Sir Philip Green’s first reaction to Tony Brown’s defection to Beales is unprintable.
“Needless to say he was not pleased, but he understood that I wanted the challenge of running a business,” smiles former Bhs retail director Brown.Brown says becoming chief executive of the 11-store department store chain opened a door normally closed to retail directors. “It is not the traditional route,” he says. “As a retail director, you are not seen to have had the breadth of general management experience, whereas at Bhs you get that experience because it is a small team.”
When he got the call from Beales, Brown did a quick recce of the stores and thought “I can make a real difference here”. He speaks frankly of the challenges he inherited when he took over in June from Allan Allkins. The business had already issued a series of profit warnings, like-for-like sales had slumped and it had closed two stores. “It was an organisation that was tired and lacked clear direction. I thought there is a job to do here, rather than just carrying on where the other person left off,” he says.
The experience to date has been “fabulous but daunting”. He says: “It has been hard work – late nights and a few tears before bedtime – but the results are there to see.” Brown has pushed the button on the refurbishment of the department store chain. New signage and visual merchandising and marketing have given the stores a facelift and aim to attract a new customer.
SKUs have been reduced by 14 per cent with a focus on depth of range rather than width. Terminal stocks have been reduced and margins have improved 2 per cent in the past three months. “We have gone into quite a substantial de-ranging exercise, getting the guys to look at what works and how much we have got invested in different parts of the product range for the return we get,” he explains.
The result is a cleaner, more energised shopping experience and increased staff morale, he says. “Confidence is building,” he adds. But when he joined Beales, he faced an uphill task in changing established mindsets. At a buyers’ breakfast in his second week in the job, he queried why sales of a particular handbag were so poor. The buyer told Brown that they had never been able to sell more than six of anything.
“I asked how many he buys. He said ‘six’,” says Brown with mock incredulity. “But to be fair to him, the handbag wasn’t executed well in store. I told him to buy 400, we merchandised it well and we sold them all in 10 days.”
He says he inherited a team of “good buyers, but not good sellers”. “They needed help to learn how to construct a promotion and energise the stores to sell,” he explains. He says that once he helped identify that process, the “lightbulb came on”. “People are now really gauging what they know already and they are being allowed to do it at last,” he says.
Brown is also working with other retailers to improve the shopping experience and create synergies. Last month he created a partnership with Allders, which he says will be mirrored by other retailers with a small store portfolio. “As cost pressures build, if they can turn to an organisation that has the infrastructure already and work together to improve profitability, then I think more people will do it.”
Allders and Beales are working together to get better supplier terms, new concessions and to pool their expertise. Beales gets a management fee and a share of the profits in return.
Since Brown’s appointment, like-for-likes have improved and in August Beales fended off a bid from shareholder and property tycoon Andrew Perloff.
He says the bid situation is “gone” and that he is just focused on “getting the model right and getting profitability back”. “That will give us and our banks more confidence in funding for expansion,” he says. Brokers have revised their forecasts for the full year for Beales. “The first was a£1.9 million loss,” he says. “Now it is a£1.6 million loss”. The chain will be in profit within two years, he says.
Brown is similarly bullish about Christmas. “There is only so much depression people can think about,” says Brown. “At some point during the year people will want to have a big party.”