Comment

Illustration: Kerrie Leishman.

Illustration: Kerrie Leishman.

The announcement of Paul Zahra's intended departure from the top job at David Jones was accompanied by a swirl of unsubstantiated rumours about internal tensions involving group executive for merchandise Donna Player.

The genesis of the retail tug-of-war story could be traced to one of David Jones' suppliers - but it is a story that Zahra vehemently and credibly disputes. He describes himself as very close to Player, whom he recruited from Woolworths last year - a story that is verified by David Jones insiders, including Player herself.

Departing David Jones chief Paul Zahra last month.

Departing David Jones chief Paul Zahra last month. Photo: Janie Barrett

In the bitchy and incestuous world of fashion the (fictional) story is said to have been concocted by a high-profile supplier who was once exclusively distributed by David Jones but now also sells in Myer.

In a formal announcement, David Jones said Zahra had given notice to resign for personal reasons and would remain until a replacement had been found. It said it could be some time before an international search was completed.

Zahra appeared relaxed and happy in the job when interviewed last month by Fairfax Media, commenting there was still much to be done in the premium department store group.

When asked at that time about his future in the role, he said he would continue while he was having a good time. ''I haven't seen all the good times yet,'' he said.

Only a few days ago, he was flying the David Jones flag at the Caulfield Cup race carnival.

He said on Monday he was happy to stay until the board found a replacement. The announcement had been made because headhunter Korn/Ferry (whose chief executive Katie Lahey is a former David Jones director) had been approached.

Since taking the position three years ago as a result of the removal of his predecessor Mark McInnes over a sexual harassment scandal, Zahra has been struggling under difficult business conditions to revive the company's fortunes.

Over the past six months, his retail strategy has been gaining traction and major shareholders have become increasingly supportive of his digital omni-channel investment, which is set to become profitable over the next 12 months.

Zahra said on Monday he thought he had completed most of the ''heavy lifting''.

David Jones chairman Peter Mason said: ''Paul will leave David Jones in a solid financial position and I thank him for his contribution as CEO. I look forward to working with Paul to ensure a smooth transition of his role to his successor.''

However, some shareholders have expressed disappointment that Zahra is leaving the company and said they did not believe any of the remaining management had the qualifications to take the top job.

Zahra's departure will leave both the upmarket department store chains looking for chief executives as Myer boss Bernie Brookes has already announced he will retire in August 2014.

While there will be an international search for a new David Jones chief executive, names that were thrown up include recently departed Oroton chief executive Sally Macdonald, Kmart boss Guy Russo and former head of merchandise for David Jones Collette Garnsey.

ANZ in Asia

On the eve of reporting seasonz for three of Australia's big four banks - and as their share prices butt up against all-time highs - it is tough for analysts to downgrade investment recommendations. Where National Australia Bank has trailed in the popularity stakes, there is a growing discomfort in some sectors about ANZ's Asian growth strategy.

A report by JPMorgan's banking analyst, Scott Manning, on Monday was not the first to point out that returns from ANZ's Asian franchise have not matched those from the Australian business, but the more comprehensive analysis reads like a report card on the current management.

It is not a fail but a ranking at the bottom of the class.

ANZ under current chief executive Mike Smith has been the Australian bank that has dared to pursue a different strategy - a riskier approach of spending capital to make a foray into the growing Asian market.

From a near standing start six years ago, ANZ now generates about 14 per cent of its profit from Asia, but the returns on these investments have never matched those from Australia.

In the financial update ANZ provided in August, even its most ardent supporters were underwhelmed that the bank's overall margins were being undermined by the Asian business.

This was pressure that competitors Commonwealth Bank and Westpac were not feeling, thanks to their intense focus on local business.

The bottom line is that the ANZ experiment with diverting funds from Australia to Asia is taking longer than expected to show positive results.

Australian banking is an oligopoly. At the corporate end of the market there is some competition from offshore banks, but for the most part the big four have been left to carve up the local customer base. They have demonstrated very clearly that in troubled times (such as the global financial crisis) they can remain profitable and manage strong returns, even in the current low-credit-growth environment.