City concern as WH Smith appoints insider to top job
WH Smith yesterday disappointed investors with the announcement that Richard Handover, who has served the newsagents to record shops group for 32 years, is to fill the position of chief executive. Magnus Grimond reports on the latest development at the ailing retail group.
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Your support makes all the difference.The group had been rudderless since June, when Bill Cockburn, the former Post Office chief taken on last year to revitalise the company, abruptly resigned to become managing director of British Telecom.
The appointment of Mr Handover drew a mixed reaction, with some analysts and investors saying it smacked of desperation after Smith was left unable to find an outsider to fill the job, despite a high-profile recruitment campaign.
That was reflected in the share price, which slipped 6.5p to 368p yesterday. But Jeremy Hardie, Smith's chairman, dismissed the market's instant reaction, saying: "This is a longer term thing than a couple of hours. He [Richard Handover] will make a lot of money for us over the next few years, of that I am sure." He also acknowledged no pressure from institutional shareholders to speed the selection process. "This is always a bit of a mystery", he said, "because if people want to express disquiet they can always ring me up. I have not been deluged with a barrage of calls."
Mr Hardie would not confirm that Stuart Rose, a former director of Burton, was ever in the running, but said there had been three external candidates alongside three from within the group. As well as Mr Handover, they included Alan Giles, managing director of the Waterstone's book chain, and John Hancock, head of Smith's US operations. Keith Hammill, finance director, pulled out of the running at the end of July. The internal candidates had all expressed their continuing commitment to the business, Mr Hardie said.
Mr Handover was chosen because of his "excellent retail skills" and because he would keep up the momentum of change started by Mr Cockburn, the chairman said. He refused to be drawn on how much Mr Handover would be paid, other than that it would be "related" to that of Mr Cockburn, who picked up pounds 254,000 in 1995-96.
Mr Handover is credited with turning round the group's newspaper and magazine wholesale business. He said yesterday his main task was to restore "fundamental retail disciplines" in the main WH Smith Retail operation, including picking out the most profitable lines, which have turned out to be books, magazines and stationery, and starting to sell them more efficiently and in a more exciting way. He said he was "completely supportive" of the efforts of Beverley Hodson, formerly of Boots and Sears, who was appointed to run the retail business in May.
Even so one shareholder, who echoed the thoughts of many, said yesterday Mr Handover's appointment was "a bit of a cop out".
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