Department store group Fenwick is taking a risk as it parts company with both chair Richard Pennycook and chief executive Robbie Feather.
The shock management changeover comes as the coronavirus pandemic brings unprecedented challenges to general merchandise retailers, with department stores, in particular, seeking to connect with shoppers in more contemporary ways.
Fenwick is one of the last remaining jewels in that sector’s crown, following the emergency surgery needed at rivals such as House of Fraser and Debenhams, which could yet crash into administration for a second time. In Fenwick’s North East heartland, there is a visceral love for the retailer, its famous Newcastle Christmas windows and food hall.
However, such traditional strengths have not been enough to protect Fenwick from the retail storm raging around it. Last year, it lost £44.2m at a pre-tax level, while operating profit before exceptionals tumbled 84%.
“There’s a niggling fear that such sweeping change in the boardroom cannot but herald further turbulence at Fenwick”
The recruitment of an external chair and chief executive for the first time – Pennycook was appointed in 2017 and Feather started at the beginning of 2018 – was prompted by recognition from Fenwick family members that outside perspectives could help navigate the 140-year-old business through troubled retail waters while staying true to its heritage. It is surprising then that the pair are leaving in the midst of the most disruptive conditions the industry has ever known.
One source familiar with situation argues, however, that now is actually the perfect time to make changes, since Fenwick’s stores and online operations are both closed and plans can be put in place for post-coronavirus realities.
Pennycook sits on a variety of other boards. In January, for instance, he became chair of chicken supplier 2 Sisters’ parent company.
Complete focus will be needed by any Fenwick chair in the present environment. Similarly, the transformation strategy being implemented by Feather was created in very different circumstances, and Fenwick will have to address daunting immediate challenges during the pandemic and its aftermath, the shape of which is unclear.
It’s true, too, that Feather’s successor John Edgar brings a strong CV, combining experience gained at department store stars Harrods and Selfridges, where he served as chief financial officer, with strategic intelligence gained at Boston Consulting, where he was a senior adviser.
And yet, there’s a niggling fear that such sweeping change in the boardroom cannot but herald further turbulence at Fenwick. The statement about the management overhaul flagged that it would “bring the family closer to the running of the business”. It’s a rather opaque comment, the exact implications of which remain to be seen.
Family affair
Some family members, including Mark Fenwick, who has been on the board since the 1990s and was executive chair for four years before Pennycook, are highly experienced retailers and intimately familiar with the business.
However, it was recognised that outside expertise would benefit Fenwick. In a book about the retailer published last year, Christopher Fenwick recalled: “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’.”
Remarkably, that motion – passed unanimously – “was the first-ever proposed by a shareholder”.
Fenwick saw the need to change, which was a testament to shareholders’ good sense. But the fact that until that point shareholders had tended to sit back is also surely a stark illustration of how family businesses can sometimes become too wedded to familiar ways of doing things.
Coronavirus will eventually pass, but the sector shift that was already rocking retail won’t go away. If anything, it will accelerate.
Values that enabled Fenwick to thrive for so long can no doubt come into their own in this moment of crisis, but so will an eye on the longer-term future. The Fenwick family are taking a huge roll of the dice.
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