Christopher Fenwick: How Fenwick faced up to the need for change

During the new century, the significance of Fenwick as a department store group cleared. Debenhams, Fraser and John Lewis with some 250 stores between them remained widespread, while Harrods and Selfridges (although with three provincial stores) dominated with their large London stores alone.

Of those groups of more moderate size, Allders had dissolved while Beatties and Bentalls had been subsumed. This left Fenwick a clear sixth in the field with nine stores of differing sizes and types that required coordination.

Nationally, the sector had weakened. These factors were not recognised. Actual sales were suffering from the inroads of online trading, growing through the century to take an “alligator” bite of some 20%, or one customer in five, out of department store clientele.

For Fenwick, this needed an urgent response, by way of wider expertise at the top level and to consider an online capability of its own with confidence in its ability to compete profitably in this new channel.

“All had to agree that it had worked in commercial terms and, that, in future, all stores would open on Boxing Day”

 

This was made no easier by some directors’ conservative prejudice against electronics altogether. This and the resistance to engaging outside expertise led to conflict. False starts in new systems and pusillanimous management when they were launched resulted.

Thus Fenwick online, or preparation for it, did not happen. On the board, no director who lasted had joined it for over 10 years, and all directors were called Fenwick smashing two 50-year-old tenets that had served well.

The chair had felt for a decade that this was flying in the face of fortune but for reasons, some personal, he was unable to win the argument among colleagues. Christopher, in 2011, appreciating the board’s adamant opposition to appointment, sought therefore to change the auditors, on the basis that such as they had the kinds of expertise, both technical and managerial, on a consultancy basis that he thought so vital for prosperity if not survival. He further thought that they were buttressing what he regarded as the too conservative outlook of the business. He pointed out static trade over 10 years and fear of absolute decline.

The idea was dismissed by directors with only the chair showing sympathy. Among shareholders, only his daughter Sophie supported, who, the next year, distributed diagrams and charts which demonstrated the firm’s plight.bIt was, however, agreed to seek and appoint an external chief executive. One was found, but withdrew at a late stage, perhaps suspecting that he/she lacked full support of the board. Matters lapsed but work to achieve change did not.

A step forward

While the board shrank, shareholders grew, ‘Generation 5’ and even ‘6’ added to their number. At a meeting in 2014, Sophia Paul proposed a motion, seconded by Christopher Fenwick for the board “to bring additional strength to the main board in diversity of skills and experience.” It was the first ever proposed by a shareholder and it was passed unanimously.

This was a step forward. This was unity, yet two matters of discord followed. Late in 2014, the chair had overruled the board to open Brent Cross on Boxing Day. It would be a first but assuredly the day holding the strongest sales of the year, unrepeatable too, for most of the shoppers that day would never return on another during the Christmas Sale.

“Disagreement was between those yearning for strength from outside the company and the directors who felt it could grow from within”

It was a choice between process and profit. Profit had to be chosen but this could not be without disagreement. The chair apologised but, afterwards, all had to agree that it had worked in commercial terms and, that, in future, all stores would open on Boxing Day.

A similar conflict between process and profit occurred when Sophie put forward five resolutions for the AGM 2015. They were simple and common sense enough in themselves: they proposed a strategic plan, replacement of the auditors, the appointment of a CEO, biannual meetings with shareholders and a working group of newer shareholders.

The recalcitrant board did not wish any of these proposals to be put forward. Constitutionally, the chair was not in a position to agree to this. Aptly, he took the resolutions into his own hands, asked for their approval and they were agreed without dissent.

Sophie, however, unable to speak to the resolutions, was unflinching. She walked to the front of the meeting, a roll of parchment-like paper in her hand. She raised it high, let it unroll revealing a list of qualities that she felt the board should adopt.

The shareholders did not wish to take matters further at this time so she withdrew. But the points had been noted. The shareholders, at first dismissive, now began to share the vivid dismay and disbelief felt by Sophie and her father as the circumstances clarified before them.

In 2015, two non-executive, non-family directors, one the first female director, Christine Cross, joined the board. Both had strong retail, corporate experience. They posed questions that instituted a reassessment of corporate powers and governance. This included the establishment of a nominations committee to regularise the recruitment of senior management and the intent to form remuneration and audit committees. A new governance system including a two-tier board was proposed, with a non-executive chair and a chief executive officer, both to be engaged from outside the company.

A more immediate requirement was a chief finance officer. This appointment was made in 2016. While directors had grown 16 years older, shareholders had grown younger as Generation 5 and even 6 came into their shares. They were more remote from the business than the directors who might have given them a more informed view.

There were now 31 shareholders, each likely to have his or her individual opinions about the business. The disagreement was between those yearning for strength from outside the company and the directors who felt it could grow from within. It was an essential experience and expertise that could only be found without. The new non-executive directors could see no other way.

• The Story of Fenwick and its Family by Christopher Fenwick is published by McNidder & Grace. Illustrated hardback, £40. Available at Waterstones.