'Burnt out', David Jones chief quits
Upmarket department store David Jones is searching for its third chief executive in as many years after Paul Zahra caught investors by surprise in announcing his desire to step down after fighting the worst retail conditions in decades and designing a new online sales platform from scratch.
Mr Zahra's planned exit from the top job comes as arch-rival department store owner Myer is also looking for a chief executive to replace its outgoing boss Bernie Brookes, with the two retailers expected to spark a bidding war for successors.
Already, market speculation has centred on the highly respected former boss of fashion and accessories retailer Oroton, Sally Macdonald, who departed the retailer in August and has publicly stated her desire to take on a new management role at a retailer.
Ms Macdonald, considered one of the best retailers in the country, revived the fortunes of Oroton after seven years in the chief role and could be well placed to take the next step up the retail food chain and run a fully fledged department store responsible for thousands of brands.
However, investors on Monday night were concerned that management salaries, which have been kept tight since the global financial crisis, could break out if David Jones and Myer engage in a bidding war for Ms Macdonald's services.
Mr Brookes is set to depart Myer next year, with the board having already searched for a replacement for a number of years.
Outgoing David Jones boss Mr Zahra told BusinessDay last night he was "simply tired" after leading the upmarket department store chain through some of the toughest retail conditions in recent history, and is looking forward to travelling, rest and new challenges.
"I think 3½ years in the department store is a long time, and if you think about our restructuring post the global financial crisis, us not being ready for the digital world - it has taken its toll and I'm just simply tired."
He said he will step down as soon as a successor is found.
Mr Zahra, who has been at David Jones in a number of executive roles over the past 15 years and was appointed chief executive in 2010 following the shock sacking of former boss Mark McInnes over sexual harassment allegations, said it was time for him to prepare for his departure from the retailer.
"I've got to the point where I have been with David Jones for 15 years, I've celebrated the company's 175th year, I have transformed the company into an omnichannel retailer."
The way in which he got the job, in the wake of the scandal around Mr McInnes and the massive slide in retail trading conditions, made his job much harder and had come at a cost.
"In my mind, I have figured the past 3½ years as a CEO, they weren't normal, let's face it," he said. "It was tough going, and I am signalling my intention to resign, not resigning today, and this allows the market to go through a process to find the right candidate.
"Remembering how I fell into the job, I wouldn't want anyone to go through the same process."
Mr Zahra said after a successor was found he was looking forward to a holiday with his partner.
"We have a bucket list of travel locations that we would like to go to."
The department store said in a statement to the ASX Mr Zahra was leaving for "personal reasons".
David Jones said a succession process had begun that would involve an extensive national and international search.
David Jones chairman Peter Mason said Mr Zahra had taken on the chief executive role at the upmarket department store at a difficult time for the company and that he would leave the retailer in a solid financial position.
Fund managers contacted by BusinessDay said they were surprised and puzzled by the announcement that Mr Zahra had decided to leave the company as soon as a successor was found to steer the department store.
"It is surprising and I didn't expect it," said Allan Gray chief executive Simon Marais.
"I don't really know. It's surprising. I don't think things have been going terribly [at David Jones], it's actually been going really well, but it's too early to know at this stage really."
Mr Marais, whose firm manages $3.6 billion in Australia and holds a 7 per cent stake in David Jones, said he had spoken to the company's chairman on Monday night and was assured there was nothing else around Mr Zahra's decision that he needed to know about.
Morningstar Equities analyst Tim Montague-Jones said the shock announcement would add investment uncertainty around David Jones. "I guess what it does is add a bit of uncertainty to the organisation until we find out exactly who will be replacing him," he said.