It may well be the case of right place, wrong time. When Paul Zahra became CEO of David Jones in 2010 — just as the company’s former CEO was swallowed up by a messy sexual harassment suit — it came as a form of recognition for more than a decade of work in the upper echelons of the company’s management team. So what happened in the three years leading up to his resignation?
Current.com.au traces the history of David Jones CEO, Paul Zahra…
Paul Zahra’s ascension to the top job at DJs will be irrevocably linked to the departure of former CEO Mark McInnes. After admitting to behaving “in a manner unbecoming of the high standard expected of a chief executive officer to a female staff member,” McInnes resigned amidst a messy sexual harassment suit. With 12 years of experience in the David Jones management team, Paul Zahra is appointment as the company’s new CEO. Days later, Zahra said the fallout of McInnes’ departure would “go on for a couple of days as these stories tend to do, and then it will be business as usual”.
After only a few months in the job, Zahra saw DJs’ results slide in the first quarter of the 2011 financial year. Citing strong sales in apparel and home furnishings, Zahra said consumer shopping behaviour was still “patchy” and the company had “seen significant deflation in televisions”.
New ‘Knifepoint’ David Jones store a move away from old strategy — February 2011
While former CEO Mark McInnes was concerned with opening new David Jones stores in “medium to high income demographies,” Zahra parts with his predecessors modus operandi, electing to open a new store in Melbourne’s Highpoint shopping centre, known colloquially as ‘Knifepoint’.
After saying in March that the company saw its online business “as a growth opportunity in the medium to long term,” in March 2012, DJs quickly changed its tune, listing multichannel retail as a major priority for the business after poor yearly results.
Myer & DJs tell suppliers to drop prices — January 2012
“People understand they might have to pay a bit more if that gives them certainty and they can shop with confidence . . . but they’re not prepared to pay 20 to 50 per cent more,” said Paul Zahra, reiterating a call from Myer CEO Bernie Brookes for suppliers to drop prices.
“We are shifting the issue down the supply chain to make it the suppliers’ issue . . . because our labour costs don’t change and our rental costs don’t change and we have to make sure we are competitive in the international market,” he said.
Two days after announcing a trading halt on company shares, David Jones released its half yearly profit results for the 2012 financial year, reporting a staggering 19.6 per cent drop in profits (after tax), down from $105.7 million in 1H FY2011 to $85 million in 1H FY2012.
With a string of poor results announcements, Zahra spearheads a new plan to return profitability to David Jones by addressing major structural changes and “macroeconomic headwinds” with a renewed focus on customer service, investment in core brands and an expansion of the retailer’s store network.
In a bizarre turn of events, David Jones shares were once again placed in a trading holt on the Australian Securities Exchange following the company’s receipt of an “unsolicited letter from a non-incorporated UK entity, about which no usual public information is available, indicating its interest in making an offer for the company”. The takeover offer was subsequently withdrawn.
In a major coup for David Jones, the department store signed a deal that would see Dick Smith managing the sales of electrical and consumer electronics products in DJs stores. Zahra had signed off on a deal that was “win-win” for both retailers — Dick Smith could keep the stock and make the sales, while David Jones could still range CE products in its stores.
After just over three years at the helm of David Jones, Paul Zahra resigns. Speaking to the Australian Financial Review, Zahra revealed the tough time he had at the top over the years:
“The last three and a half years weren’t normal years — for that reason it’s right to move on,” he told the Financial Review. “I wouldn’t want anybody to have to go through what I went through in 2010. It was horrible in anyone’s language to have to handle that and to have the public scrutiny — it sticks in your mind.
“For many CEOs the hours are relentless — you’re working around the clock seven days of the week.
“I need a break.”