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Departing DJs boss scorns rumours

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.

12 comments

  • Lets wait for ANZ annual results before we are critical of their Asian strategy.

    Commenter
    FROG
    Location
    MANLY
    Date and time
    October 22, 2013, 9:15AM
    • Why would anyone shop at this dinosaur establishment?
      T-shirts.....simple T-shirts.....$100
      Understaffed sales floors, where the poor staff are overwhelmed as soon as three genuine buyers turn up at the same time. Low product knowledge......terrible product knowledge especially in Electrical goods. Then there is the pricing policy.
      DJ's say "it costs no less to shop at David Jones". That is....and I will be polite.....misleading in the extreme. As a supplier to their organization for over 15 years, I know that the truth is very different. Cameras, home theatre, recorders, televisions that are superseded by newer models remain on the floor, sometimes for months on end, at the original asking price they were at when first introduced. Saavy competitors avoid this issue, but not DJ's.
      ......and here is the reason: the company is more interested in its' "Visual Merchandising Department" than anything else in the business. These people.....and there are MANY....rule the business at the coal face, straightening picture frames, sticking on stickers and posters, putting up POS.....all in the morribond, 1946 look that every David Jones store has come to look like.
      It's sad to see such an iconic Australian business fall to such a low, low point, but that is the nature of business....change with the times, or get left behind.
      This is THE SIMPLE TRUTH that David Jones has refused to accept, and with this refusal comes the natural outcome.

      Commenter
      The Seer
      Date and time
      October 22, 2013, 10:09AM
      • Couldn't agree more. Maybe it's about time these old timers let the younger generation show how proper fashion retail is done. Myer is no different. Although they may have staff with the fashion knowledge, their follow through service with out of stock items is atrocious. I don't mind waiting, but telling me it'll arrive at the latest on Friday and then not even receiving a call three weeks later from TWO Myer outlets is rather poor form in my opinion. It's like they're forcing me to spend my money elsewhere.

        Commenter
        reap what you sow
        Date and time
        October 22, 2013, 11:08AM
      • You just have to walk into the menswear section of David Jones at Castle Hill to know that the company has lost it way. The poor lighting makes the place look, and feel, gloomy. The displays are second-rate, the sales advisors non-existent, and then you have search for a staff member to process the transaction. Little wonder that the specialist menswear shops in the Castle Towers complex seem to be much busier

        Commenter
        RAY BARKER
        Date and time
        October 22, 2013, 12:33PM
    • There is more heavy lifting to come at David Jones. Retailers trying to establish an Omni Channel strategy without a merchandise visibility platform are only half way there (technology and cost). They may forecast their model will be profitable but it won't be maximised. On line customer experience may also take a hit further diluting loyalty to the brand.

      Commenter
      Alba
      Location
      Melbourne
      Date and time
      October 22, 2013, 11:00AM
      • ANZ in Asia?! LOL....Asians are by far much wiser than that. ANZ should start paying the Asians to use their services...or get lost.

        Commenter
        Amazed
        Location
        Sydney
        Date and time
        October 22, 2013, 11:20AM
        • That's a puerile ill informed comment. What about all the 'Asians' banking with giant British run HSBC, Standard Chartered Bank or flying with British owned Cathay Pacific? unwise? Hmmm, your comment makes really no sense.

          Commenter
          Najib
          Date and time
          October 22, 2013, 12:48PM
        • Najib...when I say "Asians" I really refer to China (& HK), the rest are rather insignificant in the schemes of things...China is the master and controller, of the whole Asian region.

          Commenter
          Amazed
          Location
          Sydney
          Date and time
          October 22, 2013, 12:55PM
        • Nijab is spot on and clearly much better researched than yourself. And, having lived in HK for years, when is Australia going to wake up and realise we are actually a key contributor to the Asia Region?

          Commenter
          Cocochi
          Date and time
          October 22, 2013, 2:02PM
      • Another overpaid CEO churns with little to show for but plenty of excuses. What used to be department stores are now merely under-staffed conglomerates of individual brand boutiques. This creates a customer-hostile retail environment. No wonder the stores are empty. If I am shopping for, say, a pair of black pants, I don't want to have to visit 20 different 'brand' micro-stores within a department store. I want a rack full of black pants, sorted by size, from which I can easily identify my choice. Nobody seems to offer this any more. There are just not enough hours in the day to run around a shopping centre trying to find that elusive standard garment. So i hop online and it is all at my fingertips (except for the sensation of feeling the fabric, which takes a leap of faith sometimes). Bring back a department store which is built around customer requirements, not brand needs, and customers might return.

        Commenter
        Brenda Loots
        Location
        Sydney
        Date and time
        October 22, 2013, 12:13PM

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