HOUSE OF FRASER SACKS MANAGING DIRECTOR JENNINGS
Byline: James Fallon
LONDON — Troubled British department store group House of Fraser PLC Wednesday fired its managing director Andrew Jennings, after increased criticism of the retailer’s performance. In addition, Rebecca Sharp, merchandising director, has resigned to take a position at Gucci in Italy later this month.
Sharp joined House of Fraser 4 1/2 months ago from Neiman Marcus, where she held the posts of senior vice president and general merchandise manager.
Jennings’s departure stems from shareholder disapproval of his management of the 52-store chain. They are upset at the slow progress in turning the company around. Some investors have been calling for the resignations of Jennings and House of Fraser’s nonexecutive chairman, Brian McGowan. However, McGowan has become executive chairman and will assume Jennings’s responsibilities for day-to-day operations until a new managing director is found.
David Dworkin, former chief executive officer of Broadway Stores, visited the company last month to explore the possibility of employment, and would likely be considered, among others. Dworkin is known in England, where he ran Storehouse plc, which owns the BhS department stores and Mothercare specialty chain. He could not be reached for comment.
The search could take up to six months, McGowan said. “The nonexecutive directors had been less than confident for some time,” he said Wednesday. “Not so much with the strategy, which I give credit to Andrew for, but with the execution of it. It became more and more apparent that there was no confidence in Andrew across the board. When you have dissatisfied nonexecutive directors and a dissatisfied city, you have to act.”
House of Fraser suffered a loss of three million pounds on sales of 322.6 million pounds in the first half, ended July 29. It warned in January that profits for the year ending Jan. 27 would be below expectations because of the unusually warm summer and fall and clearance of surplus inventories.
Analysts slashed their pretax profit forecasts to $22.95 million (15 million pounds) from $38.25 million (25 million pounds), the fifth time in two years that they downgraded their expectations.
McGowan said the company was sticking with its strategy of “developing a focused network of prestigious, high-quality department stores” and would accelerate store upgrades, merchandising and advertising. “We have to instill a sense of urgency in management,” McGowan said.
House of Fraser was floated on the London Stock Exchange by its owner, the al-Fayed family, which also owns Harrods, in spring 1994.
The retailer’s management said from the beginning that its turnaround would take three to five years, McGowan noted, adding that the management has had about 22 months to change things. “What we are seeing now is a number of returns coming through from the actions we’ve taken so far,” he said.
There continue to be rumors of possible bids for the department store company. McGowan would not comment on the rumored bids, but pointed out that the al-Fayeds tried unsuccessfully to sell House of Fraser for several years before floating it.
In addition, the retailer’s share price was as low as $1.99 (1.30 pounds) late last year but recently was trading at about $2.91 (1.90 pounds).
“There have been plenty of opportunities over the years for people to buy it if they wanted to, and at a lower price than they could now,” McGowan said.
As for Sharp’s departure, McGowan said she left for personal reasons to relocate to Italy. “It was pure coincidence that the two changes happened at the same time and one I could have done without,” he said. He is searching for two executives to fill Sharp’s role supervising soft and hard goods.
In the interim, House of Fraser’s main board director Tony Hancock will fill in for Sharp, McGowan said.