McInnes snaps back

Nine months ago, when Mark McInnes resigned in disgrace as chief executive of David Jones, it appeared unlikely he'd ever head another public company. Today Solomon Lew threw him a lifeline and an opportunity to redeem himself and re-establish what had been a stellar career.

While there might be some who criticise the appointment of McInnes as chief executive of Premier Investments' retail businesses after the intensely-publicised circumstances of his self-confessed inappropriate behaviour with a young female David Jones staff member McInnes has already paid a heavy price for those events.

He lost a prestigious job, was humiliated and his reputation ravaged, and lost millions of dollars of accumulated benefits as a result of his treatment of Kristy Fraser-Kirk.  To his credit, however, he did publicly own up to his gross errors of judgment and, in resigning, accepted that he had failed Fraser-Kirk and the rest of David Jones, as well as his own family.

No-one has ever doubted McInnes' ability as a retailer, but most boards would have steered clear of the controversies that would be generated by hiring him. Lew, a billionaire who is not unfamiliar with controversy himself, has the luxury of being the controlling shareholder in Premier. McInnes himself has made no secret of his confidence that he would be able to re-enter public company life.

Lew knows McInnes and his talents as a retailer well. Lew was chairman of Coles Myer when McInnes, with current David Jones finance director Stephen Goddard, was identified as an exceptional and precocious talent and given the task – in his late 20s – of establishing the Officeworks business.

McInnes, Goddard and McInnes' successor as CEO of David Jones, Paul Zahra, were subsequently recruited to David Jones by former CEO Peter Wilkinson, who knew them from his own time at Coles Myer.

Lew – and no doubt McInnes – understands that the appointment will generate some controversy and that McInnes is going to be more closely scrutinised than most CEOs. It is no coincidence that in the summary of McInnes' employment terms and conditions there was a less-than-subtle reference to the company's ability to terminate employment immediate "in the event of serious misconduct."

McInnes' opportunity for redemption has cost Premier's Just Group CEO, Jason Murray, his job. Murray had the misfortune of being in charge of a collection of largely fashion brands in the midst of midst of an extraordinarily difficult period for retailers, particular fashion retailers at the volume end of the market.

The conditions were reflected in Premier's first half results today, with Just Group's earnings before interest and tax down almost 13 per cent on flat-lining sales and a full-year forecast of earnings before interest, tax and amortisation of $80 million to $85 million against the previous guidance of $100 million to $110 million.

McInnes' initial task will be to do what he can to arrest the decline. His record at David Jones demonstrated stringent cost control but also the ability to carve out a very well-defined market position and brand image.

Beyond that, Premier has more than $300 million of cash and Lew has made no secret of his desire to use the Premier balance sheet to acquire more retail brands.

The current parlous condition of the private equity-owned Colorado Group (which Lew knows intimately) could provide an early opportunity but there are a host of other retailers struggling in the current environment for Lew and McInnes to pick over.