Will familiar faces bring fresh hope to DJs?

Paul Zahra’s resignation from David Jones makes a lot of sense from Woolworths’ point of view. The group can now focus on seamlessly executing its overhaul of the retailer's strategy, with all senior executives on the same page.

Paul Zahra didn’t last long under the new ownership of David Jones. Less than two weeks after South Africa’s Woolworths acquired the department store group and he has announced his immediate resignation.

Whether the departure was voluntary or otherwise -- Woolworths said he had 'taken' the decision to resign and wanted to move onto new challenges -- it makes sense from the South Africans' point of view.

Zahra showed last year he can be an independently-minded and potentially difficult executive by resigning as chief executive of David Jones, citing exhaustion. That was against the backdrop of significant tensions with his board that ultimately led to the board’s implosion, the departures of the directors with whom he had issues and created the moment of opportunity for Woolworths to pounce.

Woolworths can’t afford anything other than a seamless execution of its planned major changes to David Jones’ retail strategy, which include a massive increase in the proportion of store-owned brands in the stores in line with Woolworths’ own highly-successful retail offer. With Country Road, Witchery, Trenery and Mimco in its stable, there is a significant opportunity for Woolworths to capture more margin and leverage its increased scale.

It needs to do that. The South African department store group paid $2.2 billion for David Jones and was forced to outlay another $212 million to avert the threat that Solomon Lew would block its bid by taking him out of Country Road, so it has the best part of $2.5bn riding on its ability to significantly improve David Jones’ performance.

There is a view that David Jones shareholders received a share of the prospective synergies Woolworths plans to generate from the acquisitions, so there is a very significant and urgent need for Woolworths’ to hit the ground running and execute its plans perfectly.

To do that it needs all its senior executives in Australia to be on the same page and unconditionally committed to the strategy. It isn’t surprising that Ian Moir has decided to fill in the key Australian posts with familiar faces.

Zahra will be replaced by Ian Nairn, currently chief executive of the Country Road group and previously, before Country Road acquired it, the Witchery group. Country Road’s chief operating officer David Thomas is also being shifted across to the same role in David Jones. Country Road’s recent performance has been spectacularly good.

Nairn will be replaced at Country Road by Witchery’s managing director Matt Keogh, who has previously worked for Woolworths itself.

In other words, Moir is embedding his own trusted lieutenants from high-performing businesses in the senior roles at David Jones while promoting from within to backfill the vacancies that causes.

Zahra will have a three-month stint as a consultant to the new team before looking for his new challenge.

It should be said that, after a rocky start four years ago when he replaced the highly-regarded Mark McInnes in unusual circumstances (allegations of sexual harassment), Zahra has recently presided over a period of improved performance by David Jones within the context of a very difficult and brittle retail environment.

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