By Paul Hayes
SYDNEY, NSW: With news of CEO Mark McInnes’ shock resignation still reverberating through the retail industry, questions of damage to the David Jones brand have been asked.
McInnes’ resignation was announced by the David Jones board last Friday following revelations of two incidents of improper behaviour towards a female member of staff.
Media reports in the days following have suggested that the incidents were far from isolated, with numerous unnamed sources confirming McInnes’ history of such behaviour.
News of the high profile executive’s fall from grace caused David Jones shares to initially drop 4.65 per cent on Friday before recovering to close two cents lower at $4.49.
Regardless of the recovery, Credit Suisse analyst, Grant Saligari, downgraded David Jones’ outlook from “outperform” to “underperform” in a note to clients.
“The potential for this incident to negatively affect trading and brand value introduces additional risks to valuations,” said Saligari.
But incoming chief, Paul Zahra, believes that while the nature of McInnes’ departure is damaging, the retailer will successfully weather the storm.
“Ultimately we’ll be judged by our performance,” he told News Limited.
“The brand is 170 years old. You can’t take a short-term view.
“It will go on for a couple of days as these stories tend to do, and then it will be business as usual.”