For months, years even, nothing has gone right for him. Almost every initiative he has announced has turned to dust and his critics are not so much baying for his blood as moving in for the kill. He is now fighting a hopeless battle for survival and in a few short weeks he will face those who put him in power six years ago in one final ordeal. They will surely decide that enough is enough and throw him out.
He is, in some respects, a sad figure. Many of the problems that fell to his charge were not of his making, but were inherited from the previous regime. Nonetheless, he is the man who must face the wrath of those who feel let down and who have the power to despatch him.
Liam Strong – who else could I have meant? -has stretched the patience of shareholders in Sears well beyond breaking-point and, when he announces annual results on April 29, it must surely be the last time he fulfils that duty as chief executive.
Last week brought the latest special offer in Strong’s catalogue of despair. In an attempt to unbundle some shareholder value from what is usually called the “rag-bag of businesses” that comprises Sears, Strong had been seeking a sale of home shopping company Freemans to mail order operation N Brown, partly as a means of subsidising a 410m return this summer to his wretched shareholders. N Brown, chaired by gritty Sir David Alliance, decided that a price-tag of 400m was altogether too indigestible and walked away.
It may be that James Ross, formerly of Cable & Wireless, and these days chairman of that curious private conglomerate Littlewoods, will ride to the rescue with a keenly priced deal for Freemans, in which case Strong will have turned out to have been able to shift something after all.
But the City has decided that tragedy has turned to farce. “What a fiasco,” one analyst was reported to have said. Oddly enough, this sort of sardonic acceptance of the plight of Sears seems to be one reason for his survival.
Disastrous events at Sears have built their own momentum – as in politics, there grows a resigned acceptance that this is the way things are and the leader consequently stays longer at the helm than would otherwise be the case.
I have said before that Strong is one of the great survivors and owes much to the patronage of his chairman, Sir Bob Reid.
So let me be the party-pooper. Strong it was who thought he had sold a load of Sears’ shoe interests last year to Facia, the retail concern run by Stephen Hinchliffe, one of the less stable industrialists of the 20th century. The failed Facia group cost Sears’ shareholders an extra 25m in exceptional charges – of a total of 74m – and the shoe interests were not sold after all.
This might have been deemed enough to have done for the luckless Strong. But he carried on. Restructure has followed restructure at Sears, but nothing has served to reverse the underperformance of the shares. And now there is the on-off sale of Freemans – sometimes to Littlewoods, sometimes to N Brown – while shareholders watch its price, as well as the price of their shares, fade away.
It’s getting tiresome to restate that the only restructure that now matters is the restructure of Sears’ board. So perhaps it is more constructive to start looking for some positive lessons that can be learned from the whole sad Sears affair. The simplest may be the truest – retail conglomerates don’t work anymore.
I’m sure Strong knows this only too well – the trouble is that it is almost impossible to dismantle them at anything like a decent price if you leave it too long. Storehouse, the Bhs to Mothercare parent, is a case in point. The City acknowledges that there is now “a wall of negative sentiment” at which the share price hurls itself. Analysts at BZW and NatWest have given Storehouse a particularly rough mauling and its rating has fallen with the profit forecasts.
Compare a Sears or a Storehouse with a tightly targeted, single focus (fashion) company such as Next, which has just turned in pre-tax profits 12 per cent ahead at 158m, with the high street stores and the Next Directory catalogue operation storming forward. No wonder Next’s chairman, Lord Wolfson, wants his son on the board.
Or compare them with Tesco, where Lord MacLaurin is sufficiently focused on price not to fear taking on a brand manufacturer such as Levi’s for a price war. Conglomerates, with their motley collection of operations which were once deemed to “add value”, just don’t add up anymore.
Even department stores represent a microcosm of the failed principle of conglomeration – just look at the trouble House of Fraser has had since its flotation.
So one wonders if there is anything that Strong could have done to save Sears and his job. I rather doubt it – the market was against him. But that’s a reason, not an excuse.