to the characteristics of a small business as it gets bigger and bigger, and how to retain those competitive strengths.”
The other potential problem is leading a retailer where the founders are still very much part of the company.
“Will the founders step back and give him the freedom to operate?” questioned Ridgeway. “We’ve seen issues in other businesses when they’re owner managed but the good news is that it is a professionally run listed business with a board.
“But chemistry with the founders is critical to allow him to do what he’s supposed to do – they can focus on what they’re good at.
“Plus, it’s his first chief executive role, and it’s a listed company ,so he has a lot to learn. But he has an experienced chair in the form of Peter [Williams] who can no doubt deal with the markets and investors.”
Nevertheless, the industry will have to wait until March to find out how he grasps the top seat at one of the most talked-about fashion retailers in the UK.