Several retailers in recent weeks have hoped their founders and former leaders can turn their fortunes around – but strong businesses are not one-man shows, writes George MacDonald

The last few weeks have brought a merry-go-round of returns and departures of retail company founders. 

In the case of the returners, the big hope is that they can once again sprinkle some of their entrepreneurial magic on businesses that have become mired in difficulty.

Naked Wines founder Rowan Gormley has been drafted in to advise the online specialist’s board as it “finalises revised operational and financial plans” after sales and profitability came under pressure following a pandemic boom.

Meanwhile, embattled fashion retailer Joules has turned to founder Tom Joule, who was formerly a non-executive, and given him a hands-on role leading a “renewed product development process for the forthcoming seasons to oversee the company’s product offer and to ensure it surprises and delights our customers”.

While former JD Sports chief executive Peter Cowgill is not the founder, he is one in all but name, having made it one of the most consistently successful retailers at home and abroad from 2004 until his ignominious exit earlier this year. He will now take up a consultancy role, providing the new management with “ongoing access to his unparalleled knowledge and experience in building JD into the successful company that it is today”.

“Founders can be problematic. Sometimes they create companies too much in their own image”

On the other side of the merry-go-round, the founder of Sports Direct – now Frasers Group – Mike Ashley is ceding control of a business he built from scratch into a powerhouse. He will stand down as a director at next month’s AGM, leaving son-in-law Michael Murray to look after the shop, but Ashley anticipates “helping the team as and when they require me”. 

Retail has traditionally set great store by the verve of individual leaders, particularly those who have created companies or piloted them to unprecedented heights.

It is not hard to see why they have sometimes been parachuted in again at moments of crisis.

They typically bring a visceral connection and affinity with the brand – that appears to be especially the case in fashion. Superdry founder Julian Dunkerton returned after ousting external managers, while Ted Baker seemed to lose the magic that, whatever failures he might have had, Ray Kelvin brought after he exited.

Founders typically know from long experience what connects their brand with its customers; they recognise when amber lights are flashing and they know what to do to avoid them turning red.

Even after their companies go public, they often, like Gormley and Ashley, retain significant shareholdings. That means they still have skin in the game and so, when called upon to step into the breach, have more than their pride at stake and extra incentive to act in the interests of the wider business.

Cowgill’s deal with JD Sports, worth £5.5m in total, also stacks up from that perspective. It includes non-compete agreements, as well as, in the words of chair Andy Higginson, ensuring “access to his decades of experience, whilst best protecting our commercial interests”.

The red lights are already on at Naked Wines and Joules, so the intimate business knowledge brought by Gormley and Joule could prove invaluable for avoiding further issues.

But founders can be problematic. Sometimes they create companies too much in their own image, where there is too much cap-doffing deference and weak governance. Or they fail to take sufficient note of changing business terrain, supremely confident in their own abilities.

While shareholdings motivate and lock them into the long-term fortunes of their companies, they can still enable founders to wield greater influence than other investors. 

Few would dispute Ashley’s retail and deal-making skills but, equally, few would dispute that he has often treated Frasers as a personal fiefdom and his controversial style has prompted unease among some investors.

“One mark of a strong leader is the ability to build a strong company and leadership team”

As retailers call founders to the rescue, long-term success cannot depend on them. As huge as the contribution of founders and eminent leaders may be, the mark of a really good business is that it can survive and thrive under the stewardship of others.

In a similar vein, while the likes of Gormley, Joule and others may bring unique strengths and expertise, one mark of a strong leader is the ability to build a strong company and leadership team that can – to borrow a phrase from Marks & Spencer – “protect the magic and modernise the rest”.

It will be especially fascinating to see how Frasers navigates the transition. The signs so far, over an admittedly short period, look good. 

While Murray may be related to Ashley, nobody characterises him as a puppet and he is credited with overseeing Frasers’ elevation strategy, which when complete will make it quite a different business.

Ashley is often characterised as a maverick but if the handover works as hoped, he might just have pulled off a textbook departure. Some might be sceptical - but it would not be the first time Ashley had surprised everybody. 

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