In some ways, it is comforting that the quartet of retail entrepreneurs that comprise Maybeat – the vehicle that will reverse into a little-known Aim-listed penny-share called Knutsford – should be valued so highly.
In a world where company valuations are increasingly impersonal; where the fanciest ratings are ascribed to operations that exist only on the Internet, run by computer nerds with successful charisma by-passes; and where it seems that every company will eventually be evaluated on the number of daily visits to its Website, it’s a relief that management talent still counts for something.
And what a something it was. No sooner had Messrs Norman, Wray, Leslau and Richer announced that they were acquiring Knutsford, to transform it into a takeover machine targeting ailing retail chains, than the shares took off faster than an Internet stock on steroids.
At one stage last week, Knutsford saw its market capitalisation rise from a shade under &£5m to around &£600m, as City traders soiled themselves with excitement over which British retail lame duck the Knutsford Four would take on.
And, indeed, these four managers do have a cracking collective track record.
Archie Norman needs no introduction, having rescued Asda from close to collapse and building its value to the extent that Wal-Mart paid &£6.7bn to buy it this year.
Nigel Wray founded the USM-listed tip-sheet Fleet Street Letter, into which the fledgling Carlton Communications reversed in 1983, before going on to build property concern Burford with Nick Leslau – a fantastic operation that flourished during the recession of the early Nineties.
Julian Richer was cloned from DNA harvested from Richard Branson in the Seventies – he founded hi-fi chain Richer Sounds in 1978, a continuing success story that keeps Richer in some splendour.
They all have the Midas touch. Indeed, they are stars that shine all the more brightly in the retail firmament because of the darkness around them. The quality of British retail management appears to be very low. How else explain the wallowing share prices and dowdy performances of Marks & Spencer, Storehouse, Somerfield, Arcadia and House of Fraser?
Then look at the treatment the industry’s “top” executives are being given. They hardly look like a bunch of crisis managers battling bravely against nearly over-powering economic odds. I’ve banged on enough recently about Sir Richard Greenbury losing his touch at M&S (which effectively meant that M&S lost touch). But his successor, Peter Salsbury, as chief executive may well not have what it takes to complete such an awesome task as the regeneration of M&S.
Storehouse, meanwhile, decided last May to seek its destiny without chief executive Keith Edelman, and still has found no replacement. The same position at Sainsbury’s has been downgraded, with Dino Adriano moved sideways and his deputy, David Bremner, taking on the brief for the core business – a promotion that has left institutional investors distinctly underwhelmed.
Safeway relieved Colin Smith of his duties as chief executive recently, and its shares enjoyed a boost under his successor – but only because Carlos Criado-Perez is an outsider and former Wal-Mart executive. I doubt shareholders would have greeted anyone home-grown with the same degree of enthusiasm.
Elsewhere, Lord Blyth, chairman of Boots, chooses to sound off at the City for misunderstanding the retail market and for being foolish enough to think that Wal-Mart’s entry to the UK will affect his market. Aesop should have a fable for this – the cock, perhaps, welcoming the vegetarian fox into the hen house. It is complacency beyond belief and his image is not enhanced by the apparent mutual back-scratching as Blyth swaps chairmanships with Diageo’s John McGrath.
It’s difficult to see in all this where the management talent is in the British retail sector. So perhaps the Knutsford boys really are the brightest hope and the finest collection of management talent ever to gather in a St James’ flat. Maybe they will take on Storehouse, or Somerfield or Sainsbury (or Allders or MFI come to that – there’s plenty of underperformance out there). But I doubt it.
It’s not that I don’t believe that collective track record that I rehearsed earlier. It does speak for itself. But this is a collection of buccaneering individuals, gun-slingers who are used to dominating their boardrooms, not working alongside other highly individualistic directors for a common purpose.
And it’s not just the personality issue. It’s the whole issue of highly talented people, with high self-regard, forming themselves into corporate-raider outfits to take on the world. We’ve been here before. We saw it in the late-Eighties, when Sir James Goldsmith teamed up with some bankers called Rothschild and the likes of Kerry Packer and talked of “unbundling” the value of BAT. We saw it in the early Nineties, when Andrew Regan teamed up with some bankers called Hambro and talked of replacing the “incompetent” management of the Co-op.
I don’t make direct comparisons between these individuals. But the same self-satisfied hubris is in the air. You can cut it with a knife. Nemesis is never far behind. The Knutsford Four would have us believe that they are the exceptions that prove the rule in British retail. But I fear they’ll just prove the rule. Listen lads: quit while you’re ahead.
George Pitcher is a partner of issue management consultancy Luther Pendragon