JD Sports has appointed Régis Schultz as its new chief executive, but can the Frenchman alleviate the City’s governance concerns while keeping the business’s growth on track?
Just over two months after former boss Peter Cowgill suddenly exited the business, JD Sports has appointed a new chief executive – Régis Schultz.
The Frenchman joins the retailer with a wealth of experience both in the UK and abroad, but arrives at a time of acute change for JD Sports.
Executive chairman Peter Cowgill left the business in May, following a review of the retailer’s internal governance controls. The business subsequently split the roles of chair and chief executive.
New JD Sports chair Andrew Higginson tells Retail Week the split will “allow us to double back a bit and put a bit more structure into the business”.
“It’s come under the banner of governance, but it’s really just about putting in some more robust ways of operating,” he adds.
“Peter [Cowgill] was an amazing leader who did such an amazing job for the business. But he had a very unique way of working; by the end he had something like 26 direct reports. In splitting his role, we felt we just needed to bring in some big-company disciplines and Regis will be key in handling that.”
Since Cowgill joined the business in 2004, JD Sports’ market value has grown 60 times and the sportswear giant raked in record profits of £1bn at its most recent financial results.
Yet despite the retailer’s continued financial success, Cowgill increasingly found himself in the headlines for the wrong reasons, most notably over JD Sports’ attempted acquisition of competitor Footasylum – his last major act as boss.
Cowgill was slapped with a fine by the competition watchdog for meeting with Footasylum counterpart Barry Bown in a car park. He was also accused of “cartel activity” by the CMA for fixing prices on Rangers Football Club merchandise.
The Footasylum fiasco came to an end this week when JD Sports were forced to sell the business at a loss to German asset management group Aurelius.
Schultz faces a delicate balancing act in trying to win over worried investors to the new management structure, while also maintaining JD Sports’ incredible momentum – all while replacing a figure who has become synonymous with the brand.
Man of the world
Schultz joins the business from Dubai-based conglomerate Al-Futtaim Group, which is responsible for franchising agreements for brands such as Zara, M&S and Ikea in the Middle East, North Africa and Asia.
The Frenchman does have UK retail experience, having previously been chief financial and chief operating officers at Kingfisher-owned retailer B&Q. Most recently, he led French retailer Monoprix under the Casino umbrella.
Clarity Search managing partner Fran Minogue, who has worked with Schultz in the past, describes him as “financially savvy” and “commercially smart”.
“He’s got an international outlook, and he’s got very broad retail experience,” she adds – citing his work in the Middle East to launch brands such as Lacoste and Marks & Spencer.
JD Sports has stated that international expansion is a core focus for the business going forward – for which Schultz has a wealth of experience to draw upon.
“He’s got an international outlook and he’s got very broad retail experience”
Fran Minogue, Clarity Search managing partner
“Wherever he has gone he has done well,” one former c-suite colleague says.
“He will add a lot of value based on his international experience – there aren’t too many people on the market with international experience and he’s got that in spades.”
However, the colleague describes him as more of a “finance guy” than a “grassroots retailer”.
In its most recent results, JD Sports did not break out its international arm, but said that it was “increasingly evident that the group’s progress in North America, and the United States, in particular, is having a long-term positive impact both on the Group’s overall performance and its relationships with the international brands”.
Minogue added that what Schultz may lack in direct US retail experience, or in the sportswear sector more generally, should be made up for by the fact he has “the right players on the field” in terms of personnel already in place.
Another former colleague says he will have to get to grips with JD Sports’ domestic market quickly, given his years abroad and the fact that Schultz has not worked in the UK since 2008.
A consummate professional
What all are agreed on is that Schultz will be able to bring the level of professionalism required to restore JD Sports’ corporate reputation, following the governance issues with Cowgill.
Investec analyst Kate Calvert says “the appointment of a new chief executive should start to help restore investor confidence in the JD story,” while Shore Capital analyst Elenora Dani believes his appointment is the “culmination of the strengthening of JD’s board, and the addition of his set of skills as reflective of the international opportunities of the business”.
Minogue also believes Schultz has the professional attitude required to stabilise the business’ new leadership structure while maintaining its trading success, all while ensuring that relationships with key suppliers such as Nike and Adidas will not be damaged by any fallout.
At the time of writing, JD Sports’ share price has fallen 2% since the market opened – a more lukewarm response than the retailer might have hoped for.
Nevertheless, Higginson is convinced Schultz is the right choice to help drive JD Sports into the future.
“It was a big search done by a global recruitment firm and we looked at lots of candidates,” he says.
“Régis brings all of that big-company experience, big-company knowledge”
JD Sports chair Andrew Higginson
“It’s really just trying to find that chief executive for the next phase of development for the group. We’ve got this amazing business that has grown at such an incredible rate, it’s got a very international focus and the next phase is continuing that amazing growth.
“Régis brings all of that big-company experience, big-company knowledge. He’s previously led on some big company turnarounds, which isn’t appropriate here with what we’re doing, but the skills of putting in new structures and new ways of working aren’t entirely dissimilar. He’s got a very strong background in that and fits with our more international outlook as well.”
Schultz may have to play the long game to bring the City back on JD’s side but with his huge international experience, he will back himself to step into Cowgill’s trainers while also keeping the business smashing its financial goals.
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