UK CEO TRACKER 2020 Overall CEO turnover reached a seven year high in 2019, with Retail CEO churn increasing 25% on the previous year.

UK RETAIL CEO TRACKER REPORT 2020

2020 KORN FERRY UK RETAIL CEO TRACKER BY SARAH LIM

2020 marks a new dawn for the UK. Following on from 2½ years of political uncertainty, the resounding election result in December 2019 sees the start of a new chapter both for the country, and the economy. At the end of 2019, we saw the FTSE 100 up 12% over the year; the biggest annual gain since 2016 (the year of the referendum), with one in five Britons expecting to be richer by the end of 2020. (YouGov report, 23 December 2019).

Despite the challenges ahead in ‘getting Brexit done’, there appears to be renewed confidence that we enter AUTHOR the next decade with greater optimism. Maintaining this Sarah Lim level of confidence, and ensuring there is forward visibility Managing Director & Sector Lead, on the plans for a well-managed exit from the EU is going Retail, EMEA to be critical for the ongoing transformation of the Retail Korn Ferry International industry, which saw the toughest year in living memory in 2019, surpassing even that of the 2008 crisis. CONTRIBUTOR As we head into a new decade, one thing is for sure; Zoe Duke Retail will change unrecognisably over the next ten years and so those who lead our industry will need to do so too. This is the 8th Annual UK Retail CEO Tracker report, which tracks the changes in CEO moves across the industry, category by category and year on year. We hope you enjoy reading it.

3 2020 UK RETAIL CEO TRACKER 7 YEAR HIGH IN THE TURNOVER OF RETAIL CEOS

At the start of 2019 we predicted a higher number of changes of Retail CEO in the year ahead, and so this indeed proved to be the case. During 2019, the last twelve months saw the greatest level of CEO churn in Retail since 2012; increasing 25% on the previous year.

Introduction For the Retail sector, 2019 was the most difficult year in over a decade; perhaps longer. At a macro level, the UK economy slowed during the second half of 2019, from 0.3% GDP in the third quarter, to a predicted 0.2% GDP in the fourth quarter of 2019, yet Retail has suffered far more acutely in the past year than other industry sectors.

The past year saw a perfect storm, created by ongoing digitalisation and changes to consumer shopping behaviour; wavering consumer confidence; continued uncertainty throughout the year over Brexit; a pending general election toward the end of the year; ongoing challenges of rent and business rates; and rising costs as a result of the weakness of sterling. All of this compounded to create Retail’s ‘Annus Horribilis’ in 2019, resulting in profit warnings, a further spate of CVA’s and a number of high profile high street names finally going into administration, including , Mothercare, Clinton Cards, Karen Millen, Jack Wills, LK Bennett and Bonmarché, to name a few.

It is perhaps not surprising therefore, that the sector response has been to change out the CEO. The industry has seen an unprecedented number of changes at the top over the past year, with CEO change rising 25%, from 44 in 2018 to 55 in 2019. This is the highest churn since 2012, when the number of changes was 56 in a single year.

The Annual Retail CEO Tracker tracks changes in CEO appointments year-on-year which have taken place in the last 12 months, analysing over 200 retailers/brands operating across the UK and Ireland, across all categories. It covers all major brands and retailers, online and physical retailers, for companies whose revenues are at least £50m per annum, or more.

4 UK RETAIL CEO TRACKER REPORT 2020

Macro factors affecting the sector: • Continued political and economic uncertainty relating to Brexit • Digital transformation; physical stores to online and increased use of AI and robotics • An uneven playing field relating to taxation between bricks and mortar, and online retailers • Business rates and cost of rent continuing to have serious impact • Other costs – labour, currency and preparation for Brexit • Fragile consumer confidence and potential impact on consumer spending, but hopes for improvement during the year ahead 25% 55 24 rise in CEO change in 2019 changed seats, up from internally promoted 44 the previous year CEOs this year

5 notable findings from this year’s Annual Retail CEO Tracker: • There were a significantly higher number of CEO changes last year (55) compared with the number in the previous year (44) – up 25% • 38% of CEO changes saw the former CEO in seat for less than 3 years. This is another increase on the previous year • 21% of newly appointed CEOs came from a Finance background last year, compared to only 15% in the previous year • The percentage of female CEOs appointed has remained strong at 23% of the total, but the number of women running publicly quoted retail companies has significantly dropped • More CEO changes occurred within the sectors of Fashion, Luxury and Apparel than in any other category. Of the 20 CEOs appointed, 12 were internally promoted, showing a reversal in trend on the previous year

7 year trend in number of Retail CEO changes 2019 saw the greatest number of CEO exits in 7 years, reaching 55 exits in the full year.

2012 2013 2014 2015 2016 2017 2018 2019 56 44 32 45 41 50 44 55

5 OVERALL CEO appointments by sub sector SUMMARY

CEO changes in the 43% last 12 months 8% Compared to the previous year, 2019 saw a significant rise in the number of Retail CEO changes, 13% with 55 announced, versus 44 in 2018. Like last year, the sub-sector 6% 9% with the most significant number 21% of CEO changes was Fashion, Luxury and Apparel at 43% (see further note below). Fashion, Luxury and Apparel Pureplay Of the total number of CEO exits, Grocery there are 9 CEO seats presently vacant, Home and Garden Other for whom a replacement has not been announced; 1 will not be replaced (Bonmarché); 6 are yet to be confirmed if the CEO will be replaced on a like-for- like basis (Boden, Harvey Nichols, Jigsaw, Monsoon Accessorize, Argos Specific sector note – Fashion, and Topshop) and 2 are yet to announce Luxury and Apparel details of the new CEO (Matchesfashion and Ted Baker). In 2019, more CEO exits came from Only 7 of the 55 companies who changed the Fashion, Luxury and Apparel out their CEO are owned or part-owned sub-sector – 20 in total which by private equity/VC funds including represented 43% of all CEO changes. Alteri (Apollo), Apax, Bridgepoint, Of the 20 CEOs appointed in Fashion, Luxury Paloman Capital, L1 Retail & Electra, and Apparel, 12 of the 20 were internally promoted, highlighting the ongoing shift away including New Look (Nigel Oddy), George @ Asda from the Retail sector by private equity (Steph Strike), Charles Tyrwhitt (Luke Kingsnorth), investors. 25 of the companies are Figleaves (Jenni Burt), N Brown (Steve Johnson), private/family/member owned, and the Oasis (Sarah Welsh), Office (Kerry van der Merwe), remainder are either publicly quoted, Sweaty Betty (Julia Straus), Ted Baker (Lindsay or part publicly quoted companies. Page – promoted and then exited later in the year), Many changes were driven as a result of Warehouse (Paula Stewart). This is in stark contrast poor trading performance for example to last year, where 75% of the CEO appointments Shoe Zone, M&S (Clothing and General in that sector came from outside the company. Merchandise), Office, and/or Owner/ The 8 CEOs appointed externally were: Clarks Founder intervention, for example at (Giorgio Presca), Hotter Shoes (Ian Watson), AO.com, Boden, Superdry, Charles Joules (Nick Jones), LK Bennett (Darren Topp – Tyrwhitt, Clarks, Ted Baker; and/or who returned to the brand), Marks & Spencer broader CEO succession planning, (Richard Price – to start later in 2020), Net a Porter for example at SSP, Topps Tiles or (Nicola Brandolese), River Island (Will Kernan) River Island. and Stella McCartney (Gabriele Maggio).

6 UK RETAIL CEO TRACKER REPORT 2020

CEO appointments by sub sector Top CEOs to watch Top appointments ‘to watch’ over the next year: Ken Murphy, who steps into his first CEO role when he takes over the reins from Dave Lewis at Tesco later this year; Thierry Garnier, who took over as Group CEO of Kingfisher Group in September with a brief to turnaround the ailing fortunes of the Group; and Dame Sharon White, who will join the John Lewis Partnership in early 2020 to lead the John Lewis and Waitrose businesses as part of its new merged partnership structure. The other key Grocery sector appointments to watch will be Mel Smith at Ocado Retail, who took the helm as the newly appointed CEO of the new Ocado/M&S joint venture in the summer of 2019. This promises to be a game changer for M&S, as Ocado transitions out of its longstanding partnership with Waitrose later this year. Within Fashion, attention will be on high profile turnaround agendas: Nigel Oddy as he steps up into the CEO role at New Look; Ian Grabiner as he seeks to make Topshop relevant again; and Will Kernan as he looks to rejuvenate River Island’s fortunes and put digital at the heart of its agenda. In Department Stores, many will be watching to see if Stefaan Vansteenkiste, the non-retail restructuring expert, can perform the miracle needed at Debenhams, and Richard Price when he arrives later in the year to take on Jill McDonald’s former role at M&S. Percentage of ‘Vacant’ CEO seats Notable other appointments within Home & Garden beyond Kingfisher Group in the last year were: Nick Roberts who joined Travis Perkins as Group CEO in July; David Wood, who leads the charge at Wickes and its carve out from Travis Perkins, with a planned IPO on the cards for Q2 2020; and Rob Parker at Topps Tiles, who succeeds long-term CEO Matt 15% Williams as his internal successor. Pureplay CEO changes continued apace last year, with the appointment of Nicola Brandolese at Net A Porter; Sarah Miles at Feelunique; Steve Johnson at N Brown; Jenni Burt at Figleaves; Nick Devlin at Naked Wines; Claire Davenport at notonthehighstreet; and Ross Clemmow at Wiggle. Finally, it will be interesting to watch those retailers 85% whose founders returned to the helm in the past year. Whilst largely fashion sector led, this wasn’t exclusively so. Ones to watch include AO.com with John Roberts return a year ago; Julian Dunkerton at Superdry; and the combination of Founder and Filled Executive Chairman in Johnnie Boden and Julian Vacant Granville at Boden.

7 Changes in female CEO appointments Female representation at the top There was no material increase in the number of female CEOs appointed last year to the year before; 11 newly appointed in 2019 versus 10 in 2018, out of the 47 confirmed CEO appointments – just under 25% of the total.

77% MALE

11 female CEOs were appointed in the last 12 months. 23% FEMALE

First time CEO

49% 51%

No Yes

8 UK RETAIL CEO TRACKER REPORT 2020

In the last 12 months, the 11 female CEOs appointed were: Steph Strike at George @ Asda; Sarah Miles at Feelunique; Jenni Burt at Figleaves; Dame Sharon White at the John Lewis Partnership; Claire Davenport at notonthehighstreet; Sarah Welsh at Oasis; Mel Smith at Ocado Retail; Kerry van der Merwe at Office; Louise Hoste at Spar UK; Julia Straus at Sweaty Betty and Paula Stewart at Warehouse. Of these 11 appointments, with the exception of Dame Sharon White, Julia Straus and Claire Davenport, all were ‘step up’ candidates into their first true CEO role. At a wider industry level, of concern has been the noticeable attrition rate of female CEOs from the listed company arena, and/or female CEOs running retail businesses of significant scale and complexity over the past year. Those of note include Kate Swann, Helen Connolly, Angela Spindler and Jill McDonald, to name a few. Reasons vary, including decisions to ‘go plural’ and pursue non-executive careers; opting to move out of the limelight of the listed company CEO role and/or a desire to move out of the Retail sector altogether. Irrespective, these are regretted losses for the industry. Today, the only listed company female CEO of scale remaining is Karen Hubbard; CEO at Card Factory.

9 CEO tenure 38% of the CEO changes made in the past year saw the former CEO in seat for less than 3 years. This represents a further increase on the year before, illustrating the growing rate of change in CEO appointments year-on-year. In 80% of these companies, the change in CEO has been driven by company performance. These 20 companies are: AO.com, Bathstore, Charles Tyrwhitt, Clarks, Debenhams, Figleaves, (who have seen their last two CEOs leave in under 3 years), Harvey Nichols, Jigsaw, LK Bennett, Marks & Spencer (General Merchandise/Clothing Division), New Look (Executive Chairman stepped back), Net a Porter, notonthehighstreet, Office, Signet Jewellers (UK Division), Ted Baker, Topshop and Wiggle. 34% of CEOs appointed in the past year from Commercial/ Sales or Trading/Buying and Merchandising backgrounds 6% increase of CEOs from a Finance background this year

10 UK RETAIL CEO TRACKER REPORT 2020

Functional heritage of the CEOs appointed Functional background of CEOs in the last 12 months appointed in the last year 34% of all the CEOs appointed in the past year came from Commercial/Sales or Trading/Buying and Merchandising backgrounds. This was a marked drop from the year before which saw 46% from Buying and merchandising/Trading functional route up into the CEO seat. The 15% Fashion and Apparel sector saw a greater 34% propensity for CEOs from a classic Buying 11% and Merchandising/Trading background. 21% came up through the Finance/CFO route into the CEO seat; – a marked rise from the previous year, where previously those CEOs from Finance backgrounds 21% 13% made up only 15% of the total of CEOs appointed. Notable former Finance Directors include: Ken Murphy 6% (Tesco), Tony Buffin (Holland & Barrett), Steve Johnson (N Brown) and Stefaan Vansteenkiste (Debenhams). This rise is highly indicative of sector stress, at times where the focus has shifted toward strong financial management, debt restructuring, management of Commercial/Buying/Merchandising Marketing City/investor relationships etc. Strategy Finance Operations/Retail Other 15% of the CEOs appointed came from Strategy backgrounds. Particularly noticeable was the prevalence of CEOs appointed into Pureplay roles from a Strategy background, namely Mel Smith at Ocado Retail (formerly McKinsey), Ross Clemmow at Wiggle (formerly Bain), Claire Davenport at notonthehighstreet (formerly Head of Strategy at Skype & Ofcom), Sarah Miles at Feelunique (formerly Gemini) and Nick Devlin at Naked Wines (formerly OC&C). 13% of the CEOs appointed came from a Retail/ Operations background. This was a marked decrease from 22% in the previous year. 11% of the CEOs appointed had a formative career in Marketing, representing a 1% increase from the previous year.

11 Internal promotion to CEO In 2019 we saw a reversal in trend with 51% of CEOs appointed as a result of internal promotion, versus 41% in the previous year. This was a marked increase and was the first time in 3 years that more CEOs were appointed internally (51%), than externally (49%). With a few notable exceptions, the vast majority of the internal appointments made were as a result of ongoing succession planning.

Internal promotion to CEO

51% INTERNAL

49% EXTERNAL

12 UK RETAIL CEO TRACKER REPORT 2020

Inside or outside of sector? The trend to recruit FROM the industry FOR the industry continued in the last 12 months. With the exception of Dame Sharon White (formerly Ofcom), Nick Roberts (formerly Atkins) and Stefaan Vansteenkiste (formerly Alvarez & Marsal), all CEOs appointed had demonstrable experience in a relevant retailer or brand (online or offline) prior to their present appointment.

International CEO appointments 2019 saw a slight increase in percentage (17%) of international (non-British) CEO appointments from the previous year – only 8 out of the 47 CEOs hired. Those appointed were: Giorgio Presca (Clarks), Stefaan Vansteenkiste (Debenhams), Summet Yadav (Hamleys), Thierry Garnier (Kingfisher), Nicola Brandolese (Net a Porter), Jose Ramon Finch Castro (O&CC), Gabriele Maggio (Stella McCartney) and Julia Straus (Sweaty Betty). 13 OVERALL OUTLOOK FOR 2020

2019 was a tumultuous year for Retail, resulting in significant changes at the top, with more CEO changes than in any year since 2012.

Whilst 2020 will remain challenging, there is room for cautious optimism in the year ahead, as Brexit uncertainty lifts under a ‘pro-business’ government. For the first time in 3 years, retailers will be able to start to plan ahead for new investment and future growth, as we herald the start of a new decade of greater prosperity. We predict a slowing in the rate of CEO change in the year ahead, but a heightened demand for CEOs with greater online and digital credentials as retailers accelerate their shift to online.

At least new Retail CEOs announced as 40 appointed during 2019.

14 UK RETAIL CEO TRACKER REPORT 2020

Listing of Retail CEO changes during 2019

Company Name New CEOs announced Company Name New CEOs announced as appointed during 2019 as appointed during 2019

AO.com John Roberts New Look Nigel Oddy * ASDA George Steph Strike Net a Porter Nicola Brandolese Bathstore Ian Penney notonthehighstreet Claire Davenport Boden TBA O&CC Jose Ramon Finch Castro

Bonmarché N/A (Company Administration) Oasis Sarah Welsh BrightHouse Anth Mooney Ocado Retail Mel Smith Charles Tyrwhitt Luke Kingsnorth Office Kerry van der Merwe Clarks Giorgio Presca River Island Will Kernan Debenhams Stefaan Vansteenkiste Sainsbury's Argos TBA Feelunique.com Sarah Miles Shoe Zone Anthony Smith Figleaves Jenni Burt Signet Jewellers UK Neil Old Hamleys Yong Shen Space NK Andy Lightfoot Harvey Nichols TBA Spar UK Louise Hoste Holland & Barrett Tony Buffin SSP Group Simon Smith Hotter Shoes Ian Watson Superdry Julian Dunkerton Jigsaw Toby Foreman Stella McCartney Gabriele Maggio John Lewis Partnership Dame Sharon White * Sweaty Betty Julia Straus

Joules Nick Jones Ted Baker TBA (Lindsay Page previously appointed; subsequently Kingfisher Thierry Garnier exited in the year) LK Bennett Darren Topp Tesco Ken Murphy * Majestic Wine John Colley Topshop TBA Marks & Spencer Richard Price * Topps Tiles Rob Parker Matchesfashion.com TBA Travis Perkins Nick Roberts Monsoon TBA Warehouse Fashions Paula Stewart Morley Stores LTD Nigel Blow WHSmith Carl Cowling N Brown Group Steve Johnson Wickes David Wood NakedWines.com Nick Devlin * Wiggle Ross Clemmow

* Appointed and announced during 2019; will start in role during 2020 15 About Korn Ferry Korn Ferry is a global organisational consulting firm. We work with organisations to design their organisational structures, roles, and responsibilities. We help them employ the right people and advise them on how to reward, develop, and motivate their workforce. And, we help professionals navigate and advance their careers.

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